Y Pwyllgor Cyllid - Y Bumed Senedd
Finance Committee - Fifth Senedd20/01/2021
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Llyr Gruffydd MS||Cadeirydd y Pwyllgor|
|Mark Reckless MS|
|Mick Antoniw MS||Yn dirprwyo ar ran Alun Davies|
|Substitute for Alun Davies|
|Mike Hedges MS|
|Nick Ramsay MS|
|Rhianon Passmore MS|
|Sian Gwenllian MS|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Andrew Jeffreys||Cyfarwyddwr, Trysorlys Cymru, Llywodraeth Cymru|
|Director, Welsh Treasury, Welsh Government|
|Anna Adams||Dirprwy Gyfarwyddwr, Pennaeth Polisi Strategaeth Treth ac Ymgysylltu, Llywodraeth Cymru|
|Deputy Director, Head of Tax Strategy Policy and Engagement, Welsh Government|
|Margaret Davies||Dirprwy Gyfarwyddwr Cyllidebu Strategol, Llywodraeth Cymru|
|Deputy Director of Strategic Budgeting, Welsh Government|
|Matt Wellington||Pennaeth Cyflawni’r Gyllideb, Llywodraeth Cymru|
|Head of Budget Delivery, Welsh Government|
|Rebecca Evans MS||Y Gweinidog Cyllid a’r Trefnydd|
|Minister for Finance and Trefnydd|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Georgina Owen||Ail Glerc|
|Leanne Hatcher||Ail Glerc|
|Mike Lewis||Dirprwy Glerc|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Cyfarfu'r pwyllgor drwy gynhadledd fideo.
Dechreuodd y cyfarfod am 09:35.
The committee met by video-conference.
The meeting began at 09:35.
Bore da i chi i gyd a chroeso i gyfarfod Pwyllgor Cyllid Senedd Cymru. Yn unol â Rheol Sefydlog 34.19, dwi wedi penderfynu gwahardd y cyhoedd o gyfarfod y pwyllgor y bore yma er mwyn diogelu iechyd y cyhoedd, ac, yn unol â Rheol Sefydlog 34.21, cafodd rhybudd o'r penderfyniad hwn ei nodi yn yr agenda ar gyfer y cyfarfod. Mae'r cyfarfod yn cael ei ddarlledu'n fyw ar Senedd.tv a bydd Cofnod y Trafodion yn cael ei gyhoeddi yn ôl yr arfer. Ar wahân i'r addasiad gweithdrefnol sy'n ymwneud â chynnal trafodion o bell, mae holl ofynion eraill y Rheolau Sefydlog ar gyfer pwyllgorau yn parhau.
Gaf i ofyn, felly, ar y cychwyn, oes gan unrhyw Aelod unrhyw fuddiannau i'w datgan? Nac oes. Diolch yn fawr. Gaf i nodi hefyd, os byddaf i'n colli cysylltiad am unrhyw reswm, fod y pwyllgor wedi cytuno yn flaenorol, yn unol â Rheol Sefydlog 17.22, mai Siân Gwenllian fydd yn cadeirio dros dro wrth i fi geisio ailymuno?
Rŷn ni hefyd wedi cael un ymddiheuriad oddi wrth Alun Davies, a dwi'n croesawu Mick Antoniw sydd yma yn ddirprwy ar ei ran e.
Good morning and welcome to this meeting of the Senedd's Finance Committee. In accordance with Standing Order 34.19, I've determined that the public are excluded from the committee's meeting in order to protect public health, and, in accordance with Standing Order 34.21, notice of this decision was included in the agenda for this meeting. This meeting is being broadcast live on Senedd.tv and the Record of Proceedings will be published as usual. Aside from the procedural adaptation relating to conducting proceedings remotely, all other Standing Order requirements for committees remain in place.
Could I ask at the outset, therefore, whether Members have any interests to declare? No. Thank you very much. Could I also note that if, for any reason, I lose connection, the committee has previously agreed, in accordance with Standing Order 17.22, that Siân Gwenllian will act as temporary Chair while I try to rejoin?
We've had one apology from Alun Davies, and I welcome Mick Antoniw who is substituting on his behalf.
Iawn, awn ni ymlaen, felly, at yr ail eitem, sef prif ffocws, wrth gwrs, cyfarfod y bore yma, sef i barhau â'r gwaith craffu ar gyllideb ddrafft Llywodraeth Cymru ar gyfer 2021-22. Dwi'n croesawu nôl, er ei bod hi'n teimlo fel dim ond ddoe pan oedd y Gweinidog gyda ni yn rhoi'r sesiwn dystiolaeth gyntaf ar y gyllideb ddrafft, Rebecca Evans, y Gweinidog Cyllid a'r Trefnydd—croeso atom ni—ynghyd â'i swyddogion, sef Andrew Jeffreys, sy'n gyfarwyddwr y Trysorlys, Margaret Davies, sy'n ddirprwy gyfarwyddwr cyllidebu strategol, Matt Wellington, sy'n bennaeth cyflawni’r gyllideb, ac Anna Adams, sydd yn ddirprwy gyfarwyddwr, pennaeth yr is-adran polisi strategaeth trethi ac ymgysylltu. Croeso i'r pump ohonoch chi.
Rŷn ni wedi derbyn tystiolaeth ers i ni siarad â chi'r tro diwethaf gan nifer o randdeiliaid eraill, felly'n amlwg mi fyddwn ni'n mynd ar ôl ambell fater sydd wedi cael eu codi ganddyn nhw, ac mi gychwynnaf i drwy ofyn ar y cychwyn, os caf i: yn amlwg, rŷn ni mewn cyfnod digon anwadal, digon anodd, digon digynsail, a liciwn i ofyn sut mae effaith y pandemig wedi newid y ffordd rŷch chi'n rheoli ansicrwydd a risg, yn enwedig o ran rhagolygon economaidd a rhagolygon treth yn y tymor byr a'r tymor canolig, a hefyd wrth gwrs sut ŷch chi wedyn yn mynd i roi'r wybodaeth ddiweddaraf i'r pwyllgor am y materion yma yn y dyfodol.
We move on therefore to item 2 and the main focus of the meeting this morning, which is to continue with our scrutiny of the Welsh Government's draft budget for 2021-22. Even though it seems like only yesterday when the Minister was giving evidence in the first evidence session on the draft budget, I welcome back to committee Rebecca Evans, the Minister for Finance and Trefnydd, as well as her officials, Andrew Jeffreys, director of the Treasury, Margaret Davies, deputy director of strategic budgeting, Matt Wellington, head of budget delivery, and Anna Adams, deputy director, head of tax strategy policy and engagement. Welcome to the five of you.
We have received evidence since we spoke to you last time from a number of other stakeholders and so, obviously, we'll be pursuing the issues that have been raised by them, and I'll start by asking at the outset, if I may: evidently, we're in a very volatile, difficult and unprecedented period and I'd like to ask how the impact of the pandemic has changed the way in which you manage uncertainty and risk, particularly around economic forecasts and tax forecasts in the short and medium terms, and also how you're going to update the committee on these issues in the future.
Thank you, Chair, and good morning to the committee. There are some really particular budget management challenges in the current year. Uncertainties around tax revenues are one element, but I think the real challenge is around the size of the additional funding that has been allocated in-year in order to help us respond to the coronavirus pandemic. We do have the normal year-end flexibilities to draw on, but given the context that we're in at the moment, things are quite limited. I note that the Office for Budget Responsibility in its evidence to this committee has reflected on the fact that the UK Government is making what they describe as dramatic fiscal decisions this year, which are leading to in-year consequentials for the Welsh Government, which are just huge in the context of our very small reserve and the flexibilities that we have.
So, committee knows that we've been pressing for flexibility at year end, and I've written jointly again with my counterparts in Northern Ireland and Scotland in advance of the UK Government's supplementary estimates, asking again for the ability to have those end-of-year flexibilities, particularly in regard to the late additional funding that we're receiving in-year in respect of COVID-19, in order for us to be able to plan across the end of the financial year.
So, turning to next year, the economic outlook is highly uncertain, and that of course depends on the path of the virus, the effectiveness of the vaccine and the way in which both businesses and individuals respond to the situation that we'll find ourselves in. And for that reason, amongst others, I've held back significant resource in our reserve for next year. I do, as I said to committee, intend to make some allocations between the draft budget and the final budget, but I would expect there to be some more for an incoming government to respond as well.
