Welsh Government Final Budget 2018-2019 - GOV.WALES · the Finance Committee to develop the next...

Final Budget 2018-2019

A New Budget for Wales

December 2017

Welsh Government

© Crown copyright 2017, Welsh Government 33740, Digital ISBN 978-1-78903-065-5

Mae'r ddogfen yma hefyd ar gael yn Gymraeg / This document is also available in Welsh.

gov.wales

1

Contents 1. Introduction 2. UK Autumn Budget

3. Changes between draft and final Budget

4. Outline assessment of the impact of changes between

the draft and final Budgets

5. Welsh Government final Budget allocations for 2018-19 6. Main Expenditure Group spending plans

Annex A – Reconciliation between Administrative

Budget and Resource Allocations in the annual Budget motion

Annex B – Glossary

2

1. Introduction

1.1. The Welsh Government has tabled the final Budget for 2018-19 in accordance with Standing Order 20. The final Budget reflects changes to the outline draft Budget published on 3 October and the detailed spending plans published on 24 October.

1.2. The 2018-19 Budget marks a significant milestone in Wales’ devolution journey as, for the first time, Wales becomes responsible for raising a proportion of its own revenue from two new devolved taxes – land transaction tax and landfill disposals tax, which replace stamp duty land tax and landfill tax, respectively, from 1 April 2018 – to spend on public services.

Draft Budget scrutiny

1.3. The 2018-19 Budget also marked the introduction of the two-stage draft Budget scrutiny process agreed by the National Assembly for Wales in June 2017. Stage one scrutiny by the Finance Committee focused on the major building blocks of the Welsh Government’s budget – taxation, borrowing and spending – followed by more detailed consideration of departmental spending plans by the National Assembly’s subject committees in stage two. This new process marks the first time that subject committees have been able to report on the Welsh Government’s detailed spending proposals.

1.4. The Welsh Government welcomes the valuable contribution provided by both the Finance Committee and the National Assembly subject committees in the constructive scrutiny of budget proposals, which is particularly important at a time of reducing budgets and when the Welsh Government is faced with difficult decisions and choices. The Welsh Government is currently reflecting on the recommendations made by the committees and will respond to these in due course. Budget engagement

1.5. Following the publication of the draft Budget, the Welsh Government has run

a small number of budget engagement events in line with our commitment to pilot an approach to participatory budgeting, building on the findings in the Public Policy Institute Wales’ report Participatory Budgeting: A Rapid Evidence Review. Working with the Wales Council for Voluntary Action and Citizens Wales, events were held with Citizens Wales and Children in Wales in South and North Wales. The evidence and feedback gathered at these sessions will inform our approach to future budget engagement. We will continue to work with the Future Generations Commissioner and engage with the Finance Committee to develop the next phase of participatory budgeting.

1.6. As part of the 2017-18 Budget agreement with Plaid Cymru, the Welsh Government also committed to explore digital participatory budgeting. On 8 November, the Welsh Government became the first administration in the UK to publish a digital Budget simulator. It allows people to choose how they would like to allocate the £15.3bn budget between Welsh Government

3

portfolios, illustrating the trade-offs and challenges inherent in the budgetary process. To date, there have been more than 100 responses to the simulator. We will consider further use of the simulator in the spring when planning the engagement approach for the 2019-20 draft Budget.

Changes between the draft and final Budgets

1.7. The new Budget process protocol between the National Assembly for Wales

and the Welsh Government acknowledges the UK Budget will usually be published after the Welsh Government has published its outline and detailed budget proposals. It was agreed that, providing the UK Budget did not have a material impact on the Welsh Government’s overall budget, any non-material changes arising as a result of the UK Budget should be considered as part of a subsequent supplementary Budget.

1.8. Following the UK Budget, the Welsh Government has been reflecting on the implications. The UK Budget resulted in additional revenue and capital funding for Wales over a four-year period. Given the importance of providing our delivery partners with as much certainty as possible about the amount of funding available to run day-to-day public services, the Welsh Government is making a number of additional revenue allocations in the final Budget. Further detail about these changes is set out in chapter three. Any early decisions on immediate capital priorities will be taken before the debate on the final Budget 2018-19 on 16 January. Further details will be made available in due course. MEG restatements

1.9. Since publishing the draft Budget, we have restated the draft Budget MEG

BEL tables in accordance with the new Ministerial portfolios announced on 3 November. The restated MEG tables were published on the Welsh Government website on 4 December. This was a purely administrative exercise to regularise changes to the new structures. The restated tables are available at: http://gov.wales/funding/budget/draft-budget-2018-19/?lang=en

1.10. The final Budget reflects the new Ministerial portfolios.

http://gov.wales/funding/budget/draft-budget-2018-19/?skip=1&lang=en

http://gov.wales/funding/budget/draft-budget-2018-19/?skip=1&lang=en

http://gov.wales/funding/budget/draft-budget-2018-19/?lang=en

4

2. UK Autumn Budget

Impact on Welsh Budget 2.1 The UK Government announced its Autumn Budget on 22 November. It

resulted in changes to the funding available to Wales – as a result of UK Government spending decisions, Wales received Barnett consequentials of £1.1bn between 2018-19 and 2020-21 (the period for which this budget covers). This comprises £210m resource; £328m of conventional capital and £557m of financial transactions capital.

2.2 Of this new funding, £69m is due to the application of the 5% multiplier to the Barnett formula as a result of the fiscal framework for Wales agreed with the UK Government. In the draft Budget we assumed the multiplier would increase funding by £48m, therefore the additional funding from this element is £21m.

