Minister for Finance and Public Service Delivery Speech on Draft budget

I am grateful for this opportunity to make an oral statement on the Assembly Government's 2007 Draft Budget proposals. 

The budget marks a crucial stage in the delivery of the One Wales programme.  The proposals it contains will provide the necessary investment to make public services in Wales among the best. 

In total, we will be investing an additional £3.64bn over the next three years.  This takes our spending to more than £16bn by 2010-11.  That is £2bn more than this year and more than double the £7bn budget when the Assembly was created.

Among the key elements of the budget are:

• more than £1.2bn extra investment in health services over the next three years;


• more than £100m investment in tackling the causes and consequences of climate change;


• investment in learning for life, including an additional £15m next year to roll out the foundation phase for 3 to 7 year olds,  with extra funding in future years, and an extra £25m to increase the number of apprenticeships


• expanding the provision of affordable childcare, investing £120m over the next three years;


• a range of other measures to promote fairness and social justice, including extra help for pensioners with paying Council Tax and a new extra Children's Bond for all children entering school in Wales;


• an additional £155m to improve regional and national transport; and


• a more strategic approach to capital investment, backed by more than £400m in additional funding over the next three years

I should make clear at the outset that I do not intend to use this opportunity to initiate or engage in a full-blown debate on the draft budget.  And I do not intend to cover ground that will be covered by Ministerial colleagues who will be setting out further details of spending plans in their own areas in the coming days. 

The proper time to debate the draft budget will be once Assembly Members, subject Committees and, the Finance Committee have had time to understand, scrutinise and question the Government's proposals.  This process will take place over the next few weeks and will culminate in a full debate on the draft budget in December.

But I do want to take the opportunity today to add to the Written Statement I issued yesterday and give further detail in a number of areas.

First, I want to make clear that this Government is determined that it will be improved value for money, and not cuts, that will release the resources we need to sustain the pace of improvement in public services and allow investment in new priorities. 

Improved value for money and efficiency in service delivery comes through smarter working and making better use of our assets, not through cutting services.  Significant benefits are, for example, being delivered through:

• smarter procurement, where the new Public Sector Broadband service is an excellent example of different parts of the public sector working together to secure a better service for a lower price; and


• shared services, where the North Wales NHS shared service project has delivered real savings in back-office functions for reinvestment in frontline services.

But we also need to keep our activity under constant review and challenge and be prepared to shift resources where it is clear that money would be better spent elsewhere.  In the face of slower growth in spending, it is inevitable that we must make some difficult choices about how we spend our funds.

We have been prepared to take those difficult decisions and prioritise our spending in a way that will deliver most for the people of Wales. 

Some budget lines will reduce as we move forward: this is an inevitable part of the financial cycle as new budgets are established and others are brought to an end.  And it reflects changing priorities of Government over time, as well as the needs of the dynamic process of improving public service delivery.

It is unrealistic to expect every budget to continue to grow indefinitely.  That is unaffordable and would lead to exceptionally poor value for the Welsh pound.  It is easy to say 'why have you not spent more on this area'.  The difficult question, to which I hear no answers, is 'where would those funds come from'. 

I also want to say a bit more about funding for local government.  I want to make three points.

First, growth in total funding for local government is not out of line with overall growth in the Assembly Government's budget.  The draft settlement for local government, to be published on 14 November, will confirm final figures for planned growth in Assembly funding for local government.  But what I can say at this point is that total Assembly funding for local government, and we should not consider the Revenue Support Grant in isolation, will grow by more than 3.2% in 2008-09, not 2.2% as quoted by the WLGA, very close to our overall growth in spending of 3.4%. 

This funding for local government for example includes over £90m in extra funding to deal with waste and more than £45m to support the implementation of the Foundation phase.

Second, it is certainly not true to say that local government has been neglected since the Assembly was formed.  Between 1999 and 2007, central government support for local authorities, most of which comes from the Assembly Government, rose by an average of 8.7% per year. 

In the same period, the overall Assembly Government budget rose by 8.4% per year.  In total, central government support now accounts for more than 70% of local government spending in Wales, up from 67% in 1999. 

Third, although Council Tax yield in Wales is around 20% lower than in England, and yield from Business Rates is more than a third lower, local authorities in Wales spend more per head than do local authorities in England. 

This is only possible because Assembly Government support for local government in Wales is much higher than central government support for local government in England, to the tune of more than £500m.

Finally, I want to deal with claims that this Government is neglecting core  objectives, like tackling child poverty, in order to fund specific policy initiatives.   I reject this claim entirely.

It is well known that being raised in poverty can severely harm a child's life chances.  That is why tackling child poverty is a top priority for this Government.

Since devolution, Wales has made real progress.  The percentage of children in Wales living in poverty has fallen from 35% in 1999 to 28% in the most recent period.  Over the same period, the rate for Great Britain as a whole fell from 33% to 29%.

But One Wales commits us to going much further. Our aim is to halve child poverty by 2010 and eradicate it by 2020. This ambitious goal is backed up by specific commitments like an extra children's bond from 2009 and credit unions available across Wales, with access for pupils in every secondary school helping to ensure opportunities for saving are available to all.

Our work needs to draw on expert advice and be grounded in the latest evidence. We will therefore review our anti-poverty programmes and establish an expert group to advise on how best to meet our goal of eradicating child poverty in Wales.

This is a complex problem that requires Government action across a wide range of areas and Government Departments. Improving skills, helping people return to work and extra support for childcare are priorities for our co-ordinated approach. In order to make sure that all public services pull together, we will place a duty on public agencies in Wales to demonstrate a commitment to ending child poverty.

Focussing on spending on specific commitments misses the point.  One Wales is more than a list of particular initiatives - it sets out a comprehensive programme to continue the transformation of Wales into a self-confident, prosperous, healthy nation and society which fair to all. 

This programme is built on core objectives like improving the health of the people of Wales, tackling poverty, meeting housing need, improving public services, increasing employment and enhancing skills, and regenerating disadvantaged communities.

All Assembly Government spending over the next three years will be geared towards delivering One Wales - and One Wales is geared towards making Wales a better place in which to work and live for all of the people of Wales, particularly the most vulnerable and disadvantaged.

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