In terms particularly of the tax forecasts that you asked about, the Office for Budget Responsibility said that it does not believe there is evidence that income tax liabilities in Wales would be impacted more or less than the average due to the pandemic. I think that's a helpful analysis for us. We will receive the outturn information for Welsh rates of income tax for 2019-20 later this year, and that will be a very important and interesting point for us in Government, and I'm sure for committee as well, and although it won't directly impact on our budget for 2021-22, it may impact both the tax forecasts and the block grant adjustments for future years. So, that's why it's advisable that we consider a range of scenarios, which we've done, and you've seen that in the chief economist's report, which is published alongside the draft budget.
Yes, okay. Thank you for that. The Wales fiscal analysis highlighted—and we've all seen it ourselves, haven't we—the level of the unallocated reserves, as you say, and they describe this draft budget for next year as much more of a draft than usual, certainly, given the circumstances. I presume you agree with that. The question for me is what risks does that pose to scrutiny and transparency around your spend next week for us as a committee, because clearly we're not seeing a budget in as finalised a form as we would like to scrutinise, and there will be big changes throughout the year next year.
I think in that regard it's important to distinguish in our minds the time-limited funding that is related to COVID specifically, and then our core budget. So, we are taking our normal reserve broadly in line with the level of contingency we would have going into any financial year—slightly above; it's in the region of around £120 million at the moment, pending any decisions I make in terms of additional allocations between the draft and the final budget from that particular reserve. So, that's broadly in line with where we are normally, slightly above, as it would be when we're going into a new administration. So, that's not unusual, but what is unusual is the size of the COVID-related funding that we have in that particular reserve—so, nearly £700 million of the unallocated reserve is in relation to COVID, and, as I said, I would expect to make some additional allocations.
In terms of transparency and scrutiny, I've taken some additional steps this year to provide the maximum transparency that we're able to do, so we're having our third supplementary budget in February. I've also taken every opportunity to provide the information we have in terms of consequential funding to committee, and also provided updates to the Senedd in the Chamber as well. So, the level of transparency that I've offered and those opportunities for scrutiny have been the largest of any administration in the UK, and I think that that's something I would want to continue with because I think transparency and openness is very important. So, the additional steps we've put in place this year might be things that we could consider how we can develop for next year or for future administrations.
Okay, thank you, Minister. Andrew wants to come in as well.
Thanks. Without wishing to complicate matters further, it's worth noting that the UK budget is on 3 March. Our final budget will be published on 2 March, and so that UK budget may well change the numbers again for next year, and we won't be able to reflect what's in the UK budget in our final budget because of the timing awkwardness. So, yes, that's another complication, I think, that it's impossible for us to do anything about, but an important part of the context.
It is an important part of the context, and for us, of course, being able to track and monitor funding made outside of the formal budget processes is fundamentally what we're about, I suppose. At least, it's a large part of what we need to be doing as a committee. But also linking that with outcomes is key as well, and it is very difficult, obviously, when it happens in such an ad hoc way, or a way that isn't part of the formal processes that obviously we are used to and we would expect to ensure that high degree of scrutiny and monitoring that needs to be afforded to these things.
Okay. We'll move on then, to—. Oh, go on then, yes—sorry, Minister.
I was just remembering that the First Minister intends to publish his annual report at the end of this month. So, you talked about the importance of understanding outcomes, and so forth, and I think that that will be a useful resource in order to have that level of transparency and increased opportunity for scrutiny as well.
Yes, and the easier it is to read across from budget allocation to outcomes, the better, obviously. That's what we're looking for here. Thank you. Rhianon, then.
Thank you very much, Minister, for those comments, in particular around the dramatic fiscal volatility—I think the word could be utilised as. In regard, then, to that engagement, you mentioned that you feel that you've given adequate transparency to this committee in regard to that fiscal volatility, in answer to your previous question. How are you then ensuring engagement with the in-year allocation process, balancing that then with the third budget that we're having, and then, obviously, the situation across the UK, and particularly with the sectors that are going to be and are impacted most by the pandemic and which have been most of receipt of that significant additional funding for 2020-21?
I think here there is a role for me in finance but also roles for individual Ministers as well in terms of the connections that they have with their stakeholders and the discussions they have. I know that each Minister will have a range of engagement mechanisms with partners to monitor the ongoing response to the pandemic, and they use those discussions then in order to formulate the funding requests that they put to me, which I consider as part of my role. So, there are several aspects to this.
I think that the shadow social partnership council, which the First Minister chairs and which continues to meet fortnightly, has been really useful in terms of understanding the pressures that stakeholders and partners are facing and is helping us to respond to that. I know the Future Generations Commissioner for Wales in her response to you has welcomed this engagement that we've had, particularly on spending considerations and decisions through that social partnership approach. And that's something that we will continue to take forward. I had a specific meeting with the social partnership council that looked at the budget and explored what allocations should be for the next year, but we've also had meetings discussing the in-year position as well.
My officials also have an important role to play in this, and they attended a capital and finance investment group meeting yesterday with local government representatives, and that included the Welsh Local Government Association. And they were discussing a number of important budgetary items, including the capital budget for 2021-22 onwards, and our approach to the Wales infrastructure investment plan and the next iteration of that.
And I have my own engagement, then, with the WLGA in particular through the finance sub-group, which I attend alongside Julie James. The next meeting is on 4 February, and that's going to be a really important opportunity to hear what they tell us that they need for the COVID response particularly as we move into the next year. That will help me then in terms of formulating my approach to additional allocations from the COVID reserve before we get to the final budget.
Thank you. Obviously, the supplementary estimates are going to be of note as soon as we have any indication around that. My next question, really, is around refocusing of resources and services. So, the pandemic has resulted in such a new lens on resources and, of course, delivery of services this financial year and, as you've indicated, not just within the Welsh Government but also, very particularly, within NHS and local government delivery arms. To what extent have planned allocations in 2021 been rescheduled into 2021-22 and later, and how is this reflected in this draft budget?
We have been able to continue to deliver on the vast majority of our plans for 2020-21, and you'll see much of that reflected in the First Minister's annual report, which I have just referred to. That will set out what we've achieved over the course of this year. We've been able to mitigate impacts in many areas but, equally, there have been areas where there has been slippage. An example would be what I presented to you in our second supplementary budget, where we reviewed our capital plans right across Government and identified £49 million that was available for repurposing as a result of slippage. You saw that funding, then, reallocated through the £320 million reconstruction package that I announced back in October, and that will then be formulated [correction: formalised] through the third supplementary budget later this financial year. There has been unavoidable slippage in some areas. For example, some of the work on the Valleys taskforce hasn't been able to be delivered this year, as we would have wanted. So, you'll see reflections of that in our budget for next year, where we've allocated £9 million of capital funding to the Valleys taskforce to enable it to undertake work that wasn't possible to be delivered this year.
More generally, we're very aware of the impact that the pandemic has had on individuals as well. The additional funding for learner catch-up is really important, so there is £12 million identified in the budget for that. In terms of the core, unhypothecated local government settlement, that's being used to support ongoing service delivery in local authorities, but we've also put in place that additional funding for lost income and for additional costs from local government through the hardship fund. That's enabled them to manage service delivery. And again, in terms of the NHS, we've put in place that £800 million stabilisation package for it to be able to continue to respond to the pandemic. You'll see some of that reflected again next year when I conclude my discussions with the health Minister in terms of what is required for the immediate NHS and COVID response in the next financial year.
Thank you. And finally, then, in regard to the assumptions that you've made, in particular around mental health, and you've mentioned health and social care to some extent, how have you built that into your assumptions around those two specific areas, and at what point will you be using the data analysis and gender review content to implement more strongly a gender-sensitive budget? I understand that we are in the middle of a pandemic and crisis now, but, as you're very well aware, in terms of part-time working, in terms of pension poverty, the impact of this has been disproportionately felt by women. Have you got any comment on that?
Yes. In terms of health and social care, you will see already allocated in the draft budget [correction: you will see already allocated] an amount of £27 million for the roll-out of the vaccine, and you'll see funding there [correction: there in the draft budget] of £10 million for test, trace and protect. These are important because there can't be any kind of stop in delivery on these important aspects, which it's why it's important that it has some kind of certainty in the budget.
