The next item is the debate on priorities for the 2022-23 budget preparations. I call once again on the Minister for finance to move the motion—Rebecca Evans.

Motion NDM7749 Lesley Griffiths

To propose that the Senedd:

Considers the spending priorities for the Welsh Government’s Draft Budget 2022-23.

Motion moved.

Diolch, Llywydd. Continuing the tradition of the previous administration, I am pleased to outline the preparations for the Welsh Government's budget for 2022-23. This annual debate has become an important fixture in the Senedd calendar, providing an early opportunity to look ahead to next year's spending priorities, and, importantly, to give Members the opportunity to shape those preparations. As a Welsh Government, we have been given a clear mandate by the people of Wales following the election, a mandate to deliver on the commitments outlined in our ambitious programme for government. But we have equally been clear that we have no monopoly on good ideas. As the First Minister has already said, we will look to new ideas and new proposals from wherever they come in this Chamber, wherever they benefit Wales and our communities. And it's in that spirit that I open today's debate.

Prior to outlining our approach, it is important that we recognise the wider context within which we are undertaking these preparations. What previously we would have considered extraordinary has, sadly, become ordinary. The challenges we face are significant. They include the ongoing impacts of the UK leaving the European Union, the urgent need to respond to the climate and nature emergencies, as well as the devastating impacts of the pandemic itself.

The impacts of those challenges will be profound. Over the course of the pandemic, at least two years of gross domestic product growth will be lost, much of which may never be recovered. The Office for Budget Responsibility believes the pandemic will permanently reduce GDP by 3 per cent. Welsh businesses are now beginning to encounter many of the real costs of the UK leaving the EU. The loss of the £375 million of EU funding a year to the Welsh Government will have serious implications for Welsh businesses, individuals and our core public services. We know the pandemic's impact has fallen disproportionately on the most vulnerable, and we know that the Climate Change Committee has estimated that the additional investment required in Wales as a whole could rise to over £2 billion by 2030 to address our decarbonisation needs, not including adaptation costs or the threat to biodiversity.

It is clear the fiscal context of the pandemic has weakened public finances. The Resolution Foundation estimates non-protected departmental resource spending per person will be 24 per cent lower in real terms in 2024-25 than in 2009-10. Beyond the next spending review, OBR analysis highlights severe long-term pressures, driven by demographic change and increasing costs of healthcare. Left unaddressed, these pressures would unsustainably push UK Government debt to more than 400 per cent of GDP 50 years from now.

We also face ongoing uncertainty over the timing of the UK Government spending review and whether the Chancellor will indeed keep to his promise of providing a multi-year settlement. Until this concludes in the autumn, we are having to undertake our preparations without certain knowledge of our settlement. In that context, we will continue to press the UK Government to urgently confirm its intentions as soon as possible.

I am grateful for the Finance Committee's recognition of this challenging context. I intend to follow recent practice and publish a combined outline and departmental draft budget on 20 December and the final budget on 1 March. I fully recognise the impact this timetable will have, particularly on local authorities and the third sector, as well as the impact that this will have for Senedd scrutiny of our plans. In setting out this plan, I want to strike a careful balance of ensuring that we can effectively undertake our preparations whilst providing as much certainty as we can to partners and ensure the maximum time available for scrutiny in the Senedd. 

In preparing for the challenges to come, we must continue to maximise the impact of our available funding to prioritise the delivery of our ambitious programme for government, and in that spirit, I want to recognise the tireless work of our partners through the pandemic. In recognition of that work, I want today to confirm that funding for health, social care and local government will remain a core priority of our budget preparations.

We have previously stated our ambition to provide multi-year settlements if we're in a position to do so by the UK Government. On the basis that the UK Government keeps to its promise, we are undertaking our own preparations to enable us to respond. In the context of a UK efficiency review resulting in a less favourable outcome, we cannot ignore the incredibly challenging context we face and the difficult choices that flow from it. But we will not let these challenges daunt our ambition. Difficult times require difficult choices and that is why we will use the development of the new 10-year Wales infrastructure investment strategy, which I intend to publish alongside our 2022-23 draft budget, to shape the important work that we need to do in the coming years to strengthen the link between infrastructure and the need to tackle the climate and biodiversity crisis. We will look to all levers at our disposal, but we also remain committed to the promises of our manifesto. I am committed to respect the manifesto pledge we made not to raise Welsh rates of income tax whilst the economic impact of the pandemic is still being felt.

I know there is a great deal of interest in this budget. As in previous years, I intend to engage with groups from across public life in Wales. I hope Members will take the opportunity to speak to their own networks to consider and to bring forward innovative and novel ideas to meet the challenges that we have to face. The Welsh Government has been elected with a clear and bold mandate: to build a fairer, greener and more prosperous Wales. Our budget next year will support us along that path to deliver on our programme for government, and, in that work, I want to listen to and work with colleagues from across this Chamber, and I look forward to the debate today. Diolch.

The Finance Committee Chair, Peredur Owen Griffiths.

Thank you very much, Llywydd. I'm pleased to be able to contribute to this important debate today in my role as Chair of the Finance Committee. Like buses, they don't come for ages and then you get two at once, and I'm very pleased to be able to take part.

