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Written Statement - Implications for Wales of the UK Government’s 2015 Spending Review

Jane Hutt AM, Minister for Finance and Government Business

The Chancellor of the Exchequer has announced the next stage in the UK Government’s unjust and relentless austerity programme.

Yesterday’s announcement that Whitehall Departments are being asked to find cuts of £20 billion in the forthcoming Spending Review comes on top of the additional £12 billion cuts the Chancellor announced earlier this month in his second budget statement of 2015.  Through the Barnett formula these reductions are likely to have significant consequences for us in Wales and impact on the public services we value so highly.    

With each successive announcement, we have seen the financial position deteriorate.  Announcements of small additional allocations have done little to offset the cuts.  Most recently we have seen a net cut of £46 million in 2015-16, announced with an hour’s notice.  In total, there is now £1.3 billion less in real terms to invest in public services in Wales than in 2010-11.  We will not know the exact longer term impact of the UK Government’s on-going austerity programme until the Spending Review on 25 November, but it is clear that we can expect the Welsh budget to reduce further in real terms.  The stark warning to Whitehall Departments demonstrates how quickly any additional allocations can be cancelled out by cuts elsewhere. 

The late timing of the Spending Review makes the challenge of managing the impact of further austerity even greater.  In times of austerity it is more important than ever that we have maximum certainty on likely future funding so that we can provide our partners with certainty on future spending plans at the earliest opportunity.  The timing of the 2015 Spending Review makes proper financial planning next to impossible for all our delivery partners, including the health service, local authorities and third sector organisations. 

In his Summer Budget, the Chancellor confirmed his commitment to the ‘funding floor’ to deliver fair funding for Wales. Given the severity of the financial outlook, we will expect immediate action to ensure this commitment is reflected in the Spending Review.

This statement is being issued during recess in order to keep members informed.  Should members wish me to make a further statement or to answer questions on this when the Assembly returns I would be happy to do so.