Opportunities lost as the wrong priorities prevail
Welsh Finance Minister Rebecca Evans reflects on the UK Government’s Spending Review 2021
AS THE dust settles on the UK Government’s 2021 Spending Review it’s important to look beyond the headlines to reflect on some of its deeper themes. To look at what it means not only for Wales, but for the shared challenges we face across the UK over the coming years.
The first and most obvious point to make is that the hopes for this Spending Review were high. With leaders recently gathered in Glasgow for the Cop26 summit, every government across the UK is giving consideration to the urgent steps we all need to take to reduce emissions and protect the planet. Those same governments are also giving consideration to the way in which we can rebuild our economies and communities after Covid, address the costof-living crisis with spiralling inflation and energy prices, and respond to the intense pressure on public services.
I agree with the Chancellor on one thing – which is that this year’s Spending Review comes at a pivotal time for the UK and for the planet. But where I depart from him is that I think the measures laid out in it simply don’t meet the scale of the challenge we face. Where the Spending Review could have provided a solid platform for all governments across the UK to move faster and work smarter, it failed to be the gamechanger we all needed and all wanted.
Indeed, in some ways the challenges have become more difficult as a result of the Spending Review.
In part that’s down to a simple lack of investment firepower the Spending Review could have made available. In this, the Chancellor seriously underestimates the headwinds we face. As we recover from a pandemic, and as public services everywhere have to cope with pressure built up over nearly two years, it seems odd that traditional spending rules are to be reapplied as if we could all go about our business like it was February 2020.
As those pressures increase the Welsh Government now faces a real squeeze on its budgets. Our revenue funding for day-to-day items is going to be lower in cash terms in each year of the next three years than in the current year. By 2024-25 it will have increased by less than half a per cent in real terms.
But perhaps more worrying is that our funding for investment in capital infrastructure – to deliver initiatives that can really power our post-Covid recovery and our net-zero ambitions – will fall in cash terms in each year of the Spending Review period. It will be 11 per cent lower in 2024-25 in real terms than in the current year.
This comes on top of the fact the UK Government has historically underfunded major areas that it is directly responsible for in Wales, like rail infrastructure and research and development. There was nothing in the Budget to suggest that will change going forward.
It means that at a time when we need transformational investment – from industry to infrastructure; town centres to transport – we now face another period of UK Government game-playing and penny-pinching.
Just as we should be pulling together on some of the biggest challenges of our time, the UK Government seems more interested in trampling over the devolution settlement than in getting to net zero. The practical effect is that its aggressive unionism is muddying the funding waters so it’s now becoming harder and harder for joined-up action.
Skills funding is an instructive example. In the last Senedd term the Welsh Government had used part of our £375m of annual EU structural funding to support a high-quality network of training and employability schemes across Wales – that every day supported individuals, businesses and our economy to grow and prosper.
Instead of the UK Government replacing that funding in full as we leave the EU, so we can spend our time thinking about the most effective skills support for the post-Covid economy, they’ve taken that funding away. To make matters worse, the reduced level of funding that now does come to Wales is administered through a splintered network of other partners, with no national coherence or proper join-up.
Indeed, of the funding that did come through the Levelling-Up Funds in the Spending Review, over half has been allocated to Conservative constituencies. This means decisions are clearly now taken on political grounds while poverty reduction and fairness take a back seat.
Whatever your politics, nobody can condone this kind of politicised distribution of funding that only leaves the least well-off parts of Wales worse off.
So as we face the biggest challenges we’ve ever faced – supporting the planet and supporting the economy after Covid – investment support has never been so fractured and disjointed. Despite devolution, decisions are now being made many miles from Wales in Whitehall with little knowledge of what would make a difference to communities.
While the Chancellor claimed this was the largest settlement for the Welsh Government since devolution, in reality it equates to a modest increase in revenue funding only. The vital priorities we highlighted – including investment in coal tips – have been overlooked as the UK Government turns its back on its responsibilities and on Welsh communities. And perhaps the biggest legacy of this year’s Spending Review are the missed opportunities – the failure to provide a real platform for achieving net zero and the lack of investment to fuel a green recovery.
There will be difficult choices for the Welsh Government to make ahead of our own budget on December 20. But despite the difficulties, we are determined to continue to work with our social partners – employers, trade unions and in local government – to build the greener, fairer and more prosperous Wales we all want to see. Avoidably, that task has now become a lot harder than it needed to be.
I agree with the Chancellor on one thing – which is that this year’s Spending Review comes at a pivotal time for the UK and for the planet WELSH FINANCE MINISTER REBECCA EVANS