Response by the Cabinet Secretary for Finance and Welsh Language to recommendations in
Finance Committee’s report on the Draft
Budget 2025-26
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Welsh Government
Response
to Finance Committee’s Scrutiny of the Welsh
Government’s Draft Budget 2025-26
Cabinet Secretary for Finance
and Welsh Language
The Welsh Government published its Draft Budget
2025-26 on 10 December 2024.
On 3 February 2025, the Finance
Committee published its report on the
Draft Budget 2025-26, making 39 recommendations. 37 of these were for the Welsh Government and 2 were for the Office for Budget
Responsibility.
This document
sets out the Welsh Government’s response to those recommendations.
Introduction
I
thank the members of the Senedd Finance Committee for their work on
scrutinising the Welsh Government’s Draft Budget. I was pleased
to attend meetings
of the Committee on 12 December 2024 and 23 January 2025 to discuss the
Draft Budget and to support the
Finance Committee’s work
in this area.
The report
of the Committee, and those
of other Senedd
Committees, have informed the development of the Final Budget
2025-26 which was published on 20 February
2025. I am grateful
for the contribution that has been made to ensuring that the Final Budget
delivers for the people of Wales, which enables us to make the best possible use of the funding available.
I have set out my response to the Report’s individual recommendations below, building on the evidence
I provided during
these meetings. Furthermore, I have asked my
officials to continue their engagement with the Clerk to the Finance Committee
to ensure the Committee is updated on progress related
to these recommendations.
1. Budget Process
Recommendation 1. The Committee
recommends that if, as expected, the timetable for scrutinising the Draft
Budget is curtailed for the 2026-27 budget round:
·
the Cabinet Secretary and his officials continue
to attend a pre-budget scrutiny session with the Finance Committee; and
·
the Cabinet Secretary works with the Finance Committee to identify ways in which scrutiny
opportunities can be enhanced in the Senedd.
Response: Accept
The
work of the Senedd in scrutinising the Welsh Government’s spending
plans is an essential part of developing the Draft and Final Budgets.
I am therefore keen to ensure
that we make the best use of the time available for the 2026-27
budget round. I am
happy to continue to attend
a pre-budget scrutiny
session with my officials as part of this.
I welcome the work the Finance Committee
is doing to enhance the scrutiny
process and thank the Committee for its offer to involve the Welsh Government in these
plans. I have asked my officials
to work with the Clerk to the Committee to progress this.
Recommendation 2. The Committee recommends that the Cabinet Secretary:
·
outlines his views on proposed changes to the Budget Process Protocol before the beginning of the next financial year;
and
·
works with Senedd officials to develop key
principles as a basis for a fundamental redrawing of the protocol
ahead of the next budget round.
Response: Accept in principle
I am grateful to the Committee for its proposed changes to the Budget Process Protocol. Whilst I support a review and I am open to changing our ways of working, it remains my view
that it is not the right point
in the Senedd cycle to agree a fundamental redrawing of the Protocol. It will be for future elected members,
especially in light of the planned
reforms to the Senedd and the increase
in the number of Senedd
Members in 2026 to agree their preferred outcomes
for the future. These changes
may well result
in alterations to the scrutiny process,
including in the number of Senedd committees, their responsibilities, and how many members will sit on them.
This forthcoming change does not, however,
prevent us from making
improvements now. We have already been able to work
together to facilitate the budget process without changes to the Protocol or to Standing
Orders and I am keen to continue
this approach, making only
essential changes to the
Protocol in advance to the next
Senedd. I propose that officials work together fully to consider the proposed changes in this light.
Recommendation 3. The
Committee recommends that the Cabinet Secretary provides dates and details of:
·
the UK Government Spending Review and the Welsh Government’s involvement in that process; and
·
the Welsh Government’s own
Spending Review, including when the outcomes of the review will be known and
how the Senedd can inform that process.
Response: Accept
The
Chancellor of the Exchequer announced that the UK Government Spending Review will conclude
on 11 June.
I continue
to engage with the UK Government through the usual channels. Most recently, I met the Chief Secretary to the Treasury
with the other Devolved Government Finance Ministers at the Finance: Interministerial Standing Committee on 27 February, in addition to a bilateral meeting to discuss
Wales-specific issues.