2.3 While this additional funding is welcome, our total budget in 2019-20 will be 5% - or £900m - lower in real terms than in 2010-11. Excluding the additional financial transactions capital funding, which has restrictions about what it can be spent on and must be repaid to HM Treasury, our total budget in 2019-20 will be 7% or £1.1bn lower than in real terms than in 2010-11.

2.4 The UK Government also announced it has now concluded its efficiency

review. At the time of the draft Budget, we did not know where the UK Government planned to make its £3.5bn of departmental reductions. We had budgeted for a share of this reduction in 2019-20. Given the overall net impact of the efficiency review on our budget, there is now scope to make some modest additional allocations as part of the final Budget.

Impact on Welsh tax forecasts

2.5 Alongside the UK Government’s Autumn Budget, the Office for Budget

Responsibility (OBR) updated its economic and tax revenue forecasts, substantially downgrading its assessment of the economic outlook. Gross domestic product (GDP) per head of population is expected to grow by less than 1% each year to 2022, down from approximately 1.5%, projected for the Spring Budget. This compares unfavourably with the average annual increase of 2.3% recorded in the 10 years before the financial crisis. The revised forecasted lower rate of growth reflects the OBR’s judgement that productivity – the main source of improvement in living standards, which has stagnated over the last decade – will continue to disappoint.

2.6 Our draft Budget took into account the information we had available from the

UK Government’s Spring Budget and associated OBR forecasts. As a result of the new information, our own tax revenue forecasts have been revised downwards. Bangor University has scrutinised these forecasts to provide assurance and has published a summary report alongside this final Budget.

5

3. Changes between draft and final Budget

3.1 An overview of the changes made between the publication of the draft and final Budgets is provided below.

Tax changes

3.2 The indicative rates and bands for land transaction tax and landfill disposals tax were published as part of the draft outline Budget on October 3 to aid scrutiny of the Welsh Government’s tax and spending decisions. In announcing these rates and bands, the Cabinet Secretary for Finance said he would consider changes in light of the UK Government’s Autumn Budget.

3.3 On December 11, the Cabinet Secretary for Finance announced the starting threshold for the land transaction tax main residential rates will be set at £180,000 from 1 April 2018. The new threshold is £55,000 higher than the current starting threshold for stamp duty land tax.

3.4 The decision to raise the starting threshold for land transaction tax follows the introduction of a new stamp duty land tax relief for first-time buyers by the Chancellor of the Exchequer in the UK Budget. The relief – on homes for first-time buyers of up to £300,000 – reflects the nature of the housing market in England, in particular, the challenges facing first-time buyers in London and the South East of England where house prices are considerably higher than they are in Wales.

3.5 The new £180,000 starting threshold for the main residential rates for land

transaction tax in Wales, which will come into effect on 1 April 2018, will apply to first-time buyers and homebuyers in general. It will reduce the tax burden for around 24,000 homebuyers in Wales.

Table 1: Revised land transaction tax (LTT) main residential rates

Price threshold LTT rate

£0-£180k 0%

£180k-£250k 3.5%

£250k-£400k 5%

£400k-£750k 7.5%

£750k-£1.5m 10%

£1.5m-plus 12%

Spending changes

3.6 A small number of changes have been made to the final Budget as a result of previously-announced measures:

6

The provisional local government settlement, which was published on October 10, announced a £1.8m funding floor to ensure no authority will have to manage a reduction of more than 1% in 2018-19. This floor was based on the numbers available at that point in time. Following additional allocations to the Local Government and Public Services MEG the funding floor has now been adjusted so that no authority will have to manage a reduction of more than 0.5% in 2018-19.

An extra £7m revenue has been allocated to the Local Government and Public Services MEG in 2018-19 to deliver the second increase to the capital limit – the amount people can keep before they are charged for residential care – from £30,000 to £40,000. This increase was announced in a written statement by the Minister for Children and Social Care on December 6.

As part of the Budget agreement with Plaid Cymru, which was announced on October 1, £2m of additional revenue funding was allocated over two years for the provision of electric car charging points. Of this funding £1.7m will be provided as capital. A corresponding adjustment over the two years has been made between reserves and the Economy and Transport MEG in the final Budget.

On October 18, the Cabinet Secretary for Education announced the maximum tuition fee in Wales will remain at £9,000. An additional £10m revenue funding will be made available to HEFCW to deal with immediate issues arising from the tuition fee changes - £5m in 2018-19 and £5m in 2019-20.

Following the UK Budget, the Cabinet Secretary for Finance announced on December 13 an extra £9m and £22m will be allocated in the final Budget in 2018-19 and 2019-20 respectively, to support the switch from RPI to CPI for non domestic rates from April 2018.

3.7 Following the UK Budget, discussions have been ongoing to determine how the

additional revenue funding available over the next two years can be deployed to support the delivery of Prosperity for All and the five priority areas – early years, housing, social care, mental health and skills and employability. Discussions with Plaid Cymru have also continued, building on the Budget agreement reached at the time of the draft Budget.

3.8 As a result of the additional funding available following the UK Budget and now knowing the net impact of the UK ‘efficiency review’ on our budget, £251m of revenue funding is being allocated in the final Budget. Because of the short timeframe between the UK Budget and the publication of this final Budget, some final decisions are still to be made in a small number of areas about how funding will be deployed within portfolios. In these cases, a new Budget Expenditure Line (BEL) in the MEG BEL tables has been established. Further details about how this funding will be spent will be provided in due course and relevant adjustments will be reflected in subsequent budgets.

