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Today’s Senedd Roundup: UK Government changes “left Wales £36 million short”

10 Jul 2019 14 minute read

Owen Donovan, Senedd Home

Yesterday, the Senedd debated the First Supplementary Budget for 2019-20 tabled by Finance Minister & Trefnydd, Rebecca Evans (Lab, Gower).

The supplementary budget is analysed in more detail by the Finance Committee (pdf).

In terms of key specific changes:
• £241million to meet an increased cost of public sector pension schemes due to UK Government policy changes.
• £50million in capital funding for local government social housing schemes.
• £35million to support local economic development and transport schemes.
• £11.4million towards the EU transition fund.

Chair of the Finance Committee, Llyr Gruffydd AM (Plaid, North Wales), said there was a great deal of concern around the aforementioned UK Government changes to public sector pensions – which hasn’t been fully funded; there was a £36million gap between the money needed and the money the UK Government provided the Welsh Government to fund it.

Both himself and Rhun ap Iorwerth AM (Plaid, Ynys Môn) were disappointed that despite the climate emergency declaration there were no obvious changes to budget priorities. Alun Davies AM (Lab, Blaenau Gwent) thought it was unreasonable to expect the government to change its budget within weeks of the climate emergency declaration, but he at least expected a nod to it.

There were a number of concerns about money allocated for the Newport bypass. £20million has been put into reserves, but Shadow Finance Minister, Nick Ramsay AM (Con, Monmouth), believed the commission set up to look at alternatives should’ve been given a free hand. There were also questions about the future of Welsh Government borrowing.

Mike Hedges AM (Lab, Swansea East) said he understood why the Welsh Government were reluctant to take on responsibilities from the UK Government when, in this instance, UK public sector pension changes left Wales short.

“….it was agreed when Mark Drakeford was the Finance Minister….if we thought we’d been treated badly by the Treasury, there was an independent appeals procedure and not just going back to the Treasury and saying, ‘We don’t like it’ and they’ll say, ‘Well, that’s tough; that’s where you are.’ There’s meant to be an independent appeals procedure, and I would hope that the Government would use that.”
– Mike Hedges AM

Mark Reckless AM (BXP, South Wales East) thought the absence of any changes to the revenue figures, in light of devolved taxes, was either because the predictions and tax forecasting were accurate or due to a delay in getting the right mechanisms in place. The Minister later confirmed that revised tax forecasts from the Office of Budgetary Responsibility are due this autumn.
The Minister did raise the prospect of an appeal, as mentioned by Mike Hedges:

“I’ll turn to the issue that was raised by most speakers, and that is the issue of the pensions and the £36 million funding gap that exists in terms of the money that was handed down from Westminster….

“I (along with Scottish and Northern Irish representatives) have written to the Chief Secretary to the Treasury expressing deep concerns that the proposed funding doesn’t meet the full costs associated with those changes….if a meeting wasn’t forthcoming very quickly to discuss these issues….then we would jointly be seeking to use that appeals process to take this matter further forward.”
– Finance Minister & Trefnydd, Rebecca Evans

Ken Skates CC BY 2.0

Minister regrets promoting controversial developers

Here’s a summary of this afternoon’s questions to the Economy& Transport Minister, Ken Skates (Lab, Clwyd South).

No public money was given to defunct development company

Following the placing into administration of Northern Powerhouse Developments – a company proposing a leisure park in the Afan Valley, recently thrown into turmoil by a Guardian-ITV investigation – Rhun ap Iorwerth AM (Plaid, Ynys Môn) wanted assurances that other developments the company were involved in, such as Caer Rhyn hotel in Conwy, didn’t receive government money (said to be £500,000).

The Minister said no funding had been released as the project didn’t meet the attached conditions. Nevertheless, the Minister has been closely involved with the company:

“In the case of the Afan Valley project there may not have been an exchange of funds in any way, but there was certainly support from Welsh Government in the form of your appearance in a video (still image above) promoting Northern Powerhouse Developments plans, which gave the very public impression that the Welsh Government was backing the company. That’s exactly what the developer wanted, of course, and, no doubt, it helped attract investors. In hindsight, do you think that your appearance in that video was a good idea?”
– Rhun ap Iorwerth AM

The Minister was honest, saying he would like to see the video taken down – but he stressed the importance of separating the plans from the people developing and finance them. There were, however, no promises made on money or anything else.

Economic Record

Shadow Economy Minister, Russell George AM (Con, Montgomery), continued to use Lee Waters’ recent comments as a stick to beat the government with.

