Senedd roundup: Government writes off £470 million of NHS debt

Owen Donovan, Senedd Home

Health Minister, Vaughan Gething, has written-off the £470m owed by NHS organisations in Wales so they can focus on recovering from the COVID-19 pandemic.

Since the introduction of the NHS Finance Act 2014 a stipulation was introduced that placed a duty on organisations to break even over a three-year period.

This year’s accounts show four health boards have not been able to operate within their budgets since 2014 and together have amassed deficits of more than £600m.

The government has provided cash support of almost £470m to these health boards over this period.

Mr Gething said: “This level of historic deficit is clearly a barrier to the NHS as it starts to plan for the long-term recovery from the coronavirus pandemic and it holds these health boards back from achieving financial balance.

“Until now, there has been an expectation NHS organisations would repay this deficit and the cash support. To do this, they would need to generate underspends. I have decided the £470m of cash support will not need to be repaid and when an organisation achieves its three-year break-even duty, it will not be required to repay any historic deficits.

“This will provide certainty to these organisations, helping them to focus on the immediate recovery from coronavirus, while also planning for the future and striving for financial balance.”

New 4×4 production set to switch from Bridgend to France

Ineos Automotive has suspended plans to build a new 4×4 vehicle plant in Wales amid reports that production could be switched to a site in Moselle, France.

The company’s new Grenadier 4×4 was to have been built next to the Ford engine plant at Bridgend, which is to shut this autumn with the loss of 1,700 jobs.

In a statement released on Tuesday, Ineos Automotive chief executive, Dirk Heilmann, said: “Overcapacity has long been a major issue for the automotive sector.

‘Of course, we considered this route previously, but as a result of the Covid-19 pandemic some new options such as this one with the plant in Hambach have opened up that were simply not available to us previously.

‘We are therefore having another look – and reviewing whether the addition of two new manufacturing facilities is the right thing to do in the current environment.”

Petrochemicals firm Ineos, which is owned by billionaire Sir Jim Ratcliffe only announced that it would make the vehicle in Wales last September.

The facility in Bridgend was expected to create up to 500 jobs.

Support

The Welsh Government was reportedly providing around £10 million to bring production to Wales and the company was also set to receive support from the UK Government.

Economy Minister Ken Skates said: “I have told the CEO that abandoning Bridgend at this late stage, after so much effort and money has been invested in preparing the site, would be a terrible decision for Wales and the UK.”

“We have impressed on the company in no uncertain terms the importance of honouring its commitment to Wales and to deliver on its promise to build a British icon here in Britain.”

Plaid Cymru Shadow Minister for the Economy, Helen Mary Jones MS, described the news as “an ominous sign of things to come. “

“It’s deeply disappointing to hear that plans to build a new factory in Bridgend have been put on hold – although not a complete shock. The fact that a site on mainland Europe appears to be favoured over a site in Wales may be a sign of what we risk, post Brexit.

“It is very important that Welsh Government seeks to understand the full picture from Ineos, engage with them and try to change their minds.

Minister prioritises faster test turnaround

Health Minister Vaughan Gething said that increasing the speed at which coronavirus tests are processed in Wales is a “real priority” at Tuesday’s coronavirus press briefing.

Currently just 49.4% of test results are returned within 24-hours and 74.4% of results come back within two days.

The health minister said he was is meeting officials on Tuesday afternoon “to understand what’s being done and when I can expect to see those further improvements being made”.

The government’s scientific advisers have set 24-hours as the benchmark for a successful tracing programme and Mr Gething acknowledged that the speed of the test results makes a difference to the effectiveness of the contact tracing system.

“Because as soon as those results are available, they’re passed on to that ‘Test, Trace, Protect’ service to begin the process of not just notifying that person but obviously follow-up contact tracing,” he said.

He added he would say more on the practical changes to improve test processing speed “over the next few days”.

Strategy

The minister also said that he will publish a revised testing strategy for coronavirus by the end of next week.

He explained the benefit of conducting more asymptomatic testing was being reviewed with scientists and the chief medical officer, but added “At this point in time, the evidence still isn’t there to suggest we should have a widespread programme of testing groups of people who don’t have symptoms.”