7

Health and Social Services

An additional £100m has been allocated over the next two years to support transformation in the health service. Interventions will include:

Additional funding for the Integrated Care Fund (ICF). This will support the ongoing development of pooled health and social care budgets for residential care, delivering a shared priority with Plaid Cymru to improve outcomes for citizens through improved provision for residents. It will also support the development of other models of provision with local authorities and third sector partners, such as social value organisations, and to target support for carers;

Targeted funding to primary care clusters to continue building the primary care model and supporting community-based healthcare provision;

Support for regional planning. Local Government and Public Services

An additional £20m in 2018-19 and £40m in 2019-20 to support local authorities. Further details will be published in the Final Local Government Settlement on 20 December.

Building on the £20m announced in the draft Budget to tackle homelessness, we are providing an extra £10m in 2019-20 to specifically target youth homelessness.

Economy and Transport

An additional £8m has been allocated in 2019-20 to support Prosperity for All priorities.

Education

An extra £2.5m has been allocated in 2018-19 and £4.2m in 2019-20 in support of programmes and interventions aimed at improving skills.

An additional £18.3m has been allocated in 2019-20 to support Prosperity for All priorities.

Energy, Planning and Rural Affairs

An additional £2.5m has been allocated in 2018-19 and £3.1m in 2019-20 to support local authorities to make improvements to air quality.

An additional £5m has been allocated to support Prosperity for All priorities.

8

Central Services and Administration

An additional £5m has been allocated to support delivery of Prosperity for All priorities.

Building on the additional £5m announced in the draft Budget for Brexit preparedness as part of the Budget agreement with Plaid Cymru, we will establish an EU Transition Fund to help businesses and the public sector in Wales adjust and prepare for Brexit. The fund will run from April 2018 and we will work with partners to develop detailed programmes of support covering a range of interventions. An additional £10m of revenue funding has been allocated over the next two years in the final Budget as an initial investment in this fund.

Technical Changes

3.9 Two technical changes have been made to the final Budget:

£2m has been allocated to the Central Services and Administration MEG in each of 2018-19 and 2019-20 to establish the initial operational budget for the Welsh Revenue Authority (WRA). This budget is higher than the previous estimate due to a change to the functional requirements of the WRA, particularly in relation to additional duties associated with the collection of higher rates of residential property transactions.

There is a marginal decrease of £415k to the funding required in 2018-19 for the Direct Funded Bodies, followed by a marginal increase of £95k to the funding required for 2019-20. These adjustments will be managed through reserves.

3.10 We are committed to making some early decisions about allocating the capital

awarded as a result of the UK Budget to immediate priorities ahead of the final Budget debate in January. Further consideration will be given to future capital allocations alongside the publication of the Wales Infrastructure Investment Plan in the Spring and in subsequent supplementary budgets.

9

4. Assessment of the impact of changes between the draft and final Budgets

Impact assessment

4.1 The Welsh Government’s Strategic Integrated Impact Assessment, published as part of the outline draft Budget, set out the impact of the high-level decisions. The impact of the detailed spending decisions at portfolio level was assessed as part of the detailed draft Budget by individual Ministers. This assessment provides a summary of the impact of changes between the draft and final Budgets.

4.2 Taking Wales Forward and the national strategy Prosperity for All underpin the draft Budget. The subsequent allocations made following the publication of the draft Budget continue to support the achievement of Welsh Government objectives and the national wellbeing goals. These spending decisions continue to reflect the emphasis we place on socioeconomic disadvantage; children’s rights; Welsh language; equality and sustainable development through improving the economic, social, environmental and cultural wellbeing of Wales.

4.3 There are a number of allocations in the Education; Energy, Planning and Rural Affairs and Economy and Transport MEG where no decisions have yet been taken on their specific use. Plans for this funding will be aligned to Prosperity for All in support of the Welsh Government’s wellbeing objectives. Prosperous and Secure

4.4 The residential land transaction tax rates and bands announced at the time of the draft Budget meant that homes bought at the price of the average first-time buyer price and at the overall average house price in Wales, would not be liable for tax. Raising the starting threshold further for residential land transaction tax in Wales to £180,000 provides more benefits for homebuyers in Wales. The land transaction tax bands and tax rates explanatory memorandum and associated regulatory impact assessment will be published alongside the regulations in January 2018.

4.5 Prosperity brings security to individuals, families and communities. We will mirror the UK Government’s announcement to switch from RPI to CPI for non domestic rates with an investment of £31m over two years. This will support small businesses by reducing the amount they pay in rates and help them to continue to play an active part in the economy and provide employment across Wales.

4.6 Skills and employability is a priority in Prosperity for All. Developing people’s skills is vital to boosting the economy and enabling people to maintain secure employment. Tackling inequality in employment opportunities is one way to support people to move out of poverty and our additional investment of £6.7m over two years in this final Budget in skills is important to continue the drive towards this.

10

4.7 In publishing our draft Budget in October, we acknowledged that homelessness is a priority for this government and allocated an additional £10m in both 2018-19 and 2019-20 to help support some of the most vulnerable in society. Between 20% and 30% of young homeless people have been in care. A further £10m in 2019-20 will be invested to specifically target youth homelessness and to support young people and give them a positive progression into adulthood.

