The next item, therefore, is the statement by the Minister for finance on the Welsh Government's response to the Chancellor's statement on the medium-term fiscal plan. I call on the Minister to make her statement—Rebecca Evans.

Diolch, Llywydd. Yesterday, the latest Chancellor reversed many of the flawed and reckless decisions that were made by his predecessor and the Prime Minister in the mini-budget less than a month ago and which were a central pillar of the new Prime Minister's so-called programme for growth. The new Chancellor's statement yesterday was made ahead of his medium-term fiscal plan on 31 October, in which he signalled he would be announcing further measures to reduce public spending in a plan costed by the Office for Budget Responsibility. The UK is now in a far worse situation financially and economically than it was before the ill-fated mini-budget. This is inexcusable. As a result of its own actions and decisions, the UK Government has created mayhem in the financial markets, which has led to soaring mortgage and Government borrowing costs, and the Bank of England has been forced to take extraordinary measures to prevent a collapse in pension funds. 

All this while household budgets have been squeezed even further and a gaping hole has been created in public finances. The new Chancellor may have undone most of the tax-cutting measures brought in on 23 September, which as we know were designed to benefit the richest, but he cannot undo the damage the mini-budget has unleashed. Let me be clear that people in Wales will be paying for the UK Government’s failures with higher taxes in the future, higher energy bills and cuts to our public services.

There are a small few who have done very well as a result of the financial market turmoil that followed the disastrous mini-budget, and a small number of people will continue to benefit. The removal of the cap on bankers’ bonuses was one of the very few measures that survived the new Chancellor’s cull. Unfortunately, the people who are benefiting from the chaos created by the mini-budget are not my constituents, who have only seen their problems multiply and are left struggling to pay their mortgages, heat their homes and feed their families.

This is a UK Government that has said that its No. 1 focus is growth, yet yesterday’s statement will do nothing to improve the economic prospects of our country. I fail to see how any of the measures announced by the Chancellor will do anything other than shrink the economy and deepen the recession. This is the very opposite of a so-called plan for growth. While the Chancellor stated the UK Government’s priority in making the difficult decisions that lie ahead will always be the most vulnerable, he has, so far, offered nothing to support them. Instead, he has prematurely cut off energy support for tens of millions of households, adding to the worry about how people will pay their bills.

The UK Government has repeatedly failed to take opportunities to improve our energy security for the future and address the climate emergency. If this Government is serious about stimulating economic growth, it must be more ambitious on investment. The Chancellor must provide the capital stimulus to invest in green energy and decarbonisation. It should not seek to cut capital spending when we are facing year-on-year cuts to our capital budget through this spending review period.

The chaos that surrounds the UK Government’s mishandling of the economy has served as an unwelcome distraction and it masks the real issues that people are facing. The UK Government needs to refocus its efforts to help those most in need. The Chancellor must take the opportunity on 31 October to provide further targeted support to help households and businesses that are struggling most in the current crisis, including people on benefits. The UK Government holds the key fiscal levers to make a real difference to the cost-of-living crisis. It must use its tax levers more equitably, including taxing the windfall gains in the energy sector.

I fear the Chancellor’s statement yesterday signalled a new era of austerity. Even before any prospective spending cuts with the Chancellor’s planned efficiency exercise, inflation has already significantly eroded our devolved budget settlement. Over the current three-year spending period, our budget will be worth up to £4 billion less in real terms than it was when it was set last year. Next year alone it will be worth £1.5 billion less. Decisions taken on where to wield the axe on public spending in Whitehall will have a material impact for our budget in Wales. As we, local authorities and other partners look again at our spending plans for next year, we are being forced into an incredibly difficult set of choices. While we cannot offer protection from the full force of the UK Government’s actions, the Welsh Government will do everything it can to help households, services and businesses through this ever-deepening crisis of the UK Government’s making. This financial year we are investing £1.6 billion in schemes that provide direct support to people, such as the £200 winter fuel support payment, and a wide range of programmes and schemes that put money back in people’s pockets—schemes like the council tax reduction scheme, free school meals and pupil development grant access, which helps families with the costs of sending their children to school.