In previous years, the Finance Committee has led on this type of debate and, in normal times, the committee would hold a big stakeholder event or an online campaign to hear the views of stakeholders on where the Welsh Government should be prioritising its spending. This information would then feed into a debate of this type so that Members have the opportunity to discuss and potentially influence the Welsh Government's spending decisions prior to publishing the draft budget. As a committee, we believe this debate should be led by the Finance Committee in future years. We've written to the Minister and to the Business Committee to seek their agreement for this annual Finance Committee-led debate. 

Last year, the UK Government only provided a single-year settlement, so we again find ourselves in a position where the publication of the draft budget will be delayed until the Welsh Government has certainty over its funding settlement. The Chancellor of the Exchequer has indicated his intention to conduct a multi-year comprehensive spending review, which is likely to be concluded in the autumn.

It is disappointing that the first draft budget of this Welsh Government will be published during the Christmas recess. While we appreciate the uncertainty faced by the Welsh Government, this proposed timetable for consideration of the draft budget curtails scrutiny by this Senedd. We would urge the Minister to look at any opportunity to bring that publication date forward. Nonetheless, we are pleased that a comprehensive spending review will take place this year so that Wales has some certainty of funding for the next few years. This is imperative to assist the Welsh Government in planning effectively and to provide long-term indicative funding for the Welsh public sector.

The upcoming draft budget will inevitably reflect the Welsh Government’s continued recovery from COVID-19. Last year’s draft budget saw the Welsh Government holding significant unallocated reserves due to the need for some flexibility to deal with the response to the pandemic. We hope this year we will see a more detailed draft budget focusing on recovery for the NHS, for local government and Wales’s economy.

This draft budget will be the first of the sixth Senedd, and I hope that the Finance Committee can work collaboratively with the other policy committees. Given that the draft budget is likely to be published prior to Christmas, we intend to consult on the priorities for the next draft budget in the autumn term. I’d encourage committee Chairs and members to engage with the Finance Committee on how this consultation can support individual committees—

Can I just pause here? I understand that the translation isn't working, from looking at the Minister.

It's working okay for me.

It seems to be partially working and partially not working. [Interruption.] So, it seems to be a Labour backbench issue at this point. Can I just pause for a second whilst we see if any intervention can be made to restart the translation?

So, if I speak in Welsh in order to see whether the translation is working—. Yes, it's working for some Members certainly, but it isn't working for everyone still.

It's okay.

It's okay. If Joyce says it's okay—[Interruption.] Okay, we're sending Jack Sargeant around the back of the Chamber now to try and see if he can remedy this.

So, we will continue. I don't know what happened there. Apologies to the Chair of the committee, but you can continue with your work.

I've only got a little to go, so you don't have to be too concerned. I hope that the Finance Committee will be able to collaborate with other policy committees because, as I said, it's likely that the draft budget will be published before Christmas. We intend to consult on the priorities for the next draft budget in the autumn term. I would also encourage committee Chairs and members to engage with the Finance Committee on how this consultation can support individual committees in their scrutiny processes and how we can collaborate across the policy areas to scrutinise the Government's work. Thank you very much.

I wish I could speak Welsh and use the translation as well, but perhaps I'll get there one day. Minister, thank you for setting out the Government's priorities going forward, and I welcome also your desire for new ideas, so I won't let you down and I will lead you through some of my thinking.

I'm sure many of the people of Wales will have been listening to your speech with particular interest because this year's budget priorities will be, arguably, the most important in a generation. Welsh Conservatives have been clear that the overarching priority for any Government must be to ensure our communities and services bounce back from COVID-19. From the outset, the UK Conservative Government has been firmly driving its robust initiatives to protect jobs, businesses and livelihoods from the devastating impact of the pandemic. 

Slowly but surely, we are re-emerging from the worst stages of the pandemic, and that is why the Welsh Government cannot waste any time in paving the way for us to build back better, fairer and greener. The pandemic has highlighted that Wales was in decline even before COVID-19 struck. We have one in five people stuck on a waiting list, the slowest growing economy in the UK and the lowest wages in Britain. Two decades of Welsh Labour rule has held back Wales's true potential—two decades where aspiration has been stifled, two decades where too many young people have been left behind, and two decades where hopes and dreams have been dashed. You had the opportunity with this year's financial priorities to set right many historic wrongs, and I hope perhaps we will see some of those wrongs put right at some point. But, sadly, Minister, once again, I believe that the Government has missed the mark and the opportunity today to share more. The people of Wales needed to see a long-term blueprint for a job-led recovery to turbo-charge the Welsh economy and level up the entire country. Wales is a country of immense talent, and we want to help unleash it.

As the party of aspiration and opportunity for all, the Welsh Conservatives have an ambitious investment plan to secure Wales's future. Our bold plan for the economy would include building 100,000 new houses in the next decade to help kick-start the Welsh economy, as well as generating 65,000 new jobs. We would invest in modern infrastructure for Wales, not slash it away. We would ensure no taxes for the duration of the Senedd term, and abolish business rates for small businesses altogether. Raising taxes at this precise moment would be catastrophic, and I hope, Minister, you will rule out today introducing new taxes.