“I can though say that I’m expecting to have a revised testing strategy with updated advice information and evidence to underpin it, and I expect to be able to publish that revised strategy before the end of this Senedd term so by the end of next week at the latest.”

Earlier in the week Welsh Conservative Shadow Health Minister Angela Burns MS criticised the slowdown in the government’s testing programme in recent weeks.

“It is a scandal that only half of Covid test results in Wales are being turned around in a day compared to two thirds of a similar number of daily tests being processed in this time just a few weeks ago. Ministers need to get a grip and turn this situation around to ensure an effective testing system in place as we reopen Wales,” she said.

Three more deaths from coronavirus were reported by Public Health Wales on Tuesday, taking the total number of deaths due to Covid-19 to 1,534.

Seven new cases were confirmed, meaning 15,900 people have now tested positive for the virus. There were 3,174 tests carried out yesterday.

School categorisations to be suspended next year

The government has announced it will suspend school categorisation for the 2020 to 2021 academic year, as part of its measures to reduce pressure on schools during the COVID-19 pandemic.

Every year, all primary and secondary schools in Wales are measured against a range of factors and placed into one of four colour-coded categories.

The system helps identify schools that need the most support and guidance, those doing well but could be doing better and those that are highly effective and can act as support to other schools.

The updated categories are published every January on the My Local School website.

Education Minister, Kirsty Williams, said: “I recognise the difficult circumstances schools are currently operating in. My priority is to allow staff to focus their energies on the needs of pupils during these extraordinary and challenging times.

“I am committed to help reduce the administrative workload on education settings, where it is appropriate and safe to do so. I have temporarily relaxed requirements to undertake national tests and assessments and also worked with Estyn to pause its inspection arrangements.

“These steps will help give schools the space to continue the fantastic work they are doing in supporting their learners.”

Kirsty Williams AM Education Minister. Photo National Assembly for Wales and licensed under CC BY 2.0

Law setting out new national curriculum introduced at the Senedd

Curriculum & Assessment Bill
Introduced by Education Minister, Kirsty Williams (Lib Dem, Brecon & Radnor)
Bill (pdf)
Explanatory Memorandum (pdf)

Why introduce the Curriculum and Assessment Bill?

The Bill gives legal effect to the proposed new national curriculum for Wales (more details here).

The principles of the new curriculum were developed by Prof. Graham Donaldson during the Fourth Senedd. A white paper was published at the start of 2019 and following consultation exercises and the advice of expert groups, a final version was published at the start of 2020.

The new curriculum applies to students aged 3-16 and will be phased in for nursery, primary and Year 7 pupils from September 2022, with the process completed when 2022’s Year 7 cohort start Year 11 in September 2026.

The only provisions relating to sixth-forms/post-16 education mention providing a “broad and balanced curriculum”.

The Scottish curriculum – introduced in 2010 as the Curriculum for Excellence – is similar to the one being introduced in Wales. An independent review is currently being prepared by the OECD on its impact, with issues emerging about narrowing subject choice (at the Scottish equivalent of GCSE and A-Level) and a failure to close the attainment gap between state schools and independent schools.

The Lowdown: Four Key Proposals in the Bill

1. Enshrines the core principles of the new curriculum in Welsh law

I summarised the core principles here, but for the sake of clarity there’ll be four overarching principles/aims to the new curriculum (Four Purposes) and instead of traditional subjects, there’ll be six Areas of Learning (Expressive Arts, Health & Wellbeing, Humanities, Languages & Literacy, Mathematics & Numeracy, Science & Technology).

Teachers and schools will be given the freedom to choose how and (to an extent) what students study in each Area of Learning. However, religious education (more later), relationship & sexuality education (RSE), Welsh and English will be mandatory (with a few exceptions, touched on below).

Digital skills, literacy and numeracy will be fully integrated across all subjects, while a local, national and international context to learning (known as the concept of “cynefin”/”habitat”) aims to ensure students understand Wales and their place in the world.

Headteachers of Welsh-medium schools and nurseries can opt-out of mandatory English until pupils reach the age of 7 to ensure pupils attending Welsh-medium settings can gain a measure of fluency before they leave Foundation Phase.

Pupils will begin to specialise and choose subjects as they get older in preparation for GCSEs, and schools must offer a choice of subjects in Year 10 and 11 – though headteachers will be able to override this if a pupil isn’t meeting attainment expectations or a subject is impractical or disproportionately expensive to teach (subject to review/appeal).

