The announcement of the draft budget by Jane Hutt brings the cuts announced in the Comprehensive Spending Review home to Wales. The Budget next year will fall by £860m and will be £1.8bn lower by 2014-15.
It is this budget that will set the scene for next May’s Assembly election. It is Carwyn Jones’s first opportunity to put his mark on the priorities of the Assembly. Hitherto he has operated to a budget set by Rhodri Morgan. The budget underlines his priorities of protecting health, social services, schools and skills.
The draft Labour ’“ Plaid Cymru budget will set the financial background for the next four years. But as finance dictates the political agenda, the budget will also set the parameters for Welsh politics for the coming years.
The budget allocates around £15bn of expenditure across the public sector in Wales, covering devolved areas like health, education, agriculture, local government and economic development.
Both Conservative and Liberal Democrat opposition parties will use the occasion not only to wrong foot the Welsh government by setting out a different set of priorities, but with an eye to next May they might also want to set an agenda that distances them from their colleagues in the Westminster coalition. For tactical electoral reasons they have to demonstrate that they are standing up for Wales.
Already the Conservatives are on record in saying that they’ll ring fence the health department budget. Consequently, the governing parties have been pressing them to say where the blue axe will fall in the unlikely circumstance that they should be in government in Cardiff Bay.
Although the government will say that they have protected the cash budget in health as Jane Hutt said ’˜We have listened to the people of Wales ’“ and have taken action to protect Health and Social Services ’“ vital services that we will all depend on at some time in our lives. It is a measure of the difficult decisions we have had to make that health and social services is the only area where the budget will not reduce in 2011-12. Despite the cut to our budget in 2011-12, revenue funding for NHS Delivery ’“ by far the largest budget line in the Health Service – will actually be higher next year than this year.’
But of course with inflation there are cuts in real terms with inflation running over 3 per cent and health inflation running at over 6 per cent. So even on the Conservative commitment there will be real cuts to the health budget.
Carwyn Jones’s leadership campaign commitment of increasing expenditure on schools is being met. ’˜Budgets for schools, both within the Education Department and through local authorities, will grow by almost 5% over the three years. Budgets for schools and skills within the Education Department will grow by 6.5% over the three years. This means that we can continue the roll out of the pioneering Foundation Phase for 3-7 year olds and increase funding for Flying Start over the period.’
But as education budget is to be cut overall, it is likely that higher education will receive swingeing cuts, but the details of these as in the case of all the other ministerial portfolios will be announced later.
The universal benefits that the government are so proud of are protected. So the free bus pass scheme, free prescriptions, free school breakfasts and milk for primary school children will remain. Indeed the funding for these initiatives will rise by 3.7% by 2013-14.
This will be an area that the Opposition parties will be expected to attack because they have always described them as populist ’˜gimmicks’.
There are major cuts to the money going in to build new housing ’“ a cut of £53m in the capital amount with £8m revenue. But help to the most vulnerable is to be kept with the budget for Supported housing being kept.
Local government will also take a cut of 7.4 per cent. So there will be many cuts to services and the prospect of larger Council Tax bills falling through our doors are very likely.
What happens now? For the next couple of month’s assembly committees will be looking carefully at the draft and then all AMs will debate the budget in mid-January. The assembly government will then reflect on all the comments before drawing up its final budget to put to a vote of members in February.