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Reserves raided to stop cutbacks Welsh government raids reserves
(about 2 hours later)
The Welsh Assembly Government is planning to raid its reserves to protect public services as inflation eats into its spending plans next year.The Welsh Assembly Government is planning to raid its reserves to protect public services as inflation eats into its spending plans next year.
It will take over £200m from reserves, cutting them to 1% of the total budget, as spending rises to £15.2bn.It will take over £200m from reserves, cutting them to 1% of the total budget, as spending rises to £15.2bn.
The money released will fund priorities including £60m over two years for the Foundation Phase education for three-to-seven-year-olds.The money released will fund priorities including £60m over two years for the Foundation Phase education for three-to-seven-year-olds.
But opposition parties said local government was being "clobbered".But opposition parties said local government was being "clobbered".
There will also be £63m extra next year to get NHS waiting times down.There will also be £63m extra next year to get NHS waiting times down.
Health research and public transport receive cash injections, with more money also invested in flood risk management and preparing for any possible outbreak of pandemic flu.Health research and public transport receive cash injections, with more money also invested in flood risk management and preparing for any possible outbreak of pandemic flu.
The current global economic uncertainty clearly underlines the vital need to remove inefficiencies in the public sector Andrew Davies, Finance MinisterThe current global economic uncertainty clearly underlines the vital need to remove inefficiencies in the public sector Andrew Davies, Finance Minister
Local government is set to receive 2.8% funding increase, but based on the current rate of inflation there is a danger this could amount to a substantial cut in real terms.Local government is set to receive 2.8% funding increase, but based on the current rate of inflation there is a danger this could amount to a substantial cut in real terms.
The Consumer Price Index (CPI) measure of the cost of living has put inflation at 4.7% since August, meaning local councils could in reality be facing a drop in funding of nearly 2%.The Consumer Price Index (CPI) measure of the cost of living has put inflation at 4.7% since August, meaning local councils could in reality be facing a drop in funding of nearly 2%.
Based on this inflation rate, all assembly government departments, apart from health and education, would face shrinking budgets in real terms.Based on this inflation rate, all assembly government departments, apart from health and education, would face shrinking budgets in real terms.
The health and social services cash rise is 5.3%, equating to 0.6% after inflation is taken into account.The health and social services cash rise is 5.3%, equating to 0.6% after inflation is taken into account.
The children, education, lifelong learning and skills budget rise is 5.5%, but this would only be an extra 0.8% on the same basis.The children, education, lifelong learning and skills budget rise is 5.5%, but this would only be an extra 0.8% on the same basis.
The Welsh assembly government is to raid £200m from reserves to protect vital public services
The economy and transport department would face a 2.3% cut, as its budget is rising 2.4% in cash terms.The economy and transport department would face a 2.3% cut, as its budget is rising 2.4% in cash terms.
The environment, sustainability and housing budget would face a 1.6% drop in its funding, as it is due to get a 3.1% cash increase.The environment, sustainability and housing budget would face a 1.6% drop in its funding, as it is due to get a 3.1% cash increase.
Rural affairs and heritage are due 3.4% and 3.8% respectively, amounting to effective cuts of 1.3% and 0.9%.Rural affairs and heritage are due 3.4% and 3.8% respectively, amounting to effective cuts of 1.3% and 0.9%.
There are some predictions that inflation will fall in the coming months, relieving some of the pressure on public services.There are some predictions that inflation will fall in the coming months, relieving some of the pressure on public services.
'Clobbered''Clobbered'
Nevertheless, Finance Minister Andrew Davies was under no illusions that pressure on public finances would remain intense.Nevertheless, Finance Minister Andrew Davies was under no illusions that pressure on public finances would remain intense.
"The current global economic uncertainty clearly underlines the vital need to remove inefficiencies in the public sector, and ensure that we get value for every Welsh pound we spend which focus on outcomes that directly benefit the people of Wales," he said."The current global economic uncertainty clearly underlines the vital need to remove inefficiencies in the public sector, and ensure that we get value for every Welsh pound we spend which focus on outcomes that directly benefit the people of Wales," he said.
Mr Davies said the assembly government was now spending more than £5,000 for every single person in Wales "double the amount we spent at the start of devolution in 1999".Mr Davies said the assembly government was now spending more than £5,000 for every single person in Wales "double the amount we spent at the start of devolution in 1999".
Welsh Conservative leader Nick Bourne said it "seems extraordinary" that during the economic crisis, the economy and transport budgets had "taken the biggest hit".Welsh Conservative leader Nick Bourne said it "seems extraordinary" that during the economic crisis, the economy and transport budgets had "taken the biggest hit".
"Local government too is being clobbered with budget increases well below the rate of inflation," he said."Local government too is being clobbered with budget increases well below the rate of inflation," he said.
Mr Bourne also expressed disappointment that more money had not been found for affordable housing.Mr Bourne also expressed disappointment that more money had not been found for affordable housing.
Liberal Democrat Jenny Randerson warned local government was getting a "raw deal".Liberal Democrat Jenny Randerson warned local government was getting a "raw deal".
"The danger is that local authorities will once again face the impossible choice between cutting services or raising council tax - as a direct result of this Labour-Plaid (assembly) government's neglect of local authorities," she said."The danger is that local authorities will once again face the impossible choice between cutting services or raising council tax - as a direct result of this Labour-Plaid (assembly) government's neglect of local authorities," she said.
The Welsh Local Government Association said councils were being underfunded in comparison to the NHS.The Welsh Local Government Association said councils were being underfunded in comparison to the NHS.
"It is totally bemusing that the assembly cabinet continues to treat local government as the 'Cinderella' of Welsh public services when all the evidence points to the fact that our services are central to the quality of life for our communities," said leader Cllr John Davies."It is totally bemusing that the assembly cabinet continues to treat local government as the 'Cinderella' of Welsh public services when all the evidence points to the fact that our services are central to the quality of life for our communities," said leader Cllr John Davies.
Iwan Guy, acting director of the head teachers' union, NAHT Cymru, welcomed the funding for play-based learning.Iwan Guy, acting director of the head teachers' union, NAHT Cymru, welcomed the funding for play-based learning.
"This additional funding can now secure a proper roll-out, benefiting children in Wales," he said."This additional funding can now secure a proper roll-out, benefiting children in Wales," he said.
  • An inquiry into how the assembly government is funded by the UK Treasury began work on Tuesday.
    		•  • An inquiry into how the assembly government is funded by the UK Treasury began work on Tuesday.
    The three member commission, led by Gerald Holtham, is investigating the way Wales is funded through the so-called Barnett formula.The three member commission, led by Gerald Holtham, is investigating the way Wales is funded through the so-called Barnett formula.
    It will also consider whether the assembly government should have tax varying and borrowing powers and is due to report back in two years time. It will also consider whether the assembly government should have tax varying and borrowing powers and is due to report back in two years time.