Looking ahead, we will publish the Welsh Government’s budget on 13 December and, in doing so, we will provide a considered and careful response to the crisis, taking into account the full fiscal forecast provided by the OBR to give as much certainty as possible for our public services and partners. While our resources are limited and yesterday’s announcement will do nothing to alleviate the already challenging funding position facing the Welsh Government, our priority will be to shield the most vulnerable and create a stronger, fairer and greener Wales that safeguards the well-being of our future generations. We will know more on Halloween when the Chancellor's medium-term fiscal plan and the independent OBR forecast are published, but I'm afraid that we must now prepare ourselves for a further instalment of this horror show as a result of the UK Government's inept stewardship of the economy and public finances.

Thank you, Minister. Firstly, I want to acknowledge that the past few weeks have not been good, to say the least. And I think we are all disappointed that we find ourselves—[Interruption.]

I'm really interested and keen to hear what the Member has to say, so can we have a bit more quiet and hear the content of what's being said?

Thank you, Llywydd. As I said, I think we're all disappointed that we find ourselves in this position. I welcome the new Chancellor to his position. He is somebody who has a wide range of knowledge of the workings of Government and has the experience needed to put the country back on track. These are not normal times and, whilst recent events haven't been helpful, to pretend that we could fully insulate ourselves from numerous global shocks that have challenged us in so many ways is a fallacy. But, Llywydd, as I said earlier, I'm acutely aware that the past few weeks have been, to put it very lightly, disappointing. Whilst publicly I may have defended some of the previously announced proposals, I did so believing that the UK Government had modelled the impacts of its plans, and the Government should have published all of the information that it had when it made its original announcement, alongside detailed proposals as to its longer term financial plans. The fact that it wasn't made available was a mistake. It should not have happened, and I welcome that the Chancellor has committed to following a doctrine of fiscal responsibility, like many chancellors before him.

Llywydd, whilst I still believe economic growth is the best way out of this crisis, ultimately, what we need now is stability, and the new Chancellor must deliver this, and the reaction to his statement yesterday has seemingly helped to calm the markets a little. I also believe that the announcement of the new economic advisory council will provide further stability and direction to UK fiscal policy. I was pleased to hear that the Minister had spoken to the chief secretary, and I hope, in future conversations, that the Minister will raise the possibility for the Welsh Government to work with the council to re-establish that important cross-governmental working, as well as trying to get a Welsh perspective on the council to reflect our shared interests and Wales's particular economic outlook. I hope that certainty can be provided about what the budgetary outlook will be following the financial statement later this month.

I also agree with the Minister about the continuing need to support people, especially those who are struggling the most during these difficult times, and the UK Government has to do everything it can, like it had previously done during COVID, and beyond, to provide the help that people need. Now, I'm reassured from the Chancellor's comments that his focus will always be on those who are most in need, but I know that we must also do our bit to ensure that the Government remains focused on helping the most vulnerable, and that's why, today, the Welsh Conservative group have written to the Chancellor calling for benefits to be uprated in line with inflation.

But, I must say, when the Minister talks about how the Chancellor's announcements will shrink the economy, I do have to question whether Welsh Government policy is simply to believe the opposite of what the UK Government does. A few weeks ago, they were arguing against the growth plan and calling for it to be scrapped. Now they are seemingly suggesting that the reversal of the same plan is anti-growth, so what do they believe? Presiding Officer, what we are still waiting to hear—and statement after statement, I ask for this—is what are the Government's plans to deliver the growth and prosperity that our economy needs in Wales? If the growth plan is the wrong sort of economic growth and a reversal of the plan is anti-growth, then what exactly is the Welsh Government doing to realise the full potential of our economy? The First Minister in an interview recently said that a growing economy needs investment in infrastructure and investment in human capital, and I agree, but how does that reconcile when we have some of the highest business rates in the UK, a ban on new road infrastructure, a tourism tax that the industry on the whole does not like, a lack of house building across the country, and Welsh people earning less per year than in the rest of the UK? How can these things be the way to achieve growth? Presiding Officer, the past couple weeks have been difficult and testing, but what they have shown is that, to combat the difficulties that we face, we need to create the conditions for growth. Thank you.

Thank you to the Conservative spokesperson for those comments this afternoon, and I agree with him, it's not been a good few weeks, to say the least, and it is certainly disappointing. I think that he's done the best he can there to send a strong message to his colleagues in Westminster in terms of the Welsh Conservatives' assessment of the recent shambles that we've seen in Westminster.

