Inquiry into the funding of directly funded bodies

The Finance Committee undertook a short inquiry into the funding of Directly Funded Bodies (DFBs). The aim of the inquiry was to ensure a consistent approach was taken by DFBs when preparing their annual budget proposals.

DFBs receive their funding from the Welsh Consolidated Fund; these include the:

• Senedd Commission;
• Auditor General for Wales and the Wales Audit Office; and
• Public Services Ombudsman for Wales.

Wales has seen almost a decade of austerity and for some time the Committee has been concerned that the budgets of DFBs have not been impacted in the same way that other public service budgets have been.

The Committee has provided guidance to DFBs to ensure their budget requests are set in the context of budget constraints in the Welsh public sector. This has included ensuring their budgets did not exceed any changes to the Welsh block grant.

However, this has proved problematic as DFBs have interpreted increases in the block grant differently. This has been further complicated by other influences on the amount of funding available in any given year, such as Welsh Government tax policy decisions and the UK Government announcements of additional funding (leading to subsequent consequentials for Wales).

The Committee initially wrote to the directly funded bodies and the Welsh Government asking for their views on the above. After consideration of the responses, in May 2019 the Committee issued a Statement of Principles (PDF, 224KB) that the Committee expects DFBs to have regard to when making budget proposals.

The Statement of Principles gave a commitment that the Committee would review the document the year of implementation and periodically thereafter. Following the 2020-21 budget cycle, the Committee considered the Principles on 4 March 2020. The Committee agreed that there would not be any changes made to the Principles at this time.