Page last updated at 16:29 GMT, Wednesday, 22 April 2009 17:29 UK

Did Wales lose out in Budget?

By Phil Parry
BBC Wales political unit

Unidentified person carrying a budget box
This year's budget has been described as the most significant in recent years

It was a budget feared by ministers in Wales as none before had. There would be less money than expected for Welsh services in future, the only question was how much less.

The Chancellor tried to emphasise the Government's green credentials and increase in tax-free savings limits but it was the effect of "efficiency savings" that most worried assembly government ministers.

In fact on that, the impact was bearable.

Just £156m less to spend on public services here than had been thought.

These are the efficiency savings in UK government departments and the effect of that in Wales.

But if you factor in the reduction in predicted funding for Wales from Westminster (the block grant from the UK government) things tell a very different story.

Revenue funding is down by £216m next year and capital funding by £200m on what had been predicted. That is £416m in total, according to the Welsh Assembly Government.

However, the fall in capital funding is largely because they were given £120m from next year's budget to spend this year - and obviously it won't be repeated.

It is not quite the worst case scenario of a £500m cut to the Welsh budget that some had feared, but the figures will cause a few headaches for ministers and their civil servants over the next weeks and months.

So it wasn't the impact of the "efficiency savings" in Government departments we needed to be worried about - it turned out to be the overall reduction in the block grant.


As a result of extra funding for services like further education in the UK, more money has been earmarked for Wales (£46m this year £14m next).

Alsitair Darling at breakfast before delivering his Budget
Alistair Darling on the morning of his Budget

But that now has been overshadowed by the reduction in the block grant forecast for Wales.

We understood public sector organisations had been asked to "war game" the implications of a cut to their planned budget. They may still have to put those plans into action.

The Chancellor described this as a Budget to "speed the recovery" and take Britain through most serious economic turmoil in 60 years. The mistakes of the past would not be repeated, he said.

Whether "front-line" services in Wales would now be hit and by how much becomes the focus of attention now.

Former Welsh Secretary Peter Hain has already warned that frontline services like schools and hospitals must not be hit by efficiency savings.

Mr Hain said he believed there was still scope for savings from the "Welsh administrative bureaucracy".

Mr Hain said: 'I've long thought and in fact assembly members agree that there's room for efficiency savings within the assembly's budget.

He said he did not believe "sufficient has been done in the first 10 years of devolution to really tackle that and that's why the problems have now mounted up".

And it all came on a day when unemployment figures showed just how serious things had become.

In Wales 108,000 out of work, an increase of 10,000 over the last three months and at a rate of 7.5%.

The budget effects will really all come to bite after next year when, ofcourse, there must be a general election.

And it will be whether those jobless figures are heading down once more which could be the real test of whether the Government's economic policy is working.

No amount of car scrappage schemes - money to trade in cars over 10 years old - will take the focus away from that.

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