Page last updated at 17:52 GMT, Monday, 5 October 2009 18:52 UK

Services facing budget cuts

Budget graphic
Rhodri Morgan will step down as first minister after the budget is passed

Key Welsh Assembly Government departments are facing revenue cuts in real terms.

The scale of the cuts emerged after next year's draft budget was published.

Based on 1.5% inflation, the day-to-day spending of departments responsible for education and the economy are both set to fall by 0.6% in 2010/2011.

But the environment, sustainability and housing department revenue is set to rise by 3.9% and health and social services by 1.1% in real terms.

Finance Minister Andrew Davies said the assembly government would seek more efficiencies rather than cut services.

Welsh Conservative leader Nick Bourne said the "poor draft budget" was caused by "Labour's inability to manage finances, both at Westminster and in the assembly".

The 1.5% estimate for inflation is the figure the assembly government has used as the basis of its calculations.

In cash terms, revenue at the departments for the economy and transport and education are to rise by 0.9%, rural affairs by 1.2% (a 0.3% cut after inflation) and heritage by 1.5% (no change in real terms).

The two hardest hit areas are within the assembly government's own administrative departments.

Revenue for public services and performance will fall by one per cent in cash terms, a 2.5% reduction after inflation, and central services and administration is due to receive an increase of 0.3%, a cut of 1.2% when the inflation figure is taking into account.

Only three departments can expect real terms increases in their revenue:

• social justice and local government - up 2.2% (0.7% after inflation)

• health and social services - up 2.6% (1.1%)

• environment, sustainability and housing - up 5.4% (3.9%)

Tighter spending constraints on the assembly government's capital spending, money for projects such as the building of new schools, roads and hospitals, indicate there could be cuts of between 10 and 20% next year.

The draft budget reveals that all departments bar one will face cuts in capital spending, although extra cash for capital projects will be released from the Strategic Capital investment Fund later this year, and £120m has already been brought forward to spend in 2009/10 to boost the Welsh economy during the recession.

'Pull the plug'

Warning that "the years of plenty are over", Mr Davies said "tough decisions" had been involved in preparing the draft budget but that "people, priorities and partnership" were "at the heart of it".

"In this climate it is vital that we use our budget effectively, efficiently and innovatively to improve public services," he said.

"It is these public services that people across Wales, particularly the most vulnerable and disadvantaged, rely on," Mr Davies added.

But Mr Bourne said Wales was facing a "massive financial challenge" because of "Gordon Brown and Rhodri Morgan's debt crisis".

"So Labour could afford its 'economic stimulus' now - we're all going to be paying for it next year," he said.

Criticising planned spending on education and economic development, Welsh Liberal Democrat leader Kirsty Williams said the budget would "pull the plug on Wales' economic future".

"The argument for keeping public spending high during a recession is to stimulate economic activity - this budget ignores that logic and slashes the very funding that will create the skill base, infrastructure and environment in which business can flourish," she said.

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