The Welsh government has issued a statement that they may need to revise their budget if Jeremy Hunt implements tax and spending adjustments in his March budget that impact Wales, even after the budget is already approved by the assembly.
Rebecca Evans, the finance minister of Cardiff, expressed worry that her proposed budget for 2023 may lose its relevance if Hunt implements drastic changes in his budget on the next day. The draft budget, open for discussion, is set to be finalized on 5 March.
Evans mentioned that Hunt caused challenges for the Welsh financial department since the chancellor did not disclose necessary information prior to the spring budget, hindering proper budget preparation and oversight.
She said: “We were only told on 13 February what the allocation for Wales would be, leading us to update the draft budget. Now we could be forced to make further changes.”
The Welsh government, run by the Labour party, has requested that Hunt address a financial shortfall of £1.2 billion caused by significant inflation in the past 24 months.
Evans stated that Wales has also faced significant challenges due to strict limitations on borrowing and regulations regarding the use of its reserves. She proposed that these restrictions be eased in order to address the aftermath of the Covid-19 crisis and the increasing expenses resulting from the conflict in Ukraine, similar to what has been done in Scotland.
According to Evans, in an interview with the Guardian, the UK government should refrain from implementing tax reductions and instead allocate surplus funds towards improving public services in all four nations.
According to her, any available financial flexibility should be allocated to improving public services.
Evans stated that our health budget will receive an additional 4% next year. However, this increase will have to be taken from other areas, and it will still result in the Welsh health service being underfunded in comparison to England.
According to her, Hunt must increase the Welsh financial settlement or else Wales will face more severe cuts in public services compared to those in England.
The latest budget for Wales indicates that in the upcoming fiscal year, Cardiff will allocate over £26.6 billion. However, there will be reductions in day-to-day expenses for public services worth £20.9 billion, with the exception of health and certain net zero initiatives. This will result in a deficit of £220 million in other areas of departmental spending.
Government officials in London have reduced the allocated funds for public investment, resulting in a projected 3.2% decrease to £2.9bn. This decrease goes against the hopes of ministers who had planned to increase the amount in order to construct necessary infrastructure.
According to Evans, factoring in inflation results in a total reduction of 9%, which hinders our ability to invest in infrastructure and develop the necessary skills to nurture economic growth.
Funding for childcare is one of the sectors that will bear the majority of the cuts in the 2025 budget. However, Evans mentioned that increased demand may compel her to partially reverse the decrease in expenditures.
The plan to increase the funding for police community officers will be reduced. Although police budgets in Wales are not under their control, they have been sponsoring their own community police program in recent times.
Evans is frustrated with the UK government’s lack of consideration and is advocating for an increase in reserves. The reserves were initially set at £350m in 2018 but have decreased by 23% in value due to inflation.
“The maximum borrowing amount per year is £158m, with a total cap of £1bn. According to Evans, this amount has markedly depreciated in the last three years.”
The borrowing and reserve limits have been removed for Scotland, and Northern Ireland has received a generous settlement after their parliament was re-opened. It is now Wales’s turn to receive benefits, according to the speaker.
A representative from the UK government stated that Wales has received a 20% higher amount of funding per person compared to the amount allocated by Westminster in other regions of the UK.
“The UK government is providing the Welsh government with a historic amount of £18 billion annually,” stated the spokesperson. “The agreed fiscal framework ensures equitable funding and also grants significant flexibility and resources for the Welsh government to effectively manage their budget.”
The representative refuted accusations that there was a lack of communication with Welsh officials. They stated, “The Treasury maintains close collaboration with the Welsh government to ensure they are informed leading up to any financial estimates and events that affect their budget decisions.”
Source: theguardian.com
