Welsh budget: Why much talk remains after vote defeat

Labour ministers failed to get support for their draft budget on Tuesday

The two hour set-piece Welsh assembly debate on the draft budget yielded more heat than light - appropriate, perhaps, as the real talking is taking place behind the scenes.

But the failure of the assembly to agree either a Welsh government motion noting the proposals - or an opposition amendment rejecting them - illustrates just how much talking is still to do after Tuesday.

Here, then, is our best understanding of the current position.

There are currently three sets of talks taking place. They are between Labour and the Liberal Democrats; Labour and Plaid Cymru; and the Conservatives, Plaid and the Lib Dems.

The focus of the Labour-Plaid discussions is an increase to the enterprise budget and more capital spending.

Plaid wants to see the department's budget rise substantially - but it has not yet spelt out publicly where it would take the money from elsewhere to pay for it.

It would inevitably mean unpicking the draft budget proposals as they stand - something Labour is said to be unwilling to do.

Rival budget

Lib Dems want more money channelled to education, and specifically to the poorest pupils. This is the focus of the Lib Dem-Labour talks.

Crucially, this could be achieved without major changes of spending between portfolios. It would mean changes within the education portfolio though.

The Lib Dem "pupil premium" policy was costed in their manifesto at £84m next year, £134m the year after, and £185m in 2014-15.

However, the Lib Dems are not demanding this as additional money to be put into education: they would settle, it seems, for a re-jigging of the way the money is spent within that portfolio.

This would surely be more attractive to the government negotiators, if not necessarily to the education minister.

The opposition talks are not expected to yield a comprehensive rival budget to the government's at this stage - the three positions are far too diverse - but they are certainly a useful tool for Plaid and the Lib Dems to remind ministers of during their discussions.

Stimulus package

Where might a solution come from?

The Welsh government has already had one unexpected £38.9m windfall from Westminster this year.

It is possible any stimulus package announced by the chancellor in his autumn statement on 29 November might also bring with it some extra cash for Wales, which First Minister Carwyn Jones would presumably welcome as an additional negotiating measure.

But if the government is to pass its final budget as planned on 6 December, according to assembly procedure it will need to formally table it for debate on 29 November - the same day - and it cannot be changed after this date.

So the future of the government's budget, it seems, rests on the talks in the next fortnight.