But I do welcome the letter that the Conservatives will be sending the latest Chancellor regarding benefits—[Interruption.] It's gone, that's great. So, hopefully, this Chancellor will stick around long enough for you to have a response, because I didn't get one from the last one. But I do think that is to be welcomed in terms of your support for raising benefits in line with inflation, and that's certainly to be welcomed.

There were lots of comments there in respect of growth and how the Welsh Government sees growth. Well, the growth commission that was established by the London School of Economics was created in order to identify ways of improving the UK's lacklustre growth performance, and that commission itself highlighted the vital importance of continuing to invest in the education system and in adaptable skills and lifelong learning. It also stressed the key role of infrastructure as a vital component in sustainable growth, and it argued for higher, not lower levels of investment in infrastructure across the UK. That's entirely consistent with what the First Minister and my other colleagues are always talking about in terms of how we understand growth. It is investing in people, it is investing in skills and it's investing in infrastructure. We want to see, particularly, investment in green infrastructure to take us towards net zero and to help address the climate and nature emergencies.

It's also worth bearing in mind as well that analysis for the UK Government's own National Infrastructure Commission has demonstrated the vital role of maintaining investment in infrastructure in order to meet the challenges of improving the economic performance of lagging areas and also achieving net zero and delivering climate resilience and a better environment. So, again, even that infrastructure commission is very much seeing things as we are in Welsh Government.

The UK Government's vision for growth just seemed to be about cutting tax for the very richest, as if that was going to be the incentive that they needed, and then there's really nothing left of the UK Government's vision for growth in the existing plan, apart from the ongoing commitment, as I understand it, to the investment zones. Yet we have very little detail as to what those investment zones might look like. We look forward to further discussions with the UK Government on that.

The Member also referred to the discussion I had with the Chief Secretary to the Treasury. That was yesterday, and I did that alongside my counterpart in Scotland. That was a very useful, I think, first conversation, but what we really need is a chief secretary who really does see it as part of his core responsibilities to have that relationship with the Welsh Government and with the other devolved Governments on a day-to-day basis, and somebody who is going to take a real interest in Wales, so that they can really grapple with the things that we're trying to make progress on with the UK Government.

This, as the First Minister said, will be my sixth Chief Secretary to the Treasury and that's a problem, in the sense that you have to go back to the beginning every time you work with a new Chief Secretary to the Treasury, because lots of the issues that we're trying to progress with them are really detailed and complex. The issues around replacement EU funding and the formula that the UK Government used to determine that funding, which leaves us £1 billion worse off, we need to have detailed discussions about that. We need to continue those discussions that we're starting to have around fiscal flexibilities for Wales. So, it is disappointing when you have to just go back to zero time after time with these discussions. So, I'm hoping that building good, new, strong relationships with the latest CST will start to take us down that road as well. I look forward to continuing that relationship.

Thank you for your statement, Minister. I have to say that this mess shows once again the extent to which we here in Wales are just at the mercy of the whims of Westminster Ministers. It underlines again how the current devolution settlement leaves us effectively fiscally impotent when it comes to protecting our interests, and protecting the people who are vulnerable amongst us, from damaging UK Government decisions.

You recently described being part of the union and having the UK Government there as some sort of insurance policy for Wales, but surely now you have to accept that it's felt a bit more like a millstone around our necks in recent weeks. And if recent events don't make the case for independence, well, surely it does make the case for greater fiscal independence for Wales: more powers to protect our people from the tsunami that we're already experiencing and no doubt will intensify in the coming months.

Now, you stay in the statement that the UK Government holds the key financial levers to make a real difference to this cost-of-living crisis, and it needs to use those tax levers more equitably. Well, why allow the Tories to do their worst, instead of demanding powers for you to do your best for the people of Wales? We know, in Scotland, they can reform that income tax bands. It's a way of better reflecting people's ability to pay. That's the very least that we could expect, I think, here in Wales. But, take it to the other extreme, if the UK Government isn't introducing a windfall tax on energy companies, then why can't we have powers here to do something about it, instead of just complaining in a written or an oral statement?