The Prif Weinidog met the Chancellor of the Exchequer on 12 February, during which they touched on aspects of the UK Spending Review.
Where appropriate, the Prif
Weinidog and I correspond with relevant UK Ministers on specific Spending
Review- related matters.
I would expect that the initial
Welsh Spending Review
work begin to impact in the 2026- 27
Budget. It is important to recognise however,
that the Welsh Spending Review
takes a longer-term, strategic approach rather
than being governed
by annual budget cycles. I am committed to engaging with the Finance Committee on this work. A further response on the Welsh Spending Review
is included under
recommendation 9.
2. Economic Context
Recommendation 4. The Committee
recommends that the Cabinet Secretary
explains how capital funding has changed between the 2024-25 and 2025-26 financial years, broken down by portfolio and type
of investment, and that
such an approach is adopted in future Budget rounds.
Response: Accept
Capital allocations are outlined throughout the annual budget documentation, broken down by portfolio or Main Expenditure Group (MEG), Budget Expenditure Line (BEL) and Investment Area. They are categorised into various types
of investment, such as the split
between the General Capital and the Financial
Transactions Capital (FTC).
In the 2025-26 Draft Budget, FTC has been further broken down into schemes, details
of which can be found in Tab 8 of the Tables Supporting Spending Plans workbook.
Tables mapping MEG allocations, further broken down to Budget
Expenditure Line (BEL) level,
and to Sectors and Investment Areas are to be found in the same workbook
at Tab 9. A table mapping capital
budget allocations to Investment Areas and Sectors has been provided since the Final Budget 2022-23
enabling comparison over time. Year on year changes to capital investment by portfolio are shown in Tab 11a. Further information was also provided to the Finance Committee to enable comparison with the 2023-24 outturn.
More detailed
information on capital
investments is included
in the Infrastructure Finance Plan 2025-26.
Recommendation 5. The
Committee recommends that the Cabinet Secretary includes a comparison of outturn figures
from the previous
financial years against
the proposed figures for the forthcoming year, as part of
the Draft Budget documentation from the next budget
round onwards.
Response: Accept
I am content to provide a comparison of outturn figures
from the previous
financial years against the proposed figures for the forthcoming year alongside the Draft Budget.
Following the discussion
at the Finance Committee on 12 December, I wrote providing a comparison
of the outturn figures from 2023-24 against the proposed figures for 2025- 26
and the revised baseline for 2024-25.
I will ensure that this information is provided in future years. Provisional outturn may be provided where publication of the Draft Budget
is before the previous year’s accounts have been audited.
Recommendation 6. The
Committee recommends that the Cabinet Secretary publishes the latest block grant transparency data before the Final Budget debate and at regular
intervals thereafter.
Recommendation 7. The Committee
recommends that the Cabinet Secretary shares information provided by the
Treasury to the Welsh Government showing Barnett consequentials with the Senedd
soon after each UK fiscal
event.
Response: Accept in principle
A
summary of Barnett formula consequentials for 2025-26 arising from the Autumn
2024 UK Budget is provided
below. The total Barnett formula
consequentials for 2025-26 are different from the year-on-year changes
in the Welsh Government’s resource and general capital
settlements of £697m and £235m,
as reported in the Draft Budget
narrative. This is because the latter takes account of baseline and non-Barnett funding changes between years.
2025-26 Barnett
formula consequentials from October 2024 UK Budget
(£m)
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Fiscal Resource
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General Capital
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Financial Transactions Capital
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Health and Social
Care
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512
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54
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0
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Education
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218
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31
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6
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DLUHC
Local Government
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137
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0
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0
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DLUHC Levelling
Up, Housing and Communities
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-32
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85
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-7
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Energy Security and Net Zero
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3
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41
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-4
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HM Revenue and Customs
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2
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1
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0
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Home Office
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0
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0
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0
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Science, Innovation and Technology
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0
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8
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0
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Transport
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-2
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35
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0
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Culture, Media and Sport
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-5
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2
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0
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Environment, Food and Rural
Affairs
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-12
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-1
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0
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Business Rates
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-83
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0
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0
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TOTALS
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737
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258
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-5
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Where possible, the Welsh Government will provide this information to the Finance Committee following future major
UK Government fiscal events.
