With the size of the Assembly Government’s budget for the next three years to be announced in the coming weeks, Political Editor Tomos Livingstone explains how the battle to spin the figures has already begun
TEN years after Wales voted in favour of devolution, it’s fair to say that the Assembly’s difficult early years have been made much easier by the size of the budgets handed down from Westminster.
Although there have been plenty of arguments about whether there should have been even more in the kitty – match funding for EU Objective One cash, anyone? – the Treasury has always ensured inflation-plus-a-lot rises for Cardiff Bay: so much so that the Assembly Government budget doubled between 1999 and 2006.
But that might be about to change. There is swirling speculation that the Comprehensive Spending Review (CSR), which covers the years 2008-11, will offer Ministers in Cardiff Bay a settlement as low as 1% above inflation. Ouch.
But the picture is a little more complicated than the leaks would have us believe.
Here’s how the system works. The Assembly Government gets a chunk of money each year – £14bn last time around – in a block from the Treasury to spend as it wishes.
And it gets little top-ups along the way from the Barnett formula, which decrees a spending rise in England must mean a spending rise in Wales. So if the Chancellor announces an extra £100m for education in England, Wales gets around £5m added to its pot, too.
If the block grant only goes up 1% above inflation, then that will have severe implications for the Labour-Plaid administration in Cardiff Bay.
First Minister Rhodri Morgan cannily used the threat of a tighter spending round to his advantage during May’s election campaign.
He, with his contacts within the higher echelons of the Labour party and his experience of government, would be best placed to negotiate the best deal available, he argued.
Perhaps so, and if the Assembly does get a smaller amount of money than it would have liked, it can’t be said they were unprepared.
Finance Minister Andrew Davies was in the Treasury on Wednesday for a briefing on how the CSR is going. His Scottish and Northern Irish counterparts have been in to see chief secretary to the Treasury Andy Burnham too.
Officials are keeping tight-lipped about what was discussed, of course.
“There was a meeting, but it’s far too early to go into details,” said a spokesman for the Assembly Government.
“We’re not getting into speculation about the bottom line.”
There are complaints in Whitehall, though, about perceived attempts to spin the figures negatively before they’ve even been agreed. Fingers are being pointed, unofficially, at the new SNP executive in Scotland.
A tight spending settlement for Scotland would allow the SNP to claim it was being short-changed by England, thus assisting its drive towards independence.
So perhaps we shouldn’t be surprised that the spin machine is working as it is.
My understanding is that there is little in the way of a Machiavellian scheme within the Treasury to hammer the devolved administrations (compared with the bigger departments they could take the axe to, they’re hardly worth the bother).
Part of the problem is the protracted negotiations over the NHS in England, likely to be the big loser in the CSR.
The row centres on whether to base the next lot of funding on the English NHS’ previous budget, or on what it actually ended up spending – two different figures. The figure chosen will have a knock-on effect on how much money goes to Scotland and Wales.
So the 1% figure is very far from set in stone, and we’ll have to wait until next month to see exactly how bad – or good – the settlement is.
The other question that devolution-watchers will be asking when Alistair Darling gets to his feet to deliver the CSR statement will be – are we sticking with the Barnett formula?
The controversial system, which uses population size to allocate funding is either clear and simple or completely unfair to Wales, depending on your point of view.
Official Government policy has always been that there are no plans to review Barnett, now 30 years old. But Labour’s leader in Scotland, Wendy Alexander, caused a minor kerfuffle this week when she was quoted as saying there were concerns about the way the formula worked.
The Assembly is carrying out its own review of Barnett, but the thoughts of Ms Alexander, whose brother Douglas is writing the next Labour manifesto, may be of more significance.
A lower CSR settlement sweetened with a revamp of the Barnett formula? I think the Assembly Government could, just about, live with that.
The 1% figure is far from set in stone, and we’ll have to wait to see how bad – or good – the settlement is