“This is the toughest financial situation we have faced since devolution,” says Mark Drakeford
By David Deans
BBC Wales political reporter
First Minister Mark Drakeford is asking his ministers to find cuts as inflation and public sector pay puts the squeeze on Welsh government budgets.
He says the Welsh government faces its “toughest financial situation” since it began in 1999.
Members of his cabinet will be meeting throughout the summer to work out what can go from this year’s budget.
Mr Drakeford blamed the UK government for not providing extra cash off the back of promises to fund pay.
The Labour-run administration said it was £900m short in its £20bn budget on where it thought it would be.
The NHS, education and council-run services like social care are among the public services the Welsh government funds.
It is not clear at this stage where the cuts might fall – no department has been ruled out from the exercise, and the cabinet is looking at both this and the next financial year.
Most of the Welsh government’s money comes from the UK government, although it raises some from tax.
Recent pay rises announced for teachers, and doctors in England did not trigger extra funds for the Welsh government, because they were found from existing UK government budgets.
That has meant that pay deals in Wales also have to be found from elsewhere in Welsh government’s funds.
The Welsh budget is generally set by the start of the financial year in April and its unusual that ministers have to make significant savings mid-year.
In a written statement to Members of the Senedd, Mr Drakeford said: “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.”
In recent weeks the Welsh government has faced criticism for cutting free school meals help over the holidays – a policy thought to cost about £15m.
The Welsh government also suddenly scrapped £4.4m for monitoring sewage for Covid, despite a minister having officially opened a research centre in Bangor just months before.
Both were blamed on financial problems.
A government source said the decision not to extend free school meals over the holiday showed how serious the situation was.
Among the pressures ministers face are pay deals that ministers have agreed with NHS workers and teachers, and clearing waiting lists in the NHS.
Like the rest of society the government has rising costs. Although it has come down from recent peaks, inflation remains higher than it was a few years ago, with the rate of consumer prices increasing by 7.9% in the year to June.
Earlier this year Mr Drakeford said the Welsh government’s financial position was £900m lower in real terms than what had been expected at the UK government’s spending review in 2021.
