Jane Hutt, Minister for Finance and Leader of the House
Today, the UK Government set out for the first time its detailed public spending plans for 2015-16. This Written Statement sets out the main implications for Wales.
We knew that the UK Government was looking to make over £11 billion of further cuts in 2015-16. What we didn’t know until today, however, is exactly where those cuts would fall and the full extent of the challenge we are facing.
Today’s announcement has confirmed that the total Welsh Budget in 2015-16 will be £15.1 billion. Overall, this means that we are taking a 2% cut in real terms between 2014-15 and 2015-16 and our budget in 2015-16 will be £280m lower in real terms than our budget in 2014-15. These cuts come on top of those we have faced over the current Spending Review period. So by 2015-16, our Budget will be lower by £1,680m in real terms than it was in 2010-11. Further detail on the budget settlement is set out in the technical annex.
We have repeatedly called on the UK Government to boost the funds available for capital investment. At the recent Finance Ministers’ Quadrilateral we were clear that our priority continues to be to stimulate growth and to protect jobs. In a joint letter with the Scottish and Northern Irish Finance Ministers last week, we called on the Chief Secretary for a funding boost for infrastructure projects to stimulate economic growth and to protect jobs. Today’s announcement is a disappointing capital settlement which does not increase the funding available and will do little to boost the economy.
Our capital budget in 2015-16 will be a third lower in real terms than in 2009-10. And almost £180m of our capital, which is an unprecedented 12% of the total, is subject to restrictions and can only be used for loans and equity investments. This means that there is a cut in the funding available for real capital investment from 2014-15 to 2015-16 of more than 5% in real terms.
There is some welcome news in the confirmation that the funding S4C receives from the Department for Culture, Media and Sport (DCMS) will continue. S4C is continuing to deal with the impact of significant reductions to its budget by the UK Government as well as changes to its governance arrangements. It is welcome therefore that there is no further reduction in the budget it receives from DCMS in order for the channel to play a crucial role in support of the Welsh language as well as the creative industries in Wales.
I am also pleased to hear the Chancellor commit to giving a response to Silk in the near future and that he recognised our impressive plans for upgrading the M4. I will be working closely with the Chief Secretary in the coming weeks as we bring the talks on Silk and the M4 to a successful conclusion.
In line with the joint statement we made with the UK Government last October on funding reform more widely, we have completed a joint review of the pattern of convergence in Welsh relative funding in advance of today’s announcement. I will publish further details about this later in the week.
We have been open about the very stark reality of the difficult financial decisions that lay ahead as a result of the financial challenges we are facing. These decisions are not made any easier after today.
However, today’s announcement is just part of the story. Now that we know our settlement, our challenge is to manage how we can deliver our priorities within this settlement and reflect these into our spending plans which we will publish in the Autumn.
As a responsible Government, we are committed to doing everything within our power to mange the impact of the budget cuts on people and communities the length and breadth of Wales. We are resolute in our commitment to stand up for the interest of Wales.
Technical Annex attached.