EXTRA cash for pensioners could clinch agreement tonight between Rhodri Morgan and the opposition party leaders over next year's National Assembly budget.
In early October the combined opposition outvoted Labour to veto Finance Minister Sue Essex's draft budget. It called on her to amend her proposals to reflect five key demands:
To begin to address the historic funding gap between universities in Wales and England;
To include adequate provision to assist council tax payers as a result of the rebanding exercise and to relieve the pressure on local authorities;
To include adequate provision for a small-schools fund;
To include adequate provision to develop rail services in Wales;
To include adequate provision for frontline education services.
Indications from both sides are that there is a real chance of reaching agreement tonight.
It is possible that Labour will suggest a £100 payment to all pensioner households to offset the effects of council tax rebanding, which came into effect in April this year. Feelings about the level of council tax rises have been running high, especially since it was announced by the Westminster Government that a similar revaluation exercise has been postponed in England.
An opposition source said, "There have been quite a few meetings and it has taken about a month to get us to where we are now. The original budget was wholly unacceptable on a number of points. One of the most important was the failure to offer anything at all to those who had been hammered by the council tax increase that followed revaluation.
"What has come out from the Government side is that there are legal hurdles to overcome when giving rebates. They say it can be difficult to give concessions to one group alone because of the fear of a legal challenge from another party.
"But progress has been made in the talks between the leaders and there is a chance that agreement could be reached."
A Cabinet spokeswoman said, "We think it inappropriate to conduct negotiations via the media. However, we are hopeful that agreement could be reached on a budget this week. It is very important that we get a quick resolution so organisations like councils and health trusts can find out how much money they will have to spend next year."
The row over the budget has been a game of bluff and counter-bluff for Labour and the opposition parties.
The full Assembly has to approve the budget for 2005-06 before cash can be spent: without approval schools and hospitals would close down and Civil Service salaries would not be paid.
Agreement is needed before the Assembly breaks up for Christmas although, technically, standing orders could be suspended to allow negotiations to continue early into the New Year.
Because they outnumber Labour, the combined votes of the opposition could reject the budget and remove Rhodri Morgan from office. If that happened, however, it would be very difficult for the opposition to form an administration of their own, given Plaid Cymru's decision not to enter a coalition before the next Assembly elections in 2007.
During the public skirmishing that has continued while the budget has been in limbo, Labour has demanded to know where the opposition would impose cuts to ensure its own priorities could be accommodated.
The opposition parties have refused to be specific, and yesterday a source said that was unnecessary because of the expectation that more money would be made available to Wales following the Chancellor's pre-Budget statement.
Any deal reached tonight could be approved by party groups tomorrow lunchtime and rubber-stamped by the Assembly this week.