Healthy and Active

4.8 An additional £50m will be allocated in 2018-19 and 2019-20 in the health service in Wales, on top of the extra funding announced in the draft Budget to drive improvements to NHS services. This additional funding will support the focus on developing integrated services and primary care services, bringing healthcare closer to people’s homes and supporting older people who sometimes struggle to access services. Easier access to health services also has a positive impact on poverty and the economy with quicker recovery times and less time out of work.

4.9 Raising the amount of capital people can keep to £40,000 before they are charged for care, ensures people are able to keep more of their hard-earned savings and enables them to choose how they use their money later in life. This has a disproportionately-positive impact on older people as they form the largest proportion of people receiving residential care.

4.10 The £5.6m we have allocated over two years to support measures to meet the EU directive on air quality will help to reduce the levels of air pollution across Wales to within legislative limits and, as far as possible, below them. Air quality can have fundamental impacts on human health, affecting both the quality and duration of people’s lives, which in turn affects their ability to contribute to the economy and society. This extra funding will have a disproportionately-positive impact on those living in poverty because exposure to air pollution tends to be worse in our most deprived communities. There is evidence the harmful effects of poor air quality are most like to be experienced by the very young; the elderly and people suffering from existing health conditions, such as cardiovascular and respiratory illnesses. Improved air quality will also have a positive impact on our eco-systems.

Ambitious and Learning

4.11 Education is an important investment in our young people, creating well-rounded individuals with the necessary skills to support the economy. The additional £5m allocated in 2018-19 and 2019-20 to maintain tuition fees at £9,000 will support all students and help reduce the average debt of students studying in Wales, meaning less interest is accrued by all borrowers.

United and Connected

4.12 Increased funding for local authorities of £60m over 2018-19 and 2019-20 will

maintain under-pressure services. We have also set a funding floor so no authority has to manage a reduction of more than 0.5%. Local authority

11

services are used by all residents of Wales, but many services are targeted at those with a protected characteristic, such as age, with benefits for children and older people, or those in poverty. There will therefore be a positive impact on these service users compared to the position under the previous settlement.

12

5. Welsh Government final Budget allocations for 2018-19

5.1 The changes described in chapter three are reflected in the revised spending plans set out in this chapter, together with the Main Expenditure Group spending plans in chapter six. The detailed changes to our budget proposals between publication of the draft and final Budgets in 2018-19 are set out in the final Budget 2018-19 MEG BEL tables which are published together with the explanatory note.

Table 5.1a - Sources Of Finance 2018-19

2018-19 FINAL BUDGET

COMPONENTS OF WELSH GOVERNMENT FINANCING

2018-19 Plans as

per 2018-19

Draft Budget

2018-19 Changes

2018-19 New Plans

as per 2018-19

Final Budget

£000s £000s £000s

RESOURCE FINANCING

Departmental Expenditure Limit (DEL):

Fiscal 13,126,919 141,006 13,267,925

Non-Fiscal 664,279 - 664,279

Drawdown from the Welsh Reserve - - -

Annually Managed Expenditure (AME):

Fiscal 27,273 - 27,273

Non-Fiscal 38,619 (10) 38,609 Wales Devolved Financing:

Non Domestic Rates 1,052,000 (2,000) 1,050,000

Land Transaction Tax 266,000 (16,000) 250,000

Landfill Disposals Tax 28,000 (2,000) 26,000

Principal repayment of borrowing (616) - (616) TOTAL RESOURCE FINANCING 15,202,474 120,996 15,323,470

CAPITAL FINANCING


General 1,571,468 47,783 1,619,251

Financial Transactions 124,041 157,402 281,443 Annually Managed Expenditure (AME):

Capital 658,439 - 658,439 Wales Devolved Financing:

Borrowing 125,000 - 125,000 TOTAL CAPITAL FINANCING 2,478,948 205,185 2,684,133

TOTAL WELSH FINANCING 17,681,422 326,181 18,007,603

Table 5.1b - Sources Of Finance 2019-20

13



2019-20 Plans as

per 2018-19

Draft Budget

2019-20 Changes

2019-20 New Plans

as per 2018-19

Final Budget

£000s £000s £000s

RESOURCE FINANCING


Fiscal 13,181,382 128,827 13,310,209

Non-Fiscal 689,981 - 689,981

Drawdown from the Welsh Reserve 75,000 - 75,000

Annually Managed Expenditure (AME):

Fiscal 28,505 - 28,505

Non-Fiscal 156,965 - 156,965 Wales Devolved Financing:

Non Domestic Rates 1,078,000 (15,000) 1,063,000

Land Transaction Tax 291,000 (22,000) 269,000

Landfill Disposals Tax 26,000 (2,000) 24,000

Principal repayment of borrowing (3,744) - (3,744) TOTAL RESOURCE FINANCING 15,523,089 89,827 15,612,916

CAPITAL FINANCING


General 1,705,908 108,617 1,814,525


Capital 816,483 - 816,483 Wales Devolved Financing:

Borrowing 125,000 - 125,000 TOTAL CAPITAL FINANCING 2,754,351 301,876 3,056,227


14

Table 5.1c - Sources Of Finance 2020-21



2020-21 Plans as

per 2018-19

Draft Budget

2020-21 Changes

2020-21 New Plans

as per 2018-19

Final Budget

£000s £000s £000s

CAPITAL FINANCING


General 1,814,204 134,493 1,948,697


Capital - - -

Wales Devolved Financing:

Borrowing 125,000 - 125,000

TOTAL CAPITAL FINANCING 2,024,707 340,748 2,365,455


15

Table 5.2 – Allocation of the Wales Budget

MAIN EXPENDITURE GROUPS (MEGs)