On mental health, that clearly is going to be a huge priority going forward, and I think that we've reflected that well within the budget. We're allocating an additional £42 million for mental health-related activity next year, and that includes £20 million additional funding within health and social services to increase mental health support across a range of areas, including increased support for front-line non-clinical services, all-age crisis support, memory assessment services, and support for the clinical pathway through the 111 telephone service. There is £4 million additional for the roll-out of the child and adolescent mental health services inreach across Wales, and that builds on the funding that we've put in place in this financial year, and £5.4 million additional funding for the NHS child and adolescent mental health services for tier 4 and community intensive teams. That will be really important, because I think that we all know how difficult this period has been for young people. And there's an additional £13 million in the NHS growth funding to support an increase in the mental health service improvement fund. That is, again, for ensuring that people have access to the support that they need. And then, you'll be familiar with the additional funding for the educational response to mental health as well.
On the question of gender budgeting, you'll be aware of the work that Welsh Government is undertaking with [correction: where we have consulted with] Iceland in particular, who I think have been blazing the trail for gender budgeting, although they have said that it's taken them seven years to get to the point where they are now. I think we've made some really good progress over the course of this financial year through our budget improvement plan to drive forward the gender budgeting work, and you'll see some of that reflected particularly in the personal learning account, but also in terms of the way in which we've allocated funding for next year as well. So, there's additional funding through the budget for the violence against women, domestic abuse and sexual violence grant, for example, reflecting the fact that people have experienced higher levels of violence and domestic violence during the pandemic. And also the additional funding for the blueprints for female offending in youth justice, I think that's quite an exciting new piece of work that we're taking forward as well. So, a few really important specific allocations relating to gender in the next financial year.
Thank you, Minister. Mick, I think you wanted to come in on a previous answer.
Yes, I did. There were just a couple of things I wanted to follow on from the Minister's comments, and they were with regard to some of the unforeseen spending consequences, et cetera. The one I raise in particular is that, of course, next year, there is likely to be a whole series of ongoing costs incurred in respect of what was the flooding damage, coal tip clearance, and so on. Now, these were areas that were promised by UK Government, but if those don't materialise, they might have an impact in terms of obligations that Welsh Government will have. I'm just wondering whether any consideration has been given to how that position is going to be dealt with and what the state is of those promises at the moment.
We've negotiated with the UK Government an additional £32 million [correction: £31 million] for this year from the UK-wide reserve in response to our work on the impact of the flooding that took place at the start of last year. However, we haven't had a commitment from the UK Government that that additional funding will be available next year or in future years.
And also, we haven't managed to come to an agreement with the UK Government on any additional funding in terms of the legacy coal tip issues that we face here in Wales, which could cost, over a period of 10 years, in the region of £0.5 billion, so this is major funding that will be required. And, of course, if we're spending the money on that important work, then we're unable to allocate it elsewhere. We think that it's fair and right that this is recognised by the UK Government, because we have in Wales 40 per cent of the UK's coal tips. So, we continue to have discussions with the UK Government. My preference would be that we agree some kind of UK-wide approach to this, working with the UK Government in terms of putting together a programme to deal with the coal tip issues that we face. However, progress has been difficult so far and we need, really, for the UK Government to reflect on the fact that it's all very well having a joint committee, jointly chaired between the First Minister and the Secretary of State, looking at these issues, but actually, work needs to flow from that and funding needs to flow from that as well. And we're very happy to play our part in it, but we do think that there's a role for UK Government here as well.
We continue to have these discussions and if, as and when there's further information, obviously, I know that Mick Antoniw has particular constituency issues so I'll be keen to update him and also the Finance Committee more widely.
I think Matt Wellington wants to come in on this as well.
Something it's also just worth noting is that the assessments are still ongoing, looking at those longer term costs. So, this work is still continuing and it's a partnership with the Coal Authority, the local authorities themselves and Welsh Government. So, that's a continuous piece of work and those costs are still being assessed and will continue to be assessed and, you know, I think it's been admirable that that work has been able to continue, despite the pandemic and it's still ongoing. So, it's just important to recognise that that important work is continuing and the assessment of costs will also refine further, as we go through the financial year.
Okay, thank you, Chair.
Thank you, Mick. On we go, then, to Mark Reckless.
Good morning, Minister. The Welsh NHS Confederation highlighted the cost of PPE, field hospitals, the test, trace, protect programme and staff training, also the rise in agency staffing bills, potentially, as key risks to the financial viability of local health boards. How does the budget seek to address these costs?
I know that the Welsh NHS Confederation has noted that the forecast situation in terms of the NHS does remain fluid for the future months. So, we'll be looking to prioritise resources for the areas where we believe that there will be significant impact. I know that the health Minister has identified already the particular areas where priority will need to be placed, so, obviously, the continuation of the roll-out of the mass vaccination programme, the further support for the test, trace, protect programme, and that includes maintaining NHS capacity within our Welsh labs here in Wales, and the further expansion of community testing as well. He's also clear that we have to maintain the additional capacity in field hospitals and within the core estate as well, as long as they are necessary, and obviously maintain that supply of PPE for health and social care, and then, when conditions allow, to start resuming the more routine work of the NHS and addressing what are really significant backlogs as well. So, those will be the priority areas.
There's a role for the Welsh Government and the UK Government in terms of addressing some of these issues. As I've said already this morning, we've allocated some additional funding in our draft budget for the test, trace, protect work to sustain that, and also [correction; and in-year] for the vaccination work. However, UK Government will also have a responsibility in terms of the lighthouse labs and meeting the cost of the vaccine, so it's important that we do work closely on those issues with the UK Government.
And with the funding of the vaccination programme being outside of the budget scrutiny process, how should Members and the public look to track the costs and progress of this vital programme?
We try and be as transparent as we can in the information that we're providing. So, the testing figures now are published daily, and you'll have seen the statement from the health Minister yesterday, which sets out the further improvements that he intends to make in terms of publishing information. So, from tomorrow—sorry, yes, tomorrow—Public Health Wales will start the process of publishing more granular surveillance data on the numbers of people who have been vaccinated, and that will begin with the breakdown of those over 80 and those resident in care homes, and then, as we move through the cohorts, that will be available as well.
And in addition to this, Welsh Government statisticians intend to produce some more of the operational statistics related to the programme. So, those will be available too. And, from next Tuesday, we'll be publishing a weekly update on progress against our national strategy for vaccination, and that will set out the progress that we've made and also look ahead to the next key milestone. So, I think it's really important that we publish as much information as people require in as timely a way as we can, and we're seeking to constantly improve that.
Just on the sort of spending side of this, I think, as the Minister touched on earlier, the funding for the vaccination programme is a mixture of Welsh Government funding and UK funding. So, it's the UK that's acquiring the supplies of vaccine and distributing the supplies of vaccine around the UK, and then it's the Welsh Government that's funding the delivery of that vaccination programme in Wales. I think that's a kind of additional complexity in terms of understanding and scrutinising the costs of the programme and how those costs break down between the different administrations, and I think that's something we'll need to reflect on going forward with the UK Government about how we kind of provide information about that in a way that enables proper scrutiny of the cost of delivering the programme.
And the First Minister has said he wants to make sure that the Pfizer vaccine lasts until the next delivery is due. And with that relatively constant rate of vaccination ensured, rather than risking having vaccinators just standing around with nothing to do, will that help ensure the cost-effectiveness of the programme?
I think that the First Minister clarified the remarks in terms of the operational side of the delivery of the vaccine. But I have to say that our priority is getting the vaccine out to as many people as quickly as humanly possible, to provide that level of safety for people. And we are making great strides in that every day. The original question was about data and transparency, and I think that when we see the data today, obviously we'll see an improved picture. I think, as we move forward, we will see daily improvements, obviously, in the numbers of people who have been vaccinated, but the proportion of people will obviously increase as quickly as we can on a daily basis.
I'm not sure that I got an answer to whether the First Minister's approach was helping ensure cost-effectiveness. But, moving on, Wales Fiscal Analysis outlined to what extent the impact of COVID on productivity in the NHS was important, and I just wonder to what degree you've been able to factor those considerations into the health allocations you're making this year.
Well, we know the pandemic will significantly distort NHS productivity at a UK and individual-nation basis within the UK, and that's because the elective and out-patient procedures have decreased so sharply whilst there's been, obviously, the focus on treating patients with COVID-19. So, I think drawing any conclusions will be difficult. And, just on a normal basis, measuring productivity within public services is very difficult anyway. The Office for National Statistics has been working very hard and delivering considerable resource to try and improve the measuring of public sector productivity, but even then we're still at an early phase in this work, so it calls its data experimental rather than official at this stage. I know that Welsh Government officials are working with the ONS on productivity and other economic statistics, so that the requirements that we have for data are met. But some of this is very much at an experimental stage at the moment.
