Select Page

Author: WPS 2025

A sniff of jam? Blog by Dr Daria Luchinskaya

The flurry of pre-Christmas fiscal activity in Wales will not much affect the fundamentals for public services for next year although there is some good news. Some of the longer-term implications may prove more significant. The Final Welsh Budget, tabled today, more or less reflects the main decisions in the better-than-expected Draft Budget in October but is able to finance some new commitments by drawing on the larger than usual reserves (a hedge against uncertainty) as well as utilising the additional funding released through the Chancellor’s Autumn Statement. The Autumn Statement added just £35.8m for day-to-day (resource) spending (0.26%) in 2017-18 and £442m for capital (8.7%) 2017-18 to 2020-21 to the Welsh Budget[1]. The Final Welsh Budget primarily passes on the increased capital allocation over the next four years in the form of extra spending, including £53.4 million ‘to accelerate our commitment to 20,000 affordable homes’, £50 million for regeneration, £40 million for energy efficiency, £33 million for flood alleviation, £20 million for rural communities and £41.5m on health innovation and health estate.[2] Some money has been reallocated from reserves for modest increases in a couple of areas of day-to-day (resource) spending for 2017-18, e.g. £10m for social services, £10m for support for high-street business ratepayers, and £6m for homelessness. It looks as though not all the social services money is new, some appears to have come from adjustments...

Read More

Chancellor prioritises investment not public services

The economy and post-Brexit uncertainties was clearly uppermost in the Chancellor’s mind yesterday rather than public services. The Autumn Statement, informed by the OBR’s first forecasts since the Referendum, contained mixed news for Wales. While we are awaiting full details, the main takeaway messages for Wales are: An additional £400 million of capital investment funding for the Welsh Government between now and 2020-21 via the Barnett formula – equivalent to an extra 8% on top of the £5 billion of general capital funding the Treasury has already allocated to the  Welsh Budget for the same period; A recommitment to City Deals, including progress with discussions on the Swansea Bay City Region, proposals for a North Wales growth deal, and continuing implementation of the £1.2bn Cardiff Capital Region deal; But austerity in day-to-day spending on public services looks set to be prolonged, with an additional year (2021-22) pencilled in, meaning 12 years of cuts to many service areas; The announcement of a number of UK-wide tax and welfare changes (see below) which some commentators believe will still mean that poorer families are likely to be worse off. However, outweighing any gains made from the tax and benefit changes is the 3.7 percentage point downgrade to real earnings (driven by lower growth and higher inflation forecasts), which will hit families in Wales. The economic outlook Forecast growth in potential output (that...

Read More

A Budget for Uncertainty ? Michael Trickey’s thoughts about the new budget

Most of the political interest around the Welsh Government’s draft budget has inevitably centred on the deal with Plaid Cymru. But in fiscal terms, there was another story. The Cabinet Secretary for Finance and Local Government called it a ‘budget for stability and ambition’. It might also have been called a ‘budget for uncertainty’. The uncertainty about the content of the Chancellor’s coming Autumn Statement and, probably as significant, what the Office for Budget Responsibility will say on the same day about the impact of Brexit on future tax revenues and inflation, clearly influenced the decision to go for a 1-year Resource budget (day-to-day spending on public services) and to carry a larger than usual reserve. Given that negotiations about the future Welsh fiscal framework are also underway, in the context of the controversy about the current Wales Bill, the fog is even more dense than usual. There are no obvious signs of the Treasury carrying out a major review of its existing resource departmental spending plans for the Autumn Statement; such runes as there are suggest that any ‘fiscal reset’  is more likely to centre on capital spending and rescheduling the timeline for achieving a budget surplus. Paradoxically, although the Welsh draft budget has also set a 4-year capital plan, changes in the light of the Autumn Statement in that plan seem more likely. But we need to...

Read More

Read Michael Trickey’s blog on the new report from the Health Foundation about the NHS in Wales

Route map for a sustainable NHS for Wales Yesterday’s highly significant report by The Health Foundation, The path to sustainability: financial projections for NHS Wales, offers some encouraging news about long-term prospects for sustaining our NHS but a warning of the significant challenge over the next 3 – 4 years. The good (ish) news is the think-tank’s view that long-term fiscal sustainability (ie to 2030) may be achievable although there is a big ‘but’. This long-term assessment depends on continuing efficiency gains year-on-year and spending on health increasing in line with growth in the UK’s economy as measured by GDP. This is consistent with long-term historic trends but a recent, and not much noticed, report from the Office for Budget Responsibility[1] reminds us that, on current economic forecasts, UK health spending is on track to fall as a percentage of GDP by 2019-20. If the NHS in Wales (and the UK) is to cope with rising demographic and cost pressures, there has to be a big shift in UK policy on public spending. The Chancellor has talked of resetting fiscal policy in his November Autumn Statement but his comments so far have focussed on capital spending on infrastructure rather than day-to-day spending on services. The Health Foundation report concludes that, if funding mirrors current UK spending plans for the English NHS, the NHS in Wales could face a ‘funding...

Read More
  • 1
  • 2