Key Stages will be scrapped and replaced with progression steps at ages 5,8,11,14 and 16 based on a teacher’s assessment of how well a student is doing and a determination of what additional support they may need.

2. The Welsh Government will use three separate statutory codes to direct schools

The Welsh Government will be required to prepare three codes to govern specific areas of the curriculum:

• What Matters Code – Sets out key concepts and expectations for what students learn at each progression step though, as said, schools and teachers will have a fair deal of flexibility.
• Progression Code – Sets out how students move from one progression step to the next.
• RSE Code – Sets out how relationship and sexuality education will be taught.

The draft codes will be subject to Senedd approval, seemingly under the negative procedure (they come into effect automatically unless MSs explicitly vote to reject them).

3. The curriculum can be amended or disapplied in special cases

The Welsh Government will be able to disapply or amend elements of the curriculum by order to specific schools or nurseries if those schools/nurseries are taking part in experiments or development work.

A development plan for students with Additional Learning Needs can also disapply parts of the curriculum, while headteachers (through powers in government regulations) will be able to disapply parts of the curriculum for any pupil for a maximum of 6 months (subject to appeal).

While Pupil Referral Units (PRUs) – usually used for children with behavioural problems or otherwise at risk of permanent exclusion – have to apply the new curriculum too, they’ll only need to do so “as far as is reasonably practical” in order to provide additional flexibility given the challenging teaching environment.

4. There are regulatory changes to religious education

Religious Education is to be reformed as Religion, Values & Ethics (RVE) – it’s actually the only specific subject dealt with in any detail on the face of the Bill, though I’m sure MSs will want to add their own as the Bill proceeds through the Senedd.

Faith schools can shape their RVE syllabus around their specific religion or denomination, but if there’s no mention of religious education in their trust deed, they’ll have to include the teaching of beliefs, religions and denominations other than the one of their school – though in such circumstances parents will be able to request that their children are taught solely to the religion/denomination of the trust deed.

The RVE syllabus will be drafted by local authorities. It must reflect that Christianity forms the main religious tradition in Great Britain whilst taking into account other religions and the range of non-religious philosophical positions.

The RVE syllabus in each local authority will be developed in consultation with an advisory council which will have to include representatives of non-religious philosophies (in practice this means humanism, but could potentially also include Pastafarians, Satanists, Jedis, Heavy Metal, Dennis Bergkamp and Scientology).

Sixth-formers (16-18-year-olds) can choose for themselves to opt-out of collective acts of worship and would no longer have to receive compulsory RVE. For the under-16s, parents can withdraw their children on request.

How much will the Curriculum & Assessment Bill cost?

A lot.

The Welsh Government has already spent around £68million on developing the new curriculum, teacher training and trialling it at pioneer schools. They expect to spend a further £21million in 2020-21. That’s £89million already.

The Regional Consortia have spent £15.5million, Estyn has spent £4.4million and Qualifications Wales £3.5million. So the total rises to around £113million before the curriculum has even been introduced.

The total cost of the Bill’s provisions (on top of the money that’s already been spent) is expected to be anything between £196.4million and £225.5million between 2021-22 and 2030-31.

The actual benefits are hard to quantify and the new curriculum is more about pedagogy/teaching methods than generating a hard quantifiable benefit.

There would be a natural positive social, environmental and economic impact if the new curriculum results in a closed attainment gap between disadvantaged and advantaged pupils and boys and girls. Other potential benefits could include improved qualification rates amongst school leavers and the teaching workforce, increased numbers of students staying on to post-16 education and also improved job satisfaction amongst teachers (which may reduce stress and sickness levels and improve recruitment and retention). It’ll be a long time before we’d see any of that though.