2018-19 Plans as per

2018-19 Draft Budget

2018-19 Changes

2018-19 New Plans

as per 2018-19

Final Budget


2018-19 Draft Budget

2019-20 Changes

2019-20 New Plans

as per 2018-19

Final Budget

£000s £000s £000s £000s £000s £000s

Health and Social Services 7,673,315 50,000 7,723,315 7,927,718 50,000 7,977,718

Local Government and Public Services 5,370,561 34,807 5,405,368 5,203,269 64,000 5,267,269

Economy and Transport 1,093,858 - 1,093,858 1,271,460 8,000 1,279,460

Education 2,344,277 7,500 2,351,777 2,463,167 27,500 2,490,667

Energy, Planning and Rural Affairs 346,068 2,500 348,568 324,656 8,100 332,756

Central Services and Administration 317,355 7,000 324,355 302,227 12,000 314,227

Total Allocations to Welsh Government MEGs

17,145,434 101,807 17,247,241 17,492,497 169,600 17,662,097

Unallocated Resource

Fiscal Resource 116,369 20,344 136,713 219,520 (79,128) 140,392

Non-Fiscal Resource 138,397 10 138,407 164,199 10 164,209

Unallocated Capital General 211,083 47,033 258,116 330,769 107,867 438,636

Financial Transactions 1,193 157,402 158,595 1,193 193,259 194,452

Assembly Commission 56,788 (700) 56,088 57,114 (200) 56,914

Public Services Ombudsman for Wales 4,550 (70) 4,480 4,540 (60) 4,480

Wales Audit Office 6,906 355 7,261 6,906 355 7,261

Direct Charges to the Welsh Consolidated Fund

702 - 702 702 - 702

TOTAL WELSH BUDGET 17,681,422 325,181 18,007,603 18,277,440 391,703 18,669,143

16

Table 5.3a – Summary of the Welsh Government MEG total allocations – 2018-19

2018-19 DRAFT BUDGET TOTAL MEG ALLOCATIONS

Resource

Capital AME TOTAL MEG

MEG* Fiscal Non

Fiscal Resource

Total Traditional

Capital Financial

transactions Capital

Total Resource Capital

AME Total

HSS

7,117,871

190,000

7,307,871

294,444

-

294,444

121,000

-

121,000

7,723,315

LGPS

3,718,910

400

3,719,310

510,037

98,748

608,785

1,077,273

-

1,077,273

5,405,368

E&T

457,948

196,677

654,625

394,681

17,920

412,601

26,632

-

26,632

1,093,858

Educ

1,534,054

107,039

1,641,093

168,627

-

168,627 (116,382)

658,439

542,057

2,351,777

EPRA

232,448

13,086

245,534

94,454

6,180

100,634

2,400

-

2,400

348,568

CSA

282,329

16,000

298,329

23,087

-

23,087

2,939

-

2,939

324,355

Total

13,343,560

523,202

13,866,762

1,485,330

122,848

1,608,178

1,113,862

658,439

1,772,301

17,247,241

*Health and Social Services (HSS); Local Government and Public Services (LGPS); Economy and Transport (E&T); Education (Educ); Energy, Planning and Rural Affairs (EPRA); Central Services and Administration (CSA)

17

Table 5.3b – Summary of the Welsh Government MEG total allocations – 2019-20

2019-20 TOTAL MEG ALLOCATIONS as per 2018-19 FINAL BUDGET

Resource

Capital AME TOTAL MEG

MEG* Fiscal Non

Fiscal Resource

Total Traditional

Capital Financial

transactions Capital

Total Resource Capital

AME Total

HSS

7,337,701

190,779

7,528,480

328,138

-

328,138

121,100

-

121,100

7,977,718

LGPS

3,671,524

400

3,671,924

430,773

73,067

503,840

1,091,505

-

1,091,505

5,267,269

E&T

440,481

195,898

636,379

455,514

32,700

488,214

154,867

-

154,867

1,279,460

Educ

1,516,870

107,039

1,623,909

176,674

-

176,674 (126,399)

816,483

690,084

2,490,667

EPRA

229,489

13,086

242,575

87,781

-

87,781

2,400

-

2,400

332,756

CSA

274,046

16,000

290,046

21,204

-

21,204

2,977

-

2,977

314,227

Total

13,470,111

523,202

13,993,313

1,500,084

105,767

1,605,851

1,246,450

816,483

2,062,933

17,662,097

*Health and Social Services (HSS); Local Government and Public Services (LGPS); Economy and Transport (E&T); Education (Educ); Energy, Planning and Rural Affairs (EPRA); Central Services and Administration (CSA)

18

Table 5.4 – Changes to the Welsh Government Fiscal Resource DEL


£000s

2018-19 Plans as

per 2018-19

Draft Budget

2018-19 Changes

2018-19 New Plans

as per 2018-19

Final Budget

2019-20 Plans as

per 2018-19

Draft Budget

2019-20 Changes

2019-20 New Plans

as per 2018-19

Final Budget

Health and Social Services 7,067,871 50,000 7,117,871 7,287,701 50,000 7,337,701

Local Government and Public Services 3,682,103 36,807 3,718,910 3,592,524 79,000 3,671,524

