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  1. Nick Powell

Finance Minister: Chancellor's 'smoke and mirrors' can't hide cut for Welsh Government

The Treasury has confirmed that the Welsh Government's budget will fall by 4.5% in real terms as a result of the Chancellor's spending review. Modest cash increases in the revenue budget, which finances day-to-day expenditure will be more than cancelled out by inflation.

  • 2015/16: £12.9 billion
  • 2016/17: £13.0 billion
  • 2017/18: £13.1 billion
  • 2018/19: £13.2 billion
  • 2019/20: £13.3 billion

However, there's better news for the Welsh Government's capital budget, which pays for new roads, schools and hospitals. That's going up by 4.7% -a cash increase from £1.5 billion to £1.7 billion by 2020. So the Chancellor's promise of a budget totalling £15 billion will be kept and he's also committed to keeping overall spending in devolved areas 15% higher in Wales than in England until the next Westminster election.

People will not be misled by this smoke and mirrors approach to public finance: this is the slowest recovery in living memory and family and national prosperity is being held back on a daily basis. Today’s Spending Review shows that the people of Wales will continue to suffer from the Chancellor’s failure to meet his own fiscal targets. He gives with one hand and takes away with the other.

Although today’s commitment towards a funding floor that will ensure that in future public spending in Wales is at 115 per cent of the England average is welcome this is unhelpfully restricted to this Parliament. We haven’t got fair funding yet and it is essential that there is an inter-government agreement on the way forward. The devil is very much in the detail as to how this will work in practice.

– Finance Minister Jane Hutt AM
  1. Nick Powell

Extra cuts will cost Wales tens of millions says Finance Minister.

Finance Minister Jane Hutt says she expects to have to save "tens of millions" from this year's Welsh Government budget as a result of spending cuts announced today by the Chancellor, George Osborne.

Whitehall departments were asked to identify further savings after the election and today the Chancellor said they would total £3 billion. He's also raising another £1.5 billion by selling the government's remaining shares in Royal Mail. Some of the Whitehall cuts will produce so-called "Barnett consequentials", which will reduce the Welsh Budget.

The exact amount will be spelt out in a letter from the Chief Secretary to the Treasury to the Welsh Finance Minister. Treasury sources won't say what indicative figures have been given to the Welsh Government but the First Minister has tweeted a figure of £84 million.

ITV News understands that the Welsh Government will be given the alternative of deferring the savings until next year. Tonight the Welsh Secretary, Stephen Crabb, defended the cuts as both fair and necessary.

The reality is we need to keep on making tough decisions to get the public finances back on track and secure the economic recovery. Whitehall departments have shown that by being more efficient, they can deliver more for less. This settlement is fair and allows us to keep up the momentum on sustained growth across Wales.

– Welsh Secretary Stephen Crabb MP


Euro aid spending approved

A detailed agreement between the Welsh Government and the European Commission has been reached on how £2 billion of European aid will be spent over the next seven years.

It's split between a regional development fund, worth about £1.1 billion and a smaller social fund, which supports skills development and helping people into work. Most of the development money will be spent on the European Commission's objectives, including research and innovation, the competitiveness of small and medium sized enterprises, renewables and energy efficiency,

But £252 million will be spent on transport, which the Welsh Government argued was also a priority for economic growth. The metro scheme to improve public transport in Cardiff and the Valleys will be a major beneficiary but the Commission has also agreed to some of the money being spent on road improvements to the A40 in west Wales and the A55 in the north.

Wales is the first to adopt programmes in the UK and indeed, it is a model for the rest of Europe's regions in terms of 'partnership in action'. Thanks to the tireless work and dedication - from ministerial level to the grassroots, we are able to launch these vital programmes for investments that will set Wales on the path to smart and green growth - connecting people, skills and jobs

– European Commissioner for Regional Policy Corina Cretu

The EU is a unique partnership of nations working together for the benefit of their citizens, and as a pro-European Government we value the role of Wales in Europe and to the UK’s membership of the EU.

– Finance Minister Jane Hutt AM

European aid will have a real impact says minister

The Welsh Government has welcomed the agreement on how the next £2 billion of European aid will be spent in Wales. The minister who negotiated the deal, Jane Hutt, says that it will deliver real economic growth and jobs.

This announcement is a significant milestone with the European Commission confirming Structural Fund allocations to Wales of over £2 billion. This is great news for Wales and this new EU funding will have a real impact on the Welsh economy and job creation. It will help us deliver more innovative and inspiring EU-funded projects.