Over the last 16 months, we've also seen how our front-line health and care professionals have endured so much in keeping us safe; we now owe it to them to ensure that they have the best facilities and sufficient resources to do their jobs. That is why a key priority has to be to develop a clear plan to enable the Welsh NHS to clear the waiting list backlog that has deteriorated during the pandemic, as well as seeing more funding to address the many specific areas, such as mental health, and the ever-increasing demand on social care.

As a past long-standing council leader, I have mentioned in this Chamber how I have seen the growing disparity between funding and reserves of various councils, and have argued that the current system is out of date and requires review, and that councils need a multi-year settlement—and I was pleased to hear what you said in that regard—to ensure that they can continue to deliver first-class services. To ensure a sustainable future for local authorities, Welsh Conservatives would also reform the local government funding formula to ensure fair funding across Wales, particularly to our rural councils, and help prevent excessive council tax rises.

And one of the saddest facts to date is that a generation of young people have been let down. We can't afford this to be repeated again. That is why our plan for change would also ensure all schools would be the very best they can by ending the underfunding of young people's education—something that has gone on for far too long. This is in addition to recruiting 5,000 more teachers to help young people to catch up on lost learning and boost school performances.

What I've just laid out should be the Welsh Government's priorities for moving Wales forward. We don't need any more excuses for any further calls for more powers, which will do nothing to solve the inherent problems facing the people of Wales. What we are calling for today is entirely possible, but it's up to Welsh Labour Ministers, who control the purse strings, whether they wish to put right those many historic wrongs. It is a fact that you still have an eye-watering amount of unallocated money, as I mentioned in the earlier debate. Now is the time, if you are going to use that money, to do so. So, Minister, for the sake of Wales's future, will you heed our calls and use the unallocated money, as well as introducing our forward-thinking ideas, as you've welcomed, to allow us to build a stronger, fairer and greener Wales?

May I welcome this debate, and thank the Minister for bringing forward this debate in the absence of the fact that the Finance Committee wasn't established in time to do so?

The first thing I want to say and what I want to do is to echo what I said in the previous debate: now is the time for the Welsh Government to be more creative and more ambitious in terms of its budget for next year. The circumstances in terms of responding to the climate emergency, emerging from the pandemic and continuing to respond to Brexit mean that the Government must do everything possible to innovate with its expenditure plans.

Now, we as a party set out options in our manifesto for the election, but a major part of this, of course, is to do everything we can to avoid just implementing more austerity on behalf of the UK Government in Wales, and to use the powers that we have, but also to insist on further powers to invest in the recovery that we all want to see.

Now, I referred to borrowing earlier, and I'll make that point again: borrowing is limited—I know that—but, over the past five years, only £59 million of the £0.75 billion has the Welsh Government borrowed. I think circumstances would require us to move from that point, because now, more than ever, we need a budget to transform the lives of the people of Wales that is focused on the long term, that is focused on the preventative agenda and not business as usual.

Now, that was the radical culture change that many of us hoped would be brought about by the Well-being of Future Generations (Wales) Act 2015, but, essentially, of course, that fundamental change hasn't happened. Generally speaking, the budgetary allocations of the Welsh Government are the same today as they were 10 years ago. I want to see a clearer shift and a clearer focus next year on delivering against the goals of the well-being of future generations Act. I also want to see a relentless focus on transitioning to a green economy, which will help to mitigate the risks of economic shock in future, and will create a more resilient Wales for future generations. 

Now, the delay and review of road projects announced by the Government is a signal to me that the Government does want to move in that direction, but the litmus test for me every time is the budget. If I don't see that message being clearly highlighted in the budget for next year—not just in the context of roads, but across the whole of the Government's budget—then that won't lead to the very real change that I want to see, and the circumstances now do insist that business as usual is no longer an option. 

Now, some of my fellow Members on these benches will outline certain issues in the debate; I just want to touch on one or two in the time remaining to me. We all, of course, want to ensure better pay and conditions for NHS staff in Wales, and Plaid Cymru supports the demand for an increase in the salaries of nursing staff that recognises the value of their work. I very much hope that we will see the Welsh Government's response being closer to what's been agreed in Scotland—that 4 per cent—rather than the suggestion of 1 per cent made by the UK Government, because, without giving a deserved pay increase to our nurses, we will have an increased recruitment and retention problem within the health service. So, we need to invest now in order to ensure an adequate workforce to secure a more resilient and sustainable service for the future. Anything less than that would be counterproductive.

The same is true of carers' salaries. As a society, we have delegated care to those on the lowest salaries and with the least support, and in face of the ongoing cuts to the budgets of local authorities over the years—down almost 25 per cent in real terms since 2010—the Government does have to take action on that agenda.

Housing, of course, is an important area. We've heard reference to that already—not just the housing crisis and the need to take action in the budgetary context when it comes to tackling some of the issues related to the housing market, but also, of course, the need to develop the ambition in terms of house building. The pandemic has shown that we can bring homelessness to an end if the political will is there; we need to maintain that momentum now. And, of course, research has shown that preventative spend to prevent homelessness would generate savings, and that's certainly something that we would want to see the Government intensifying its focus on.

