The Welsh government has warned it could be forced to redraw its budget only one day after it is approved by the Senedd should Jeremy Hunt make tax and spending policy changes that affect Wales in his budget in March.
Cardiff’s finance minister, Rebecca Evans, said she was concerned that her budget, which was published as a draft in 2023 for discussion and will be completed on 5 March, could become redundant if Hunt adopts radical measures in his budget the following day.
Evans said Hunt had made life difficult for the Welsh finance ministry after the chancellor failed to share information in the run-up to the spring budget “to enable sound budget planning and management”.
She said: “We were only told on 13 February what the allocation for Wales would be, leading us to update the draft budget. Now we could be forced to make further changes.”
The Labour-run Welsh administration has called on Hunt to fill a £1.2bn gap in funding brought about by high inflation over the past two years.
Evans said Wales was also badly affected by tight restrictions on how much it can borrow and rules governing how it can use its reserves. She argued they should be relaxed to help cope with the fallout from the Covid-19 pandemic and the escalating costs that followed the Ukraine war, as they had been in Scotland.
Speaking to the Guardian, Evans said the UK government should reject tax cuts in favour of setting aside spare funds to increase public services across the four nations.
“Whatever financial headroom is available to the chancellor, he should spend it on public services,” she said.
“Our health budget is going to get 4% extra next year, but that will need to come from other areas,” Evans added.
She said Hunt needed to top up the Welsh financial settlement or risk Wales suffering even deeper cuts in public services than will take place in England.
The final Wales budget shows that Cardiff will spend more than £26.6bn in the next financial year. Day-to-day spending on public services – worth £20.9bn – will be cut apart from health and some net zero projects, leaving a shortfall in other departmental spending plans.
Public investment that ministers hoped could be increased to build vital infrastructure is on course to fall by 3.2% to £2.9bn, after a cut in the allocation by officials in London.
Evans said taking inflation into account means it adds up to a 9% cut “that prevents us investing in infrastructure and the skills we need to grow the economy”.
Childcare funding is among the areas that will take the brunt of cuts in the 2025 budget, though Evans said higher demand could force her to reverse some of the reductions in spending.
A scheme to top up the allocation for police community officers will also be scaled back. Wales does not control police budgets, but has funded its own community police scheme in recent years.
Evans’ anger at what she calls “the disregard shown by the UK government” includes a call to extend the level of reserves, which was set at £350m in 2018 and has fallen by 23% in value due to inflation.
Borrowing is limited to £158m in any one year up to a total cap of £1bn, which Evans said had also “significantly fallen in value” over the past three years.
“Scotland has had its borrowing and reserve limits lifted while Northern Ireland has had a generous settlement following the re-opening of its parliament. Now it is time Wales benefited,” she said.
A UK government spokesperson said Wales had received about 20% more funding per person than equivalent Westminster spending in other parts of the UK.
“The Welsh government is receiving a record £18bn per year from the UK government,” the spokesperson said. “The fiscal framework it agreed ensures funding is fair and includes substantial flexibility and tools for the Welsh government to manage its budget.”
The spokesperson denied claims that it failed to communicate with ministers in Wales. “The Treasury works closely with the Welsh government to keep it updated in the run up to all estimates and fiscal events which impact on its budget-setting,” they added.
• This article was amended on 1 March 2024. An earlier version referred incorrectly to the Welsh “assembly”, rather than the Senedd.
