Drakeford ‘optimistic’ ahead of Welsh budget

Wales’ new finance secretary Mark Drakeford expressed optimism about the Welsh Government’s draft budget but warned public spending will not suddenly start flowing.

Prof Drakeford said he is planning for 1% growth in day-to-day revenue spending and a flat settlement for longer-term capital expenditure.

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Appearing before the finance commission for scrutiny, the former first minister said: “I have some optimism that things will be a little bit better.”

He cautioned: “I don’t think it’s going to be a sudden turning on of public expenditure but I think that things won’t be quite as tight.”

Pressed by Labour’s Rhianon Passmore about areas that could be deprioritised in Wales, he said it is too early to say ahead of the UK Government’s budget on October 30.

And pressed to reassure people that the in-year budget is secure, in light of £500m cuts in Scotland, he said: “It looks to me more like what I would have thought of as a ‘normal year’.”

‘Jumbo jet’

Prof Drakeford stressed that stresses and strains persist but the previous budget was extraordinarily more difficult, leading to “very, very painful” cuts this time last year.

He said the first minister’s statement on her government’s priorities will shape the Welsh Government’s draft 2025/26 spending plans that will be published on December 10.

The former first minister compared his overriding responsibility as finance secretary with landing a jumbo jet of a budget on a postage stamp.

He stressed the importance of getting maximum value from expenditure and not overspending which “takes you into very difficult territory”.

Prof Drakeford suggested negotiating relationships with the UK Government on matters such as freeports and investment zones will be near the top of his agenda.

He said his focus will also be on legacy issues like the shared prosperity fund, replacement EU funding – “one of the sorrier examples of spending by the previous UK Government”.

‘Micromanagement’

He said: “I will wish to have conversations with my UK colleagues about the longer-term transfer of post-EU funding back to where it belongs: here in the hands of the Senedd.”

Prof Drakeford suggested the Welsh Government will seek powers that have already been devolved to Scotland and Northern Ireland.

He said talks would focus on “freeing up the micromanagement of our affairs” by the UK Treasury, giving more scope to deploy money in an efficient and effective way.

“At the moment, our hands are tied and we don’t get the best value,” he warned.

Prof Drakeford told the committee the Welsh Government has identified £65m to make coaltips in Wales safe as he urged the Labour UK Government to contribute.

The finance secretary said talks with UK ministers about rail funding are also ongoing.

‘Big if’

He said if Wales receives additional capital expenditure next year – “and it’s a big ‘if’” – improving NHS efficiency through new equipment and buildings will be a priority.

Prof Drakeford agreed the current “fiscal framework” – which determines how Welsh public services are funded – while he was finance secretary between 2016 and 2018.

He said: “The problem from our point of view has been … that the numbers that were struck – the amount you can borrow, the amount you can put in the Welsh reserve, the amount you can draw down … are still the figures that we agreed as the right figures for 2016.”

Prof Drakeford told the committee meeting on September 25 that he expects the cabinet to debate Welsh rates of income tax but he would need “quite a lot of persuasion”.

“The only way you can raise significant amounts of money from income tax in Wales is by increasing the basic rate,” he cautioned.

The finance secretary said hiking additional and higher rates, which raises untested issues around tax migration, would not bring in a substantial sum.