That said, new powers, yes, okay, that's one thing, but we also need to use the powers that we already have to maximum effect to protect the most vulnerable people from what's ahead. The First Minister was coy again earlier, so I'll ask whether you'll confirm that varying the Welsh rates of income tax is actively being considered by this Government. And will you join Plaid Cymru in accepting that it's looking as if it is going to be necessary to act in that way in order, again, to mitigate some of the devastating Westminster cuts that are looming?

You're right to criticise the shortening of the energy support package to six months, because it does leave a cliff edge and people not knowing what will happen at the end of that period. I understand that you have spoken, as you said, with the Chief Secretary to the Treasury, but what plans do you have to actually speak with the Chancellor himself, to set out not only the case for greater fiscal powers for Wales, but to make sure that he understands the implications of his recent announcements for Wales, and also to make sure, before the statement at the end of this month, that he understands what implications there might be there for us here in Wales?

On energy specifically, will you make the case for those properties that are off grid, particularly, because it is something that is of huge concern? I know that Ben Lake, my Plaid Cymru colleague at Westminster, raised the need for support in relation to oil and people who are off grid. The Chancellor didn't rule it out. So, in your discussions with the Chancellor, will you please reiterate the need to extend support to those who aren't currently able to access it in the same way as most people?

Now, yesterday, your written statement said that the Chancellor offered nothing to comfort the most vulnerable. Well, we could levy the same criticism at your statement today. There's nothing new there; a few vague references to previously announced support schemes. I was hoping that you'd be actually coming here today with something a bit more concrete to tell us. And you do say that the UK Government needs to refocus its efforts to help those most in need. Well, surely that's just as true for the Welsh Government as well, and is it not time for you to be preparing an emergency budget here in Wales to refocus and to reallocate resources to help the most in need, as you say, and to do so for this financial year, of course, and not wait until next year?

And finally, in relation to next year's budget, you've said it twice now, in the last written statement yesterday and your oral statement today, that the Welsh Government's budget will be introduced on 13 December. My understanding was that the original agreement was that it would be no later than 13 December, and that that date was chosen, or specified, because it was in relation to the expected UK Government fiscal announcement in November. Given that that has now been brought closer to today, surely you're in a position to publish your draft budget earlier. That would allow greater scrutiny from this Senedd, and it would also give a longer lead-in time for those public service providers in Wales who are going to have to make every single penny work as hard as possible.

I'm very grateful for all of those remarks. I'll just start where we started the last time that we discussed the UK Government's mini-budget, and that is it's my view that it's not the UK that's the problem, it's the UK Government that's the problem, and we do have the opportunity to change that. I think that the current Prime Minister's position is completely untenable, in my view, especially since the carnage that has ensued has been of her making, just as much as it was of the Chancellor, whom she removed from post.

But I think that the broader points are really important in terms of having that wider conversation about the powers that are available to us here in Wales, and what an improved set of powers might look like. I think that that is a discussion that is ongoing. It's very live. The Institute of Welsh Affairs is doing some really interesting work at the moment in that kind of space, to try and draw other people and other voices into that conversation, which I think is really to be welcomed.

In terms of the Welsh rates of income tax, I think that the First Minister wasn't being coy today. I think that he was just setting it out honestly, in the sense that we have been really clear that we have got an established process in relation to Welsh rates of income tax, which goes on every single year. That is to consider Welsh rates of income tax, and to consider the role that Welsh rates of income tax have to play in funding public services here in Wales, and then we announce those decisions alongside the draft budget.

Just to continue the discussion that was ongoing between the First Minister and the leader of Plaid Cymru earlier on today, in respect of Welsh rates of income tax, I know that there was some interest in the amount that could be raised through higher rates and additional rates, in particular. Well, we'll start with the basic rate, and this is the figure that gets quoted quite frequently within the Chamber: that would raise around £220 million. But then the higher rate—and this is if you raised it by one penny—would raise around £30 million, and then just £4 million if you were to raise the additional rate. So, I think that that just helps to give some useful context, really, for the kinds of decisions that we will have to make, and the kinds of choices available to us. But just being completely honest: no decisions have been taken. I do think that the UK Government's u-turn on income tax has now changed the context for those decisions, but we will be having those discussions as we move towards the publication of the draft budget on 13 December.

