The Welsh Assembly Finance Minister, Andrew Davies has warned that things are going to get worse for public services with an estimated £500 million budget cut in the 2010-2011 financial year due to the economic downturn. This will have a massive knock on effect on health, education and local government spending:
Chancellor Alistair Darling announced in his pre Budget report (PBR) that to pay for the increase in UK government spending to combat the downturn, value for money savings of £5bn would have to be found in 2010-11.
If all of this was passed on to Wales, it would mean a cut of up to £300m.
Underspends in the NHS capital budget in England are expected to reduce the Welsh NHS budget by around £75m in that year.
And bringing forward capital spending this year and next will have to be paid for by a £150m reduction in the 2010-11 budget.
The implications for Welsh public spending are expected to be severe.
Welsh ministers have been told that, at a minimum, they will receive no increases to their budgets for 2010-11.
Mr Davies has told the cabinet that the PBR has “set a challenge” for the assembly government.
With reserves already forecast to be low, there will be significant pressure to maintain the current level of services, let along paying for promised improvements.
And from 2011 onwards, the new assembly government will have to adapt to growing cost pressures with extremely low, or even flat budget increases.
Responding to the threat of further cuts, Welsh Liberal Democrat Leader, Kirsty Williams said: “This government has not prepared Wales for times of massive cuts like this. The issue now is for the Labour-Plaid government to reprioritise money into important front line services rather than wasteful gimmicks.
“By wasting money on gimmicks in times of plenty, the outcome of this is that Wales will now face even longer waiting lists, less repairs to school buildings, council tax rises and all around cuts in public spending.
“Labour-Plaid government’s One Wales programme was unrealistic and undeliverable when both parties formed a coalition nearly two years ago, now during difficult economic times, they will have to concentrate on delivering core services for the people of Wales.
“It’s important now more than ever that the Assembly government uses the tools at its disposal to ease the burden on people who this recession and difficult financial times will be affecting.
“By giving a proper and decent settlement to local authorities, the people who are bearing the brunt of this recession will not have to pay for the blunders of the Welsh and Westminster governments in higher council tax.”
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