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Cost of Covid-19 in Wales

18/06/2020

The Welsh Government has an additional £2 billion to spend, but it's not certain how much more will be needed to combat the effects of Coronavirus in Wales.

The Senedd's Finance Committee has been examining the first supplementary budget from the Welsh Government which takes into account the impact of the global pandemic.

Supplementary budgets are updates on government spending since the start of the new financial year and show any changes in the amount of money spread across different departments to reflect emerging priorities.

 

Most of the money comes to the Welsh Government after funding announcements by the UK Government, which Wales automatically gets a share of under the devolved funding arrangement.

The Committee is concerned that the channels of communication between the two governments are not as clear as they could be and wants to see better co-operation between both Welsh and the UK Government, to ensure the timely communication of major policy announcements and clarity over funding options.

The Committee also wants to see more information about the Welsh Government's recovery plan after Coronavirus, including kickstarting the economy and reawakening Welsh high streets. Currently there is little information about how much extra funding could be needed and how much should, or is, being set aside to cope with a potential second wave of the virus.

While extra funding has gone to support essential services, other areas have experienced reductions in funding as budgets are reallocated. These include the Higher Education Funding Council for Wales (HEFCW) and Natural Resources Wales (NRW).

In total, £256.2m has been reallocated from departments for Covid-19, of that £46.6 million has been deferred in the education budget, which is affecting HEFCW, while £24 million in environment, energy and rural affairs is also being reprioritised which impacts on NRW.

The Committee recognises tough decisions have been made and some public sector organisations will see reductions in funding. But Members want to be assured that ongoing discussions are happening with HEFCW and NRW about the impact loss of funding would have on either.

Chair of the Finance Committee, Llyr Gruffydd MS, said:

"Few governments have ever faced such difficult choices, or have had to respond with the such speed and decisiveness as that needed to tackle the Coronavirus pandemic.

"In that regard, the Welsh Government deserves credit for the swift action it has taken.

"The sums of money involved to support our health services, economy and local authorities are huge and, at the moment, we still don't know whether it is enough.

"It is clear that communication channels between London and Wales are not as open as they could be, and that efforts to tackle this virus in a co-ordinated way are being hampered.

"What isn't clear is what ministers are doing to prepare for life after lockdown is eased, how it will kickstart the economy again, or even what contingencies does it have available should we be hit by a second wave?

"These are important decisions to be made and we believe the Welsh Government should be telling us their plans."

The Committee makes 17 recommendations in its report, including.

  • That the Welsh Government accelerates work to support local economies. Town centres will be impacted longer term by changes in retail habits, and the Committee is keen to understand how this work will be refocussed to take into account current circumstances;
  • The Committee would welcome details of the discussions undertaken with public sector organisations facing significant reductions in income this year, and recommends that the Committee is provided with details of how the Welsh Government has worked with these organisations to mitigate the impact of the reductions; and,
  • That the Welsh Government provides further information about the actual and projected additional costs for local health boards as a result of Covid-19 measures and the allocations to be made to them as a result of the increase in funding reflected in the Supplementary Budget.

The Committee's findings will now be considered by the Welsh Government.

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