Economy and Transport 458,798 (850) 457,948 433,331 7,150 440,481

Education 1,526,554 7,500 1,534,054 1,489,370 27,500 1,516,870

Energy, Planning and Rural Affairs 229,948 2,500 232,448 221,389 8,100 229,489

Central Services and Administration 275,329 7,000 282,329 262,046 12,000 274,046

Total Fiscal Allocations to Welsh Government MEGs

13,240,603 102,957 13,343,560 13,286,361 183,750 13,470,111

19

Table 5.5 – Changes to the Welsh Government Non Fiscal Resource DEL


£000s


2018-19 Draft

Budget

2018-19 Changes

2018-19 New Plans

as per 2018-19

Final Budget


2018-19 Draft

Budget

2019-20 Changes

2019-20 New Plans

as per 2018-19

Final Budget

Health and Social Services 190,000 - 190,000 190,779 - 190,779

Local Government and Public Services 400 - 400 400 - 400

Economy and Transport 196,677 - 196,677 195,898 - 195,898

Education 107,039 - 107,039 107,039 - 107,039

Energy, Planning and Rural Affairs 13,086 - 13,086 13,086 - 13,086

Central Services and Administration 16,000 - 16,000 16,000 - 16,000

Total Non Fiscal Allocations to Welsh Government MEGs

523,202 - 523,202 523,202 - 523,202

20

Table 5.6 – Changes to the Welsh Government Capital DEL – General Capital (excluding Financial Transactions)


£000s


2018-19 Draft

Budget

2018-19 Changes

2018-19 New

Plans as per

2018-19 Final

Budget


2018-19 Draft

Budget

2019-20 Changes

2019-20 New

Plans as per

2018-19 Final

Budget


2018-19 Draft

Budget

2020-21 Changes

2020-21 New

Plans as per

2018-19 Final

Budget


294,444 - 294,444 328,138 - 328,138 309,988 - 309,988

Local Government and Public Services

510,037 - 510,037 430,773 - 430,773 430,451 - 430,451

Economy and Transport 393,831 850 394,681 454,664 850 455,514 496,969 - 496,969

Education 168,627 - 168,627 176,674 - 176,674 154,750 - 154,750


94,454 - 94,454 87,781 - 87,781 77,521 - 77,521


23,087 - 23,087 21,204 - 21,204 17,648 - 17,648

Total General Capital Allocations to Welsh Government MEGs

1,484,480 850 1,485,330 1,499,234 850 1,500,084 1,487,327 - 1,487,327

21

Table 5.7 – Changes to the Welsh Government Capital DEL – Financial Transactions


£000s


2018-19 Draft

Budget

2018-19 Changes

2018-19 New

Plans as per

2018-19 Final

Budget


2018-19 Draft

Budget

2019-20 Changes

2019-20 New

Plans as per

2018-19 Final

Budget


2018-19 Draft

Budget

2020-21 Changes

2020-21 New

Plans as per

2018-19 Final

Budget


- - - - - - - - -


98,748 - 98,748 73,067 - 73,067 44,700 - 44,700

Economy and Transport 17,920 - 17,920 32,700 - 32,700 8,000 - 8,000

Education - - - - - - - - -


6,180 - 6,180 - - - 2,000 - 2,000


- - - - - - - - -

Total Financial Transaction Capital Allocations to Welsh Government MEGs

122,848 - 122,848 105,767 - 105,767 54,700 - 54,700

22

Table 5.8 – Welsh Government AME Budget – Resource allocations


£000s


2018-19 Draft

Budget

2018-19 Changes

2018-19 New Plans

as per 2018-19

Final Budget


2018-19 Draft

Budget

2019-20 Changes

2019-20 New Plans

as per 2018-19

Final Budget

Health and Social Services 121,000 - 121,000 121,100 - 121,100


1,079,273 (2,000) 1,077,273 1,106,505 (15,000) 1,091,505

Economy and Transport 26,632 - 26,632 154,867 - 154,867

Education (116,382) - (116,382) (126,399) - (126,399)

