Part of the debate – in the Senedd at 3:20 pm on 13 December 2022.
I'm pleased to make a statement on the Welsh Government's draft budget for 2023-24, which has been laid this afternoon. This is a draft budget unlike any other that we've laid since the start of devolution. It's been one of the toughest that we've ever made, reflecting the perfect storm of economic and budgetary pressures faced in Wales, none of which are of our making.
A decade of austerity has been compounded by the ongoing and long-term impacts of Brexit, the pandemic and our recovery from it, the economic and humanitarian consequences of the war in Ukraine, and now an unprecedented cost-of-living crisis, which affects every aspect of daily life and business. The UK is in recession, inflation is at a 40-year high, and energy prices are soaring at the same time as standards of living are falling. Our economy and public services are very fragile and are not able to withstand further shocks. People and communities across Wales are grappling every day with the challenge of just getting by.
Our funding settlement is not sufficient to meet all of these extraordinary pressures, let alone our priorities in 2023-24. Even after the additional funding that we received in the autumn statement—£1.2 billion over two years—our settlement is still worth up to £3 billion less in real terms, and up to £1 billion less in 2023-24. And just as the UK was falling into recession, the UK Government took the incredible decision not to make any more capital funding available to stimulate our economy. The UK enters recession in the worst shape of any of the G7 economies, and our capital budget will be 8.1 per cent lower in real terms, falling far short of what we need to meet our ambitious plans.
Llywydd, in this budget process, Welsh Ministers have made some very difficult decisions to ensure every pound that we have invested makes the greatest positive impact. The 2023-24 draft budget builds on the indicative spending plans that we set out in last year's three-year Welsh spending review. In this budget process, all Ministers have worked hard to refocus funding from within existing plans to reprioritise it towards where it will have the greatest impact. Together with additional revenue funding provided through the autumn statement, we have made some additional allocations, focused on three main priorities: protecting front-line public services and our ambitions for the future as far as we possibly can; continuing to provide help to those most affected by the cost-of-living crisis; and supporting our economy through recessionary times.
Recognising our commitment to protecting front-line public services, this includes an extra £165 million for NHS Wales to help protect front-line services. An additional £227 million is being provided to local government through the settlement to help local authorities safeguard the important and wide range of services that they provide, including directly funding schools. As a result of the spending decisions made in relation to education in England, Wales received a consequential of £117 million a year in the autumn statement. Through the choices we have taken, this is being provided in full to local government. We will also provide funding, through the local government settlement and the health budget, to continue to deliver the real living wage in social care—an important investment in the people who work in social care and the wider health and care system. More detail about the provisional local government settlement will be available tomorrow.
Wales is proud to be a nation of sanctuary and has welcomed thousands of people fleeing the conflict in Ukraine. Over the last year, we have created and funded our own supersponsor route, which has helped almost 3,000 people come to Wales. In the absence of any firm funding from the UK Government for the second year of its Homes for Ukraine scheme, we will continue to provide funding to support our humanitarian response, making sure people from Ukraine in Wales receive a warm welcome and the support that they need while they're here. The draft budget includes an allocation of £40 million in 2023-24 and a further £20 million in 2024-25.
Of all the challenges facing Wales today, the cost-of-living crisis is the one that bites hardest for most people. The draft budget provides an additional £18.8 million for the discretionary assistance fund, which provides a lifeline for many tens of thousands of people facing financial hardship. An extra £10 million is invested in homelessness prevention and relief interventions across Wales.
The crisis facing our economy is also at the forefront of our minds. This draft budget contains £319 million for a package of non-domestic rates support for businesses in 2023-24, and a further £145 million for 2024-25. We're also investing £18 million for employability programmes to support people in work and help those who are without employment with the skills that they need to enter and to remain in work.
This is a budget that seeks to balance the short-term need to protect people in the face of the immediate cost-of-living crisis whilst also ensuring our public services remain sustainable in the longer term. We're today making an extra £40 million available to support public transport, helping create a sustainable and greener transport system. A £20 million capital grant will help local authorities decarbonise their buildings, building on the success of similar public sector schemes, such as the solar farm at Morriston Hospital in Swansea, which is now supplying a quarter of the hospital's power needs.
In addition to our funding allocations, details of the proposed rates for Welsh taxes for 2023-24 are published as part of this draft budget. There will be no change to any of the current rates for Welsh rates of income tax for 2023-24. This means that the three rates—the basic, higher and additional—will remain at 10p in the pound. Landfill disposal tax rates will be increased in line with retail price index forecast inflation, with effect from 1 April 2023. There will be no further changes to the rates and bands for main residential land transaction tax rates following those changes that were introduced on 10 October. Similarly, no changes are proposed to the higher residential or non-residential land transaction tax rates introduced on 22 December 2020. I am issuing a separate written statement today setting out further details about our tax plans.
We continue to publish an extensive suite of documentation as part of our draft budget package, enabling a high level of transparency for Senedd members, our public service partners, social partners, the third sector, and indeed the people of Wales. Our chief economist's report and the Wales infrastructure investment strategy project pipeline are part of this package, all of which are published today on the Welsh Government's website and shared with the Senedd. I am particularly proud that our budget improvement plan, created with the budget impact and improvement advisory group, maintains our commitment to provide transparency around improving budget and tax processes.
I'm very grateful to my Cabinet colleagues for their commitment and hard work during this process, and I also want to thank Siân Gwenllian, lead designated Member for the co-operation agreement, for the ongoing engagement and close working relationship during this process.
Llywydd, this is a draft budget made in hard times for hard times. It reflects the constraints of our funding settlement but not a lack of ambition. It maintains our commitment to prioritise the most vulnerable, and public services, whilst continuing to create a stronger, fairer and greener Wales for all.