Financial situation ‘toughest faced since devolution’
FIRST Minister Mark Drakeford has said the current financial situation in Wales is the “toughest we have faced since devolution”.
In a statement, Mr Drakeford said he had asked ministers to find cuts in their departments to fill a £900m gap in the Welsh Government’s £20bn budget.
He put the cause of this down to “record levels of inflation” as a result of the “mismanagement of the economy and public finances by successive UK governments over the last 13 years”.
UK interest rates are at a 15-year high of 5.25%.
It is not clear where the cuts in the budget for 2023-24 might fall but Mr Drakeford said the Welsh Government was committed to “protecting frontline public services, as far as possible, and targeting support towards those at greatest need”.
Mr Drakeford said: “The cabinet met on August 1 to discuss the significant financial pressures we are facing in the 2023-24 budget and to continue preparations for the 2024-25 budget round.
“When we made our budget for 202324, we drew on all our available resources to protect frontline services and provide targeted cost-of-living support to individuals and the economy.
“But even after doing all that our financial position after the UK Spring Budget in March was up to £900m lower in real terms than when that budget was set by the UK Government at the time of the last spending review in 2021.
“This is the toughest financial situation we have faced since devolution.
“We are in this position because of the record levels of inflation we have experienced post-pandemic because of the mis-management of the economy and public finances by successive UK governments over the last 13 years and because of unfunded commitments made by the UK Government, particularly in relation to public sector pay.
“The cabinet will be working over the summer to mitigate these budgetary pressures based on our principles, which include protecting frontline public services as far as possible, and targeting support towards those at greatest need.
“A further update will be provided to the Senedd once this work has been completed.”
The UK Government responded by saying “the Welsh Government is currently receiving the largest funding settlement in the history of devolution”.
A spokesman said: “We are providing a record £18bn-per-year settlement, which is still increasing in real terms over the 2021 spending review period.
“The best way we can help families and support growth across Wales is to have low inflation which is why we’re sticking to our plan to halve it this year something which the Bank of England forecast only last week that we are on track to do.”
The assistant director of the Welsh NHS Confederation, Nesta Lloyd-Jones, said: “NHS leaders welcome the Welsh Government’s honesty regarding the unprecedented state of public finances.
“Across Wales, NHS organisations currently face considerable cost pressures. Between the pandemic, rising energy costs, the increased cost of staff recruitment and retention, and record levels of demand on services NHS finances have been significantly impacted.
“NHS leaders are already making difficult decisions about spending priorities, considering where further efficiencies can be made, with more to come.
“While financial stability is key, the quality of services and ensuring positive outcomes for patients is vital.
“Decisions made now could have a long-term impact on the health and wellbeing of the population. Therefore, a national conversation has never been more pressing.
“We’re calling for an open and honest conversation with the public about what the future health and care service looks like to ensure the sustainability of health and care in Wales.”
The First Minister’s statement sparked criticism from Welsh Conservative leader Andrew RT Davies, who claimed that “Labour continue to make their own problems worse”.
He said: “Only back in March, the Labour government, and their co-operation agreement partners in Plaid Cymru, sent back £150m to the UK treasury that they failed to spend. Now they’re saying they don’t have enough money. You couldn’t make it up.
“Labour continue to make their own problems worse by pushing their extreme ideology and vanity projects, such as costly default 20mph speed limits and sending more politicians to Cardiff Bay. This money should be spent on our vital public services.”
Welsh Conservative shadow finance minister Peter Fox MS added: “As part of the budget preparations Welsh Conservatives put forward a clear plan to make sure the Labour government focuses on the people’s priorities: sorting the Welsh NHS waiting lists, ending the housing crisis, and giving our young people the best start in life.
“Mark Drakeford’s call is too little too late. In 2019, the independent auditor general said that despite the Labour government having £1.20 for every £1 spent on the NHS and education in England, only £1.05 actually reaches the front line here. This is all whilst Labour continues to be the only government in the UK to have ever cut an NHS budget on two separate occasions.
“All available funding must be spent on these essential areas, not top-sliced for pet projects.”