WIREDGOV

The following statement is made by the Minister for Business and Budget, Jane Hutt.

Yesterday, the UK Government published its Spending Review, which sets out public spending plans for the next four years.  Cabinet met this morning to discuss the implications for Wales.

The plans published yesterday amount to the deepest cuts to public spending since World War II.

The Assembly Government has always said that it will play its role in reducing the UK budget deficit.  But the cuts announced today are too fast and too deep.

Taken with the £18bn cut to welfare benefits, they will endanger the fragile economic recovery and threaten devastating and long term consequences for the most vulnerable people in our society.  

The UK Government has said repeatedly that it wants to ensure that the Spending Review does not hit any part of the UK disproportionately.  But, in fact, these cuts will hit Wales particularly hard and the UK Government has done absolutely nothing to mitigate this.  

The Spending Review means that Wales will receive the biggest cuts in its budget in at least a generation, and bigger than the reduction in any of the other Devolved Administrations’ budgets.

We have a duty to promote fairness and equality in the way we allocate resources which will be best for the economy, as well as the social fabric of Wales. That is why we are committed to protecting investment in schools, skills and healthcare, and committed to maintaining universal entitlements – including the successful concessionary fares scheme, free prescriptions, free swimming and free breakfasts & milk for primary school children.

The UK Government’s cuts mean that half a million public sector jobs will go across the UK over the next four years, with more than 38,000 of these job losses in Wales.  They mean that the St Athan project – the biggest ever investment in Wales – will not now go ahead and no progress has been made with electrification of the London-Swansea rail line.  They mean that the independence of S4C has been compromised and its future funding uncertain.  They mean that the most vulnerable in Wales will bear the brunt of unprecedented cuts in welfare benefits – an additional £7bn in cuts on top of the £11bn announced in June – and increases in VAT from April next year.  

Overall our budget will be £860m lower in real terms than it is this year (£15,119m – £14,259m), it  will be £1.8bn lower in real terms by 2014-15.

Despite the crucial role capital investment plays in the economy and developing public services, the UK Government has cut the Welsh capital budget by 40% in real terms by 2014-15 – a significantly bigger cut than the overall reduction in capital spending across the UK.  This means that, by 2014-15, our capital budget will be lower in real terms than at any stage since the 1980s.  The budget is slashed in the first year by more than 25% in real terms.  This risks doing major damage to the economic recovery in Wales.

The UK Government had an opportunity partly to mitigate the impact of the Spending Review on Wales by taking action to address the persistent underfunding demonstrated by the independent Holtham Commission.  The UK Government have chosen not to act.  We look forward to the UK Government’s consideration, with the Assembly Government, of the compelling recommendations contained in the Final Report of the Holtham Commission, as we continue to be underfunded – to the tune of more than £1bn over the next four years.  

The scale and speed of the UK Government’s cuts make it all the more important that we continue to drive efficiency and innovation. For the past year we have been developing a pan-public sector response to the challenge of falling budgets.  This is essential if we are to avoid resorting to 'salami-slicing' cuts in services and cuts in front-line jobs, with those in greatest need often taking the biggest hit. That is unacceptable to the Assembly Government, which is committed to doing everything it can to narrow the equality gap, not widen it.  

Links

Welsh Assembly Government response to UK Government's Spending Review
Budget Timeline: What happens next?
Your Government Your Money