The Welsh Government Budget 2013-2014: Four key choices

Last week, the Welsh Government’s budget for 2013-2014 was approved in a vote by Assembly Members.

The context is bleak. As with every other organisation, the Assembly is having to deal with sharply reduced funding, because of the bad mistakes which are being made by the Conservative/Lib Dem coalition in Westminster. Over four years, the Assembly’s budget will fall by well over a billion pounds. Next year alone there will be £300 million less than this year to spend on vital public services – health, education, transport and so on – here in Wales. The capital budget available to the Welsh Government will fall even more sharply than its revenue. At exactly the time when almost every economist and economic organisation is calling for investment in major projects to kick start the British economy, the money available to do that in Wales will have reduced to only just over a half of what was available when Labour left office at the last General Election. As the First Minister, Carwyn Jones, puts it, when all this is over, Wales will be left trying to deal with 2015’s problems with a 2005 budget.

Against that background, four key choices lie behind the budget now agreed for 2013/14.

The first is an overall strategic choice. At a time of reducing budgets, there has been a great deal of pressure on Welsh Ministers, from opposition parties, and others, to ‘target’ spending more, through greater use of means-testing. Successive Labour-led Assembly governments have preferred, where possible, to provide universal services – making prescriptions free for all, removing entrance changes for Welsh national museums and galleries, providing free bus travel for everyone aged over 60 and with disabilities, and so on. The budget meets that choice head on, and comes down in favour of defending universal services here in Wales. It does so because universal services are more efficient economically (they simply cost less money to reach more people) and represent the sort of social bargain which lies at the heart of a Labour approach. Services available to everyone are services in which everyone has a stake and which everyone has an interest in making as good as possible. They are the glue which helps to hold a complex, modern society together. But it is a choice, and one which is there to be debated.

The second is a strategic choice about revenue spending. Essentially, the one major decision which any Welsh Government has to face, in setting its budget, lies in the allocation it makes for health and local government services. Once those two items are fixed, 60% of the entire revenue budget has been spent. Everything else comes out of the remaining 40%.  In England, the coalition has made savage cuts in local government – leading to the sorts of decisions which are now reported every day to close libraries, abandon youth services, reduce help available to very frail elderly people and so on. In doing so they claim to have ‘protected’ spending on the NHS. The truth of the matter, however, is that a huge amount of what the health service does depends on the services which local councils provide, especially in social services and in housing. Here in Wales, where Labour’s ambition for the health is to shift services out of hospitals and closer to people’s homes, that is especially important. The choice is reflected in the budget. Local government in Wales faces a tough time, but its budgets have been protected well in excess of the position in England. That means that vital services in the community for people with mental health difficulties, for example, can go on being provided. It does mean that the NHS in Wales is having to cope with standstill budgets, at a time when demand is increasing, because of a growing elderly population. It’s a choice: and one to be debated.

The third is a strategic choice about capital spending. With capital budgets reduced so dramatically, the essential choice facing Welsh Government budget makers has been between trying to spread the jam every more thinly, so that as many small projects as possible go ahead, or concentrating resources on a smaller number of priorities of real strategic significance. Labour Ministers have opted for the second course of action. We now have a Wales Infrastructure Investment Plan which aims to ensure that future capital investment is used to deliver the maximum benefit to Wales. It is why, here in Cardiff, there will be £40 million capital spending to create a really up-to-the-minute new Further Education college for Cardiff and the Vale. The choice has been made because Ministers believe that concentrating spend in this way creates more jobs, provides a greater immediate boost to the economy and produces a really significant impact in shaping the future prosperity of Wales. But it undoubtedly means that there will be less money available for some of those smaller and sometimes urgent jobs which we would have wanted to fund. It’s another choice, and another legitimate debate.

Finally, there is an important tactical choice which lies behind the budget too. The Labour Government at the Assembly is a minority administration. When every vote is cast, Labour has 30 votes and all the other parties have a total of 30 too. If the Government’s budget is put to the vote and the result is a tie, the budget falls. That means that, every year, the budget can only pass if at least one other Party agrees either to support it, or to abstain. Last year, Labour was able to do a deal with the Liberal Democrats which has produced extra money in schools with high concentrations of pupils from less well-off backgrounds. Schools in Cardiff received an additional £4,072,950, and in Cardiff West this included, for example, an additional £94,500 for Glyn Derw High School, £58,950 for Lansdown Primary School and £238,500 for Fitzalan High School. This year, the Lib Dems came forward again with plans for more extra money for education, and a fund to support innovative treatments in health. This year, too, Plaid Cymru held budget discussions on the basis of extra funding for an expanded scheme of job opportunities for young people. Youth unemployment is a really serious issue, here in Cardiff West. We simply cannot afford, as a society, to have another Thatcher generation growing up, without hope of work or a future for themselves. One of the first things the Tories did after the last General Election, was to cancel Labour’s scheme for helping young people into work. Here in Wales, we’ve reinvented that scheme, using the Assembly’s own money. This year, the Jobs Growth Wales programme has already achieved its target of creating 4,000 new posts for young people aged between 18 and 24.  The deal on the table with Plaid Cymru has added an extra £20 million to be invested in supporting apprenticeships for next year, and a further £20 million in the budget for the year after, to extend the scheme again.  It’s the fourth and final choice which has shaped the budget put forward by Labour for 2013/14. The First Minister has made it clear that there was much in the Lib Dem proposals which Labour would have been willing to support. In the end, however, in the dire position which the coalition’s handling of the economy has created, jobs and future Welsh prosperity won out this time. It’s one more choice, and one more debate which lies behind the budget.

Every month, Cardiff West Labour Party holds a meeting to sort out practical business matters, to hear from its MP and Assembly Member and to debate a political issue which matters to our members. When we discussed the budget at our November meeting a lively discussion followed, exploring further the way in which Labour budget has been constructed for next year. All Cardiff West’s monthly meetings, held between 7 and 9 p.m. on the fourth Friday of the month in Transport House, are open to all Labour Party members in the constituency. At every meeting we aim to have at least one substantial discussion of a political issue which the views of Labour Party members can help to shape. If you haven’t been to one of the meetings before, you’d be very welcome indeed to join us in the New Year.