Hopes and fears for pandemic recovery spending priorities

(Title Image: BBC Wales)

Before summer recess, MSs had a chance to set out their views on what the Welsh Government should prioritise in the next Welsh budget as Wales recovers from Covid-19.

Little appetite for tax rises

Chair of the Finance Committee, Llyr Gruffydd MS (Plaid, North Wales), told the chamber that health and education were seen as the top priorities following several polls. There was little appetite for tax rises, with the preference overall being for increased borrowing, with some support for a tax cut to boost the economy.

Alun Davies MS (Lab, Blaenau Gwent) argued the budget should – as in other countries, such as the United States – take the format of legislation, which would mean the Senedd would have greater control over public spending and tax rates rather than the government.

Shadow Finance Minister, Nick Ramsay MS (Con, Monmouth) called for the Welsh Government to put sustainability at the heart of any recovery process, but also for a greater focus on digital infrastructure to reach as close to 100% broadband coverage as possible.

“The provision of financial incentives to bring branch factories to Wales have produced very many unhappy endings. If you have to bribe a company to come here, I can tell you: they don’t want to come. They’re only coming because you’re bribing them and if they get a better offer somewhere else, they’re off. We all know of examples of this.”
– Mike Hedges MS (Lab, Swansea East)

Several MSs spoke out in support of extra funding for local government given the vital role they’ve played during the lockdown, while Rhianon Passmore MS (Lab, Islwyn) cautioned against a return to austerity politics, demanding the Welsh Government stick with an interventionist approach to business support.

However, Lynne Neagle MS (Lab, Torfaen) was concerned about £7million cuts to mental health in the emergency budget – given the negative impact the pandemic will have had on children’s mental health in particular, as well as the inevitable coming recession which will impact mental health more broadly.

Not enough money to do all the things we would like to do

Finance Minister, Rebecca Evans (Lab, Gower), said various economics forecasts provide a sombre reminder of the challenges that lie ahead in terms of the pandemic, a seemingly-inevitable no-deal Brexit at the end of the transition period and climate change.

“….the claim that Wales has received an extra £500 million from the measures announced by the Chancellor last week is nothing short of misleading. The reality is that we will receive only £12.5 million in new revenue consequentials as a direct result of the measures announced in the economic update, and no additional capital funding.”
– Finance Minister, Rebecca Evans

The Minister said, quite frankly, that there wasn’t enough money to do all the things the Welsh Government would like to do. The government expects to find out how much money they’ll have to spend for 2021-22 in the autumn, but there was a chance that no budget may be published until the very end of the next term.

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