A SECRET Welsh Assembly Government Cabinet paper suggests keeping hundreds of millions of pounds of public money in reserve and unspent.
Last night Labour was accused of seeking to emulate John Redwood, the former Tory Welsh Secretary who infamously sent £100m of Welsh Office funds back to the Treasury in 1995.
Written in March this year, the Cabinet paper, titled The Budget Planning Round: Resource Assessment Exercise (RAE) 2007 and written by Finance Minister Sue Essex, advocated increasing the level of Assembly reserves from the current figure of £156m – just over 1% of the Assembly budget – to 3%, around £420m.
The paper also sets out the Assembly Government’s assumptions about the future level of funding available to it: “We have enjoyed a period of strong and sustained growth in public spending over recent years. This is now coming to an end and we must align our expectations with more limited levels of additional resources.”
Plaid Cymru leader Ieuan Wyn Jones said, “Increasing the reserves will result in even more money being held back from frontline public services –– from our hospitals and schools. Withholding such large sums of money is reminiscent of John Redwood sending £100m back to London when he was Secretary of State for Wales.”
He said Labour seemed to be planning for a spending spree ahead of the next election.
The Cabinet paper also states that between 2008-2009 and 2010-11, the Assembly can expect an overall budget growth of 1.6% a year.
Eurfyl ap Gwilym, Plaid’s economic adviser, said, “I am absolutely amazed at how low this prediction is. Gordon Brown has already gone on the record saying UK government expenditure will rise by 2% over this period. The Assembly can expect a higher rise than that via its funding formula because 70% of the money coming to Wales is determined by the amount allocated for health and education in England, which is rising at a higher rate than the overall figure. The Labour Assembly Government's figure of a 1.6% rise in the budget for Wales would only be accurate if there were massive cuts in spending on health and education in England – and that's not going to happen."
Labour responded, “The Cabinet Paper repeats what the Finance Minister, Sue Essex, has said in plenary, that each time the Government publishes a three-year spending plan it intends to maintain as a contingency reserve 1% in year one of the plans, 2% in year two and 3% in year three.
“A contingency reserve is kept in order to respond to the unexpected – and obviously events become more uncertain three years in advance compared to the following year. As the three plans roll forward the reserve is reduced from 3% to 1% and the funds are allocated to spending programmes. This is good financial management and the Government has been entirely open on its operations. It would be irresponsible for opposition parties to publish manifestos on the basis that this necessary reserve can be reduced.”
Conservative enterprise spokesman Alun Cairns, who was sent the Cabinet paper anonymously, said, “This paper sets out clearly the financial restraints under which the Assembly will be operating.
“Plaid Cymru’s manifesto is based on there being a growth in public spending of a magnitude which this paper makes clear is not going to happen.”