5. What discussions has the First Minister had with the UK Government regarding the main priorities for Wales in the forthcoming autumn budget statement? OQ58692

Llywydd, last week I had a constructive meeting with the Prime Minister, during which I set out a series of practical measures that could be included in the Chancellor’s statement on 17 November. Those practical measures would help the most vulnerable in our communities.

I'm truly glad to hear that Welsh Government has laid out its priorities in advance of the autumn statement. We know, as a matter of fact, from our constituents, from our local authorities and our third sector that mark 1 Conservative austerity tore the guts out of local government and has imperilled the continuation of the third sector, despite the best efforts of our local authority colleagues and despite the best efforts of volunteers and the voluntary sector out there. What reason on earth would we have to believe that Conservative austerity mark 2 would fare any better for the people of Wales and the public services on which they rely?

Llywydd, Huw Irranca-Davies makes a really important point. We have already had a decade of a flawed and failed experiment of austerity in the United Kingdom, which has left us all worse off than we otherwise would have been. And the facts simply speak for themselves, Llywydd. Between 2010 and 2021, every one of those years a year of Conservative Government at Westminster, gross domestic product per head in the United Kingdom grew by only 6 per cent in real terms. It grew by 11 per cent in Germany, it grew by 17 per cent in the United States of America. In 2010, disposable household income per head in the United Kingdom was 90 per cent of the German figure. By 2021, it had fallen to 81 per cent. The New Economics Foundation estimate that the direct impact of austerity is to make the UK economy £100 billion smaller than it otherwise would have been. Who ever would think of repeating the same experiment? It wasn't attempted elsewhere in the world. They had a different approach, they had an investment approach, they had a Keynesian approach, and they came out of the dilemmas of 2008 in a far stronger way.

We see the same pattern already repeating itself. Last week, inflation in the United States fell below 8 per cent. The Bank of France announced last week that the French economy will escape recession in the fourth quarter of this year. The German economy grew by 0.3 per cent in the third quarter of this year. Every single one of those things is not true of the United Kingdom under the stewardship of the Conservative party.

I don't often, Llywydd, quote The Daily Telegraph in answering questions here, but, if you had looked at The Daily Telegraph yesterday, you would have seen a very serious article that argues that tax rises and public spending cuts at this point in the economic cycle are exactly the wrong prescription for the UK economy. Here is an economy already in recession, according to the Bank of England, and now to have purchasing power drained out of it at an ever-accelerating rate, mortgage rates rises by the Bank of England, and money taken out of people's pockets by the UK Government as well. This will guarantee, it seems to me, that the recession that we are facing already will be longer, it will be deeper and, once again, it is those communities and those organisations that can the very least afford it who will be on the front line of another dose of Tory austerity.

I too welcome you, First Minister, back to the Chamber following your illness; it's good to see you. I don't doubt that the Chancellor has some difficult choices to make ahead of the autumn statement, so I'm going to try to be constructive. This will have an impact on the Welsh Government, which I am somewhat sympathetic to. As a former council leader of 13 years, I understand too well what it's like to set a budget when the funding settlement isn't quite what you'd like it to be, and I'll say no more in that regard. However, during these difficult times, it's important that we all work together, rather than against each other, to get us back on track.

I was very encouraged to see the First Minister and the Prime Minister join others at the recent meeting of the British-Irish Council. Presiding Officer, I would like to ask the First Minister whether he took the opportunity to discuss the uprating of pensions and benefits in line with prices with his UK counterparts at the recent meeting, because, as we know, this is something that on this side of the Chamber we agree with. And looking closer to home, what assessment has the Welsh Government made about the value of the devolved grants and allowances that it administers in light of the impact of inflation, as called for by the Bevan Foundation?

Well, Llywydd, first of all, I thank Peter Fox for his kind opening remarks, and I recognise, as I try always to do, the experience that he has as a former leader of a council having to make actual decisions when there are really difficult choices to be made.

Can I say, Llywydd, that I welcome the Prime Minister's decision to attend the British-Irish Council? He's the first Prime Minister to do so for a very long time. I think it was an important, symbolic decision, given the continued tensions in relationships around the Northern Ireland protocol, and given the pressures that are on the diary of any Prime Minister to give up the amount of time that he did to be there and to hold separate meetings with a range of different individuals. I think that's commendable and I hope, as I said in my original answer, that that constructive start sets a different tone for the future in terms of inter-governmental relations.

