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Welsh Government: Comprehensive Spending Review

Volume 746: debated on Thursday 4 July 2013


Asked By

To ask Her Majesty’s Government what discussions they have had with Welsh Government Ministers about the effect of the Comprehensive Spending Review on the delivery of devolved services in Wales.

My Lords, Treasury Ministers and officials have regular discussions with the Welsh Government on a wide variety of topics. Finance Ministers from the devolved Administrations met the Chief Secretary in Belfast on 3 June to discuss the forthcoming spending round. We have also received a joint written representation from all three devolved Administration Finance Ministers.

My Lords, is the Minister aware that Wales has the lowest level of GVA per head of any nation or region in these islands? Does he also accept that the key to regeneration is infrastructure investment, particularly to stimulate local economies? Why was it then that, in the review last week, while Scotland and Northern Ireland received an increase of 2.7% and 1.5% respectively in their capital DELs—departmental expenditure limits—Wales received a paltry 0.3%? As Anglesey has had the lowest GVA per head of any county in the United Kingdom during the past decade, will the Government now find capital funding for a much needed new road bridge over the Menai Strait to Anglesey, both to improve the traffic bottleneck there and to stimulate economic development on the island?

My Lords, as the noble Lord said, the Welsh Government’s capital budget for 2015-16 will increase by 0.3% in real terms, but that is only part of the story in terms of government capital expenditure in Wales. As he knows, south Wales is set to benefit from the electrification of the main line to Swansea and of the valley lines. He will be aware also that the Government have committed to spending £0.25 billion on a major new prison in north Wales.

My Lords, given the high dependence of Wales on public sector expenditure and public sector employment, what is the Government’s best estimate of the number of jobs in Wales which will be lost as a result of the review?

My Lords, I do not think that it is a question of jobs being lost in terms of the review. As I said, the capital budget for Wales is increasing. The resource budget for Wales will fall only very marginally in cash terms, by 0.4%, which is significantly less than the cut in the non-protected budgets of departments in the UK.

My Lords, in view of the dreadful shortage of money that we have for health services—in north Wales, we had a meeting last week that might threaten the existence of one of our district general hospitals—could not the Barnett formula be immediately reviewed to bring some areas in Wales more up to date?

My Lords, as noble Lords are aware, the Government have made it clear that we will not be reviewing the Barnett formula during this Parliament, at a point when we are sorting out the country’s finances.

My Lords, do not the Welsh Government desperately need to increase their borrowing capacity and was this not dealt with specifically by the Silk commission report last November? The Government promised their response to the report in the spring. Allowing for the vagaries of our climate, when, please, is spring coming?

As the noble Lord has pointed out, it has been a late spring this year. I can tell him that the result of the Government’s consideration of the Silk review will be published shortly.

My Lords, how much was the older population in Wales taken into account in the spending review, given that our elderly population is 4% greater? In fact, we are net importers of elderly people, who come to retire in Wales. They come with comorbidities and needing high healthcare spending, which is then borne by the Welsh Government.

That is obviously one factor out of a whole raft of factors relating to the different demographics and needs of the nations and regions of the UK. The elderly population are, of course, protected by the triple lock on pensions. It means that their state pension has done pretty well during this Parliament.

My Lords, does the Minister agree that the impact of the comprehensive spending review on Wales could have been radically different if the £9.6 billion of VAT uncollected over the last period had been collected? Perhaps if HMRC’s spending had not been reduced by 5%, that would have enabled it to collect what was due and Wales could even have had two prisons.

My Lords, I did not know that the noble Baroness was in favour of such radical spending on prisons. In terms of the tax cap and VAT, the next figures on the tax cap will be coming out in September. HMRC has been very successful during this Parliament in collecting previously uncollected taxes from a range of sources and, as the noble Baroness knows, we have put a lot of additional resources, almost £1 billion, into tackling tax avoidance and evasion.