Page last updated at 17:24 GMT, Wednesday, 25 February 2009

No agreement with Brown on cuts

Welsh and Scottish first ministers Rhodri Morgan and Alex Salmond
Welsh and Scottish first ministers Rhodri Morgan and Alex Salmond

A meeting between Gordon Brown and leaders from Wales, Northern Ireland and Scotland has failed to reach any agreement on proposed budget cuts.

Downing Street said talks with Welsh First Minister Rhodri Morgan and his Scottish and Northern Irish counterparts were "constructive".

But UK Government sources said a 5bn efficiency programme will go ahead.

The Welsh Assembly Government has already warned it could get 500m less from the UK Treasury in the future.

The discussions at Westminster were held to look at ways of agreeing a coordinated response to the recession and there are plans for further talks on this this.

But Mr Brown's plans for efficiency savings proved a sticking point.

Mr Morgan said after the meeting that any cuts in allocations to Wales would be "inappropriate", if they were based on the inability of Whitehall departments to use their own budgets to the full.

He said that he was more than happy to compare Welsh efficiency savings with any other administrations in an "efficiency Olympics".

But it would be wrong if unspent Whitehall budgets were classed as efficency savings, thus leading to direct cuts in the Welsh block grant.

Mr Morgan said he didn't want anything in Chancellor Alistair Darling's budget on 22 April to hit his own public spending programmes, and therefore risk "imperilling" any economic recovery "before it gets going".

'Clogged up'

He said Mr Brown was now fully aware of their concerns, and that these issues would be discussed further at a key meeting of UK finance ministers in Edinburgh on 12 March, which will also be attended by the Chief Secretary to the Treasury, Yvette Cooper.

Mr Morgan also noted that the bulk of the meeting was taken up by a long discussion about the need to get the UK banking system to restart making loans.

He talked of the need to "deconstipate the banking system", which he and the other devolved leaders had told Mr Brown was "still totally clogged up."

Before the meeting, Mr Morgan had said that governments needed to ensure that public money was in place to keep the economy moving until industrial and consumer demand pick up.

"We have to use public expenditure in classic Keynesian fashion [a macroeconomic theory started by British economist John Maynard Keynes] to try to take the place of very, very weak private consumer demand and industrial demand and then we turn that round once we are sure that the private sector recovery is in place," he said.

"Then we start the pay down of the levels of national debt we have got now."

Scottish First Minister Alex Salmond had said on the BBC's Politics Show Wales that all three devolved administrations are enormously worried by, what he calls the "huge implications" of the "looming cutbacks".

He said no-one wanted to see public expenditure cut during a recession and he believed that by making the argument jointly they could ensure a rethink.

The UK Treasury's planned efficiency savings aim to save 5bn over the next few years.

The UK Government's plan, announced in the pre-Budget report, aims to help save the UK from a deep recession, but has taken the country's borrowing to record levels.

Also at the meeting were Welsh Secretary Paul Murphy, and Northern Ireland's Deputy First Minister Martin McGuinness and Secretary of State Sean Woodward.

Assembly 'argy bhaji' on the menu
14 Jan 09 |  Wales politics
Scotland 'needs spending powers'
24 Feb 09 |  Scotland
Darling slams Salmond over budget
22 Feb 09 |  Scotland

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