The
block grant transparency document is an HMT publication. It is for the UK Government to publish updates,
with the next one expected
later this year. The Welsh Government does not hold all the detail in the format
used for that publication and would not wish to replicate the work behind
it. This will be kept under review
if there are continuing delays to the HMT
publication. In the meantime, the Draft Budget
documents contain considerable detail on the financing of the Welsh Government’s
Budget - including the block grant, tax revenues,
and block grant adjustments.
Recommendation 8. The Committee
recommends that the Cabinet Secretary
works with the UK Government to ensure that issues with the Fiscal
Framework regarding uprating borrowing and limits on the Wales Reserve to original real terms value;
and removing the annual drawdown limit from the Wales Reserve are resolved before the end of the 2025-26 financial year and that an update is provided to
the Committee on progress by the summer recess.
Response: Accept
The
Prif Weinidog and I have had collaborative discussions with UK Ministers,
including the Chancellor of the Exchequer, where we continue to press for further fiscal flexibilities.
We have requested agreement to update the Welsh
Government borrowing and reserve limits from 2018-19
to 2024-25 prices,
in line with the latest
Budget GDP deflators, and to index these
to inflation thereafter. We have also asked for the Welsh Government annual reserve
draw-down limit to be abolished.
I raised
this issue with the Chief Secretary to the Treasury
at our latest bilateral meeting on 27 February and will continue
to raise this in future
bilateral meetings if necessary. In addition to these changes, there is also a strong case for bigger increases to the annual
and aggregate limits on access to capital
borrowing, so they are at least in line with inflation, with the aim of providing
sufficient flexibility to allow
prudent budgetary management from one financial year to the next, in order to maximise the funding
available to the Welsh Government.
I raised
the wider issue of late UK Government allocations and end of year budget
flexibilities alongside the Finance Ministers from Scotland and Northern Ireland
at the Finance: Interministerial Standing Committee (F:ISC)
in Cardiff on 27 February. This will be further
considered as a substantive item at future meetings of the F:ISC.
The UK Government have responsibility for making decisions
in this area but I will keep the Finance Committee informed of
progress.
Recommendation 9. The Committee recommends that the Welsh Government provides details and timescales relating
to the Welsh Spending Review,
including details of documents and
outputs, and commits to lay such documents before the Senedd ahead of the Draft
Budget 2026-27 to allow time for
Senedd committees to
meaningfully inform and influence its outcomes.
Response: Accept in principle
It
is important to recognise that the Welsh
Spending Review is not intended
to be a single episode, but rather a shift towards
embedding a continuous and strategic approach to longer-term fiscal
planning which will provide the best defence
possible against the challenging fiscal outlook for public finances.
There is no intention therefore, to conclude the work on a particular date or publish
a specific report or set of
documents. The outcomes of the Welsh Spending Review work are intended to feed into
future
government policy and budgetary decisions, which will be published and scrutinised
in their own right.
This longer term work will not replace the annual Budget process and the Senedd and
its Committees will continue to inform and scrutinise this in the usual way.
The longer-term impacts of the work will extend beyond
this Senedd term.
I am committed to engaging with the Finance Committee on Welsh Spending Review work and I have asked my officials to discuss with the Committee
Clerk on how best to do this.
Recommendation 10. The
Committee recommends that the Cabinet Secretary provides an update, as a matter of urgency and before the Final Budget debate, on funding
the Welsh Government will receive from the Treasury to mitigate the impact of the increase
in employer National Insurance Contributions on public services.
Response: Accept in principle
National
Insurance is a reserved matter.
The UK Government has
confirmed it will provide funding to public sector employers to cover the increased
costs of employer National Insurance Contributions using the official
ONS definition of a public sector
employer. Our initial estimate of the additional National Insurance costs to
devolved public sector employers in Wales is £253m.
Whilst
the UK Government has confirmed that the Welsh Government will receive additional
funding as a result of this support, we have not yet had confirmation of how much additional funding Wales will receive. I will update the Senedd
as soon as I can after receiving this confirmation.