In terms of the budget, though, and what we would intend to do in this particular area, we're providing more than £385 million of additional funding for core NHS services, and that takes the funding for the NHS for 2021-22 to more than £8.4 billion. So, that will allow the NHS to meet core costs growth and also pay awards, which I think is important as well. And then there's some funding there specifically for transformation. So, £10 million for Public Health Wales to support the transformation of the health protection services in Wales, and £30 million for primary care, including new treatments and new technologies, including the development of genomics and advanced therapy and medicinal projects. So, we've got the core activity, which needs to continue, the transformational activity, but then also the COVID-related activity and catch-up, if you like, kind of activity.
And finally from me, Minister, and I know that in some ways this is difficult to answer because your focus is on the budget for the year ahead, and also there's huge uncertainty about the waiting times or amount of other work that's going to get backed up in the NHS, but I just wonder, in terms of setting expectations for future years for Wales and all of us who are trying to put forward ideas in this context, whether any increases in the budgets that we may have available over the next few years are likely to have to be focused on addressing the issues in the NHS that it has coming out of COVID, thereby limiting the funding that's going to be available for other parts of the budget.
Well, a few issues here. The first would be, of course, that this will be a matter for the next administration in terms of to what extent it prioritises and continues to prioritise the NHS in Wales. But that aside, we've published the chief economist's report alongside the draft budget, and that does provide some information on the future prospects for the Welsh Government's budget. And it's worth noting that, although we have seen some welcome growth in our budget over the last couple of years, the core fiscal resource spending per head is still 3 per cent lower than it was in 2010-11, and the report says that it's only likely to return to 2010-11 levels by 2023-24, so I think that we still have some challenges ahead. And again, we're in a situation this year, as we were last year, with just having the one-year settlement despite the fact that we had been promised the multi-year settlement and the spending review. So, that issue in and of itself makes things more difficult to plan. But I do think the chief economist's report is useful in setting out where we, potentially, might find ourselves. But as I say, it will be for future Governments to consider what they prioritise.
Thank you. And can I also thank the chief economist and put appreciation on the record for the work he's done in that? I found it useful and an innovation, that report, I have to say.
Thank you, Mark. Margaret Davies wanted to come in, so maybe Margaret could come in first, and then Mike Hedges wants to pick up on something that was said as well.
Thank you, Chair. So, I think, just to amplify that from what the Minister has said, at a UK level, in the spending round, the UK Government increased the NHS budget in England by, I think, £7 billion, but the majority of that was already announced as part of the longer term settlement that they'd previously announced. So, I think it's just a recognition that those are challenges that, obviously, at a UK level, they will be considering as they move into future years as well, because there wasn't necessarily a significant increase in 2021-22 for the NHS in England.
That's an important point. Thank you. Mike.
Very briefly, Chair, what I would say is that we've spent a lot of time talking about productivity, but I think you also need to consider efficiency and effectiveness. If you increase class sizes from 25 to 50, you would double the productivity of teachers. I'm not sure anyone would be advocating that as a means of improving education, but you'd be able to have this little tick that productivity has doubled. There are areas of improved productivity: health have now discovered ICT, and now doctors are getting information at GP level from hospital by email and by electronic means rather than being posted it. Now, that's progress. I think what we need to do is work on those areas where we can use electronic means effectively to increase productivity, but not get hung up on productivity. Because—and I'll finish on this—when the amount of time home care workers spent with a person started getting reduced, productivity shot up, but the quality of home care to those on the receiving end dramatically reduced. So, let's not get too hung up on productivity; there are areas where efficiency can come in, but there are also areas where, if you increase productivity, you produce a much worse service.
I thank Mike for making that point that it is about outcomes for the individual concerned and achieving what we're hoping to achieve in people's lives and in our economy as well. So, that's an important point that Mike has made. His point about digital transformation within the NHS is really important, which was why we've allocated an additional £25 million for transformation in that regard. We've seen a significant increase and a real, I think, transformation of services, actually, through the pandemic, through necessity, with so many people having their online consultations with doctors and so forth. So, there has been quite a lot of innovation, and we need now to build on that.
It's about being able to demonstrate that link, again, isn't it, between budget allocations and outcomes. Mick Antoniw.
Thank you, Chair. I'd just like to ask a few questions about local government and the local government provisional settlement. Of course, local government is relatively pleased with the provisional settlement. But, of course, we are in an unusual period of time. The impacts on social care, childcare, education and so on are, obviously, very significant. So, there is that residual concern as to whether, even with the provisional settlement that has been announced—that it still may not adequately fund or support the Welsh Government's promises in respect of support for public services in the budget. How would you respond to that, Minister?
In setting the budget, we were clear really early on that we wanted to provide the best possible settlement to local government, and I know that the settlement has been welcomed by the Welsh Local Government Association, who have outlined that they expect the settlement would cover a significant amount of the inflationary and demand pressures that they're facing. Individual local authorities have also commented that they've had a better-than-expected settlement, which, I think, is positive. But that doesn't, of course, take away from the fact that I absolutely understand that local authorities are under a great deal of pressure and continue to have to make difficult decisions.
In setting the overall settlement at this level, we've also responded to the negative impact of the pandemic on non-domestic rate collection. So, the baseline settlement cash increase of £176 million does reflect a larger increase in the revenue support grant to compensate for the fall in NDR. It also accounts for the impact of freezing the NDR multiplier for next year as well. It's important to recognise that this settlement isn't the only source of funding for local authorities; they also have council tax and fees and charges, which they can also raise income from. But, as I say, these are difficult decisions.
I recognise there's a particular pressure on local authorities in terms of the council tax reduction scheme and the reduced collection rate of council tax, and we're having some continued discussions with the WLGA, monitoring the financial impact of that, to explore whether there's more we need to do in that area. And, as I say, we have the meeting with the finance sub-group shortly to explore these issues in further depth. But I would, as I say, have the area of local government support as one of the key areas for potential additional allocations between the draft and final budget, based on the discussions that I'll have at the finance sub-group and also those discussions Julie James and her officials are having with local government in the meantime.
Thank you for that, Minister. Of course, one of the very important aspects in terms of the local government and public sector provision is in respect of social care, which is, obviously, a major front-line provision during the pandemic, and the costs and burdens that are going to be there, with all the responsibilities that are going to be on local government, are, obviously, going to potentially increase. Now, there have been suggestions that there needs to be some sort of provision for transitional funding into the future to take into account those anticipated increased responsibilities and costs that are there. Has Government given consideration to that? How is that accommodated within the budget, and is this an area where there is ongoing discussion?
That will be one of the areas that we continue to discuss between the draft and the final budget. We've been very proactive, I think, in terms of our discussions with the local authority sector right through the pandemic. We were able to put in place the £500 million—at least £500 million—of additional support for local authorities, and that's been really instrumental in meeting some of the challenges that local authorities are facing in terms of social care provision locally. We have, of course, had the national uplift in rates to meet the additional costs for in-house and commissioned adult social care provision across domiciliary care, residential care and supported living, and local authorities, of course, have been able to access additional funding through the hardship fund to provide some market stability in terms of voids and other exceptional, unpredictable or emergency experiences that the social care sector has been facing as well. That fund has been well utilised and is still there for local authorities through the end of this financial year. But, as I say, we're considering how best to meet these additional needs next year.
Thank you for that, Minister. Perhaps one further question from me. One of the demands in respect of local government is, of course, in respect of education, and one of the big challenges of education, of course, is that we are, at relatively short notice, as we know, having decisions in terms of schools—the arrangements in terms of online learning, whether schools can open, when they can't and what the arrangements may be there. But one of the real concerns—and I know this has been expressed by the chief executive of Gwynedd Council—is in respect of the disproportionate impact that this is going to have on some of disadvantaged within our communities, and that might require additional funding in order to boost the catch-up provision that's there to try and, I suppose, respond to the damage that's been done. The suggestion is that there needs to be consideration of some specific funding to actually target that. Now, bearing in mind the approach of Government to equality within our communities, and, I suppose, the implementation of section 1 of the Equality Act 2010, which is imminent, will further consideration be given to that specific objective?
I share the concerns that the chief executive of Gwynedd Council has shared with you in terms of the concern about disadvantaged learners particularly, and I know this is something of real concern to the education Minister as well. That's why, in July, she announced an additional £29 million of funding to recruit, recover and raise standards in Welsh schools, in response to the impact of the pandemic. Of that funding, £12 million you'll find in the draft budget for next year, and this was really about recruiting, I think I'm right in remembering, 700 [correction: around 700] full-time equivalent staff members to support children, particularly in years 7, 11, 12 and 13, and children with additional needs, to not slip back in their learning as a result of the pandemic. I know that local authorities are reporting really good recruitment and progress in that area already, so that's something that we are maintaining through additional funding into next year's budget.
