Part of the debate – in the Senedd at 4:45 pm on 13 December 2022.
One of the things that I am disappointed not to be able to do is make further significant capital allocations. That was a matter of deep regret, that there was no further capital as a result of the autumn statement. Our capital budget will be 8.1 per cent lower in 2024-25 than in the current year. And, of course, the Organisation for Economic Co-operation and Development, the London School of Economics Growth Commission and the UK Government's own National Infrastructure Commission have all said that investment in infrastructure and investment in skills absolutely is the way in which we should be growing the economy and investing at this point. So, that is particularly of concern.
Some interesting points were made about releasing land, so just to confirm that the Welsh Government does release land from time to time. For example, within this financial year, there's been a release of land from within the economy portfolio; you'll see details of that within the supplementary budget, which will be published in February. We do acquire and release land from time to time. In terms of Welsh Government land, though, we are taking a different approach following the setting up of the land division, and that's very much about looking at the land that Welsh Government holds and first and foremost asking ourselves is this land that could be used for housing, is this land that could be used to help develop our social housing in Wales. We are making some progress on that as well.
Turning to the reprioritisation exercise that we undertook, colleagues will have heard me say that that released £87.4 million from our existing plans. That was really about refocusing to those areas where we think the need is greatest. That's been a really painful exercise for all colleagues, and I know that committees will get into that in more detail. But I just thought I'd share with you how we undertook that exercise. Certain areas were given a degree of protection from reprioritisation. They included the revenue support grant for local authorities in the finance and local government main expenditure group, NHS and social care funding under the health and social services MEG, and part of the education MEG as well. That was important to us because those are the areas where you see the front-line service delivery, which is exactly what we're trying to support through the reprioritisation.
Some Ministers have gone to areas that are demand led and had the potential to have surplus funding, and released funding, depending on what they understand uptake to be. Other options have been about reviewing contracts; some could be terminated or relet. Our e-procurement contract, for example, was coming to an end, and we were able to reprocure that at a cheaper cost. Other approaches by Ministers have been about looking to issue a kind of blanket reduction across other parts of the MEG as well. So, there have been different approaches to get us to where we are today. But inevitably, I think that that leads us then to some real difficulties in terms of looking at how we will deliver things.
You will see in the budget, and in our Wales infrastructure investment strategies pipeline, which sits underneath it, that there are areas where we will have to deliver potentially over a longer period, or not deliver as much. Sustainable communities for learning, for example, could be affected by the current economic conditions, including high inflation and, of course, delays in the supply chains affecting the building sector. We do remain committed to investing more than £1.5 billion in the next phase of delivery, but of course, the economic conditions may mean that we end up delivering less for that money. So, those are just to give a little bit of flavour, really, to the difficult choices that we've had to make and what the implications might be.
Thinking ahead now to the final budget, I can't see any scope for allocating further funding based on the way in which we've taken our approach to reserves for next year. What we can do, of course, is to make changes between the draft budget and the final budget, thinking of the recommendations that will come forward from committees and the representations that we will have from colleagues within the Senedd, and, of course, organisations outside it. Because our approach, as colleagues will remember, which we set out at the start of the three-year spending review, was not to hold unallocated DEL in the next financial year, but to manage the pressures within the year from within the Wales reserve. You'll see from the plans published today that plans for next year already draw down £38 million of the potential £125 million annual drawdown, so things are extremely tight, and, of course, we maintain our capital overprogramme. Next year, that will be £98.5 million, so no general capital will be available to allocate. I do intend to make allocations in respect of financial transactions capital between the draft and the final budget, however. So, again, that will be an area for some further discussion.
Thinking about the local government settlement in particular, there were some particular questions there. I just want to make the point that the £227 million for next year is obviously additional funding, but that does include the £117 million that we received in consequential funding in the autumn statement in respect of education. It also includes local government's share of the £70 million in respect of the real living wage for social care workers. Not all of it goes through local government, of course, some goes through the health MEG as well. That said, I think the overall settlement might be a little bit more generous than local government was expecting, or certainly not as bad as local government was fearing, but, of course, the details of that will be published tomorrow.
Local government has been very clear all along that its big pressures are education and social care, so we expect local government to want to put additional funding in those particular areas. One of the reasons why things are different here is because, of course, we continue to fund schools through local government, rather than funding schools directly as they do across the border. But even with that, we have provided additional funding through the education MEG for the work that they're doing on the recruit and raise standards side of things, additional funding for the pupil deprivation grant, recognising how important that is for families who may be struggling, and also additional funding in respect of delivering our additional learning needs work as well, which is really important.
On the health side of things, the £165 million uplift will be targeted to protecting core NHS services. It does mean that there will be some refocusing of spending in other areas, for example, such as establishing the NHS executive. The impact there would be a reduction in scope and capacity over the short to medium term. That's another example of the decisions that have been taken by colleagues, but it's very much about recognising the impact of inflation on the NHS.
I was really pleased to make the announcement in respect of non-domestic rates to support businesses across Wales. Obviously, we've frozen the multiplier, we've provided transitional relief to support businesses across the tax base that have been affected by the revaluation in April 2023. I won't talk too much about that, because I can see my time is running out, and we have the next item of business this afternoon to debate that, but we're also extending and enhancing the existing relief for retail, leisure and hospitality. What I will say there is it cost us more to do the same thing in Wales because of the nature of our tax base, but we were able to provide what is a very, very good package, and that is drawing on some funding that we'd already allocated within the non-domestic rates space.
And then, just finally, I can confirm that the funding that we had in consequentials from the UK Government in respect of social care and education has all been passed on in full and, actually, has gone over and above the funding that we received in consequentials, because I know that's of particular interest to many colleagues. I could go on forever, but my time is up. Thank you.