Recommendation 11. The Committee recommends that the Cabinet Secretary undertakes an assessment of the impact
that increasing employer
National Insurance
Contributions will have on third sector organisations in Wales, and for such information
to be made publicly available ahead of the Final Budget
debate.
Response: As I outlined
when I attended the Finance
Committee, my responsibilities as Finance Minister are to make decisions on overall spending
levels, to agree
with my colleagues the major spending blocks and the allocations to each
department, making sure we maximise
the amount of resource that is available
to us. It is for my Cabinet colleagues to make decisions on how to spend the funding available to them within their area of responsibility, as they are closer to the issues and will be engaging
with partners in their sectors. The Draft Budget provided significant
uplifts of funding to every area of the Welsh Government to enable my colleagues to invest in their areas of responsibility and to make the spending
decisions which deliver
the most for the people of Wales.
Overall responsibility for the third sector in Wales falls to the Cabinet Secretary for Social Justice, Trefnydd and Chief Whip. I have brought this recommendation to her attention for consideration.
Recommendation 12. The Committee recommends
that the Cabinet Secretary ensures
that any additional funding provided by the UK
Government to make up for the increase to employer National
Insurance Contributions is distributed to local authorities based on calculations of additional costs as a result of the change.
Response: Accept
I have repeatedly committed
to passing any additional funding
provided to the Welsh
Government in relation to increased employer National Insurance Contributions costs to those public sector bodies affected, including
local authorities.
I will keep the Senedd updated
on progress in this matter.
Recommendation 13. The Committee
recommends that the Welsh Government works with local authorities and the public sector to understand how commissioned services are impacted by the increase in National Insurance Contributions and considers the most appropriate method of
distributing funds to mitigate the financial impact.
Response: Accept in principle
National Insurance
is a reserved matter for the UK Government. The Draft Budget includes significant uplifts in
funding to all areas of the Welsh Government and maximises the allocation of the funding
we have available to us.
The UK Government has confirmed it will provide
funding to public
sector employers to cover
the increased costs
of employer National
Insurance contributions. It will use the
official ONS definition of a public sector employer. However, we have not yet had confirmation of how much additional funding
Wales will receive.
We expect to receive the additional funding in late spring and are working with HM Treasury to clarify the details and the level of support
that will be provided.
As I said during the Draft Budget debate on 4 February, once we know the additional funding we will receive from
the UK Government I will ensure that it is passed immediately to those public service
employers which come under the ONS definition.
3. Taxation, Forecasts and Other Fiscal
Levers
Recommendation 14. The
Committee recommends that the Cabinet Secretary provides a narrative
around how the impacts of key long term financial risks such as climate
change, demographic and health trends are being addressed in the short, medium
and long term, to enable Senedd committees to consider this approach before the Draft Budget for 2026-27 is published.
Response: Accept in principle
The Well-being of Future Generations’ Future Trends Report
draws together a range of information on the big trends and drivers that are likely
to shape Wales’ future in the
long term. It includes trends
linked to the five ways of working that make up the
sustainable development principle and the seven
well-being goals as well as an insight into trends covering public finances.
The
Wales Economic and Fiscal Report (WEFR) 2024 published alongside the Draft
Budget includes material
on longer term fiscal risks and demographic trends, together with
longer term prospects for the Welsh Government’s budget.
The Welsh Government’s annual budget primarily
relates to the year ahead so does not
deal directly with longer term risks and trends, although
we have used the well-being goals and national
indicators and milestones to shape and inform the
budget decisions. The Welsh Spending
Review process is designed to take account
of longer-term issues, creating
a shift towards embedding a continuous and strategic approach to longer-term fiscal planning.
This approach aims to enhance
the budget process,
including scrutiny, by
considering an evidence based preventative approach to some of the key fiscal challenges we face.
Recommendation 15. The Committee recommends that the Office
for Budget Responsibility, as part of the redesign
of their Wales Taxes Outlook
publication, prioritises
improving its analysis of the relative growth and performance of the Welsh taxbase and tax incomes compared to the UK in
their Welsh tax outputs.
