Drakeford sounds alarm: £900M Welsh budget crisis – worst since devolution

First Minister Mark Drakeford has sounded the alarm over the Welsh government’s financial outlook, reiterating finances are £900m lower in real terms than when that budget was set by the UK Government at the time of the last spending review in 2021. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

The £900m figure has been referenced several times recently over spending, however the latest mention comes in a written statement updating Senedd members on Budget 2023-24 pressures. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

The statement details that the Cabinet met on 1 August to “discuss the significant financial pressures we are facing in the 2023-24 budget, and to continue preparations for the 2024-25 budget round”. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

The First Minister Mark Drakeford said, “When we made our budget for 2023-24, we drew on all our available resources to protect frontline services and provide targeted cost-of-living support to individuals and the economy. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

“But even after doing all that, our financial position after the UK Spring Budget in March, was up to £900m lower in real terms than when that budget was set by the UK Government at the time of the last spending review in 2021. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

“This is the toughest financial situation we have faced since devolution. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

“We are in this position because of the record levels of inflation we have experienced post-pandemic; because of the mis-management of the economy and public finances by successive UK governments over the last 13 years and because of unfunded commitments made by the UK Government, particularly in relation to public sector pay. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

“The Cabinet will be working over the summer to mitigate these budgetary pressures based on our principles, which include protecting frontline public services, as far as possible, and targeting support towards those at greatest need. A further update will be provided to the Senedd once this work has been completed.” ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

The announcement has prompted strong reactions from Welsh Conservative Leader, Andrew RT Davies MS, he criticised the Labour Government and their co-operation agreement partners in Plaid Cymru, accusing them of making their problems worse through “extreme ideology” and mismanagement. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

Referring to the return of £150m to the UK treasury earlier this year, Davies expressed disbelief at the current financial crisis. ‌​‌​‌​​​‍‌​‌​​‌‌‌‍‌​‌‌​​‌​‍‌​‌‌‌​‌‌‍‌​‌‌‌‌​​

The announcement has triggered Welsh Conservative Leader, Andrew RT Davies MS.

He criticised the Labour Government and their co-operation agreement partners in Plaid Cymru, accusing them of making their problems worse through “extreme ideology” and mismanagement.

Referring to the return of £150m to the UK treasury earlier this year, Davies expressed disbelief at the current financial crisis.

Welsh Conservative Shadow Finance Minister, Peter Fox MS, also weighed in, arguing that the Labour Government’s efforts were “too little, too late.”

Fox said: “Mark Drakeford’s call is too little, too late. In 2019, the independent auditor general said that despite the Labour Government having £1.20 for every £1 spent on the NHS and education in England, only £1.05 actually reaches the front line here. This is all whilst Labour continues to be the only Government in the UK to have ever cut an NHS budget on two separate occasions. All available funding must be spent on these essential areas, not top sliced for pet projects.”

With inflation remaining higher than in recent years, coupled with ongoing criticism over policies like default 20mph speed limits and the proposed increase in the number of politicians in Cardiff Bay, the debate around the budget is set to intensify in the coming months.

Responding to the First Minister’s budget update for 2023-24, assistant director of the Welsh NHS Confederation Nesta Lloyd-Jones said:

“NHS leaders welcome the Welsh Government’s honesty regarding the unprecedented state of public finances.

“Across Wales, NHS organisations currently face considerable cost pressures. Between the pandemic, rising energy costs, the increased cost of staff recruitment and retention and record levels of demand on services, NHS finances have been significantly impacted.

“NHS leaders are already making difficult decisions about spending priorities, considering where further efficiencies can be made, with more to come. While financial stability is key, the quality of services and ensuring positive outcomes for patients is vital. Decisions made now could have a long-term impact on the health and wellbeing of the population.

“Therefore, a national conversation has never been more pressing. We’re calling for an open and honest conversation with the public about what the future health and care service looks like to ensure the sustainability of health and care in Wales.”