‘Climate emergency’ not reflected in Welsh Government’s £17 billion draft budget

Published 29/01/2020   |   Last Updated 29/01/2020

The National Assembly’s Finance Committee has been reviewing how the Welsh Government intends to spend its budget of £17 billion in the next financial year on things like improving Welsh schools, hospitals, roads and the environment.

Committee members recognise this draft budget cycle has been delivered under “exceptional” circumstances, given the general uncertainty around the UK General Election and Brexit which has impacted on both the Welsh Government, and other stakeholders’ ability to plan. 

Overall, the Welsh Government’s budget has risen by 2.3% in real terms, or £593 million pounds on last year and extra funds have been spread across devolved areas.

However, the Committee is concerned by the evidence it heard that increases in future budgets will be unsustainable without higher borrowing or increases in taxation.

The Welsh Government’s draft budget for 2020/21 does not reflect its own declaration of a ‘climate emergency’, according to the Finance Committee. 

Since the Minister for Environment, Energy and Rural Affairs declared a climate emergency in Wales on 29 April 2019, the Welsh Government has announced a £140 million capital investment to support decarbonisation.

But the Committee is not convinced the government has a clear understanding of the impact its decisions will have on carbon emissions or the climate.

Committee members were disappointed that the Welsh Government considers it acceptable to declare a climate emergency and then publish a budget that does not attempt to set out the carbon impact of its expenditure.  

“In declaring a ‘climate emergency’, the Welsh Government is takingsteps towards addressing the issue of climate change and its impact on the world,” said Llyr Gruffydd AM, Chair of the Finance Committee.

“However, this Committee feels the Welsh Government could and should have gone further to recognise the effects its own decisions and priorities are having on our climate.”

Other concerns raised about the budget by the Finance Committee included the impact of Brexit on Wales, especially the continuation of funding previously provided by the European Union and, in particular, direct payments to farmers and other businesses in the fisheries and agriculture sector. The Committee is looking for assurances from the UK Government this funding will be provided.

The Committee welcomes the inclusion of poverty in the budget priorities but feels there is a lack of clarity in the Welsh Government’s strategy for tackling poverty. It says the strategy needs clearer objectives and should explaining how the budget will drive long-term improvement, particularly in addressing the root causes of poverty.  

The Committee firmly believes more action needs to be taken to reduce poverty in Wales. There are too many people in low skilled and/or low paid jobs. Upskilling the workforce and increasing employment will benefit the Welsh economy regardless of the outcome of Brexit.

Llyr Gruffydd AM said:

“We are in unprecedented times as we approach Brexit and, risks and opportunities aside, what people are searching for most of all is clarity and certainty.

“The Welsh Government expects EU Structural funds will be replaced by the UK Government. But agriculture sits outside of this so the Committee would like assurances farming payments will continue as normal until a new funding structure is brought in. 

“Nobody should be worse off as a result of leaving the EU.”

The Committee makes 27 recommendations in its report, including:

  • That future Welsh Government Budgets should include flexibility and specific scenario planning to respond to economic shocks or uncertainty;
  • That the Welsh Government provides confirmation that it has obtained assurance from the UK Government on the financial support available to the agricultural industry in Wales for every year of the Parliament; and,
  • That the Welsh Government provides more detail in future years on how allocations and programmes will progress towards the commitment to be carbon neutral by 2050 and over what timescale this will be achieved.

The Welsh Government’s draft budget and the Committee’s findings will be debated during a full meeting of the National Assembly at the Senedd on Tuesday 4 February 2020.

Five National Assembly committees will publish more detailed reports on 31 January.

The Assembly Commission research service has produced an interactive graphic to help explain the Welsh Government draft budget including changes on the previous year’s projections.