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Present

  • Rt. Hon. Mark Drakeford AM – First Minister
  • Rebecca Evans AM
  • Vaughan Gething AM – (from item 4)
  • Lesley Griffiths AM
  • Julie James AM
  • Kirsty Williams AM
  • Jeremy Miles AM
  • Jane Hutt AM
  • Shan Morgan – Permanent Secretary
  • Des Clifford – Director General Office of the First Minister
  • Carys Evans – Principal Private Secretary to the First Minister
  • Will Whiteley – Head of Cabinet Division
  • Toby Mason – Head of Strategic Communications
  • Jane Runeckles – Special Adviser
  • Alex Bevan – Special Adviser
  • Dan Butler – Special Adviser
  • Paul Griffiths – Special Adviser
  • Clare Jenkins – Special Adviser
  • Andrew Johnson, Special Adviser
  • Tom Woodward – Special Adviser
  • Christopher W Morgan – Cabinet Secretariat (minutes)
  • Damian Roche – Cabinet Secretariat
  • Jonathan Price – Chief Economist (item 4)
  • Andrew Jeffreys – Director Treasury (item 4)
  • Margaret Davies – Deputy Director Strategic Budgeting (item 4)
  • Alyson Francis – Deputy Director Communities Division (item 5)
  • Rae Cornish – Head of Gender Equality (item 5)
  • Gian Marco Currado – Director Environment and Marine (item 6)
  • Rhodri Asby – Deputy Director Waste and Resource Efficiency (item 6)

Apologies

Eluned Morgan AM
Ken Skates AM

Item 1: Minutes of the previous meeting

1.1 Cymeradwyodd y Cabinet gofnodion y 14 Hydref / Cabinet approved the minutes of 14 October.

Item 2: First Minister’s items

UK pre-election period

2.1 The First Minister informed Cabinet that the UK Parliament was expected to dissolve sometime that week and the UK government would then formally enter its pre-election period. The majority of Welsh Government work would be unaffected and it would be business as usual during the UK General Election campaign. Nevertheless, constraints would inevitably be placed on some ministerial activities.

Item 3: Government Plenary business

3.1 Cabinet discussed the Plenary grid and noted that voting on the Section 109 Order, scheduled for Wednesday, would take place immediately after the debate.

Item 4: Draft Budget 2020 to 2021

4.1 The First Minister invited the Welsh Government’s Chief Economist to provide an overview of the economic and fiscal prospects for Wales.

4.2 Since the referendum, the UK’s already slow growth had deteriorated further, lagging behind the rest of the EU and the G7 Nations. Underperformance on GDP was around 2%, which was worth around £400 per head of population in Wales in 2019. It was recognised that the UK Growth slowdown since the 2008 recession was unprecedented in modern history. It had been a very protracted and limited recovery, where the UK government policy of excessive austerity and Brexit had been contributing factors, but some of the international causes were not yet fully understood.

4.3 The slowdown in productivity growth globally was widespread, but the UK was an outlier, and the poor performance of the UK had been partially masked by strong growth in employment. It was recognised that over the medium to long term, productivity was the driver of real wages, the tax base and material living standards.

4.4 In terms of quality of life, the ONS indicators of UK and Welsh subjective wellbeing had identified improvements since the election in 3 key questions, which could be probably linked to the rise in employment and the decline in long term unemployment.

4.5 There had been no significant trend movement in Welsh GVA per head, relative to the UK, so over the medium term, the Welsh Economy had grown in line with the rest of the UK on a ‘per head’ basis. However, it was important to note that GVA per head exaggerated the gap in the level of performance between Wales and the rest of the UK, in part because it did not take into account the demographic structure, level of commuting or other factors affecting income levels.

4.6 The so called Welsh productivity gap was smaller than the gap in GVA per head but Welsh performance was still relatively weak. However, recent data confirmed particularly strong labour market performance in Wales over the period since devolution, where most growth had been in highly skilled occupational classes, but little other data was available on changes in job quality on a consistent basis over the long term.

4.7 In terms of spatial GDP and GVA growth across Wales, there was, as expected, relatively strong growth in Cardiff, but there was no clear urban – rural divide. GDP and GVA were a poor measures of living standards, but Wales performed better on measures of income, particularly for the median or ‘typical’ household.

4.8 Medium term fiscal prospects remained highly uncertain, it was the same over the longer term, but the position appeared constrained even under favourable assumptions.

4.9 There were a number of risks to the Welsh economy. UK public finances were currently underperforming and UK public sector balance sheet was weak. There was limited headroom for increased resource spending without tax increases. Brexit related uncertainty was having an impact on growth and would impact on future UK government fiscal policy choices.

4.10 There was a need to consider the impact of weak long term productivity growth, alongside the prospect of future recessions, while having to support the costs of an ageing population and financing increasing pension costs.

4.11 There was also the risk of structural weakness in certain tax receipts, such as fuel duty, and of consequent UK government policy choices that would impact on UK fiscal transfers to Wales. There were also major challenges with the increased costs of providing health and social care. Evidence from the OBR and the UK CCC indicated that the costs of managing climate change mitigation and adaptation, while large, appeared relatively manageable compared to other risks.

4.12 The Welsh tax base faced specific risks as the population aged 16-64 was projected to decrease. Other risks were noted, including those associated with public sector pay increases and the vulnerably of major employers relocating because of Brexit.

4.13 Cabinet thanked the Chief Economist for his presentation and noted that most of the material presented to ministers would be used to support the Budget narrative.

4.14 The Minister for Finance and Trefnydd introduced the paper, which asked Cabinet to agree the MEG-level allocations for 2020 to 2021, ahead of the publication of the draft Budget.

4.15 Cabinet approved the paper.

Item 5: Response to Phase 2 Gender Equality Review Report and Roadmap CAB(19-20)16

5.1 The Deputy Minister and Chief Whip introduced the paper, which asked Cabinet to agree the formal response to Phase 2 of Chwarae Teg’s Gender Equality Review.

5.2 The aim of the Review was to help deliver the ambition for gender equality in Wales.  The proposed actions, which cut across all portfolios, were long-term and would require a dramatic and sustained cultural change.

5.3 Accepting the Review’s recommendations would commit Welsh Ministers to making wide-ranging changes to the way the Welsh Government operated. It was important to develop a plan, which would build on phases of change to achieve the goal of advancing equality in Wales.

5.4 The minister intended to make a written statement on 26 November to set out the government’s response to the Gender Equality Review.

5.5 Cabinet welcomed the paper and congratulated the work of officials in making a great deal of progress in this policy area.

Item 6: Pathway to a circular economy

6.1 The Deputy Minister for Housing and Local Government introduced the paper, which asked Cabinet to approve the approach and areas for action that would be included in the proposed consultation on a circular economy strategy.

6.2 Cabinet approved the paper.

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