“We have had three major economic strategies since devolution, but these efforts to improve the economy have not worked and have not raised the economic fortunes of Wales. Now, the economic action plan covers a large number of different themes but contains no targets for measuring progress, so it is, I think, also contradicted and undermined by the Welsh Government’s 2018 budget, which provides no new funding to support any of the action plan’s key priority sectors.”
– Shadow Economy Minister, Russell George AM

The Minister, echoing recent comments from the First Minister, said there were plenty of things to be pleased about: the creation of 300,000 jobs since devolution, employment at record high levels and a rapid increase in the number of qualified individuals.

However, the “fruits of growth” haven’t been felt evenly across all parts of Wales and regional inequality was one particular area where more work was needed.

Minister “excited” about small modular nuclear reactors

David Rowlands AM (BXP, South Wales East) asked whether the Welsh Government have given any further consideration to the development of small modular nuclear reactors (SMRs) at the former Trawsfynydd nuclear power station in Gwynedd?

Yes, the Minister had:

“I’m really excited about the potential of Trawsfynydd as an area that could be used to develop and support small modular reactors. I’m not alone in this….

“….I’ve met with Rolls-Royce (a developer of SMRs) to discuss this very issue directly in relation to Trawsfynydd and so too have members of the North Wales Economic Ambition Board, and I think it’s worth telling Members today that energy features as one of three primary strengths of the north Wales regional economy within the economic ambition board’s vision for the region.”
– Economy & Transport Minister, Ken Skates

Former Welsh Language Commissioner Meri Huws and Guto Harri on Y Byd yn ei Le. Picture by S4C

Little need for new Welsh language law, but Welsh Language Standards “could be streamlined”

Culture Committee
Supporting and Promoting the Welsh Language (pdf)
Published: 9th July 2019

“As a Committee, we would like to see the Welsh Government….ensuring all Government policies align and create the conditions to support the aims of Cymraeg 2050 (million Welsh-speakers by 2050). An adequately resourced cohesive plan would have more oversight over government policies and activity relating to education, planning, economic development and rural development for instance.”
– Committee Chair, Bethan Sayed AM (Plaid, South Wales West)

  1. The Welsh Language Measure 2011 is “good, but not perfect”

Welsh and English became official languages for the first time via the passing of the Welsh Language measure during the Third Assembly. It also established the position of Welsh Language Commissioner, abolished the Welsh Language Board and set out the gradual introduction of Welsh Language Standards for public services.

There was broad agreement amongst witnesses that the Measure has had a positive impact on the rights of Welsh-speakers, though some witnesses felt it was too focused on the Welsh language itself, not its use.

While the Measure was seen as imperfect, there was an overall conclusion that there didn’t need to be a new Welsh language law – a proposal which was eventually dropped by the Welsh Government. The then Welsh Language Commissioner, Meri Huws, didn’t believe there was a need either as the Measure itself wasn’t particularly restrictive.

There were criticisms of the complaints system by local authorities, who suggested that complaints relating to Welsh language services should first go through an internal council complaints procedure, instead of being a stand-alone system; though Cymdeithas yr Iaith said complaining directly to the Commissioner was easier.

  1. Welsh Language Standards are complex and bureaucratic; consideration should be given to streamlining them

Under the Welsh Language Act 1993, public bodies in Wales had to prepare and publish Welsh language schemes. Following the 2011 Measure, this changed to being subject to nationally-consistent Welsh Language Standards.

A number of witnesses said the standards system presented significant administrative burdens on public bodies; Colegau Cymru described it as a “long, drawn-out, laborious process”, while the Welsh Government announced a pause on new standards being introduced from June 2018.

However, the system was defended by the former Welsh Language Commissioner because the Standards set out very clearly what was expected of public bodies so there could be no ambiguity.

There was broad agreement that it was too early to determine whether the whole system needs to be revised, though the Committee recommended that existing standards could be reviewed and streamlined when applied in future to bodies currently not subject to any standards – like housing associations, utilities and transport.

  1. The Welsh Language Commissioner’s ability to promote the language has been limited

The 2011 Measure grants the Welsh Language Commissioner powers to do anything they believe is necessary to promote the use of Welsh. There was some criticism that the Commissioner’s office has focused too much on regulation and not enough on promotion – including criticism from the Welsh Government – however, the Committee concluded this criticism was unjustified.

The former Heritage Minister, Alun Ffred Jones, shared that view. He believed the Welsh Government should be responsible for promotion – which was his understanding when a Minister. This view was also supported by Cymdeithas yr Iaith, though they accepted there was nothing to prevent the Commissioner from promoting the language in principle. The Welsh Language Standards themselves were considered to be a “soft” form of promotion.