We've been able to make some allocations in year, as well. Just a week or so ago, the education Minister announced nearly £12 million of additional funding for devices, particularly laptops, to help disadvantaged learners particularly, and those who struggle to get online, to do their work and to have the kit that they need in order to do their home learning. I think that's been really positive. That takes, I think, the number of devices that we've allocated up to 133,000 since the start of the pandemic. Again, this is something that is very much focused at disadvantaged young learners, but we're very keen to explore what more we can do in this area, given the fact that this is not going to be something that we can recover from overnight.
I think the issue that was raised by the chief executive of Gwynedd Council is, of course, that there might need to be a specific catch-up provision, something that goes above and beyond all the provisions that, in fairness, are being taken in respect of the impact of the pandemic, and whether we're going to get to a situation where we're assessing the legacy in terms of sections of our communities that have fallen far behind, and there might need to be a specific strategy that would, obviously, require financial support. Is that an area that there might be some ongoing discussion about with the education Minister or within the Government generally?
I'm always having further discussions and bilaterals with all of my colleagues about what their future plans are, particularly in terms of recovery and reconstruction work, alongside the immediate response to the crisis. I do think the additional funding that we've announced for learner catch-up particularly is an important start in the process, but I know that the education Minister has undertaken some further work as to how we can ensure that we respond to the very negative impact that the pandemic has had on young people and their learning. I know she will want to say more about that in the near future too.
There we are. Thank you, Mick.
Ymlaen â ni, felly, at Siân Gwenllian.
We move on, therefore, to Siân Gwenllian.
Diolch, Gadeirydd. Os caf i jest bigo i fyny ar yr ymateb olaf yna rŵan ynglŷn ag addysg a'r angen am arian ychwanegol. Roeddech chi'n sôn reit ar y dechrau ynglŷn â'r cyhoeddiadau dramatig sydd yn dod o bryd i'w gilydd gan Lywodraeth y Deyrnas Unedig o ran arian sylweddol ychwanegol o fewn blwyddyn, mewn ffordd. Pa ragweld ydych chi'n gallu ei wneud o fewn hynny y bydd yna arian mawr ychwanegol yn dod, ac felly pa drafodaethau sydd yn digwydd efo rhywun fel y Gweinidog Addysg er mwyn sicrhau bod yna gynlluniau yn barod i fynd, o ragweld y tebygrwydd y bydd yna fwy o arian yn cyrraedd Cymru?
Thank you, Chair. If I could just pick up on that final response in terms of education and the need for additional funding. You mentioned at the outset the dramatic announcements that come from time to time from the UK Government in terms of significant additional in-year funding. What forecasts can you make that there will be additional significant funding emerging from that, and what discussions are happening with people like the education Minister to ensure that there are plans that are ready to go, in terms of forecasting the likelihood of further funding coming to Wales?
We get almost no advance warning of additional funding that does come to Wales, generally speaking, so it's often been the case during the pandemic that we've been finding out about announcements at the same time as everybody else, when we turn on the news or when we hear about things on news media. That's been an unfortunate way of working, I think, through the pandemic. It has, certainly in the earlier days of the pandemic, been the case then that we would have these announcements and then officials would be working to explore whether or not there was additional consequential funding attached to them, or whether it was something that was being announced from within a UK department's existing budgets, for example. That's been difficult, which is why then we agreed the guarantee of funding.
But we have come to points within the year where we understood the guarantee was our full guarantee for the year. So, the message was, 'This is your entire envelope for this financial year; there won't be any additional funding.' And so you naturally cut your cloth accordingly. However, it might be the case then, as it has been, that a week, several months later—who knows—you get a large amount of additional funding as well. So, that's been quite unsatisfactory in terms of budget management. But we have been seeking to explore what more we can do in-year. So, the additional funding of £40 million announced by the Minister for Education just on Monday of this week has been really important in terms of addressing student hardship, particularly in respect of those students who are struggling financially, but also in terms of their well-being as well. So, we're trying to explore what more we can do, both in-year and then what the needs might be for future years as well.
It's that particular point I'm looking at, really—the need in future years. If we know that there could be substantial money coming, how much planning is happening in terms of how that money could be spent? What is our aspiration, if you like, if that money comes along? How much planning is happening around that?
I know the education Minister is very focused on the recovery and the catch-up work, and I'd be happy to ask her to provide committee with more detail of that work. But in terms of what money we know is coming, actually, that's a very difficult picture, because this next financial year we will only have, as things stand at the moment, £766 million of additional funding for COVID, and that compares, of course, with the £5 billion that we've had in this financial year. We also know that the UK Government has only allocated around £32 billion of £55 billion that they've set aside for COVID, but we understand that a significant part of that residual will be for UK-wide measures—so, the continued roll-out of the vaccination programme, for example, the work of the lighthouse labs, and so forth. There is still a large degree of uncertainty as to additional COVID funding next year. I would imagine that there would be some additional funding beyond the funding we've had in the settlement thus far, but it's very difficult to say just what that might be, and in relation to what UK Government activity.
I've got hands going up all over the place here, now. Margaret Davies first of all, then Matt Wellington, then Andrew Jeffreys, and Rhianon also would like to come in afterwards.
Thank you, Chair. I think my point was a broader point about beyond 2021-22, in terms of not having that settlement and the certainty that the UK Government have provided for the schools funding in England, for education. So, we only have the settlement for 2021-22. We need to be able to see what the full picture looks like across the whole of the Welsh Government budget in order to understand what that means in terms of our overall settlement. So, I think that's just one of the challenges of only having budget certainty for one year.
Thank you. Matt.
Thank you, Chair. I think the other side to the money is the ability to plan in the knowledge of what the impacts might be. There's such significant uncertainty at the moment that official data sources, obviously, are trying to catch up with the pandemic. There's still a great deal of uncertainty about what exact path the pandemic might have. So, as ever, we're always actively monitoring the latest data, the latest information. We're trying to do what we can, but it's also worth recognising the uncertainty about what the impacts might be, particularly as, even now, we're seeing a third variant of the pandemic since the last session. So, it's the scale and pace of the change as well, and the ability for us to respond to that, again, while we're taking steps to monitor more information, looking at whatever information we can as regularly and actively as possible.
Thank you. Andrew.
Matt and Margaret have covered the matters I was going to—
There we are. Okay. Rhianon, you wanted to pick up on something as well.
Basically, I'd like to understand more fully whether there is any reason why the bigger picture, as has been stated, can't be articulated. Is there any real challenge to the ability of the UK Government to be able to articulate out of this £5 billion why there's not more certainty for Wales? It just smacks, really, of poor management. Is there a particular reason that can be pointed to as to why Wales does not have certainty at this time?
Now there's an invitation for you, Minister.
No, we have obviously sought greater clarity on what additional funding might be coming, but, actually, we've got the same challenge within this financial year as well. So, we understand that the UK Government still has significant funding in its coffers that hasn't yet been allocated, but which has been earmarked for the COVID response. Now, are we going to find ourselves in the position, as we are tabling our third supplementary budget very shortly, really late on in the financial year, of finding out that we have an additional allocation coming to us as well? That is why that kind of year-end flexibility is so important. But, no, we don't have that clear picture as to why such a small amount of additional COVID funding has been allocated for next year.
Thank you. Diolch. Siân.
Felly, jest i gario ymlaen i edrych ar sgiliau ac ailadeiladu cyflogaeth, unwaith eto mae yna feirniadaeth nad ydy'r cynllun adfer yn uchelgeisiol iawn. Beth yw'ch ymateb chi i hynny, a sut mae'r cyfrifoldeb am ddatblygu a gweithredu'r cynllun ailadeiladu o fewn Llywodraeth Cymru yn cyd-fynd â'ch rôl chi?
Just to continue looking at skills and reconstruction of employment, once again there has been criticism that the recovery plan lacks ambition. What's your response to that, and how does the responsibility for developing and implementing the reconstruction plan in the Welsh Government fit in with your role?
I think the reconstruction plan has been a really, really valuable piece of work in terms of collating, really, the views of a very large section of Wales. So, the plan itself is the product of more than 2,000 responses that we had to our consultation round-tables, which the Counsel General undertook with Wales-wide and international leading experts and thinkers in this kind of area, and also the work that has been undertaken across Government as well. So, I think that it is an important building block, really, for the recovery. Its immediate plan, though, was to guide the additional funding we provided—that additional £320 million of reconstruction funding—so that we were in a good place to start the recovery.
