The draft budget

November 15, 2011 3:18 PM
By Peter Black
Originally published by Peter Black and South Wales West Liberal Democrats

Peter Black: As the leader of Plaid Cymru has pointed out, the first thing to note about this year's budget is how little has changed since last year's indicative figures. Last year's budget was, of course, set under the coalition Government with Plaid Cymru, yet the priorities remain the same, despite the fact that, as Ieuan pointed out, things have changed quite dramatically in the economy and in the context in which the Assembly and the Welsh Government are operating.

Last year, we highlighted the fact that the budget did not do enough for education or the economy. The same is true this year. Last year, we tabled amendments to the budget in an attempt to address these problems. Unfortunately, a year later, we are in the same position. The Government has made no progress in either of these areas, so we are unable to support the budget as it currently stands.

This year, we have tabled a joint amendment with the other opposition parties that sets out our collective concerns about the draft budget as it has been presented. As other speakers have pointed out, the draft budget, we believe, does not adequately address the financial pressures faced by the national health service, the current economic climate, funding for schools, or the financial pressures on capital projects. We could all repeat those points over and over. If you refer to the excellent Finance Committee report, which the Minister welcomed not so long ago, that also reflected some of those concerns, particularly those to do with the health service, the opaqueness of the budget with regard to scrutiny and the strategic approach taken to the expenditure of capital money, which we think is crucial if we are to address the issues facing us today.

The funding gap between English and Welsh pupils currently stands at £604. At the same time, education standards in Wales are slipping compared to those in England. Addressing these problems must be a priority for the Government. Additional funding can help to fund additional teaching staff, catch-up classes or extra material to help pupils achieve good results. The Welsh Liberal Democrats want to see a pupil premium introduced, which would have two aims. First, it would start to reverse the growing spending gap and, secondly, it would target funding directly at pupils from poorer backgrounds. My colleague Kirsty Williams, during questions to the First Minister, highlighted how pupils who are from poorer backgrounds achieve less in their education than those who come from better-off families. Only one in four children from poorer backgrounds are achieving those A* to C grades at GCSEs. Clearly, we need to invest and target that investment to start addressing that problem.

Sandy Mewies: Do you think that an investment means things like supporting them with their educational maintenance allowances and tuition fees or not? Are you going to come up with ways of cutting the budget to get the money that you say you can find? You are saying the words, you are saying them in the right order, but you are not telling us what you are going to do.

Peter Black: This is a draft budget that is in front of us today and, as you know, talks are going on with the Government and all three opposition parties as to how we can get from this draft budget, which we cannot agree on, to a final budget that we can get through this Assembly, before the end of this term. I am not in a position to put the detail of those negotiations in the public domain and, as experienced politicians, you will appreciate that negotiation in public is not a fruitful way forward. We will be negotiating with the Government in the correct way.

We support the retention of EMAs in Wales and, in fact, they are also available in England for poorer pupils. We also support the Government's current position on tuition fees, but we want more clarity on the legal position. We are hopeful that we will get it at some stage. Where we are at the moment is that we do not have a budget on which we can get a majority in this Chamber. You must agree that the objective is to get a majority in this Chamber behind a budget that is going to deliver on the health service, jobs and education. That is what I am setting out here, in my role as Welsh Liberal Democrats' spokesperson.

We are concerned about aspects of the business budget. Not only has the budget seen one of the largest cuts in real terms of all departments for the next three years, but there is not enough of a focus on creating the right kind of infrastructure for highly skilled jobs in the future. We would like to see an innovation fund established to create the right conditions for a knowledge economy to grow. We need to support the development of patents and spin-off companies, but instead we have the Government withdrawing support for the Prince of Wales innovation scholarships-a scheme that had been massively successful in pump priming innovative companies and creating jobs and wealth around the university sector. We would hope that, at some stage, the Government will be in a position to replace that particular scheme with one that will do something similar.

On the Jobs Growth Wales fund, we are adamant that it needs to be focused more on the private sector. By doing so, we will be helping our small and medium-sized enterprises, which are the lifeblood of our economy, to grow and, at the same time, supporting young people into employment. In effect, we would be doing two lots of work with the same sum of money. The Government should be geared towards private sector growth, so the Jobs Growth Wales fund must include support for jobs in the private sector. This will create the right set of skills and it will prove more sustainable in an era of diminishing budgets. The Government has, so far, hinted that some of this funding will be focused on the private sector, but we do not know how much. There is a danger that the Government will try to replicate the Future Jobs fund, which saw more than half of the trainees back on benefits a month after their placements had finished. We believe that that is not a good use of public money.

I have talked previously about the financial pressures on the NHS. The Government, as a number of speakers have pointed out, has taken the unusual step of providing emergency support for the health service at the start of the year, rather than relying on providing back-up support from reserves at the end of the year. The danger, which has been highlighted by the Health and Social Care Committee and the Finance Committee, is that local health boards might have been lulled into a false sense of security by relying on support from reserves at the end of the year, and might therefore still expect financial help at the end of the year. At the same time, they have been asked to find additional savings through efficiencies. When the efficiencies and additional funding are taken together, we are talking about a cut of £170 million a year.

3.15 p.m.

The Government needs to be honest about what its expectations are for local health board finances in light of the Wales Audit Office report. Are local health boards expected to make huge savings, or are they in need of more funding just to carry on as they are? The pressures on the health service are compounded by the inflation rate used in the budget. The Treasury's GDP deflator figure is based on a more general level of inflation, while inflation in health budgets tends to be a lot higher. As a result, the ability of LHBs to continue to provide services at their current level will be much harder than it appears in the budget figures. So, we are looking for reassurance from the Government that it will be flexible if the health boards come back near the end of the year and say that, despite this injection of money, they are not able to meet the Government's requirements with the funds that you have given to them. How will you respond to that? That is something that every political party in the Chamber is concerned about, and we need reassurance on that particular issue.

We are also concerned about the lack of clarity surrounding capital projects in the NHS. The Minister for Health and Social Services said in committee that projects previously announced before the election would be put on hold. However, she has said since that no projects are on hold and that the Government is simply waiting for various projects to be authorised. That is confusing, but there is additional confusion because the Minister now appears to be waiting for local health boards to make decisions on what business cases they are putting forward to the Government for approval, while the Government previously appeared to be directing which projects were being considered. Is this a case of the Government trying to pass responsibility back to the LHBs, to avoid being seen as responsible for turning projects down? Again, there needs to be clarity on this. We need to know where we stand on those important capital projects, which are vital if we are to reconfigure the health service to deliver a service that is fit for the twenty-first century.

There are a whole range of issues that I could go on to with this budget, but I only have a short time left. Therefore, I want to highlight the 8.1 per cent cut in real terms in the Department for Economy and Transport's budget. That is above the average cut of 6.1 per cent. The leader of Plaid Cymru raised particular concerns about that, which we share. It is reflected in the amendment that we have put down. If we are to have a budget for growth and jobs, and if we are to ensure that the health service is able to deliver what we require of it, the priorities of this budget need to be focused accordingly. We are not satisfied that what we have in front of us is the right budget for Wales at the moment. We are happy to continue talking to the Government, but the Government needs to be more flexible and needs to start listening to what we have to say before the debate on the final budget on 6 December.

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