The climate emergency permeates all parts of the budget—or hopefully it does—for next year, but NRW will drive a very important element or elements of that work, and we know about the unsustainable trajectory in terms of the funding, which is shrinking year on year, while responsibilities increase year on year. We need to resolve that once and for all.

So, my plea to Government is: if your next budget is a business-as-usual budget, then there is no desire to facilitate that on these benches; but if you are brave, radical and ambitious, then we will walk that road with you.

I've just understood the Conservatives' economic policy: you spend more, and you tax less. I'm not quite sure how that has worked, and I'm sure that Peter Fox didn't do that when he was leading Monmouthshire County Council, so why he wants the Welsh Government to do it, I'm not quite sure.

The aim of every budget is the same: to improve health, improve the environment, reduce carbon emissions, improve educational attainment, improve the economy and improve the quality of life of the people of Wales. What will happen is there will be a substantial increase in funding for the health budget, which will, via health boards, send the money to hospitals to undertake treatment.

I want to talk about something different: promoting health, instead of just dealing with sickness. Health can be promoted by encouraging healthy activities, regular physical exercise, reducing or avoiding unhealthy activity or situations, such as smoking or excessive stress. We know that the following improves health: washing your hands. We've seen a substantial reduction in stomach problems and gastric problems in the last 18 months, when people have been sanitising and washing their hands continually. I've heard from at least one health board that it's gone down by about 90 per cent. We need to sleep regularly—improve our sleep hygiene—maintain good posture, drink plenty of fluids, be more active, get 150 minutes of aerobic exercise a week, minimise stress levels and reduce pollution. The less traffic we have on the road, the more we reduce pollution, and far too many of my constituents live near roads where they are 1m away from, when they get out of their front door, where the nitrogen oxides that are coming in there are damaging their health.

And, of course, can I take you on to the major one: obesity? Obesity is our biggest problem. It'll soon be our biggest killer. High blood pressure is caused because additional fat tissue in the body needs oxygen and nutrients in order to live. Obesity is the major cause of type 2 diabetes. If current trends continue, we'll have 300,000 people in Wales with diabetes, and that will cost the NHS over £500 million a year. And I'm talking about type 2 diabetes, not type 1 diabetes, which is entirely different. Around 80 per cent is spent on managing complications, most of which could be prevented. Heart disease with hardening of the arteries is present 10 times more often in obese people than it is in people who are not obese.

Whilst we've seen a continuing reduction in smoking, which is really one of the great successes—and I'm sure all Governments will claim credit for it, but I think it's one of the great successes we've seen; people smoke substantially less, and it's become something that is not really socially acceptable any more—what we have is people eating themselves into obesity. The Welsh Government needs to promote a healthy lifestyle, and thus reduce the number of people with ill-health conditions.

Is it any surprise that people with a poor diet, living in cold, damp conditions, are more likely to have ill health? The Attlee Government from 1945-51 realised the link between housing and health. Unfortunately, that has not been followed by any Government since. We need to build high-quality council houses across Wales to improve people's lives and health. Improving the environment and providing green spaces and better air quality improves health.

Turning to some other areas, as we know, we are fast losing biodiversity in Wales. The latest 'State of Natural Resources Report' states that the overall trend is one of serious decline, reflecting the global, internationally recognised, nature emergency. On the economy, successful areas in the world, including the UK, have high-quality universities, a ready supply of new graduates and a critical mass of technology companies, with research and development taking place, and a large number of start-up companies. Can the Welsh Government economic policy target life sciences, ICT and financial services? I don't think I'm the only one who thinks we need more Admirals and fewer LGs. Investing in our schools and young people is an investment in the future. The pandemic has shown how important local government is and how, when we need it, it provides not just the basic services, but can get out there and provide all the support that is necessary.

Finally, in 2022, it will be entirely different to 2019. Working from home and online shopping are here to stay. They were a direction of travel the economy was going in up till 2019; they were going slowly. What we saw was the pandemic turbo-charge those, but people aren't going back—the number of people I talk to in different places where working from home some or all of the time is the new norm. And there's no reason to go into some workplaces. If all you're doing is accessing a database that isn't even in the office you're going into, then why do you need to go into that office to do it? You can do it from anywhere. The database might be in Dublin or it might be outside Newport—why do you need to go into an office in Cardiff Bay or in Swansea to do it?

And can I just say how disappointed I am the Welsh Government is still building a second Llandeilo bypass? The A40 is the first one.

I welcome the opportunity to raise the importance of the basic payment scheme in supporting Wales's hard-working farmers during today's debate and the need for it to be protected in the 2022-23 budget. The basic payment scheme, the BPS, is an integral part of Wales's farming industry, supporting farmers in their production of high-quality produce in a sustainable manner. I welcome the positive comments from the rural affairs Minister last month, in which she stated it was the Welsh Government's intention to maintain the basic payment scheme throughout 2022. The Welsh Government have the capacity to ensure that this is the case, and I would argue that it isn't reliant on the UK Government's future funding commitment, unlike what the Minister said. It's well documented that the Welsh Government's rural development plan falls short of its obligations and intent, and I would argue strongly that the prioritisation of future agricultural funding should be directed towards the BPS rather than the RDP. 