A number of witnesses, including Cymdeithas yr Iaith, Dyfodol i’r Iaith and the Welsh-medium teaching union UCAC, supported calls for an arms-length agency to promote the language for different reasons. However, the Minister for International Affairs & Welsh Language, Eluned Morgan (Lab, Mid & West Wales), said the situation was already difficult for people to understand and a third agency would “muddy the waters further”.

The Committee recommended the Welsh Government’s Language Unit be strengthened and that appropriate use of academic research – particularly within an international context of minority languages in Europe (i.e. Basque Country) – should be used to identify gaps in knowledge.

Minister wants “absolute clarity” over responsibility for the Welsh language

National school funding formula ruled-out

Children & Young People Committee
School Funding (pdf)
Published: 10th July 2019

“The system for funding schools is hugely complex, multi-layered and dependent on many factors. While it would have been easy for us as a Committee to simply recommend additional funding for education and for schools, we absolutely believe that increasing the level of funding alone is not the solution. The funding must also be used effectively.”
– Committee Chair, Lynne Neagle AM (Lab, Torfaen)

  1. The funding mechanism for schools in complex and should be urgently reviewed

    Image by National Assembly of Wales

Decisions over how much money schools actually get largely lie with local councils, though the Welsh Government plays a role by setting the overall budget for local government as well as adding top-up funding for specific education initiatives (like the Pupil Deprivation Grant).

In 2018-19, £2.57billion was spent on schools, working out at £5,675-per-pupil – slightly higher than 2017-18 in cash terms, but after inflation is taken into account it’s actually lower. 84.2% of the schools budget actually goes to the schools, with councils retaining the other 16.8% (£407million) to cover the cost of centrally-provided services like home-school transport. The proportion of school budgets retained by councils has actually decreased from 25% in 2010-11.

There are only 29 fewer pupils in 2018 compared to 2010, but over the same period, the equivalent of 1,416 full-time teachers have been lost.

Witnesses said the main problem was the size of the overall pot, not necessarily how it’s spent. Within the education sector, it’s believed the Welsh Government doesn’t prioritise education to the same extent as the NHS, while schools have to compete with social care within local council budgets.

The Committee recommended the Welsh Government urgently reviews how much funding is required to provide schools with sufficient resources based on a basic minimum cost, with specifics (for deprivation and sparsity) added afterwards.

  1. There’s a lack of transparency in the way schools are funded

There are big differences in per-pupil funding between different local authorities, ranging from £4,432-per-pupil in the Vale of Glamorgan to £5,755-per-pupil in Powys during 2018-19. Headteachers raised concerns about the transparency of grants awarded by regional consortia as well, while there were further concerns that councils and regional consortia were effectively duplicating their school improvement service spending – raising worries over potentially wasted money.

A number of teaching unions complained of a “funding fog” too, though three main reasons were given for local differences: overall funding to a council from the Welsh Government; local authority prioritisation of the education budget; how much the local authority retains to run education services centrally.

The WLGA argued that while the current funding mechanism for councils was imperfect, it was the best method available and there will always be winners and losers. The Welsh Government have said repeatedly they’re open to changing the council funding formula if councils can reach a consensus – but that hasn’t yet happened and there’s no indication that the WLGA want a review.

The Committee recommended that if the formula is changed in the future, it should be needs-based and use the aforementioned basic minimum cost for education.

  1. There were mixed views on the need for a national funding formula

Each council decides for itself how much an individual school gets using their own formulae, but witnesses said this sometimes led to schools with similar characteristics in different local authorities having up to a £1,000-per-pupil difference in funding.

However, there was no consensus on whether there should be a national funding formula. Swansea Council said such a system would lead to winners and losers in itself, while the Association of School and College Leaders (ASCL) called for a national formula and even went a step further by supporting possible direct funding for schools by the Welsh Government.

The Committee would prefer more consistency between local authorities, retaining local control over spending, than recommending any kind of national funding formula.

  1. Schools should move to a three-year budget model

As far back as 2006, it was recommended that schools be put on a three-year budget cycle instead of an annual one – though it would have to be taken forward alongside a three-year budget settlement for councils. It’s believed a three-year cycle would allow schools to plan more effectively over the long-term.

The Pupil Deprivation Grant is fixed for two years, for example, but the Committee was warned that the Welsh Government doesn’t know with any certainty what their own funding will be beyond 2020 because of a severely delayed spending review by the UK Government.

The Committee didn’t believe this prevents the Welsh Government from providing three-year settlements to councils and schools and recommended they take a serious look at it.

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