MINISTER CALLS FOR SUNAK CASH
FINANCE Minister Rebecca Evans is hoping that Chancellor Rishi Sunak will provide millions of pounds more to the Welsh Government so it can fight back against the damaging economic impact of Covid-19.
This morning she will publish the Welsh Government’s draft budget for 2021-22 – but she made it clear to the Western Mail that she wants extra funding from the Treasury before the final version of her budget is released in March.
Asked which policy areas would face cuts in the draft budget, Ms Evans said: “There’s more we would want to do. Disappointing for us in the Spending Review has been our capital settlement.
“The March 2020 Budget suggested there would be a 19% increase in departmental spending for UK departments. So on that basis it would have meant a £400m increase to our budget – and you can really do something with that in terms of capital.
“But unfortunately what’s happened is a cut of £131m to our capital budget. So that’s the area where we would have hoped to be able to deliver a lot more.
“That said, the Chancellor is publishing his Budget on March 3. I would hope to hear at that point more about the ‘Levelling-Up Fund’. My understanding is it’s a capital fund. So there might be an opportunity to make some late additions to our budget, just before it’s voted on March 9.
“I’ll be making a statement with a small number of Covid allocations in the draft budget, but of course I want to retain some flexibility to make further allocations between the draft budget and the final budget – to do so in a way that reflects the course of the pandemic, and where we find ourselves at that point.
“And I’d expect to make a small number of additional allocations in respect of EU transition – because of course in laying the draft budget we still don’t know the shape of our exit and the challenges that might come forward as a result of that. So what you see laid today isn’t the final story yet.”
Ms Evans said it had been possible to prioritise social housing and active travel – both of which were seen as really important to the Welsh Government.
Asked whether er she could offer organisations in the arts and culture sector any ray of hope, she said: “I suppose I would point to the additional funding which we have made available to the arts through the Covid fund. When you look at the Covid fund in our budget for this year, it’s an extra £766m.” ”
Ms Evans said aid that potentially ly there would be e further Covid funding available from the UK Government to spend in other sectors. Asked to what extent the need to provide financial assistance to businesses via a business rates freeze and other measures would limit the ability to help in other areas, Ms Evans said: “We’re hoping that the UK Government will have more to say at its Spring Budget on March 3 about support for businesses in the next financial year in terms of rate relief. At that point we might be able to say more between the Spring Budget and the final Budget on our approach.
“But we have again put in place this year a generous package of support for businesses with their rates – small businesses in particular. Equally we recognise the pressure that council tax puts on families, especially at a really difficult time. So this year we’ve been able to provide significant funds to support families with their council tax.” Ms Evans said that thanks to a new means of funding capital projects known as the Mutual Investment Model (M (MIM), more new schools could be built: “That’s been a really innovativ innovative approach, to respond to the relative paucity of o capital, and it allows u us to be much more ambitious amb and create new ways o of financing projects. 21st Century Sch Schools and work o on the A465 [the Heads of the Valleys road] – these
things just wouldn’t have been able to go ahead had it not been for our innovative MIM approach. We’re trying to be as innovative and as flexible as we can to deliver on so many competing priorities in difficult circumstances.”
MIM has been described as excessively expensive in comparison with the conventional funding model by Plaid Cymru MS Delyth Jewell, who has compared it to the much-criticised Private Finance Initiative (PFI) of the Blair years, which has saddled public bodies with high repayments over decades.
Ms Evans said: “They’re very different to traditional PFI schemes – for example, it has community benefits written into it. The Welsh Government takes a stake in it, so we benefit from any profits. And of course that money would get reinvested in public services and other priorities here in Wales.
“We have really strict conditions, so if the company doesn’t deliver on everything, then clearly it doesn’t get paid to the same extent. There’s a huge incentive on those companies to deliver, and we’re ensuring for example that when trees are planted, job opportunities and apprenticeships are available for local people as well. So it’s very different to traditional PFI.
“I think one of the things Plaid missed when they did their analysis was that we’ve a fixed cost now over 30 years, and the value of money today is going to be very different in 30 years time.”
A UK Government spokeswoman said: “We are currently providing unprecedented levels of funding to the Welsh Government. Since the March 2020 Budget an extra £5bn has been guaranteed to the devolved administration. And last month the Chancellor announced that the devolved administration in Wales will receive an additional £1.3bn from the UK Government for 2021-22, which can be spent on capital investment.”
The spokeswoman pointed out that in November’s Spending Review Chancellor Rishi Sunak announced a £1.3bn block grant increase for the Welsh Government via the Barnett formula for 2021-22. Any of this can be spent on capital. It is more than double the £600m provided for 2020-21 at the 2019 spending round
The spokeswoman added: “Additionally, the devolved administration in Wales can borrow up to £1bn for capital investment, with £150m available each year since 2018-19. It also has significant taxation powers.
“At the March 2020 Budget the Chancellor announced £360m in additional funding for the Welsh Government from the previous year. In the following months, in response to the Covid-19 pandemic, an extra £5bn was guaranteed to the devolved administration in Wales to ensure it had certainty to plan its response.
“Workers and businesses across Wales will continue to have full access to our unprecedented UK-wide financial support like furlough until the end of April 2021. So far, one in three jobs in Wales – more than 500,000 livelihoods – have been protected across Wales by the UK Government’s direct support for workers.”