– Finance Minister Jane Hutt AM

There's been criticism that previous rounds of European aid have been spent on too many small projects, which though worthwhile in themselves did not improve the prosperity of West Wales and the Valleys. The area remains one of the poorest parts of the entire European Union.

Whilst this funding will be welcomed, we must not forget that it has only been granted due to the failure of successive Welsh Labour Governments to improve Wales’ economic performance in previous tranches. Back in 2000, former First Minister Rhodri Morgan described Objective 1 funding as a ‘once in a lifetime’ opportunity. Well here we are again, and under Welsh Labour parts of Wales remain amongst the poorest areas in the EU, never mind the United Kingdom

– Welsh Conservative Leader Andrew RT Davies AM

One of the main beneficiaries of the new funding will be the South East Wales metro plan to improve public transport, after the Welsh Government successfully argued in Brussels that some of the money had to be spent on transport if the aid programme was to achieve any lasting economic improvement.

Finance Minister: 'Another Budget of missed opportunities for Wales'

According to Finance Minister, Jane Hutt, the UK Government's Budget is another missed opportunity for Wales doing nothing to boost economic growth.

But the Minister did welcome confirmation that the Wales Bill will be published tomorrow and said that this was an important step forward for Wales.

Since 2010 we have seen record breaking cuts to the Welsh Budget. By 2015/2016 , it will be 10% lower than when the current UK Government came to office in 2010.

This Budget delivers some small increases but also brings significant additional burdens. It gives with one hand but takews away with the other.

The Chancellor has given Wales an additional £36m over the next two years. But at the same time we are being forced to find at least another £70m from our Budget over the same period to cover public sector pension costs

– Finance Minister, Jane Hutt


Wales should get share of HS2 funding says Plaid

Plaid Cymru is hoping to use today's debate on the controversial HS2 rail scheme to ensure extra money is given to Wales as a result. Jonathan Edwards MP has tabled amendments to the legislation paving the way for HS2 which will be voted on in the Commons today.

He says his amendment will be 'the last chance to enshrine in law' the principle that the Welsh Government should be receive funding equivalent to 5% of the cost of the project.

Plaid Cymru has fought a three year long campaign to ensure that Wales receives a fair share from HS2. The cost of the network has doubled over the summer to over £40bn according to the Treasury’s own estimates. Independent assessments by the Institute for Economic Affairs put the cost of HS2 at over £80bn. A fair share for Wales therefore would be between £3bn and £4bn.

Historically, Wales has been poorly served by Westminster Governments when it comes to transport infrastructure in our country – receiving less than half of what our population share would dictate. It’s no wonder that our transport systems are so poor.

– Jonathan Edwards MP, Plaid Cymru

Treasury says Wales did get some HS2 money but won't get much more

The Treasury has issued a further statement on the disagreement between Welsh and UK Governments over extra spending as a result of the HS2 rail scheme. Click here to read the background.

The Treasury now agrees that the Welsh Government HAS received a relatively small amount of extra money (£35m) because the Department for Transport's cash for HS2 came too late to change the formula used to decide how much money Wales gets.

But it's made clear the formula will be changed before there's any major spending on HS2 which means that Wales won't get any extra money if the project finally gets the go-ahead. A Treasury source described the dispute as 'overplayed.'

At the Spending Round in June, the Welsh Govt received a capital consequential of £84.5m. This was based on a £2bn increase in the total DfT capital budget. The Barnett formula calculation used the framework set out at the Spending Review in 2010, which set out 73.1% per cent of changes in DfT spending are subject to Barnett consequential for the Welsh Government. The framework is expected to be updated at the next full Spending Review, as is usual practice, and will reflect the latest information on departmental spending.

– Treasury spokesperson

Welsh Government insists it's right in Treasury dispute

A Welsh Government spokesman has further clarified why Finance Minister Jane Hutt is sticking to her guns in a disagreement with the UK Treasury. The dispute is over whether or not Wales has received a share of spending on the controversial HS2 rail scheme.

Jane Hutt has already told ITV Cymru Wales that she stands by her claim as set out in a letter to the Finance Committee. Now a Welsh Government spokesman has underlined her position.

The Finance Minister's letter to the Assembly's Finance Committee is accurate. At the Spending Round in June, the UK Government allocated funding for HS2 in 2015-16 through the UK Department for Transport capital budget. This contributed to an overall increase in the DfT capital budget from £7.5bn to £9.5bn in 2015-16 - a £2bn increase. This increase includes funding for HS2. The Welsh Government received a capital consequential of £84.5m from the £2bn overall increase in the DfT capital budget.

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