It is my intention to stay with the date of 13 December, because it does respect the protocol that we have with the Finance Committee. But also, I think that I have to tell people that this is going to be the most difficult budget that we will have set since devolution, in the sense that we are looking already at a budget that is worth £1.5 billion less next year. That's before any cuts that are announced either on 31 October or in a forthcoming spring statement. So, this is going to be a budget where we are looking again at our programme for government, we are looking again at our priorities and so on. It could potentially be a budget where we are forced to cut main expenditure groups or programmes and so on. So, I think that that is a good reason why we need time to do that work as a Government.

It's often the case that we are asked to allow greater time for scrutiny than we have even to prepare a budget. I just want to describe the sheer amount of work that goes in to developing a budget, in terms of those commissions that go out to every single one of my colleagues. We have a round of bilaterals with each single one of my ministerial colleagues. All of their departments will be looking at all of their programmes and trying to look to see what could be done differently, where the pressures are, and so on. So, these things do take weeks and weeks and weeks to do, and when we are looking at a budget that is about cutting rather than allocating, it just makes the job even harder. So, I just wanted to say to colleagues that this is the reason why we need time to undertake this work. [Interruption.] And yes, I agree that the scrutiny role is really important as well, but the timetable that we do set out does respect that scrutiny role. 

So, in terms of the other points raised: yes, I will certainly take forward the specific points that you wanted raised with the UK Government around off-grid support, for example, and I share the concerns about the announcement of the energy cap being removed as of April. I think that that will only cause a lot of worry now for households in Wales who need a greater degree of certainty to plan for the period ahead.

The UK Government has said that it is instituting a review of the energy support, and we have been really clear that that review has to start and conclude very quickly. The UK Government, in the meeting yesterday, was quite open that we can be involved fully in that review and have input into that review. It's Treasury led, but I think they were—. Potentially because it was our first meeting, they started off in a very collegiate way, wanting to be open and transparent. So, I thought that it seemed like a good place where we could potentially work together to start off with, and that would be a chance for us to set out exactly what our constituents will be feeling as a result of the situation at the moment, and also the lack of ability for businesses and public services to plan ahead in this space as well.

Thank you, Minister, for your statement this afternoon. I’ll start by welcoming the remarks of the Conservative spokesperson, actually. I know how difficult these contributions can be, but you did seem to be struggling towards contrition. I hope that he’s able to complete the journey over the coming weeks.

We know that the failure of the UK Government to manage the overall economy is going to have real-terms consequences, and the Minister has outlined the devastating consequences for our public services as a part of that. However, I’d like to address other matters this afternoon. We also know that the UK budget, if you like, has a £40 billion Brexit hole in the middle of it, and whatever else we do in terms of economic decision making, unless we’re able to trade freely with our closest neighbours we’re always going to have an economy that’s underperforming. I would hope that the Welsh Government will begin to look seriously now at how we start the journey towards rejoining the customs union and the single market to ensure that we’re able to restart economic activity in the country, but also, Minister, that you lead a debate on taxation.

You’ve answered, I thought, very fully the questions raised by Plaid Cymru this afternoon, but there does need to be a debate in Wales, in this place, about levels of taxation. We cannot deliver the services that we want to deliver and create the country we want to live in without the taxation income that’s required in order to do that. Our levels of taxation, whatever penny here or penny there, are significantly below the levels in other comparable economies, and that means that our public sphere is always going to be underinvested in relative terms. I hope that we can begin that debate.

As a part of that debate—and I won’t press the patience of the Presiding Officer any further—there needs to be a debate on the financial powers available to this place. The First Minister was very clear in answer to a question from the Member for the Cynon Valley earlier that the borrowing powers available to the Welsh Government are far from adequate—in fact, they’re entirely unsatisfactory and inadequate. But we need to look at borrowing powers amongst a suite of other powers available to this place and to the Welsh Government to ensure that we do have all the tools available to us that we require in order not just to deliver on our ambitions for the programme for government, but to defend Wales from the incompetence of a Tory Government in London that really doesn’t care at all about us and our country.

The Deputy Presiding Officer (David Rees) took the Chair.