When the phrase 'public money for public goods' is bandied around, I see no greater public good than the food produced by dedicated Welsh farmers. And while this debate may only focus on the 2022-23 budget, I would add that the agricultural industry requires a long-term funding commitment. Indeed, NFU Cymru president John Davies said that we now need further commitment from the Welsh Government to maintain this funding. Therefore, I urge you, Minister, to work with your Cabinet colleagues, especially the rural affairs Minister, to ensure that our farmers continue to receive the support they require by prioritising funding towards the BPS. Diolch.

I'm sure we're as one in our hope that this will be a budget for recovery rather than a reactive budget, and I'd like to echo Llyr Gruffydd's points: this needs to be a radical budget if we are to address the challenges faced by our communities. It will be crucial, therefore, that the central role played by our cultural, arts, creative and heritage sectors is recognised in it. After all, these sectors are so central to our economy and our identity as a nation, as well as the well-being of each and every one of us.

They are also an integral part of our lives, as has become even more apparent over the past 12 months, as many of us have found comfort in being creative and having a number of new hobbies, and so on. But although these sectors have been innovative in terms of their response to the pandemic, they have also been impacted greatly, with great uncertainty facing many of those working in these areas, as freelance workers or as staff members. It's not overstatement to say that, despite the cultural recovery fund, the future of Theatr Genedlaethol Cymru, National Theatre Wales, the National Library of Wales, National Museum Wales, Literature Wales, National Dance Company Wales, the Books Council of Wales, the Wales Millennium Centre, Welsh National Opera, Ffilm Cymru, the National Eisteddfod of Wales, the BBC National Orchestra of Wales, and Urdd Gobaith Cymru are all under threat. Now, the Welsh Government must safeguard their valuable contribution, their independence and their financial viability.

But let nobody think that this is simply the fault of the pandemic in terms of how vulnerable the cultural organisations of Wales are. The truth is that they have suffered a lack of investment and strategic direction for over a decade—indeed, since the days of the One Wales Government, with Alun Ffred Jones as Minister for culture and sport. It's only a few months since this Senedd discussed the need for fair, consistent funding for our national institutions, such as National Museum Wales and the national library. Thank goodness, after a public debate that went on for many months between the library and the Government, emergency funding was provided to these organisations a few months ago. But that just filled the gap rather than providing long-term support and assurances. It is scandalous that we don't have a cultural strategy with the funding to support it, and I welcome the commitment of the Deputy Minister, Dawn Bowden, to take this work forward. It is needed as a matter of urgency, and the content needs to be radical and ambitious, with the funding to deliver. One possible example that could be considered is the idea of a basic income for creative individuals, something that the Future Generations Commissioner for Wales spoke in favour of, noting too that the Welsh Government is missing opportunities in terms of culture in the post-pandemic planning.

Culture is not something at the margins, and it shouldn't be treated as such by our Government. As What Next? Cymru noted in its manifesto prior to the election, we must strengthen

'the cultural dimension throughout Welsh Government as this will fulfil more effectively and efficiently the government's own societal and economic ambitions'.

They also ask the Government to ensure

'that all departments of government support, fund and advocate a strong cultural component to their work.'

'Culture is ordinary', the famous words of Raymond Williams. But if we are serious about ensuring access and representation for everyone in Wales in terms of culture, then we must fund that. I very much hope that we will see this budget doing exactly that by putting right the historic underfunding and supporting these sectors to deliver their potential for the benefit of the people of Wales, the Welsh economy and also Wales's status as a confident, international, multicultural nation.

I'd like to start by saying a word of thanks to the Government for undertaking this debate in the absence of the Finance Committee during this period. I think that it is an important thing that the Senedd does have an opportunity to discuss the budget before the Government establishes it, so we have an opportunity to say, as the representatives of the people of Wales, what our priorities are as a nation. And I want to start by asking the Minister, in your response to this debate, to explain where the Government stands on the subject of a legislative budget. The Minister will know that I have discussed this several times over the years, and I think that this is an important thing, particularly in this Senedd.

But like others, there are some areas where I think the Government should set its priorities. Like others, I would suggest climate, tackling poverty—I think that's vital—and safeguarding the future of public services. No-one here would be surprised by those priorities, and it's the easiest thing in the world to say that, but I also want to say that it's important during the coming years that the Government does do things that are not particularly popular.

I have argued over the years—and I think it's about time that the Government tackled this—that the Welsh Government is too small to achieve the aims that we set for it. I think we need to invest in the network of the Government itself. The easiest thing in the world—and we all do this, all the parties, the opposition parties and the Labour backbenchers—is to criticise the Government for not introducing or rolling out what it wants to do. But for too long as well, we have all been arguing for cuts to the civil service and cuts to the administration of the Government. And if we are serious about the different policies that we have—and I've mentioned the climate, and I've mentioned poverty—we also need a Government who can do that, and that means that we invest in the Government, and I think that it's important to do that.

And I'm very pleased that the First Minister is in his seat for this debate this afternoon, and the First Minister has said in response to questions that there will be a statement made by the Government on how the current, new Government is going to undertake work in the Valleys. I and others led work on the Valleys taskforce during the previous Senedd, and I'm eager to understand how this budget is going to consider investing in our most impoverished communities in the country. I hear what people say about there being impoverished communities right across the country, and it's possible to make strong arguments for investing in each community—I recognise that—but we all recognise that the most impoverished communities in Wales, Britain and Europe are still in the Valleys, and I think we do need this Government to make a clear statement that there will be investment in that region.

