SENEDD ELECTION 2021
■ ACT ON POVERTY, POLL: PAGE 6 ■ MANIFESTOS
THE three main political parties in Wales have set out their stall ahead of the 2021 Senedd elections next week, promising spending and tax commitments across the board.
But when you add up the various promises by each party, who is pledging to spend the most and are the sums even feasible?
Experts from the Wales Fiscal Analysis team at Cardiff University have crunched the numbers and concluded that all three – Conservatives, Plaid Cymru and Labour – have a “lack of detail” when it comes to spending plans.
And Labour is lagging behind when it comes to specific spending and tax commitments.
It’s hardly surprising that there are some common themes between the three – notably the post-Covid recovery, NHS spending and schools. And it’s not rocket science that Welsh Government budgets will need to be flexible to changing circumstances in the next term.
Even so, there’s little reference to potential trade-offs required across all manifestos, the experts have concluded.
For example, looking at the NHS, health-related consequentials will likely be sufficient to fund underlying pressures in the NHS over the next four years but will likely fall short of the amount required to meet post-Covid pressures.
And they’ve estimated local authority spending will need to increase by 3.4% a year to meet spending pressures over the next four years. This means there could be a funding gap of up to £607m next year for local authorities.
The analysis concludes that based on current plans, spending pressures in Wales are “likely to go unmet”.
They state: “There is limited scope to fund large manifesto commitments without increasing revenues and/or relying on a change to UK spending plans.”
A 2p increase in all rates of Welsh Income Tax could play an important part in meeting spending pressures and funding enhanced public services over the medium-term, they add.
The analysis is based on the latest indicative UK Government spending plans set out last month. Compared to a decade ago, and adjusting for population growth, the Welsh budget is 4% smaller than it was in 201011.
And looking ahead into the first year of the new government term, the Welsh Government received £5.7bn of Covid-19 resource funding in 2020-21, of which, £500m has been carried forward into the next financial year.
Overall, in cash terms, core funding (excluding Covid-19 funding) is set to increase from £17.1bn in 202122 to £19.3bn by 2025-26.
The analysis looks at the fiscal implications of the party manifestos for the Welsh Tories, Labour and Plaid Cymru, breaking each down into the main areas of spending and taxation: NHS spending, schools, social care and tax policy commitments.
Using the 2021-22 final budget plans as a baseline, it concludes that it’s “difficult to assess whether manifesto programmes are affordable and fully costed in the round”.
NHS spending
■
The Tories have pledged to “enshrine an NHS Covenant into law” and guarantee increased spending on the NHS each and every year. This represents at least an extra 2% rise in the NHS budget which is the equivalent to £1.4bn a year extra day-to-day spending in 2025-26.
They’ve also promised 3,000 more nurses and 1,200 more doctors by 2026.
Labour have said they’d launch a £1bn NHS recovery plan “on day one” but haven’t said over how many years. Furthermore, there’s no overall medium-term spending commitment to the NHS in their manifesto. They would however train 12,000 doctors, nurses, allied health professionals and psychologists, they promised.
Plaid Cymru hasn’t set any overall target growth in NHS funding but has committed to providing 1,000 new doctors and 5,000 degree level health professionals such as nurses, midwives and physios.
Expert verdict: NHS spending will likely need to be significantly higher after the pandemic – all parties relying on further health-related consequentials from UK Government or unspecified cuts in other areas.
Schools
■
The Conservatives say Wales needs to spend £1,000 more per pupil than at present and they would “end this underfunding”.
The promise to increase teacher numbers by 5,000 would cost up to £250m a year which would come on top of projected costs of £268m leave a significant funding gap with £337m of consequentials projected from UK government spending plans in England.
Labour said it would recover and raise standards with a schools catch up plan but has given no indication of what the overall costs of this might be.
It has also promised an extra 1,800 tutors in schools and to expand the free schools meals entitlement “as far as resources allow”.
Plaid Cymru is reportedly planning additional spending of £300m per year over the course of the Senedd term, which would pay for 4,500 extra teachers and support staff and extending free school meals to every single family on Universal Credit and eventually all primary school children. That latter plan
would alone cost £160m a year by 2025-26, the experts said.
Expert verdict: Little detail on scope and cost of any front-loaded “catchup” plans and some manifesto commitments look quite modest in comparison. Education Policy Institute (2021) suggest a multi-year package of £600-£900m could be required – again probably relying on UK Government increasing spending.
Social care
■
All parties are proposing increasing the wages paid to social care staff with both the Tories and Plaid Cymru proposing a £10/hour wage for social care workers and Labour preferring wages set in line with the real living wage (currently £9.50/ hour). Experts say this would initially cost around £19m per year.
While the Tories want to increase the capital limit to £100,000 for those accessing residential care (which would cost £40m a year), both Labour and Plaid Cymru are in favour of making social care free for all at the point of need (which would cost £131-192m a year).
Tax policy commitments
■
The Conservatives outline a series of more specific tax-related promises compared to the other two parties. They have promised to cut VAT for tourism operators (estimated cost of £60m), a Jump Start scheme which would partly pay employer’s National Insurance contributions (estimated cost of £60m), a council tax freeze, scraping the land transaction tax for first time buyers (estimated cost of £39m) and abolishing business rates for small businesses (estimated cost of £100-105m a year).
Labour’s manifesto is a bit more vague and promises no increase in Welsh rates of income tax “as long as the economic impact of coronavirus lasts” and offers a woolly promise to make council tax fairer.
While Plaid Cymru is proposing a substantial reform of council tax and non-domestic rates, there is no indication of revenue effect and assumed neutral by the analysis.
■ Other spending commitments Labour has proposed more police community support officers, a new system of farm support and a young persons guarantee among other things. The experts at Wales Fiscal Analysis have costed these to amount to around £100m per year by 2025-26.
The Conservative manifesto implies large increase to NHS and schools spending, alongside other specific spending commitments such as on social care and childcare. It differs substantially from other parties in proposed tax cuts and while there’s uncertainty around our estimates of tax and spending policies – but implies little room for other manifesto commitments and spending pressures.
Plaid Cymru has pledged a weekly payment of £35 to help 180,000 children living in poverty and the experts have crudely estimated this comes at a cost of £300m a year. Furthermore, Plaid wants to increase the overall borrowing capacity of Welsh Government from £1bn to £5bn.