Recommendation 16. The Committee
recommends that the Office for Budget
Responsibility provides an update on its work to understand the impact that freezing income tax thresholds will have on the proportion of income tax
raised in Wales, ahead of the 2026-27 budget round
Response: These recommendations are for the Office for Budget Responsibility. We will ask them to
consider these recommendations.
Recommendation 17. The Committee
recommends that the Cabinet Secretary provides an update on the outcome of discussions it has had with the Office for National
Statistics and the Office for Budget Responsibility on steps taken to mitigate
the loss of key data and its impact
on Welsh forecasts.
Response: Accept
The Welsh
Government is in close
contact with the Office for National Statistics (ONS)regarding developments in statistical data sources. There have been well
publicised issues with labour market statistics in recent years, particularly
with the quality of data from the Labour Force Survey (LFS) and the speed of development of its
successor survey – the transformed LFS. The Welsh Government is working with the ONS to
address those concerns
and in the meantime is disseminating data from a range of sources to provide the best available
information on the labour market in Wales.
Welsh
Government officials hold frequent meetings with the OBR on forecast methodologies and available data sources. The LFS is an important input to the OBR’s macroeconomic forecast, however the devolved tax forecasts do not
draw directly on LFS information. The forecast for the Welsh Rates of Income
Tax utilises the latest monthly Real Time Information from HMRC Pay As You Earn sources to inform the starting
point for the medium term revenue forecast. This is an administrative data
source and is not subject to the same issues as survey-based information.
Recommendation 18. The
Committee recommends that the Cabinet Secretary provides details
of any assessments it has made of the likely impact of its plans to increase capital
investment significantly in 2025-26 and how this may impact on capacity
for private sector investment in Wales, both positively and negatively.
Response: Accept
The
documentation published alongside the Draft Budget illustrates how capital
budgets are to be used and their impacts. This includes the Infrastructure Finance
Plan, the Draft Budget Narrative, Strategic Integrated Impact Assessment, and individual
evidence papers from individual Cabinet
Secretaries regarding their own spending plans.
Strategic public investment acts to crowd in investment
from private sources.
The
£575m
additional capital allocated through our Draft Budget 2025-26 is intended to do
that: stimulating private companies in the construction industry, taking
forward our ambitions for the renewable energy economy of the future, and
paving the way for the Investment Summit which the First Minister will lead
later this year.
The
significant additional capital allocation to the Health and Social Care (HSC)
MEG, for example, reflects the priority we place on improving the performance of the NHS in
Wales. This funding will be for maintenance and improvement of the NHS Wales estate, such as ongoing refurbishment of
Prince Charles Hospital in Merthyr Tydfil and the completion of the orthopaedic hub development at Llandudno Hospital. The funding will also be invested
in the latest digital technologies, as well as the availability of fit for purpose, modern, reliable equipment. The capital allocations will have a significant
beneficial impact on patients, staff and visitors
through transformation of services and increasing planned procedures.
We take account of the current
landscape in terms of private
sector investment when considering how to allocate
capital funding. Through
the Draft Budget,
the RSL Development Loans scheme, a key mechanism for delivering more homes for social rent
was extended
for one year. This is in recognition of the current
market failure due to the housing sector facing several
difficult challenges including significant tender increases due to material cost rises and
contractors pricing in higher risk, rising inflation and interest
rates and higher bad debt and void rates. Our investment will provide a boost to the housebuilding industry and development supply chain, with new developments incorporating additional
green features, such as renewable energy sources to help respond to our changing
climate. For those who already
own their own homes, we are
investing to help retrofit and decarbonise their homes by funding heat pumps and solar
panels.
4. Narrative and Strategic
Approach
Recommendation 19. The Committee recommends that the Cabinet Secretary explains how the Draft Budget is moving money to support preventative measures, broken down for each Main Expenditure Group,
and that this is provided
ahead of the Final Budget debate.
Recommendation 20. The Committee recommends that the Cabinet Secretary
works with the Future Generations Commissioner to agree an updated definition of what is meant by preventative spend, for inclusion in the Draft Budget narrative for 2026-27 and that an update on these discussions is provided by the summer recess.