And those eight key themes that the report also identified as being priority areas for reconstruction and recovery have guided our budget process this year. At the last committee, I think I tried the Chair's patience slightly going through all eight of those areas and giving some examples of the additional funding that we've made in response to that piece of work. I think it has been really useful in terms of guiding us through the difficult path of starting to look towards recovery and making the right kind of allocations for that. And it's been very much an inclusive and co-produced piece of work.
Sorry, can I ask, Siân, just to interject, do you feel that maybe the recovery work and the reconstructing work have been concluded prematurely? You've told us on a number of occasions that everything is still changing and the goalposts are always moving, and, really, that work mustn't be set in stone now, must it?
No, the recovery work is definitely very, very fluid indeed. So, we were able to make some in-year allocations this year, particularly on the capital end of things to start some kind of reconstruction. We were able to move quickly on a number of those important allocations, especially during those months that were less difficult for us during the course of the year. But, equally, this plan sets the building blocks for the future. It's not set in stone; it highlights the priority areas that are going to be important regardless, I think, of what happens. These are the areas that people tell us that they very much care about for the future. So, the important work on town centres, for example, that's not going to go away; we know the challenges are very much continuing there, and that needs to be a significant area of focus. And the focus also on mental health and social care; those problems aren't going to go away either and will definitely need to be addressed as we move through recovery. So, I think that the plan is versatile and wide-ranging in order to enable us to use it usefully.
Diolch. Sori, Siân; mi wnes i dorri ar draws.
Thank you. Sorry, Sian, for interrupting you.
Mae'n iawn. Beth mae'r diffyg cyllideb ar gyfer yr adfywio wedi'ch atal chi rhag buddsoddi ynddo fo, a pha fuddsoddiadau ydych chi'n eu hystyried o gronfeydd wrth gefn, cyllid ychwanegol posib o'r Deyrnas Unedig, neu drwy ddefnyddio cyllid arloesol? Dwi'n gofyn yr un cwestiwn mewn ffordd wahanol, really.
It's fine. What has the lack of budget for regeneration prevented you from investing in, and what investments are you considering from reserves, through potential additional funding from the United Kingdom, or through the use of innovative finance? I'm asking the same question in a different way, really.
The difficult capital settlement that we've had this year for the next financial year does constrain us in terms of what we would like to do. So, as I said to committee previously, our overall capital settlement for next year is some £130 million less than it is for this year, and, of course, when you combine that with the restrictions on our borrowing, it does mean that there is always more that we would want to do. We do have a really strong pipeline of regeneration initiatives that we would want to bring through as well, and we're doing the additional work on the next iteration of the Wales infrastructure investment plan. So, there's plenty more that we could do if we were to have additional capital.
We understand that, potentially, the shared prosperity fund, or the levelling-up fund, will be potentially primarily a capital fund, so there might be additional funding from those funds coming to Wales, but as yet we don't have an indication. It might be the case that we find ourselves at the 3 March budget, which the UK Government is laying, in a much clearer position about potential additional funding for capital, and we might be able to say more about where our priorities would be. Clearly, it will be for the next government to set, through its first supplementary budget, what the allocations would in fact be, but I think it's fair to set out where priorities would lie, should we be in a position to deliver on those.
We've talked at length, I think, in the Senedd Chamber about the mutual investment model, and the role that that's playing in terms of the A465 scheme, which is very closely aligned to our Valleys taskforce objectives. On a smaller level, then, we do have some important allocations additionally this year in respect of regeneration—so, an additional £3 million to support our high streets and town centres, recognising their important economic role, and an additional allocation of £5 million to support the wider regeneration activities through the town-centre loans programme. I'd encourage colleagues to explore whether there are schemes happening locally, and we can send information to any Members who want to find out what's happening locally, because I've been really impressed by what I've seen through the town-centre loans scheme in terms of the regeneration activity that is delivered there. So, I'm very pleased to have had some additional firepower behind that for the next financial year.
Diolch yn fawr iawn. Mike Hedges.
Diolch, Cadeirydd. As we're well aware, pre pandemic there was a gentle movement in the economy for more homeworking, more online shopping and more virtual meeting. That has been turbo-charged by the pandemic, and I for one do not believe we're going to go back to February 2020 when the pandemic comes to an end. What assessment have you taken of the effect that will have on certain areas and localities, as well as on certain industries? An example is city-centre food provision for people working in offices, which may well never get anywhere near the level it was pre pandemic.
I think we're still continuing to understand the impact of the pandemic, particularly on businesses. We've sought to keep as many businesses going and as many jobs in place as we possibly can through the pandemic by providing around £2 billion of additional support for business, but that important question about how society has changed and will continue to change is going to provide challenges and opportunities for businesses. I know some of them are starting to feel some of the impact already. In terms of town centres, though, and increasing and continuing that footfall to support those businesses in town-centre areas, we're very much focused on housing-led regeneration within town centres. Mike and I are both here in Swansea, and we've seen some good examples of that transforming High Street in Swansea, working alongside the social landlords to do that. We're also providing funding through this budget for the Transforming Towns initiative, which is looking at co-location working hubs, particularly in regard to a number of areas across Wales, and when we have some more information on those co-location hubs, I know that we'd be keen to provide that. And also just the general support for digital, I think, is very much increasing. Of course, the UK Government, really, is in charge of telecommunications infrastructure, but we've managed to make some serious investment, and our interventions have made around 800,000 properties in Wales have digital access in terms of superfast broadband connectivity, which they simply wouldn't have had otherwise. But, again, this is another area where we need to continue to work and to learn from the analysis of what might happen with the economy as we move forward.
Matt wanted to add something as well.
Thank you, Chair. Just to build on that point, I think a lot of international commentators at the moment are still uncertain about quite how much some of these changes will sustain. The term 'Zoom shock' is emerging particularly about exactly what this—you know, how much this—[Inaudible.] There's significant uncertainty at the international level about which scenario will emerge. We're also very minded about some of the disproportionate impacts some of this could have as well. So, I think we're very closely following the international evidence, but even internationally there's a lot of uncertainty about how we'll emerge from the pandemic, particularly the digital changes that will embed.
I think that I can say what is going to happen. It'll be somewhere between what it was and what it is now, and it's where it is in that region that's going to be the big key. But there are advantages, of course, for people not travelling. I cannot be the only person that's noticed on Radio Wales in the morning that, unless there's an accident, there aren't traffic problems on the A470 and on the M4 around Newport, which used to be on every morning. So, having this happening—really, how are you going to work to support remote working? Because people working from home, if given a choice, would probably work from home three or four days a week and go into the office once a week. On remote working, can I just say I'd love these Thursday morning meetings to continue remotely? I don't think there is any possibility of Senedd meetings continuing to meet remotely, because they don't work effectively, but when we've got 12 of us on a screen here, it's a lot easier than 12 of us making our way to Cardiff.
Well, I'll leave that final one for the Chair to consider for the future meetings of the committee. But I agree; we have come to, I think, a transformational point in terms of the way in which we both live and work, and there are going to be huge repercussions across all Government portfolios in that regard. Housing comes to mind; to what extent are the houses that we build currently exactly what people are going to be looking for in future? If you're homeworking in a different way, you might be looking for a different kind of home, and also that premium of living very close to your employment potentially is less valuable to you in future, because you can undertake your work from home and maybe only go in, as Mike suggests, once or twice a week. So, lots of different things for us to consider.
I think that this is why the additional funding that we've put in place for next year—or the new funding we've put in place for next year—for the Centre for Digital Public Services is going to be really important. So, that's £4.9 million of funding. That centre is specifically looking at how we can transform the way we deliver public services in Wales through the use of digital. I think it's a really timely investment. Actually, we were starting to work on this idea before the pandemic came along, but I think it's given this initiative new importance and new impetus now.
Andrew wants to come in as well, and then Matt.
I think one of the most important aspects of this is the potential differential impact of some of these trends, both geographically—different impacts on different parts of Wales, maybe arguably reversing some of the trends that we've seen over the past 20 or 30 years towards concentration in cities and in different directions—but also the differential impact on different groups in society, different types of work that are more or less susceptible to working from home. So, in addition to looking at the big trends, we also need to try and understand the differential impact of those trends and the implications, inevitably, then for policy and the kinds of things that Government is particularly concerned to act on.
