The Welsh Government has promised £22bn to protect public services in Wales and and boost the economy in the wake of the global pandemic.
In the final Budget, unveiled on Tuesday by the finance minister Rebecca Evans, recovery from the coronavirus pandemic and the loss of EU funding to Wales make up key parts of spending in 2021-22.
That’s why millions will be pumped into health, with more than £630m earmarked to support the NHS and local government over the next six months as they continue to respond to the pandemic.
The Welsh Government has also promised nearly £225m additional capital funding will be ploughed into the £320m reconstruction package previously announced in October.
More than half of this extra cash will go towards building more houses and £30m will be used to “accelerate” the ambitious 21st Century Schools and Colleges Programme.
In recognition of the devastation caused by the winter storms in December and January, the Welsh Government has set aside an extra £8m to help local authorities and Natural Resources Wales repair the damage and protect communities at risk of flooding.
All departments are receiving funding increases (excluding money allocated to help deal with the Covid-19 recovery) with health spending up 4.1%. Councils will receive an average of 5.2% more, an extra 7.6% will go to education while spending on the economy and transport and the environment get the biggest hikes of nearly 9% and 9.2% respectively.
The announcement of Wales’ spending plans come the day before Rishi Sunak’s UK government budget where he is set to announce £93m for Wales and the creation of 13,000 jobs.
Depending on what Mr Sunak says, the Welsh settlement for 2021-22 could be subject to change.
The Welsh Government will provide an early Written Statement setting out the implications of the UK Budget for the Welsh Budget on Wednesday.
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Unveiling the final Budget, Ms Evans MS said it would give the Welsh economy “an investment to help inject jobs and demand into a recovery that takes root today”.
She added: “It also provides the NHS and local government with the certainty they need to respond to the next phase of the pandemic.
“We know that our hardest hit businesses need certainty too. That’s why we repurposed budgets to provide more funding for business support in Wales than we received as a share of the package in England.
“We will provide further clarity when our funding position is absolutely guaranteed.
“When the Chancellor confirms the funding Wales will get as its share of the English position on rates relief for next year, I will announce the next steps for Wales.
“Today’s measures build on a budget designed to protect public services and our economy, build a greener future and create change for a more equal Wales.”
The departments that receive the most funding in total from the Welsh Government
The departments getting the biggest funding increases, excluding Covid-19 allocations (figures show % increase on last year)
The final Budget confirms plans to spend an extra £1.1bn in the next financial year. The Welsh Government set out what it might spend in 2021-22 in draft form last December and today’s final Budget confirms some of the extra items that the Welsh Government is spending money on. Some key areas are summarised below.
The government is remaining flexible about how it allocates money towards the pandemic recovery but today’s final Budget allocates a further £682.2m to the fund.
Of this, £380m will be spent in the first six months of 2021-22 in the continued rollout of the vaccination programme, maintaining Covid-19 testing capacity, meeting ongoing demand for PPE, maintaining enhanced infection control cleaning standards, supporting NHS local response plans, and additional funding for other pandemic response measures.
A further £50m will be allocated for contact tracing and £206.6m will be used to support local government for the first six months of 2021-22 to help fund term-time free school meals, adult social care, care home testing, school cleaning, excess deaths management, self-isolation payments, and homelessness support.
The final Budget also sets aside £200m in reserves for additional business support next year to respond to the evolving challenges of the pandemic.
Post-EU exit funding
The final Budget commits £7.1m in 2021-22, comprising £6.1m revenue and £1m capital, as part of the £50m EU Transition Fund to continue work in a number of key areas, including Brexit coordinators, tackling food poverty and to promote Wales as a “world-class higher education sector” on the international stage.
Capital stimulus package
Reconstruction priorities will benefit from a capital stimulus package totalling £224.5m on top of the £320m package of reconstruction funding announced in 2020-21.
This will be used for funds including the the social housing grant, the optimised retrofit programme and Help to Buy Wales.
£30m will boost the 21st Century Schools and Colleges Programme while a further £10m will target road improvements at known “pinch points” in mid-Wales while an additional £8m will be given to local authorities and NRW to improve and maintain Wales’ flood defences.
Welsh culture and sport will share a pot of £5m to “safeguard” important parts of Welsh cultural heritage and to build and improve sports facilities.
Tackling the climate emergency
Building on the £140m capital package announced last year to tackle the climate emergency, Ms Evans has promised nearly £80m extra capital in 2021-22 to directly support activities that promote decarbonisation and further enhance biodiversity.
These measures include £20m for active travel, a £5m investment for decarbonising schools and colleges in Wales, and £15m to boost fuel poverty and renewable energy programmes.
The Confederation of British Industry (CBI) said it was “the right thing” to put Covid support and economic recovery at the centre of the Budget. Responding to the final Budget, Ian Price, CBI Wales Director, said: “(The) continued engagement with business and transparent decision-making throughout the pandemic have done much to bolster confidence in challenging times. While investment in long term priorities like infrastructure will help to put the local economy on the path to growth, consumption and government spending alone can’t deliver the sustainable recovery we need.
“To achieve that, we need business firing on all cylinders and doing what it does best: investing, innovating and creating jobs.
“Covid support from the UK and Welsh governments has saved countless jobs and businesses across Wales, particularly in some of the hardest hit sectors. Avoiding a business rates cliff-edge in April would doubtless help many hospitality, retail and tourism firms – plus those in vital supply chains – to weather the months ahead.
“With jobs and livelihoods still in the balance, all eyes will be on the Budget for measures cementing short-term support, incentivising investment and setting out a path to sustainable growth over the longer term.”
The Senedd will debate the final Budget on March 9 next week.