Photo by Toa Heftiba on Unsplash

Report: 1,100 top-earners would need to move to Wales to make a top-rate income tax cut pay off

Finance Committee
The impact of variations in national and sub-national income tax (pdf)
Published: 2nd July 2020

“Though we concluded our evidence gathering for this inquiry before the true extent of the Covid-19 pandemic was realised, it is clear that difficult decisions on taxation will need to be made in order to aid economic recovery. We urge the Welsh Government to start considering tax policies and looking at contingencies to ensure that all the fiscal levers are available to aid Wales’ recovery from the global pandemic.”
– Committee Chair, Llyr Gruffydd MS (Plaid, North Wales)

Since April 2019, Wales has been able to vary income tax up or down by up to 10% (“Welsh Rate of Income Tax/WRIT”). The Welsh Government has committed to keeping WRIT unchanged for the remainder of the term.

A combined 141,200 people are estimated to cross the Wales-England border in both directions for work daily, but the income tax they pay will be based on where they live. The Committee was focused on the cross-border impact of different rates of income tax.

1. A lack of Wales-specific data makes cross-border tax modelling difficult

Research by Cardiff Business School found that a 5% cut in income tax in Wales would reduce Welsh Government revenues by up to 3.9%. While it would eventually result in a 0.13% increase to GVA and a 0.35% increase in employment, this will only happen over a longer period.

However, there’s a lack of Wales-specific data, making accurate economic and tax modelling (particularly concerning cross-border issues) difficult. The Committee recommended that HMRC’s knowledge and intelligence division improves taxpayer identification and works with the Welsh Government to improve research.

2. Cross-border “tax migration” will be more common amongst top earners and there are fewer of them in Wales

To be in the top 1% of earners in Wales you need to earn a minimum of £94,600, while the UK figure was £153,400, meaning differences in earnings between Wales and England were also bigger at the top end than at the lower end.

The Institute for Fiscal Studies’ David Phillips told the Committee that international evidence points to higher earners making the most of different tax regimes than average earners. That said, moving to take advantage of different tax rates is in itself expensive (cost of moving properties, tax planning, social impact). He concluded that it may only be worth the effort if there’s a big difference in tax rates.

If Wales abolished the additional/top rate of income tax (45%), then at least 1,100 top earners would need to move to Wales for the tax cut to lead to an increase in Welsh Government revenues. If 6,000 top earners moved to Wales, tax revenues would increase by up to £129million a year – effectively doubling the number of top-rate taxpayers in the country.

The Committee recommended the Welsh Government considers tax policy options to broaden the tax base – including attracting young graduates and high-earners – but only after taking into account non-tax factors which may affect migratory behaviour (employment, cost of living, education).

3. The Welsh Government need to be wary of people using tax loopholes

One of the biggest tax loopholes to minimise an income tax bill is for someone to incorporate their income by, for example, registering as self-employed or as a company.

The difference in tax bills between an employee earning £40,000 a year (income tax) and a company/self-employed person (dividends, corporation tax, capital gains etc.) earning the same amount can be up to £4,500 – and it’s completely legal.

David Phillips said devolving savings and dividend income (the WRIT only applies to non-savings and non-dividend income) may give the Welsh Government more options but would “expose the Welsh Government to more volatile parts of revenues”. The Committee agreed – though the Welsh Government wasn’t keen to seek those powers yet.

There was also a warning on so-called spill-over effects. In Scotland, when the basic rate of income tax was cut to 19%, those who claimed means-tested benefits run centrally by the UK – such as universal credit – saw their benefits reduced, which effectively cancelled out the tax reduction.

Health board accounts source of “real concern”

Plaid Cymru North Wales MS Llyr Gruffydd has criticised the government following publication of the annual report and accounts of troubled health board Betsi Cadwaladr.

The report shows staff absences at Betsi Cadwaladr for 2019/20 had risen substantially compared with 2018/19 and that the board also spent £26.8m on agency staff – £2 million a month.

Betsi Cadwaladr University Health Board has been in special measures – and under the direct control of Welsh Government, for five years.

Mr Gruffydd said the fact that the annual budget for temporary staff hadn’t reduced significantly over the past few years should be a source of “real concern” for the Welsh government and that since being in special measures the board had employed  “dozens of management consultants”.

“We’ve yet to see what savings or improvements he and the other management consultants have made to the health board but my focus is on ensuring we have enough frontline staff to provide the care that’s needed here in north Wales,” he added.

“I’m unconvinced that, since special measures were imposed more than five years ago, the Welsh Government has a plan to recruit, retain and train enough nurses, midwives, doctors and other key workers in the NHS locally and that’s frankly a disgrace.”