2. Will the Minister make a statement on what requirements were considered when determining the capital settlement for Isle of Anglesey County Council? OQ57750

The agreed formula for distributing unhypothecated capital for local authorities takes into account factors such as population, road length, sparsity and housing stock condition.  The level of capital funding we received from the UK Government was disappointing and it's not sufficient to meet our ambitions to invest in Wales’s future.

And I certainly concur with the Minister about the need to ensure a higher level of capital funding. Ensuring adequate capital funding is vital to be able to invest in the future. Anglesey County Council, under the leadership of Plaid Cymru, has an excellent track record recently in providing property for businesses on the island, for example with important investments in Llangefni and Holyhead, and there are further plans to invest in other areas to ensure that prosperity is spread across the island, to Amlwch, for example. What assurance can the Government give that Ministers will be willing to work with Anglesey County Council to enable delivery as regards supporting more businesses and creating more jobs on the island?

I think the Welsh Government has a really strong record of working very closely with the isle of Anglesey. Over the last five years, for example, almost half of the council's capital investment has been funded through capital grants, demonstrating I think the effective partnership working between Welsh Government and local government. And of the capital funding that we have provided in the budget, which we agreed yesterday, I know that there are some areas of particular shared interest for our parties, including, across Wales, nearly £300 million for sustainable communities for learning, £10 million for net-zero fund, and nearly £20 million for Welsh medium. And I think those reflect our priorities of education and climate change, which are shared priorities. But, as I referred to, much of Anglesey's capital spend has been supported by Welsh Government funding, and obviously, we would be looking to continue that productive relationship.

Although local government revenue funding for 2022-23 will increase by 9.4 per cent, there's an element of robbing Peter to pay Paul here, with local authority general capital funding across Wales, and in Anglesey, down 16 per cent. Further, although prosperity levels per head in Anglesey are the lowest in Wales, at just under half those in Cardiff, and Anglesey is amongst the five local authorities in Wales where 30 per cent or more of workers are paid less than the voluntary living wage, Anglesey received one of the largest cuts in the local government settlement in 2019-20, one of the lowest increases in the local government settlement in both 2020-21 and 2021-22, and only seven out of 22 Welsh local authorities, including Gwynedd, will receive a lower increase in the local government settlement in 2022-23. Given that the Welsh Government tells us that its local government formula is heavily influenced by deprivation indicators, why does Anglesey therefore lose out?

So, the question here relates to capital funding and the capital settlement, and the speaker referred to robbing Peter to pay Paul. That makes no sense whatsoever. We have a revenue settlement from the UK Government, and we have a capital settlement from the UK Government. We've deployed both in full. We've over-programmed on capital and we plan to draw down the full borrowing. So, there's no element of robbing Peter to pay Paul. What we do see in the capital settlement is the direct impact of the UK Government's very poor capital settlement for Wales. We'll see in the next three years our capital funding falling every year, as compared to this year. And that is just not the way to invest when we're coming out of a pandemic, needing to invest in infrastructure, in creating jobs, and to cut capital spending in those terms I just don't think is the way forward. Certainly, our local authorities are crying out for additional funding. And that's one of the reasons why, this year, I was able to provide an additional £70 million of capital funding to local authorities, which they can use to displace funding this year, they can put it into reserves and plan to spend it in future years. I hope that that will smooth some of the disadvantage that they will feel as a result of the UK Government's very poor capital settlement in the spending review.