Thanks, Chair. Just to build on Andrew's point, this is part of the work that's being taken forward to develop the successor for the current Wales infrastructure investment plan, thinking about the role of infrastructure in the future, digitally included housing infrastructure, thinking about not just where you put infrastructure, but how it's going to deliver as much as possible—so, you know, again, some of these trends and how they play through. There's work already trying to consider how policy would need to shift in the future, and budgets alongside them.
Can I thank everybody for all the answers? I actually agree with Andrew Jeffreys, but I think the question is: where in the budget can I find that expenditure?
Sorry, Chair, I missed the start of the question. It was a bit quiet.
I agree with what Andrew Jeffreys said about the direction we were going, but where in the budget can I see the funding to support that?
Well, you will see it throughout the budget in terms of the decisions that individual Ministers are taking from a policy perspective. I'll give an example of—. Andrew Jeffreys just referred to housing, and you've talked about the importance of being able to work effectively from home, so Julie James, within her portfolio, has taken a policy decision to try and ensure that new housing built in the future is digital enabled, so it's not something that you have to come back to and backfill to provide that digital connectivity; actually, it's built into the planning and so on. So, you can see it in the kind of policy decisions that we're taking, as well as budgetary decisions.
In terms of a specific budgetary allocation, though, we're investing an extra £2.8 million in the public sector broadband aggregation. That brings our total investment there next year to £11.5 million. That will provide connectivity and digital services to the public service in Wales, and will enable greater mobility of working from people who are working in the Welsh public services. So, that's an example of where we're providing opportunities for more agile working in response to the pandemic.
I thank the Minister for that answer. Unfortunately, with housing, many of us are having difficulty in getting private developers to actually build roads of adoptable quality and to put street lighting in of adoptable quality and to put drainage in of adoptable quality. I wish the Minister very well in trying to get them to do something in addition, when we can't get them to do the basics, but I won't pursue that any further.
The final question I've got is this. We all talk about green industries and moving towards a green recovery, and I think there are very few people who don't support having a green recovery. How is this budget going to help us along that route?
Even early on in the pandemic, when we started thinking about recovery, the desire was there to ensure that we build back better, and that absolutely is still the aim, very much with a focus on a green recovery. You'll see—and I think and I hope that you'd agree—in the budget for next year some significant allocations there. Last year, in the budget, I announced an additional package of £140 million of capital funding to help tackle climate change and address the climate emergency. That was a really important step forward, and actually we've managed to maintain the vast majority of that additional £140 million funding in next year's budget, but on top of that put in place a further £80 million of capital to deliver interventions to promote decarbonisation and biodiversity, alongside an additional £17 million of revenue funding as well. Some of that funding, for example, is in terms of active travel, bringing our annual funding next year up to £50 million, which is a huge increase on where we were at the start of this Senedd term.
There is some reflection on the fact that the Carbon Trust is also developing an NHS decarbonisation strategic delivery plan for us. That's going to be completed early in 2021, but in anticipation of that I've allocated £6 million in the budget for additional capital funding to deliver the energy efficiency opportunities that that plan will identify. Also, again, in the budget for next year, there are some very specific allocations in respect of the carbon agenda as well, so additional funding for the development of the National Slate Museum in Llanberis, as well as initiatives to reduce the carbon footprint of the National Library of Wales, the National Outdoor Centre for Wales at Plas Menai, and also further funding in respect of decarbonisation and moving towards that net-zero pilot project for schools, as well. I know that the future generations commissioner, in her evidence to the committee, has recognised the strong progress that we have been making, and I'm absolutely committed to taking that forward, but all the time recognising that some of the major levers in this area, in terms of carbon pricing, regulatory change and so on, are sitting with the UK Government.
I'll pass on to Nick Ramsay, who's got a number of questions on this area. But what I would much prefer to hear Ministers saying is, 'We're looking for reduced travel'—as opposed to active travel or alternative travel—'We're looking to reduce the amount of travel people are doing'. It does actually have benefits for the economy and everything else. But that's just a comment. Chair, I'm not doing your job, but I think Nick's got some questions on this.
He does, indeed. Thank you, Mike. Okay, on to Nick, then. Diolch.
Sorry, I just muted myself after I was unmuted. I think Mike has actually strayed into the area I was going to ask about and made some important points about the more Zoom meetings you can do and whatever, then, yes, there is certainly less strain on the transport network. So, a broad question for you, Minister: are you confident that this budget does address the climate challenge and the need, as Mike said, to build back better and to build back greener?
Yes. I think that the kind of allocations that I've just described to Mike Hedges, and the fact that we've managed to maintain most of the additional £140 million from last year, which, at the time, was a real big step forward, and not only do that but augment it by an additional £80 million capital and the £17 million revenue this year—I think that does demonstrate our continued commitment in this area.
And in terms of the old adage about silos and making sure—this can't just be an add-on, can it, there has to be spending across all portfolios. So, are you looking at spending in the health budget and in the culture budget and making sure that there's a proportionate amount being spent on the climate issue?
We have really good structures in place in terms of addressing the climate emergency within the Welsh Government. So, we have our cross-ministerial decarbonisation Cabinet sub-committee, which is chaired by the Minister for Environment, Energy and Rural Affairs. And that is very much the governance framework that holds departments to account to one another, but also works together, then, to address issues of common concern and is an opportunity, really, for us all to reflect on the fact that each of us has responsibilities in the area of decarbonisation that we need to deliver on, and it's not purely in the purview of the Minister for Environment, Energy and Rural Affairs.
We have similar structures in place for other parts of Government where there is an important imperative that we work together. I chair a ministerial assets group, which looks at Welsh Government land, with a focus on what we can release and use for social housing in particular in the first instance. There's also a ministerial group on digital and data, which I've previously chaired and is now chaired by my colleague Lee Waters. That, again, looks across Government at what we can do to work together to avoid that kind of silo working in these important areas. The inter-ministerial group on paying for social care is another really good example of where we work together across Government, recognising that some of these big, chunky issues aren't things that a single ministerial portfolio is going to be able to address. So, I think we've made good progress in terms of putting the right structures in place to ensure that there's that breakdown of any potential silo working.
In terms of the carbon footprint and how you develop that across portfolios, how are you intending to develop that in future so that the carbon footprint of policies really does become embedded in future budgets? And perhaps if I add my next question, as well, onto that, involving the future generations commissioner, something we've been looking at on the Public Accounts Committee: what's the involvement of the commissioner in terms of developing the budget to ensure that it does meet the legislation?
On the first part of the question about measuring the carbon impact of our spend, you'll see that, for the first time this year, we've made progress through our budget improvement plan to undertake the work on starting to provide an analysis of Welsh Government spend on carbon emissions. So, this is very much just a first step down that road. So, at the draft budget, we provided an indicative assessment, based on last year's funding for the health and social care portfolio, to give us an idea of what was possible, and we intend to provide more detail on this year's budget alongside the final budget. So, that's been a really important and useful piece of work, but it also has shown the limitations of this kind of approach as well, because it does provide an estimation of the supplier emission associated with the goods and services that the Welsh Government purchases through its budget, but what it doesn't do, then, is go on to model the carbon emissions or the savings associated with the outcomes arising from this spending. I think that's something that could potentially be done at a more granular level on particular interventions within portfolios, rather than, necessarily, the whole Government budget, because, when we think about the Government budget as a whole, around half of it is related to pay, so, actually, if you wanted to go the full extrapolation of all of this, you would look at what individuals were spending their pay on, and what the impact was of that, just because such a large part of our Welsh Government budget relates to pay. I think there's certainly more that we can do to improve our understanding of carbon impacts, but we've made, I think, good progress this year.
In terms of discussions and liaison with the future generations commissioner, as part of my budget preparation, I had a meeting with all of the commissioners, the statutory commissioners, to discuss what they felt they would like to see in the budget, what they felt the real challenges were that needed addressing, and also to consider whether they saw any opportunities for work that they thought now has had its day and that we should be looking to do things differently in future. So, that was a really important and useful meeting.
I'll ask Matt, if I may, to come in and just describe some of the work that officials do with the future generations commissioner's office in order to help support our budget development as well.
Thank you, Minister. We have regular engagement throughout the year with the commissioner's office around issues like some of the areas we've taken forward in the budget improvement plan. We're regularly engaging with them on some of the new research that they're doing; they're doing a lot of various pieces of research through the New Economics Foundation. So, there's regular engagement throughout the year, throughout the budget, and that's something we always maintain, and we're always very interested in the commissioner's views on certain budgetary matters.
Okay, diolch. Yes, Margaret wants to come in as well.
