Welsh Government (WG) published its draft budget for the next financial yearn 30 September 2014. The following analysis is based on a a background prepared by Len Arthur for yesterday’s Wales Against Austerity & Cuts Conference in Cardiff (minutes and reports to follow).

Fot those (relatively few) who may not know Len, he is the driving force and Secretary of RCT/Bridgend People’s Assembly, and therefore someone I have grown to hugely respect over recent years. He combines a 30 year academic career, including two PhDs, in management, organisational analysis, sociology and social history, with direct experience of trade union and social movement organising. His credentials for this sort of analysis are beyond reproach.

The budget documents can be found here: http://wales.gov.uk/funding/budget/draft-budget-2015-16/?lang=en

SPENDING POWER

The whole budget is consists of a grant from the UK Government, based on the infamous Barnett formula.
The WG has no borrowing or tax raising powers.
Allocated for 2015-16 = £15.333 billion
Final budget 2014-15 = £15.374 billion

Difference = £41 million less for next year. (These figures include capital and revenue)
Once inflation is factored in, this represents a real terms cut of 3.7%

Every budget since 2008, the year of the baking crisis, has had a real terms cut. The WG minister for finance concede that since 2010-11 the WG budget will have been cut by around 10% in real terms by next year.

If this continues in similar fashion to 2017-18, as all main parties are indicating it will, it will lead to a massive 18% real terms cut in the WG budget for the decade following the banking crash.

Combining this reduction with the direct cuts from UK Government, such as Bedroom Tax and benefits cuts, it amounts to a yearly loss of around £1300 p.a. for every man, woman and child in Wales, or put another way, a £5,200 cut for the average family. This is the true financial cost of austerity in Wales, and, of course, the impacts will much harder on low income families that the wealthy.

IMPLICATIONS

These will be many and varied, but the NHS is a key devolved matter, so the implications here are particularly pertinent. The NHS is usually funded on a three year cycle, and what has happened is that this has a led the NHS to incur annual deficits that it has been forced into in order to try and maintain services. This has come home to roost this year as the WG has been forced to bail out our NHS with an additional £200 million this year and and a promise of an additional £225 million next year. Without this additional funding the NHS in Wales would have faced collapse.

These additional costs barely cover the the inflation in NHS costs, and do absolutely nothing towards meeting the cost of increasing demand or the costs of medical innovations. It leaves NHS trusts having to contemplate hospital closures, service cuts and denying people expensive life saving/extending medications. People that could be saved are going to die.

Where has this extra but inadequate money for the NHS come from? Peter is paid by robbing Paul.

It is not commonly appreciated that Council Tax revenues only make up about 13% of local authority budgets. 87% comes from grants from the WG budget.
WG cut this funding by 3.4% in 2014-15 and another 3.5% is expected next year (2015-16)

The Welsh Local Government Association has warned of a projected £900 million funding shortfall to LAs by 2018. Service failure will be inevitable. We are already seeing Councils making choices between libraries and feeding the elderly, for example.

Wales Against Austerity & Cuts Conference was clear that none of this is necessary at all and that there are alternatives. More to follow.