Response: Accept in principle
The Welsh Government is committed to a preventive approach in its budget processes and spending plans. I agree that it is essential we have a commonly understood, clear definition of what is meant by preventative spend as a first step towards achieving these
recommendations.
When
I attended the Finance Committee on both 12 December and 23 January, we discussed this matter in some detail and I am grateful
to the Finance Committee for the
constructive approach on this issue to date. I would welcome continued
dialogue with the Committee
as well as with the Future
Generations Commissioner to identify and agree what actions and which elements
of funding should be deemed as preventative.
In developing an updated definition, we remain committed to working closely with the Budget
Improvement and Impact Advisory Group to improve how we apply and reflect the Well-being of Future Generations Act within our
preparation for Draft Budgets.
Further
embedding a preventative approach will also be key to the Welsh Spending
Review. The approach will consider the totality of the funding that is
available to the Welsh Government, not just the block grant, and will enable us to consider
all fiscal levers available
to make up the overall spending envelope.
Recommendation 21. The Committee
recommends that the Cabinet Secretary works with the Future Generations Commissioner to review
its Strategic Integrated Impact Assessment to ensure
it accurately reflects
the ways of working outlined
in the Well- being of Future Generations (Wales) Act 2015 and provides an update on those discussions
ahead of the summer recess.
Response: Accept
Our Strategic
Integrated Impact Assessment (SIIA) is a key tool in identifying and addressing the strategic and cumulative impacts of decisions made in throughout the budget process.
A review of the SIIA is currently
underway and I expect it to conclude later
this year.
I have already invited the Future Generations Commissioner’s office,
along with all other members of the Budget Improvement and Impact Advisory
Group, to contribute to this
review to ensure that the SIIA accurately reflects the ways of working outlined in the Well-being of Future Generations Act 2015.
Recommendation 22. The Committee recommends that the Cabinet
Secretary evaluates the documents it produces to
assess the impact of the budget, to make it as straightforward as possible for stakeholders to identify how budgetary decisions
align with the Welsh Government’s aims.
Response: Accept
The Welsh Government is committed to continuing improving the documentation it publishes as part of the budget
process.
In December
we published a comprehensive suite
of documents as part of the Draft Budget which provided a detailed account of the Welsh Government’s decisions and how they align with our aims and our ambitions. This information serves a wide range of people, and so it is important
that we continuously evaluate the way we present
information on our budgetary decisions
to ensure that we do so in the most appropriate
and transparent way. We will continue to evaluate these and to make improvements wherever possible.
Recommendation 23. The Committee
recommends that the Welsh Government publishes, as a matter of urgency,
the results of the remaining gender budget pilots and works
with stakeholders to reflect the results in future budget cycles.
Response: Accept
We are committed to publishing the key findings
from the gender
budgeting pilot schemes as
soon as possible.
The Welsh Government is working to drive a better understanding of gender budgeting, building
on the work with colleagues in the Equality and Human Rights Team and with
the Wales Women’s Budget Group
(WWBG).
As part of our review of the SIIA, we will continue to engage with the Budget Improvement and Impact Advisory
Group (BIIAG) as well as with other Governments
including Iceland, Canada, Scotland and Northern
Ireland to draw on experience and best practice from around the world. We have
also engaged with key groups such as the Women’s Equality
Network in Wales and will be accelerating this engagement over the
next few months and seeking wider views from across Wales.
Recommendation 24. The Committee recommends that the Cabinet
Secretary establishes a Standing
Committee on the Cost of Living and Poverty as a matter of
urgency in order to ensure that support
for those most in need is provided,
and that an update on progress on this issue is
provided by the summer recess.
Response: Responsibility for tackling
poverty falls to the Cabinet Secretary for Social
Justice, Trefnydd and Chief Whip. I have brought this recommendation to her attention for
consideration.
Recommendation 25. We recommend that the Cabinet Secretary provides details of where and when the Welsh Government’s Baby Bundle scheme will be rolled out, and if they are not provided
universally across Wales,
to explain the reasons for this, and for
such information to be provided
ahead of the Final Budget debate.
Response: Responsibility for the
Baby Bundle scheme falls to the Minister for Children and
Social Care. I have brought this recommendation to her attention for
consideration.