The final thing I want to say is about how we afford all of this, because we all still think about a budget as a spending plan, and there hasn't been any contribution yet during this debate about where the income is going to come from. Now, we have the opportunity here to raise taxes, if that's what the Government's objective is; I've argued previously that we do need to do that in order to safeguard our public services. But what I want to hear from the Minister is this: she has said what the Government's priorities are, and I agree with all of them, but can I ask the Minister whether there is enough cash in the bank to do that? And if there isn't, where is that money coming from? What kind of impact has the pandemic had on income from Welsh taxes? Do we know that yet? Has there been any analysis of where the income is coming from? Because I do think that, as part of the maturing process of the Senedd, we have to move towards a legislative budget, but it has to be a budget, and not just a spending plan. I think that's the weakness that has underpinned our previous discussions on this. Everybody wants to spend money, but no-one is proposing where the money should come from, and I do think that we do need to start to consider that during the coming months. Thank you.

Thank you for the opportunity to debate on budget preparations for the next financial year or so. This is a timely debate, and obviously an extremely important one as we come out from the COVID-19 pandemic, and I would like to turn my contribution to local government, and the role and opportunity of properly supporting councils. But at this point, I remind Members of my interest as an elected member of Conwy County Borough Council as well.

Throughout this pandemic, councils have worked incredibly hard, and their efforts have been exceptional. The last year and a half has shown that councils are often best placed to decide what is best for their area. People know who their local councillors are, and have a personal connection with that local democracy as well. As such, it's vitally important that they have the finances to deliver on local priorities. Councils in Wales, as we know, have faced substantial pressures during the pandemic, and some of the most recent information shows that Welsh councils have so far reported financial losses of hundreds of millions of pounds through loss of income and additional expenditure. I certainly acknowledge the significant support that Government has provided to councils through this time, but these losses will have a significant impact on future council budgets, leading to increased budgetary pressures, not just now, but in the future, too. The latest report from Wales Fiscal Analysis showed that unfinanced pressures in councils next year could be over £400 million, and this needs to be properly acknowledged and supported through budgetary decisions so that councils can deliver on those local priorities.

So, from delivering local services to supporting vulnerable people and delivering business support, councils have shown what they can do when they are properly funded and supported, and this can often be done while providing value for money and clear local accountability. In terms of value for money, we know that local spending by local authorities does provide that value for money. Local government can often work more closely and better with local suppliers, and reports have even shown that, for every £1 spent with a local supplier, it's worth about £1.76 to the local economy, but only 36p if it's spent out of the local area. That makes every £1 spent locally worth around 400 per cent more to the local economy, so it provides really good value for money in the local areas.

Finally, the work and planning of councils can be further strengthened through the delivery of realistic, multi-year settlements for those councils, and this would give longer term financial certainty to support the delivery of vital services. Furthermore, as I've already said in the Chamber many times, now is the time to devolve more powers to councils and bring that power closer to people, which would be welcomed along with that proper financial support. So, to conclude, Llywydd, from my side, now is the time for this Welsh Government budget in the planning for next year to allow councils to flourish through more certainty of funding, and to empower local decision making through those levels of funding that reflect the value that councils have in our nation. Diolch yn fawr iawn.

As the purpose of this debate is to seek the views of the Senedd on the budgetary priorities of Government, I want to take this opportunity to once again emphasise the need to move towards budgets that are preventative, and budgets that provide long-term solutions.

Investing in the education of our children and young people is a central part of the preventative agenda, and it's clear that we need to prioritise investment in our schools, and to employ more staff to support our young people with their learning. Over a decade, we have lost almost 1,700 staff from our schools, and we need to start to reverse this as a matter of urgency, and to do this by planning to increase the workforce by investing in our schools, rather than what has ben happening, namely forcing them to make cuts to their budgets and to make staff redundant.

May I urge you to include the extension of free school meals as a priority in the 2022-23 budget? Don't ignore your own Government's review, which has come to the conclusion that every family on universal credit should qualify for free school meals. If you do only one thing in this budget, do that for the benefit of the poorest families in Wales.

And finally, may I just take this opportunity to ask about teachers' pay and conditions? The independent review body has suggested that every statutory grade point—at all grades and allowances—should be increased by 1.75 per cent. The Minister for education has accepted this recommendation. Of course, I understand that there is no additional funding for teachers' pay allocations from the Tories and their Government in England. Can you provide us with some clarity on this point? How are you going to take forward that recommendation that has been accepted by your education Minister? And will you give us an update on your negotiations with the WLGA as to what the situation will be with teachers' pay and conditions? We need to know this as a matter of urgency, because school budgets run from September, of course, which is another problem. But having clarity on that situation this afternoon would be very useful indeed. Thank you.