Thank you, Chair. It was just to add in terms of carbon impacts and decarbonisation. In the same way that Matt said about the digital being a key feature of the future Wales infrastructure investment plan, it's fair to say that decarbonisation, obviously, will be— [Inaudible.]—as well, so that's something that we'll be taking forward in the coming year.
Okay. Thank you. Just a couple more questions from myself, and maybe Members might want to raise further issues afterwards. Poverty, of course, is a big priority for all of us really, isn't it—tackling poverty has to be one of the key priorities here. And we know that the pandemic is impacting more on people who are in lower-paid jobs, particularly on those who are in fragile employment. So, could you tell us how you've adapted your policies and your allocations to try and alleviate poverty in your budget?
Yes, certainly. I think some of the work, particularly, in the budget on skills, on employment, is important, because that, obviously, is the most important way that we can support people to not fall into poverty in the first place, but then also to relieve poverty where it does exist. And within the budget, you'll see that there are a number of steps that we've taken to support those who are in fragile employment. So, we've maintained our COVID commitment, which we made earlier on during the pandemic, to offer people over the age of 16 support to find work, to pursue self-employment, or to find a place in education or training. And then we've also put in place, of course, those hiring incentives for employers to take on new members of staff as well.
So, the range of support that we've put in place, and that you'll see in the budget, does include the work for the Working Wales service, and that provides that national entry point, then, to careers advice, to guidance, and to onward referral to employability support programmes. It expands our approach to ReAct and access programmes across Wales, and also provides opportunities for people through the Wales Union Learning Fund, our flexible skills programme, and we've talked quite a bit in committee about the personal learning accounts as well. So, there's very much a strong focus on work and employment.
On top of these programmes, we've allocated an additional £6 million in the budget to boost specialist employment advisory support and intensive mentoring to people who are either at risk of poverty, through local authorities—or facing poverty—through our Communities for Work Plus. So, all of these aspects are really important, but also I'm aware, as I know all colleagues will be, of people who are finding themselves in absolutely desperate situations right now. So, we've allocated significant additional funding through the pandemic through the discretionary assistance fund, and you'll see the fund continued into next year. But we've also loosened some of the restrictions around that fund so that people can now make a larger number of applications to that fund within one financial year, for example, to try and get them over the particularly difficult situation that they are in.
And then, also looking to what more we can do to alleviate poverty in terms of housing poverty, you'll see that the allocations in next year's budget have been particularly welcomed by the housing sector, in terms of further funding for the housing support grant and also the homelessness prevention grant, bearing in mind how important these particular aspects are as well.
And then, finally, additional finding for next year for advice services, recognising that people, many people probably for the first time, are now finding themselves in need of advice. And for children, of course, we've got the additional funding for free school meals and also the £2 million additional for the school holiday enrichment programme. So, those are some of the examples of the allocations that you'll see in the budget.
Thank you for that. You emphasised the importance of skills and employability. So, how do you respond, therefore, to concerns that the future generations commissioner has expressed around the allocation specifically for skills and employability, which she says is insufficient to keep pace with both rising demand and a rapidly changing labour market? So, you might be doing things, but the suggestion from the future generations commissioner is that it's not enough.
So, I'm very aware, actually, that we need to do more in this area, which is why, through this financial year, we've made additional funding—the £40 million package I have in mind—regarding the support for employability that we announced earlier on in the year, and some of that was specifically in relation to apprenticeships. So, I'm keen to explore what more we can do, potentially, through the COVID-related funding in that field between the draft and the final budget, and I'm having some further discussions with Ken Skates in that regard. So, this is, as I say, an area where I recognise that there's important further work to be done, and I hope to say something at the final budget on that.
Okay. And we've taken evidence, as I'm sure you're aware, from the Bevan Foundation and the Joseph Rowntree Foundation as well and, obviously, there was a clear focus on poverty, particularly, in much of that discussion. One very interesting point they made was that all of these allocations and many of those you've listed now, in terms of the various hardship funds and the pupil development grant, the various support schemes—they're quite disparate, aren't they? There's a plethora; there's a large number of those schemes. The suggestion was: should the Government not be looking to introduce a bit more coherence and maybe boiling it down to a much more simple process, where there are fewer schemes out there, but, actually, that might introduce some more efficiency into the system? And I was quite struck, actually, by the suggestion—or what they told us in evidence was—that, when you add up all of those schemes that Government have to support people in poverty or people who need particular support because of poverty, the global figure for that is actually higher than the whole of the jobseeker’s allowance and universal credit bill for Wales.
I think that we're already undertaking that kind of rationalisation of existing support, and I would point to two things—first of all, the Working Wales approach, which, essentially, is that single door into support for employment and employability, and I think that that meets the kind of ask that you've described there. And also, on housing, the housing Minister is working very much on that kind of 'no wrong door' approach to support people who are homeless as well. So, I think that what you describe is happening, and perhaps we need to find a way to articulate that more effectively.
Okay. Just to pick up finally from me, then, as well, we know that you told us previously—and the Minister for Environment, Energy and Rural Affairs has also reiterated the fact—that you're still hoping to extract the money that wasn't forthcoming in the spending review for agricultural payments in Wales from the UK Government. I think you've suggested previously that you're particularly keen to get a commitment from the UK Government to cover the £42 million that isn't there because of pillar transfer. Can you update us? Has there been any progress or have you had any kind of response?
So, we understand from Her Majesty's Treasury officials—in the last couple of days, actually—that the Chief Secretary is minded not to agree our request for the return of the £42 million. We haven't had that notification formally; we'd expect that through the UK supplementary estimates process, which we're likely to have information on very shortly. But that, certainly, is the understanding that we have from officials. As soon as that's confirmed, Chair, obviously I'm keen to clarify that for committee, but also, then, set out what our response would be to that.
Yes, okay. Well, thank you for that information. That's hugely disappointing, I have to say, but we'll await formal confirmation. Rhianon.
Thank you, Chair. And very quickly, if I may, Chair, in regard to the announcement of £8 million for Bristol Airport, has there been any further confirmation that Cardiff Airport will receive similar consequential funding? Thank you.
So, it's my understanding that there is no additional funding coming for Cardiff Airport in that regard. I'll turn to Margaret and Andrew just to check if they've heard anything different in the last couple of days.
Andrew has indicated. Andrew. Oh, and Margaret. Okay, Andrew first, then Margaret. Sorry, Margaret.
Well, we might be saying the same thing, but—. So, that scheme that was re-announced, I suppose, yesterday by the UK Government—initially announced in November—is an England-only scheme, so only for airports in England. But we understand that the funding for that is within the funding that's—we would have had a consequential from that as part of our £5.2 billion funding that we've had so far this year for COVID-response type stuff. So, that's an England-only scheme.
Margaret, anything to add?
No. There we are. Okay. There we are. Do Members have any further questions or any further points you wish to raise? No.
Dyna ni. Ocê. Wel, diolch yn fawr iawn, Gweinidog, a diolch ichi am ymuno â ni, a'ch swyddogion, unwaith eto. Mi fyddwn ni yn amlwg yn ystyried eich tystiolaeth chi ac yn adrodd ar y gyllideb ddrafft, yn cyfrannu i'r ddadl, dwi'n siŵr, ac yn edrych ymlaen i weld y gyllideb derfynol pan ddaw honno hefyd. Felly, diolch am ymuno â ni.
Well, thank you very much, Minister. Can I thank you for joining us, and your officials, once again? We will be considering your evidence and will be reporting on the draft budget, contributing to the debate, and look forward to seeing the final budget when it comes as well, So, thanks for joining us.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod, ac o'r cyfarfod ar 27 Ionawr 2021, yn unol â Rheol Sefydlog 17.42(ix).
that the committee resolves to exclude the public from the remainder of the meeting, and from the meeting on 27 January 2021, in accordance with Standing Order 17.42(ix).
Cynigiwyd y cynnig.
Mi wnaiff y pwyllgor nawr symud i sesiwn breifat. Ac yn unol â Rheol Sefydlog 17.42(ix), dwi'n cynnig bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod hwn, a hefyd o'r cyfarfod yr wythnos nesaf ar 27 Ionawr. Ydy Aelodau i gyd yn fodlon â hynny? Iawn. Diolch yn fawr iawn. Mi arhoswn ni, felly, cyn parhau, tan i'r darllediad ddod i ben.
The committee will now move into the private session. And I propose, in accordance with Standing Order 17.42(ix), that the committee resolves to exclude the public from the remainder of this meeting, and also the meeting next week on 27 January. Are Members content? Fine. Thank you very much. We will wait until the broadcast comes to an end.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 11:08.
The public part of the meeting ended at 11:08.