Energy, Planning and Rural Affairs 2,400 - 2,400 2,400 - 2,400

Central Services and Administration 2,939 - 2,939 2,977 - 2,977

Total Resource AME Allocations to Welsh Government MEGs

1,115,862 (2,000) 1,113,862 1,261,450 (15,000) 1,246,450

23

Table 5.9 – Welsh Government AME Budget – Capital allocations


£000s


2018-19 Draft

Budget

2018-19 Changes

2018-19 New Plans

as per 2018-19

Final Budget


2018-19 Draft

Budget

2019-20 Changes

2019-20 New Plans

as per 2018-19

Final Budget

Health and Social Services - - - - - -


- - - - - -

Economy and Transport - - - - - -

Education 658,439 - 658,439 816,483 - 816,483

Energy, Planning and Rural Affairs - - - - - -

Central Services and Administration - - - - - -

Total Capital AME Allocations to Welsh Government MEGs

658,439 - 658,439 816,483 - 816,483

24

6. Main Expenditure Group spending plans

Table 6.1 – Year on year percentage change, Resource DEL

RESOURCE - Year on Year Percentage Change £000s


2017-18 2018-19 2019-20

Supplementary Budget

June 2017

2018-19 New Plans

as per 2018-19

Final Budget

% Change

2019-20 New Plans

as per 2018-19

Final Budget

% Change

Health and Social Services 7,080,176 7,307,871 3.22% 7,528,480 3.02%

Local Government and Public Services 3,625,588 3,719,310 2.59% 3,671,924 (1.27)%

Economy and Transport 668,861 654,625 (2.13)% 636,379 (2.79)%

Education 1,654,150 1,641,093 (0.79)% 1,623,909 (1.05)%

Energy, Planning and Rural Affairs 282,424 245,534 (13.06)% 242,575 (1.21)%

Central Services and Administration 300,291 298,329 (0.65)% 290,046 (2.78)%

Total Resource Allocations to Welsh Government MEGs

13,611,490 13,866,762 13,993,313

25

Table 6.2 – Year on year percentage change (real terms), Resource DEL

RESOURCE - Year on Year Percentage Change - Real Terms

£000s


2017-18 2018-19 2019-20


June 2017

2018-19 New Plans

as per 2018-19

Final Budget

% Change

2019-20 New Plans

as per 2018-19

Final Budget

% Change

Health and Social Services 7,080,176 7,307,871 1.71% 7,528,480 1.59%

Local Government and Public Services 3,625,588 3,719,310 1.09% 3,671,924 (2.64)%

Economy and Transport 668,861 654,625 (3.55)% 636,379 (4.13)%

Education 1,654,150 1,641,093 (2.23)% 1,623,909 (2.42)%

Energy, Planning and Rural Affairs 282,424 245,534 (14.33)% 242,575 (2.57)%

Central Services and Administration 300,291 298,329 (2.10)% 290,046 (4.12)%

Total Resource Allocations to Welsh Government MEGs

13,611,490 13,866,762 13,993,313

26

Table 6.3 - Year on year percentage change, Capital DEL

CAPITAL - Year on Year Percentage Change

£000s


2017-18 2018-19 2019-20 2020-21


June 2017

2018-19 New Plans

as per 2018-19

Final Budget

% Change

2019-20 New Plans

as per 2018-19

Final Budget

% Change

2020-21 New

Plans as per

2018-19 Final

Budget

% Change

Health and Social Services 251,548 294,444 17.05% 328,138 11.44% 309,988 (5.53)%

Local Government and Public Services 495,293 608,785 22.91% 503,840 (17.24)% 475,151 (5.69)%

Economy and Transport 522,861 412,601 (21.09)% 488,214 18.33% 504,969 3.43%

Education 102,073 168,627 65.20% 176,674 4.77% 154,750 (12.41)%

Energy, Planning and Rural Affairs 101,731 100,634 (1.08)% 87,781 (12.77)% 79,521 (9.41)%

Central Services and Administration 15,727 23,087 46.80% 21,204 (8.16)% 17,648 (16.77)%

Total Capital Allocations to Welsh Government MEGs

1,489,233 1,608,178 1,605,851 1,542,027

27

Table 6.4 - Year on year percentage change (real terms), Capital DEL

CAPITAL - Year on Year Percentage Change - Real Terms

£000s


2017-18 2018-19 2019-20 2020-21


June 2017

2018-19 New

Plans as per

2018-19 Final

Budget

% Change

2019-20 New

Plans as per

2018-19 Final

Budget

% Change

2020-21 New

Plans as per

2018-19 Final

Budget

% Change

Health and Social Services 251,548 294,444 15.35% 328,138 9.90% 309,988 (7.11)%

Local Government and Public Services 495,293 608,785 21.12% 503,840 (18.39)% 475,151 (7.27)%

Economy and Transport 522,861 412,601 (22.24)% 488,214 16.69% 504,969 1.70%

Education 102,073 168,627 62.80% 176,674 3.32% 154,750 (13.87)%

Energy, Planning and Rural Affairs 101,731 100,634 (2.52)% 87,781 (13.98)% 79,521 (10.92)%

Central Services and Administration 15,727 23,087 44.66% 21,204 (9.43)% 17,648 (18.16)%

Total Capital Allocations to Welsh Government MEGs

1,489,233 1,608,178 1,605,851 1,542,027

28

Annex A - Reconciliation Between administrative Budget and Resource Allocations in the

Annual Budget Motion

2018-19 as per 2018-19 FINAL BUDGET

£000s

Health and

Social Services

Local Government

and Public

Services

Economy and

Transport Education

Energy, Planning

and Rural Affairs

Central Services

and Administration

TOTAL

Resource 7,307,871 3,719,310 654,625 1,641,093 245,534 298,329 13,866,762

Capital 294,444 608,785 412,601 168,627 100,634 23,087 1,608,178

Resource AME 121,000 1,077,273 26,632 (116,382) 2,400 2,939 1,113,862

Capital AME - - - 658,439 - - 658,439

TOTAL MANAGED EXPENDITURE 7,723,315 5,405,368 1,093,858 2,351,777 348,568 324,355 17,247,241

Reconciliation to Resources

Resource Consumption – Welsh Government Sponsored Bodies

(225) (400) (6,281) (190) (12,400) -

(19,496)

Supported Borrowing - (88,800) - - - - (88,800)

National Insurance Fund Receipts Collection Costs

(906) - - - - -

(906)

National Non-Domestic Rates Payable (and Collection Costs) -

(1,055,172) - - - -

(1,055,172)

Interest Repayments on Borrowing - - - - - (2,017) (2,017)

PFI - - (8,729) - - - (8,729)

RESOURCES REQUESTED 7,722,184 4,260,996 1,078,848 2,351,587 336,168 322,338 16,072,121

29

2019-20 as per 2018-19 FINAL BUDGET

£000s

Health and

Social Services

Local Government

and Public

Services

Economy and

Transport Education

Energy, Planning

and Rural Affairs

Central Services

and Administration

TOTAL

Resource 7,528,480 3,671,924 636,379 1,623,909 242,575 290,046 13,993,313

Capital 328,138 503,840 488,214 176,674 87,781 21,204 1,605,851

Resource AME 121,100 1,091,505 154,867 (126,399) 2,400 2,977 1,246,450

Capital AME - - - 816,483 - - 816,483

TOTAL MANAGED EXPENDITURE 7,977,718 5,267,269 1,279,460 2,490,667 332,756 314,227 17,662,097

Reconciliation to Resources

Resource Consumption – Welsh Government Sponsored Bodies

(225) (400) (6,281) (190) (12,400) -

(19,496)