I need to declare an interest as I am a still Flintshire councillor as well. Over the last 10 years of austerity, because of Welsh Government's budgets being cut, public services, including councils, have been cut to the bone. They have reorganised and restructured until they are at tipping point. Council tax used to equate to 24 per cent of the budget; the rest comes from Government. Now, it equates to 30 per cent of the budget, and cannot keep increasing. Residents cannot afford it, and non-collection rates will keep growing. Councils are also one of the biggest employers, which also then feeds the economy. Pay awards, increasing budget pressures, mainly on social care and education, and delivery of new legislation need to be covered, as councils are now at tipping point. Cuts to council services mean cuts to drainage teams, maintenance of highways, funding for education, social care, waste collections, fixing of potholes and street cleansing—all of these things that matter to people. Whatever the size and demographic of a council, there remain fixed, unalterable costs in many areas. A funding floor needs to be in place so the lowest funded still have enough to be able to deliver the basic services. Could I ask the Minister what work has been done to investigate the introduction of a local government funding floor to protect services and those that rely on them, and if that can be considered for the future as well? Thank you.  

It's a pleasure to take part in the debate this evening. Can I declare an interest as I'm a Denbighshire councillor? I'm going to mention local government.

The coronavirus pandemic and the impact that COVID-19 has had on these shores during the past year and a half has highlighted the structural problems within the Welsh Government's budget. As the nation as a whole struggles to cope with the virus, it was those who relied upon our social care sector who struggled the most. It was those who worked in our care sector who had to shoulder the largest burden. Some of our lowest paid workers had to work day in, day out, with very little protection, and having to deal with the constant heartache of having their charges die from a terrible disease that stole the lives of so many. More than 1,600 people living in care homes died as a result of the pandemic, but more than that, they died because our social care sector is underfunded and overstretched. This debate by the Welsh Government asks us to consider the priorities for the next financial year. I say the priorities are simple: we need to address the chronic underfunding of our care system. The Welsh Government have committed to completing the integration of health and social care. They are widening the roles of regional partnership boards, but not following through with more money. So, it's more of the same. They expect local government social services departments to do more, but provide them with less and less each year. Before any of us had even heard of COVID, colleagues in local government were warning of a shortfall of hundreds of millions of pounds in social care. The situation has gone from bad to worse. 

In evidence to the previous Senedd's Finance Committee, the Welsh Local Government Association identified over £279 million-worth of underlying budgetary pressures for the current financial year alone. In their evidence to the health committee, the WLGA highlighted that the funding problems had created particular issues in respect of the impact on demand-led social care services, and the potential fragility of smaller, council-commissioned private care providers. These pressures are rising and will continue to rise. We need around 20,000 extra social care staff by the end of the decade, and we have to ensure that they are paid a fair wage. We have an abject lack of disability adaptable housing. We have seen the number of children in care increase by over a quarter in the last five years. Yet, the Welsh Government failed to give social care the priority it deserves. The supplementary budget failed to set aside any significant funds for social care. More funding was allocated to the creation of international exchange programmes than what was allocated to additional support for early years learners. It's time to stop funding pet projects and ensure our social care sector, and by extension local government, is adequately funded. Diolch yn fawr iawn.

The Welsh Labour Government was re-elected in May of this year for another five-year term by the people of Wales. For me, the starting point is those discussions on the 2022-23 budget preparations. They can be found within the pages of that contract between the Labour Government and the people of Wales. We know—all of us in this place—that we must end this pandemic and build back fairer and greener, but it's that journey that is critical. I will not repeat the inescapable external pressures and lack of levers, totally ignored by the Conservative Party opposite and their 'spend more, tax less' approach, no doubt much appreciated by Alice in the Welsh National Opera's recent production.

Anyway, in the fifth Senedd—my first as the Member of the Senedd for Islwyn—I advocated strongly for us to ensure that Wales develops a national music strategy and an education plan, sitting within a funded cultural strategy, so that our children across Wales can access music education without there being a financial or access barrier. I do agree with much of what has been said in this area. Wales is known throughout the world as the land of song. It is our duty to ensure in this place that we nurture that legacy and enhance it for future generations. So, I was particularly pleased to see, in the Welsh Labour manifesto, the commitment to establish a national music service to make sure that a lack of money is no barrier to young people learning to play an instrument. That will not be easy in this climate. And yes, there will always be a challenge, as has been articulated, for allocating funding. But fund we must the children of Wales to ensure that our wonderful cultural life is retained, now and for future generations. Budgets rightly must focus on pounds and pence, but we cannot and should not value the life of our nation in simple profit and loss. It must be all of our collective mission and vision to nurture the musical and creative life of Wales. As the chair of the cross-party group on music, I welcome the many Members across the Chamber and across all parties who are committed to ensure that Wales's children continue to have access to their musical and creative birthright. I do welcome also the exciting proposals mooted for UBI.

Llywydd, the benefits system in Wales is run by the UK Tory Government, and there will be a strong need for the Welsh Labour Government to continue to stand very tall for those in need, whether that be those abandoned due to chronic welfare cuts, consequences of fuel poverty, unemployment or the reality of the lack of compassion shown to them by Westminster. As the Welsh Government has stated, by deciding to end the additional £20 universal credit payment from September, the UK Government has abandoned a great many people when they need the support the most. It will be vital that we assess future budget priorities to continue to ameliorate the devastation that poverty causes in the lives of families and communities. Minister, one thing I know for certain is that the good people of Islwyn will be well served by a Welsh Labour Government determining the budget priorities for 2022-23, and fighting for a brighter, greener, fairer and more prosperous future for all.

