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Inflation bites into Wales' £15bn Inflation bites into Wales' £15bn
(about 5 hours later)
Rising inflation is expected to have a major impact on ministers' plans to fund public services next year in Wales.Rising inflation is expected to have a major impact on ministers' plans to fund public services next year in Wales.
Although cash increases will be announced later, cuts in real terms, after inflation, are likely.Although cash increases will be announced later, cuts in real terms, after inflation, are likely.
The 2009/10 budget forecasts were based on 2.7% inflation, whereas prices are actually rising by about 4.7%.The 2009/10 budget forecasts were based on 2.7% inflation, whereas prices are actually rising by about 4.7%.
The Labour-Plaid assembly government may have to focus on fewer priorities and cut or delay other spending plans.The Labour-Plaid assembly government may have to focus on fewer priorities and cut or delay other spending plans.
Next year, is the second of a three-year budget plan first published in November 2007, and it was already expected to be tight.Next year, is the second of a three-year budget plan first published in November 2007, and it was already expected to be tight.
The lower inflation estimate, 2.7%, would have meant health and social services receiving a real terms increase of 0.4% next April.The lower inflation estimate, 2.7%, would have meant health and social services receiving a real terms increase of 0.4% next April.
Economy and transport's budget would have shrunk by 1.8% in real terms, if funding for regional European projects is taken out of the figures.Economy and transport's budget would have shrunk by 1.8% in real terms, if funding for regional European projects is taken out of the figures.
Based on 4.7% inflation, health and social services may now face an effective cut of 1.6%, education and heritage 1.7% and social justice and local government 1.9%.Based on 4.7% inflation, health and social services may now face an effective cut of 1.6%, education and heritage 1.7% and social justice and local government 1.9%.
Environment could experience a funding cut of 2.1% after inflation, rural affairs 2.8% and economy and transport around 3.8%.Environment could experience a funding cut of 2.1% after inflation, rural affairs 2.8% and economy and transport around 3.8%.
Higher energy, fuel, food and other general costs are also likely to limit the assembly government's room for manoeuvre as it attempts to shift funds from one budget to another to protect spending priorities.Higher energy, fuel, food and other general costs are also likely to limit the assembly government's room for manoeuvre as it attempts to shift funds from one budget to another to protect spending priorities.
Its attempts to encourage private sector investment across a range of schemes could also be curtailed by the financial downturn.Its attempts to encourage private sector investment across a range of schemes could also be curtailed by the financial downturn.
The details of the draft budget are expected to be outlined to assembly members in the Senedd this afternoon.The details of the draft budget are expected to be outlined to assembly members in the Senedd this afternoon.
Speaking beforehand, the Welsh Conservatives called for an era of "smart spending" to protect frontline public services.
They also called on the government to "ditch expensive gimmicks and freebies" such as universal free prescriptions and free school breakfasts.
They want resources to be focused on issues such as closing a funding gap in higher education, increasing resources for councils, and building more affordable housing.
So what should we look out for?So what should we look out for?
There are some obvious financial solutions such as scrapping free prescriptions or making students in Wales pay for their higher education just as they do in England.There are some obvious financial solutions such as scrapping free prescriptions or making students in Wales pay for their higher education just as they do in England.
Both of these would free-up tens of million of pounds for other priorities but would the political price for sacrificing such flagship policies be too high a price to pay?Both of these would free-up tens of million of pounds for other priorities but would the political price for sacrificing such flagship policies be too high a price to pay?
What other issues may be involved?What other issues may be involved?
Will there be significant extra cash to help eradicate child poverty, reduce fuel poverty and tackle the problems of the lack of affordable homes in Wales? If not, then where does that leave the government's own targets?Will there be significant extra cash to help eradicate child poverty, reduce fuel poverty and tackle the problems of the lack of affordable homes in Wales? If not, then where does that leave the government's own targets?
Will there be extra investment in the Foundation Phase for three-to-seven-year-olds, worth around £25m?Will there be extra investment in the Foundation Phase for three-to-seven-year-olds, worth around £25m?
Will there be specific extra assistance for local authorities in order to stave off either cuts in local services or council tax increases - or maybe both?Will there be specific extra assistance for local authorities in order to stave off either cuts in local services or council tax increases - or maybe both?
Will specific pledges such as the free laptops trial go ahead and will schemes such as bovine TB culling go ahead at the same pace and same cost?Will specific pledges such as the free laptops trial go ahead and will schemes such as bovine TB culling go ahead at the same pace and same cost?
How much money will be available for changes such as the NHS restructuring process or will these kinds of costs have to flow from efficiency savings made within the NHS, or will they be delayed until the financial situation improves?
    		How much money will be available for changes such as the NHS restructuring process or will these kinds of costs have to flow from efficiency savings made within the NHS, or will they be delayed until the financial situation improves?