Wales budget affordability doubts raised

A group of AMs has questioned whether the Welsh government's spending plans are affordable.

The assembly's finance committee said there was particular concern about NHS funding in next year's draft budget.

It also says that UK government reforms of the welfare and council tax benefit systems will put pressure on the Welsh government's resources.

A spokesman said the government was confident its spending plans could deliver its programme.

The Labour administration needs to strike a deal with opposition parties to get the budget approved because it only has half the seats in the assembly chamber.

A report by the cross-party committee says that after allowing for inflation the Welsh government's £15.1bn budget has been cut by more than 3% compared to this year.

Health, social services and children is the biggest portfolio, taking more than 40% of the budget.

With no powers over taxes, the vast majority of the Welsh government's funding comes from an annual Treasury grant.

The report looks at whether the Welsh government can meet its objectives with the money it receives.

It says AMs had unanswered questions about affordability and that the evidence they heard did not always match the finance minister's confidence.

Health was the biggest area of uncertainty, with local health boards often requiring extra funding to balance their books at the end of the year.

The report says the committee is "unconvinced that LHBs will come in on budget this year".

It adds: "There is a risk that if this year's funding is inadequate, then the need for additional cash for health will draw funding from other portfolios, and undermine the government's prioritisation."

Committee chairwoman Jocelyn Davies said: "The committee is not convinced this draft budget can cover everything that the Welsh government wants to achieve in the next financial year.

"Of particular concern is the evidence which suggests that Wales' local health boards will not come in on target this year and we believe further consideration should be given to what areas and departments will be squeezed if and when budgets get tight."

She said there also needed to be more clarity on the costs local councils will face when implementing legislation "as currently there appears to be a large discrepancy between Welsh government and local authority estimates".

With no outright majority in the Senedd, the Labour Welsh government will need opposition votes to get the budget approved.

For the Conservatives, shadow finance minister Paul Davies said the report should "ring alarm bells".

He said: "Labour ministers should now take the responsible step to revise their budget plans to adequately fund the Welsh NHS to prevent threatened downgrades and cuts to vital services."

A Welsh government spokesman said: "In preparing our draft budget proposals for 2013-14, we have reviewed our spending plans to ensure they are aligned to support the delivery of our priorities, as set out in our programme for government.

"As a result of this review, and the additional £129m we provided in the final budget for 2012-13, to support our Five for a Fairer Future commitments, we are confident that our spending plans can deliver our programme for government.

"In terms of the health budget, we have been clear from the start that this represents a challenging settlement, and we are working closely with the NHS to ensure services remain safe and sustainable in the long term.

"The Health Minister has instigated a review of both the financial and non-financial performance of the NHS in the current year which is due to be completed later this autumn. It would be premature for us to anticipate the outcome of this work now.

"We will consider the committee's report and findings as we work with other parties to agree a final budget."