Recommendation 26. The Committee recommends
that the Cabinet Secretary:
·
confirms the costs associated with the roll out of Phase 3 of Flying
Start;
·
issues an update on the proposed full roll out of the Flying Start programme,
including the associated timeframes; and
·
for these to be provided
ahead of the Final Budget debate.
Response: Responsibility for Flying
Start falls to the Minister
for Children and Social Care. I
have brought this recommendation to her attention for consideration.
Recommendation 27. The Committee recommends that the Cabinet Secretary works with support
and charitable organisations, including those bodies representing older people, to ensure that those who are
eligible to receive financial support in lieu of the Winter Fuel Payments are
able to do so.
Response: Responsibility for tackling
poverty falls to the Cabinet
Secretary for Social Justice, Trefnydd and Chief Whip. I have brought this recommendation to her attention
for consideration.
5. Budget Priorities
Recommendation 28. The
Committee recommends that the Cabinet Secretary explains how the allocations in the Draft Budget will address the increased demand for social care and outlines the actions the
Welsh Government will take, as a matter of urgency, to address the social care funding model
to ensure its future resilience and provides an update to the Committee
by the Final Budget debate.
Response: Responsibility for social care falls to the Minister for Children and Social Care. I have brought this recommendation to her attention
for consideration.
Recommendation 29. The
Committee recommends that the Cabinet Secretary provides an update to the Committee on any additional funding the Welsh Government will provide to the social care sector
and for associated purposes, ahead of the Final Budget debate.
Response: Accept
I
am pleased to be able to allocate
an additional £30m of
resource funding for the social care sector
at Final Budget to target delayed
hospital discharges and provide more care and support in local communities. This funding
will be provided the Health
and Social Care MEG (Main Expenditure Group) to local authorities through a Pathways of Care Transformation Grant
to boost investment in community-based social care. It will support assessments and provide packages of care to
ensure people can leave hospital when they are medically fit to do so, helping to reduce the level of delayed hospital
discharges. It will also strengthen community-based care services.
Recommendation 30. Following the UK Government Spending Review, the Committee recommends the Cabinet
Secretary provides local authorities with multi-year funding settlements, as a matter of urgency,
to ensure greater
financial stability and facilitate
future planning.
Response: Accept in principle
I agree that ensuring
greater financial stability
for local authorities and other partners that we
fund is a priority and we have always committed to provide longer-term budgets when
possible. We welcome the UK Government’s intention
to provide us with multi- year settlements from 2026-27 onwards
as this will allow us greater financial
stability and the ability
to plan further than a single year’s budget.
Recommendation 31. The
Committee recommends that the Cabinet Secretary considers a funding
floor for local authorities in the Final
Budget 2025-26 and provides the criteria
used for deciding when, and at what level, to implement a funding floor.
Response: Accept
I am pleased to be able
to allocate a further £8.24m through
the local government
settlement to ensure every local authority sees an increase
in their funding
of at least 3.8% compared to 2024-25, on a like for like basis. This floor is 1.5% higher
than the previous year and supports
nine authorities. Every authority will see a larger increase
in 2025-26 than they did in 2024-2025.
The Cabinet
Secretary for Housing
and Local Government published the final
local government revenue and capital settlement on 20 February, this includes the final Local Government Finance
Report and additional tables containing details
of the final settlement by individual authority.
Recommendation 32. The
Committee recommends that the Cabinet Secretary provides further clarity on the protocol
being developed between the Welsh Government and local authorities that would apply
in circumstances of significant financial
challenge, including timescales for implementation, by the Final Budget debate.
Response: Responsibility for local government falls to the Cabinet Secretary for Housing and Local Government. I have brought
this recommendation to her attention for consideration.
Recommendation 33. The Committee
recommends that the Welsh Government publishes the Local Health
Board allocation letter for 2025-26
and NHS Wales
Planning Framework for 2025-2028
before the Final
Budget debate, and reiterates its recommendation that the Welsh Government should, as a matter of course, make this information publicly
available each year at the same time it is issued to the sector
to facilitate scrutiny of the Draft Budget.
