Schools and NHS cash dodge Welsh government budget cuts

The Welsh government says it will use a shrinking budget to stimulate the economy and create jobs.

Its draft budget hands cash rises to the health and education departments next year, but all others will be cut.

Every department will see a real terms revenue cut of at least 5% over the next three years.

Opposition parties accused Labour of using "smoke and mirrors", cutting the economy minister's budget and being too timid.

Without an overall majority, Labour will need the opposition's help to get their budget through the assembly.

The housing, regeneration and heritage department will take the biggest hit next year, losing 4.9% of its budget.

Funding for the business and enterprise portfolio will fall £8.9m to £271m.

Unveiling a draft budget worth around £14.5bn to Welsh assembly members, Finance Minister Jane Hutt said Labour was acting like a "responsible government with a credible budget".

She announced funding to train 4,000 young people and extra cash for the NHS.

Ministers are braced for a real terms cut in their overall budget of 12% between 2010/11 and 2014/15.

By the end of the period and after accounting for inflation, the capital budget will be half what it was two years ago.

Revenue spending will return to what it was in 2005/06, in "stark contrast" to the growing budgets in the first decade of devolution, ministers said.

In a statement to the Senedd chamber in Cardiff Bay, Ms Hutt said there would be a national infrastructure plan with "innovative funding solutions".

She repeated a call for the Welsh government to be allowed to borrow money.

Labour occupies half the seats in the assembly, meaning its spending plans will not be approved unless at least one opposition member votes in favour or abstains.

The arithmetic could give opposition parties an opportunity to secure some of their spending proposals.

The Conservatives want protection for the health budget, Plaid Cymru has called for more money for the economy and the Liberal Democrats will not back the budget without extra funding for education and skills.

New spending commitments will be largely paid for from dipping into the government's reserves.

Ms Hutt said £75m would be spent over three years on training 4,000 young people and £55m would be available to extend the pre-school Flying Start programme for underprivileged children.

An extra £288m will be spent on the NHS over three years, £48.5m of which has already been announced to help cut orthopaedic waiting times.

Despite modest cash increases, revenue spending on health and social services - the biggest part of the budget - will fall 5.8% in real terms during that time.

Money will also be available to recruit 500 new police community support officers.

The minister said: "Our vision for Wales is for a more prosperous economy with better, more efficient public services that equip people to fulfil their potential and maximise their contribution to society and the economy."

For the Tories, shadow finance minister Paul Davies said: "This is Welsh Labour's budget of smoke and mirrors.

"Over the coming weeks, we hope Welsh Labour will ditch their tribalism of the past and work constructively with opposition parties in the Welsh national interest."

Plaid leader Ieuan Wyn Jones said the government could not claim it had a budget for jobs and growth when it was cutting the budget of the economy minister.

'Bare minimum'

"How will this government be equipped to take action to save jobs and respond to the worsening economic crisis?" he said.

A Welsh government spokesman said creating jobs was a "key priority across government", not the sole responsibility of one department.

Welsh Lib Dem finance spokesman Peter Black said: "Sadly, this 'bare minimum' budget is far too timid to make the difference that Wales needs.

"The modest increase in schools funding is welcome but does not begin to provide the kind of resources Welsh children need and deserve."