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Friday, 12 July, 2002, 19:19 GMT 20:19 UK
Brown gives Wales 10bn windfall

Well, here we go again. It is time to get out the calculators and budget tables, and try to make sense of what Gordon Brown has in store for us in his public spending review.

On Monday afternoon, the chancellor will set out how much the UK Government has to spend during the next three years.

Downing Street says it is the key event of this parliament. It is certainly important if Labour is to deliver the improvements in public services it promised during last year's general election campaign.

And it is particularly important in Wales because it is the key to unlocking the European grants which could help close the economic gap with England.

What is the spending review?
It fixes spending plans for three years
It takes place every two years
This review will lay out spending plans from 2003 to 2006
The first spending review took place in 1998
Some of it we know already. Mr Brown will confirm an extra 1.5bn for health in Wales over the next three years.

There will be more money for education (if we believe the Prime Minister), and public spending overall will rise substantially between now and 2006.

The Welsh Assembly has more than 10bn to spend this year - next year, that should rise to more than 11bn, with more increases to follow.

Wealth from Westminster

Wales' share of any extra spending is determined by what is known as the Barnett formula.

I'll spare you the complicated calculations - but it means that, if England gets another 100m to spend on health or education, the assembly gets around 6m to spend as it chooses.

The formula is based on population rather than need. Although public spending in Wales is higher than in England, opposition parties say the formula leaves us short-changed. But that is a different battle best left to another day.

It is important to remember that, even if Wales benefits from increases in English health and education spending, the assembly has complete freedom over how it spends the money.

But, for all the talk of "made in Wales" policies, the assembly government's priorities - health and education - are remarkably similar to those in Westminster. With 10 months to go before polling day, that is likely to continue.

European question

One other thing. The issue that led to the fall of former First Secretary Alun Michael is back on the political agenda.

Wales can't make the most of European funds unless they're matched from other sources.

Mr Michael couldn't deliver this - nor could Rhodri Morgan - and the Treasury says there is plenty in the assembly budget to match the grants from Brussels.


Hundreds of millions poured into the NHS in Wales since 1999 have yet to deliver a similar effect on hospital waiting lists

The one concession made in 2000 is that, for the first time, the Treasury added the value of the grants to the Welsh settlement - something that is worth 160m next year.

The success or otherwise of the latest settlement will be decided by whether Mr Brown agrees to repeat the deal.

But the money for European grants is a relatively small part of what is a rapidly rising budget for the assembly to spend.

Perhaps the question we should be asking is whether that money is spent effectively. Hundreds of millions poured into the NHS in Wales since 1999 have yet to deliver a similar effect on hospital waiting lists.

In politics, few things are certain - although the fall-out from this spending review is predictable enough.

Labour will claim this is a record budget, Plaid Cymru will say it's not enough, and the Liberal Democrats will try to take the credit for it.

And Conservatives in Westminster and the assembly will contradict each other.

The government's plans for future spending are published on 15 July

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