The Minister for finance to reply to the debate—Rebecca Evans.

Diolch, Llywydd. I'd like to thank all colleagues for what's been a really wide-ranging debate and thank you for the representations that you've been putting forward today. I do agree that, in future years, it would be excellent for this debate to be held by the Finance Committee. Clearly, for practical reasons, it wasn't possible this year, but I'm really heartened to hear that the committee will be undertaking an inquiry through the autumn. That will be very helpful in helping us determine the decisions that need to be made in terms of allocations. Again, it's really positive that the committee will be engaging with other policy committees to explore areas of joint interest and joint priorities. So, again, another excellent innovation, I think.

Whilst we continue to face extremely uncertain and challenging circumstances, we do welcome those new ideas and new proposals wherever they benefit Wales and our communities. We're a Government that is ready to take on innovative concepts regardless of which political party presents them. We can't escape and neither can we ignore the difficult decisions that we'll need to take. At the same time, we won't let this daunt our drive and our determination to deliver our commitments outlined in our ambitious programme for government, as mandated by the people of Wales. I am confident that we have the tools and the ideas to deliver against this ambitious agenda that we've set for ourselves. I'll use our preparations to explore all the levers at our disposal to maximise the impact of the funding available, whether this is through placing more value on social impacts and procurement contracts, or repayable finance models providing a more business-orientated focus to the programmes and projects that we support.

I'm grateful to colleagues for all of the comments. I won't respond in detail, because that's not the purpose of today's debate; today's debate really is about us listening and you having the chance to set out your priorities. But I do want to just share with you some of the things that I think I've heard from the discussion today. One is that we should have a really relentless focus on recovery, both in terms of individuals and tackling poverty, but also in terms of protecting and safeguarding our wonderful public services, including the NHS and, of course, local government, and working to ensure that those people who've been hardest hit by the pandemic aren't left behind in the recovery. The points made about the role of education and supporting struggling families are well heard there.

In terms of health and social care, I've heard that there is a keenness to support the workforce, support for carers and to promote health and wellness, and also a real focus on sustainable social services. In terms of housing, there's a keenness to address those issues relating to the market itself, to address the need to build more houses and tackle homelessness, with having that intensified focus on prevention. In terms of tackling climate change and biodiversity, there was a real passion for that, I think, across the Chamber this afternoon. And lots of comments in terms of how we can support the economy, whether it's growing the areas where we're developing real expertise here in Wales, such as the financial services sector, or supporting our rural economy, or noting and developing the important role that our music, culture and heritage sector has both in the economy, but also in terms of our culture and our social life. All of those points I think have been really well made this afternoon.

I do also want to say something very briefly about the resources available to the Welsh Government, because, of course, we need the funding to turn these aspirations into things that will have a difference and make a difference in people's lives here in Wales. I do want to talk about the impact that the UK Government's decision regarding the levelling-up fund will have on us here in Wales and our budget and what we're able to do. The European structural and investment funds are worth £375 million annually to Wales over seven years. Had we remained in the EU, Wales would have had a full year's financial allocation starting from January 2021 for new programmes, irrespective of ongoing payments from the EU budget for existing commitments made during the current round of EU programmes. In 2021-22, we estimate Wales will receive £30 million to £50 million from the levelling-up fund and the community renewal fund, noting that both of these, of course, are competitive, and this creates a huge cut to the Welsh Government's budget, making local councils compete for some of that money. And it's been sold to people in Wales as an investment in levelling up, but frankly, if the gap isn't filled, Wales will be further disadvantaged in addressing our economic challenges. 

The UK Government plans put at risk critical pan-Wales programmes which will be central to recovery, for example, Business Wales and the development bank, as well as key employability schemes such as the apprenticeships and traineeships that have been integrated into the economic landscape in Wales over many, many years. So, that is what is at risk here as well. 

And I do want to say something about the resources available in terms of farm and fisheries funding as well. We will only receive £400 million—. Sorry, excuse me, we will only receive £242 million in replacement funding for the common agricultural policy from the UK, leaving Wales £137 million short of the funding we expected to receive this year. And we completely disagree with the UK Government's suggestion that they have met their obligations to provide replacement funding for farmers and rural development through a combination of replacement funding from the spending review, and Wales's remaining EU funding of £95 million and £42 million pillar transfer. Had the UK Government provided a reasonable and multi-year financial settlement last year, then we would have been in a better place to consider the support for these arrangements. 

So, these are some of the real challenges that we're dealing with currently, and which will inevitably have a continuing impact on our budget in future years as well. 

So, I'd just like to say in closing, I do welcome the debate. I think it shows that we all have a part to play in ensuring that we work together to build that fairer, greener and more prosperous Wales. Thank you to all colleagues for their contributions. 

The proposal is to agree the motion. Does any Member object? No, there is no objection to this motion. So, the motion is therefore agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.

Which brings us now to voting time, and therefore, we will take a short break before we hold the vote. 

Plenary was suspended at 19:02.

The Senedd reconvened at 19:05, with the Llywydd in the Chair.