Response: Responsibility for the NHS falls to the Cabinet Secretary
for Health and Social
Care. I have brought this recommendation to his attention
for consideration.
Recommendation 34. The Committee
recommends that the Cabinet Secretary:
·
explains how the Welsh Government is assessing productivity across the Welsh public sector;
·
explains how the capital allocations are linked
to making revenue more efficient; and
·
outlines the improvements it expects from public services
in 2025-26 in return for the
capital funding provided, and that this information is provided ahead
of the Final Budget debate.
Response: Accept
When allocating significant increases in capital funding for 2025-26 I have emphasised the
importance of using this funding
to improve productivity and enable services
and workforces to work more effectively. I anticipate significant enhancements in public services as a result
of over £3 billion capital
investments in 2025-26.
For example, over
£554 million in NHS Wales infrastructure and equipment is aimed at maintaining and addressing backlog as well as improving
the efficiency of healthcare
delivery. Through
upgrading buildings, digital infrastructure and medical equipment, we can reduce operational
costs and enhance service delivery, ultimately leading to more efficient use of
revenue.
Issues around the performance and productivity of Welsh public services is an area my
Cabinet colleagues focus on continually. For example, improving performance in the NHS is one of our key priorities and the Cabinet
Secretary for Health and Social Care has been
clear with the NHS that current and additional investment needs to demonstrate value for money. The work of the NHS Value and Sustainability Board and that of the NHS
Executive supports a range of activities directed
at improvements in productivity,
better outcomes, cost savings and reduced variation. A
Ministerial Advisory Group is also currently
reviewing how the NHS could ensure improved
productivity and performance related to secondary
care access, unscheduled care, planned care (including cancer) and diagnostics.
Similarly, in local government, funding to improve
productivity is demonstrated by allocations to support
digital innovation in local government. The Welsh Government provides ongoing core funding
of £900,000 for the Local
Government Chief Digital Officer and her team. In addition, last year over £1.3m was also provided for the Local Government
Digital Transformation Fund and Digital Skills Fund to support digital
transformation projects which
solve shared problems. Funding for decarbonisation in the estate is also intended to drive savings over the medium and long term, which can be seen in an increase in funding for local authority estate decarbonisation from £20m to
£30m for 2025-2026.
Recommendation 35. The
Committee recommends that the Cabinet Secretary explains how the £40 million
for the Digital Priorities Investment Fund within the Health and Social Care Main Expenditure Group was determined, how it will be allocated and how outcomes
for this funding will be evaluated.
Response: Responsibility for funding within
the Health and Social
Care MEG falls to the Cabinet
Secretary for Health and Social Care. I have brought this recommendation to his
attention for consideration.
Recommendation 36. The Committee
recommends the Cabinet
Secretary provides assurances that the funding
allocated in the Draft Budget
to alleviate workforce pressures in the NHS and Social Care workforce
is sufficient to address the recruitment
and retention challenges being faced.
Response: Responsibility for the NHS and social care workforces falls to the Cabinet
Secretary for Health
and Social Care and the Minister for Children and Social Care. I have brought this recommendation to their
attention for consideration.
Recommendation 37. The Committee recommends the Cabinet Secretary confirms whether the funding
for the education and training
of the NHS workforce reflects
the Health Education and Improvement Education and Training Plan for 2025-26, with an
explanation if this is not the case together
with an assessment of the potential
consequences.
Response: Responsibility for the NHS falls to the Cabinet Secretary
for Health and Social
Care. I have brought this recommendation to his attention
for consideration.
Recommendation 38. The
Committee recommends that the Cabinet Secretary outlines how funding is being
prioritised to support Additional Learning Needs in the Draft Budget, and the
outcomes it expects this funding to achieve, ahead of the Final Budget debate.
Response: Responsibility for
education falls to the Cabinet Secretary for Education. I have brought this
recommendation to her attention for consideration.
Recommendation 39. The
Committee recommends that the Cabinet Secretary provides an update
on the assumptions used to derive allocations to Transport for Wales in the
Draft Budget ahead of the Final Budget
debate.
Response: Responsibility for Transport
for Wales falls to the Cabinet Secretary for Transport and North Wales.
I have brought this recommendation to his attention
for consideration.