I’m very grateful for those questions. Alun Davies is absolutely right that there are real-life, real-time consequences for people as a result of the UK Government’s decisions and the chaos that has ensued recently, not least, for example, with the mortgage rate hikes that the First Minister was referring to in his statement earlier on today. I absolutely recognise what’s been said about the Brexit budget hole. I think, for me, COVID and now the cost-of-living crisis are both camouflaging the impact that Brexit is having on the economy. Inevitably, we will see long-term damage to the economy just because of Brexit, let alone all of the other issues in relation to the pandemic and the cost of living. I’ll just say to Alun Davies that we’re probably on the same page on a lot of this particular issue, so I’m sure we’ll have further discussions about that in due course.

I agree as well that we do need to have a wider debate on taxation. Even since I’ve been in this post, I’ve seen a real sea change, really, in the level of interest that there is about the Welsh Government’s tax-raising powers, but the power that tax can play more generally, both in terms of driving certain behaviours, but also raising public finances. I think that the work that the Institute of Welsh Affairs, which I’ve referred to, has been doing is really helpful in this space as well. The IWA’s report actually looks at borrowing powers, and I think it makes the case for prudential borrowing, which again is something that we’d very much support. Just thinking about the impact, though, since the fallout from the mini-budget, if we look at what the impact has been on borrowing for Government, £100 million of borrowing last year would have cost us £4.6 million a year to service, whereas £100 million borrowed now would cost us £6.8 million a year to service. That's an increase of nearly 50 per cent. And over the borrowing term, we would now pay £69 million in interest compared to just £16 million in interest last year. So, that again is one of those real-life examples of the impact that the chaos has had on budgets. 

Finally, Carolyn Thomas. 

Diolch. When I was a councillor having to deal with 10 years of austerity and cuts, we often used to think what's the point in having Government setting policy and Parliament setting policy when we didn't have the budget or resources to actually deliver them. Now the situation has got much worse under the chaos and inflationary pressures brought on by the UK Government. Cardiff's gap is £53 million that they're having to face. Conwy, Wrexham and Flintshire are looking at a £26 million funding gap, so they're going to have to make really tough decisions. They said if they stopped collecting all the waste, cut all the public transport, if they stopped cutting grass at play areas and closed swimming pools, they still would not have enough to fill the gap. It is dire. The health energy pressure is £90 million to £100 million, I learnt last week. Without cutting health services to fund that gap, when nurses need a pay rise, we have huge waiting lists, and earlier we heard about ambulance waiting times—. How are we going to fill that gap? I just don't know at all. I know you understand, but I don't think the UK Government and Jeremy Hunt understand. And the problem is that cuts like these pit people against each other as well, in different services, which is totally wrong, when, fundamentally, we need more investment in public services. 

You need to ask the question now, please. 

Thank you. So, Minister, what representations will you be making back to the UK Government that we do need investment in public services? Thirty per cent of people in Wales are employed in public services, and you need them to help the private sector grow. Thank you. 

Thank you very much for raising that and also giving a really stark picture of the challenges facing local authorities, particularly the ones that you've referred to in north Wales. I've had the opportunity to meet recently with the finance sub-group of the partnership council for Wales, and also with the Welsh Local Government Association executive committee, to talk about budget pressures. We now have a fortnightly series of meetings with local authority leaders, and in those meetings we're able to discuss issues such as budget pressures as well. I really do find those meetings extremely helpful in terms of being able to hear exactly what's happening in local authorities, and the size of the funding gaps that they're identifying. 

I think that this year is extremely challenging, but looking ahead to next year and the year after, I think that those years are the ones probably most keeping leaders up at night at the moment. This is exactly the same challenge that we're facing in terms of the impact of inflation, which is why the UK Government absolutely has to change tack in terms of these threats to cut public services, because, as you suggest, these are jobs, these are services that we all rely on in our communities. Local authorities aren't spending huge amounts of money doing things that don't matter; they're providing education, they're providing social services, they're dealing with waste, and so on.

I think that these messages are really important, and they do need to get back to the UK Government that there needs to be investment in our public services, rather than looking to cut public services at this particular time, with all the implications that that will have for jobs, and then that awful cycle when people lose their jobs and they start to become more dependent on services, and those services themselves are cut, and so on. It's a spiral that we don't want to get ourselves into. 

I thank the Minister.