Supported Borrowing - (88,800) - - - - (88,800)

National Insurance Fund Receipts Collection Costs

(906) - - - - -

(906)

National Non-Domestic Rates Payable (and Collection Costs) -

(1,068,172) - - - -

(1,068,172)

Interest Repayments on Borrowing - - - - - (4,440) (4,440)

PFI - - (8,982) - - - (8,982)

RESOURCES REQUESTED 7,976,587 4,109,897 1,264,197 2,490,477 320,356 309,787 16,471,301

30

Annex B – Glossary

Action Within each Spending Programme Area (SPA), budgets are allocated to a number of sub-programmes known as Actions.

Ambits

Descriptions of the specific purposes for which Welsh Ministers are authorised by the National Assembly for Wales to spend resources. Ambit descriptions and resource limits are contained within the annual Budget motion. Ambits correspond to MEGs.

Annually Managed Expenditure (AME)

Expenditure which cannot reasonably be subject to firm, multi-year limits in the same way as DEL and is therefore reviewed twice a year as part of the HM Treasury’s Budget and pre-Budget report processes. AME typically consists of programmes which are large, volatile or demand-led; for example the issue of student loans.

Budget Expenditure Line (BEL)

Within each Action budgets are allocated to a number of sub-expenditure groups known as BELs. Tables showing budgets at BEL level are available at: http://gov.wales/funding/budget/?lang=en

Budget motion

The means by which the National Assembly for Wales authorises Welsh Ministers to spend resources up to a specific level for specified purposes and to draw cash up to a specific limit from the Welsh Consolidated Fund.

Capital Expenditure that in the main results in a physical asset, for example a new building. The Welsh Government DEL and AME budgets have separate capital and resource limits.

Departmental Expenditure Limit (DEL)

The multi-year budget limit for the Welsh Government set by the HM Treasury. DEL is planned and controlled on a multi-year basis in Spending Reviews.

Depreciation

The drop in value of an asset due to wear and tear, age and obsolescence. Under resource budgeting, depreciation is part of the Welsh Government’s DEL but is a non-fiscal resource DEL item.

Direct Charges on the Welsh Consolidated Fund

Expenditure which is legally required to be charged directly to the Welsh Consolidated Fund and therefore does not score against the budgets of the Welsh Government or any other body. Direct charges include the remuneration of the Presiding Officer and Auditor General.

http://gov.wales/funding/budget/?lang=en

31

Financial Transactions Capital

Financial transactions are part of the capital DEL settlement that can only be used for loans and equity investments to third parties. A proportion of the funding must to repaid to the Exchequer.

Fiscal Resource DEL (previously known as near-cash)

Accruals measures of transactions that normally turn into cash flows soon, for example, pay current procurement, resource grants and subsidies.

Main Expenditure Group (MEG)

The Welsh Government DEL is divided into a number of Main Expenditure Groups. There are currently six MEGs: Health and Social Services; Local Government and Public Services; Economy and Transport; Education; Energy, Planning and Rural Affairs; and Central Services and Administration.

Non-Fiscal Resource DEL

(previously known as non-cash)

Accruals measures included in budgets to ensure they reflect the full economic cost of activities even though there is not a direct link to cash flows in the relevant period - for example, depreciation and provisions. Non-fiscal resource DEL cannot be used to fund fiscal resource DEL spending.

Receipts Some areas of Welsh Government activity generate income, for example, through the sale or rental of assets. These are represented in the budget as negative figures.

Resource budgeting

The Welsh Government’s budget is set on a resource basis derived from accruals information. Accruals information measures resources as they are consumed rather than when the cash is paid. So, for example, resource budgeting includes a charge for depreciation, a measure of the consumption or wearing out of capital assets.

Spending Programme Area (SPA)

Within each MEG, budgets are allocated to SPA according to the kind of services they will deliver.

Spending Review

Every two or three years HM Treasury reviews expenditure for each UK Government Department and sets budgets for the forthcoming three years. Budgets for the devolved administrations are derived from these budgets via the Barnett formula, which is the mechanism used by HM Treasury to calculate public expenditure allocated to Wales to reflect changes in spending levels allocated to public services in England.

32

Total Managed Expenditure (TME)

The total Departmental Expenditure Limit plus Annually Managed Expenditure.

Welsh Reserve

The Welsh Reserve will operate from April 2018 as a new tool to enable the Welsh Government to manage its budget across years. The Welsh Government will be able to save surplus revenues from the devolved taxes and underspends on the Departmental Expenditure Limit in the Reserve for use in future years. The Reserve will be able to hold up to £350m, with be an annual drawdown limit of £125m for resource and £50m for capital. There will be no annual limit for payments in to the Reserve.

Welsh Consolidated Fund

The account into which the money voted by the UK Parliament for use by the Welsh Government, the Assembly Commission, the Auditor General, and the Public Services Ombudsman for Wales is paid.

WGSB Welsh Government Sponsored Body.

Welsh Government Final Budget 2018-2019 - GOV.WALES · the Finance Committee to develop the next...

Documents

Transcript of Welsh Government Final Budget 2018-2019 - GOV.WALES · the Finance Committee to develop the next...