As well as bilateral meetings with the Prime Minister, he also chaired the first meeting of the Prime Minister's council. This was part of the inter-governmental relations review that was concluded in March of this year. No previous meeting of the council had been held. So, again, very early on in his tenure as Prime Minister, Mr Sunak made it a priority to chair a meeting of that council, and I was glad to see that as well.

I did, of course, take the opportunity, with others—the Chancellor of the Exchequer attended the council, as did Michael Gove—to raise the issue of the uprating of benefits, and the triple lock for pensioners, but I also was able to put on the record a set of modest in their way but very important in the lives of the people affected actions that I believe the UK Government could take in its autumn statement.

I argued strongly for the abolition of standing charges for prepayment meter customers. What can be worse than finding, when you finally manage to get some money together to put on a supply of electricity, that that money has already been eaten into paying a standing charge for all those days when you weren't able to use electricity at all? It's a deep economic injustice, and this Government could simply abolish those standing charges and make the companies absorb the costs, as the Government did when it said to the BBC that it had to pay the cost of free licences for the over-75s. They could take their own example and apply it to prepayment meter customers.

I argued for an increase in discretionary housing payments and the local housing allowance. Here is an absurd example of a Government saving some money with one hand—small amounts of money—by failing to uprate those allowances in line with inflation, and paying far, far more with another hand when those people find themselves made homeless because they can no longer afford the rents. It makes just sense from an economic, public purse point of view to put that money in a different place and to do better with it.

Then, I offered the members of the council to share the experience that we have had here in Wales, led partly by my colleague Jane Hutt, in providing guarantees against loss to credit unions, so that they are able to offer loans to people who otherwise would be regarded as too risky. In a normal assessment of risk, you wouldn't lend money to that person. Credit unions in Wales are able to do that because we offer them a guarantee against loss. The wonderful result, Llywydd, is this: of course you lose money when you lend to people who are in very, very difficult circumstances, but 80 per cent of the money that the credit unions loan to people covered by our guarantee comes back from the people themselves, because of the way in which credit unions operate. That's another area in which the UK Government, with modest investments, could really help those people who otherwise will be forced to go and borrow money in the most expensive and risky parts of the market.

Good afternoon, First Minister. Lovely to have you back. Croeso yn ôl.

I just wanted to focus in on social care. As we know, our local authorities across Wales are going to be struggling with their budgets going forward, in relation to funding social care—our most vulnerable people. That would help our health services as well. It's lovely to hear from you about the points that you have made to the UK Government, but to be honest, I have absolutely no faith whatsoever that the Conservative Government in London will meet the needs of the people in Wales, and will definitely not meet the needs of vulnerable people. But here in Wales, we do have an option, and I'd like to ask you: will the Welsh Government be raising taxes in order to fund social care here in Wales? Diolch yn fawr iawn.

I thank Jane Dodds for that question, Llywydd.

I think that this week is gearing up to be a very bad week for social care services across the United Kingdom. We await to see what happens on Thursday, but any piece of informed leaking from the Treasury is suggesting that the Conservatives are going to abandon their commitment to introduce their version of the Dilnot review. You will have seen the absolutely scathing comments of Sir Andrew Dilnot himself at this latest—well, I think 'betrayal' is the word that he uses—of the work that he did on behalf of a Conservative Government. And if that is the case, it has direct impacts on social care services here in Wales, as we know.

It has always been one of the great conundrums of trying to move forward on social care, and I'm very grateful for the work of the expert group that was established as a result of the co-operation agreement in this area. But the report does tell you that the interweaving of decisions made by a UK Government and the decisions that can be made here in Wales is very real. I'm afraid that, if the solution that the UK Government has to the real difficulties in social care is to say that council tax can be put up in England, it really is a desperate solution to what is a very serious problem indeed.

I have answered the question a number of times, Llywydd, about the powers that we have as a Government in relation to Welsh rates of income tax, and it's the same answer: we will make those decisions when we have the full facts, and in an orderly way, as part of the budget-setting process that we have set out for colleagues here in the Chamber. Let me say this, though, Llywydd: nobody should believe that putting up the basic rate of tax is an easy decision here in Wales. We are talking about taking money out of the pockets of people who earn £12,000 a year. I've already said this afternoon that I think that one of the great mistakes that is about to be made is that the recession we're already in is about to be made worse by taking purchasing power out of the pockets of people. That person earning £12,000 here in Wales is facing all the bills that we've talked about here in the Chamber—the energy bills, the food bills, the rent bills, all of those things. Nobody should think that a decision to take more money out of the pocket of that person is one that we would enter into lightly.