1. The Budget and the LG settlement. Rural Forum 8 November 2013 Jon Rae Director of Resources WLGA

2. Remember this? The Fiscal Repair Job

3. The Welsh public sector may have been financially better off than across Offa’s Dyke but….. Such cuts to public service spending not done in the UK before – Never more than 2 consecutive years of cuts previously – Spending plans imply April 2010 to March 2017 will be the tightest 7 years for public service spending since WWII On the other hand cuts follow a period of big spending increases – 12 consecutive years of real increases (1998-99 to 2009-10) – by 2016–17 total public service spending will be the same as in 2004-05 in real terms (2000–01 as a % of national income) © Institute for Fiscal Studies

4. UK & Wales spending: back to the Future?

5. IFS Scenarios in 13-14 prices

6. “….we will not be able to protect Local Authority budgets as we have in recent years” “…..the funding reductions experienced by Local Government in England signal the future financial reality for us in Wales”; “Whilst I understand we set out indicative figures for 2014/15 ….. they can no longer be considered as a basis on which to plan” “Authorities need to engage immediately in decisive and radical short-term financial and service planning so as to align public services quickly to the lower levels of resources available in the future”. Lesley Griffiths AM letter of 23 May and comments in Assembly Plenary - Selected Highlights.

7. England: the real reason there’s not much to smile about 33% real terms reductions in funding over SR2010 LGA “…..local authorities have been expected to make bigger reductions than the average across the public sector” Tony Travers to PAC 02/13 12% of Councils under financial stress NAO Report Further 10% reductions for 2015-16 “We will maintain an iron discipline on spending control” Ed Balls MP English LG settlements SR2010 CashReal terms 2011-12 compared with 2010-11-6%-8% 2012-13 compared with 2011-12-6%-8% 2013-14 compared with 2012-130%-2% 2014-15 compared with 2013-14-5%-7% Cumulative-16%-23% Simple average-4%-6%

8. What does the future hold?

9. Impact on Budgets

10. Financial Planning

11. Measures to open to Council Cymru:  Cut expenditure on cultural services by 75% over the two year period potentially closing art galleries and museums.  A 25% reduction in spend on planning in 2014-15.  Close down all sports and leisure facilities if they cannot be transferred to third sector or operated commercially (without subsidy) by mutual or arms-length organisations.  Reduce libraries expenditure by 50% over a two year period, keeping open half of those facilities that will act as hubs for welfare reform changes.  Reduce highways spend by a quarter in 2015-16.  Switch off up to 50% of street lights from midnight to 5am in 2014-15 and all from 2015-16.  Cut spend on economic development by a half in 2015-16.  Cutting general administration and back office budgets by a quarter in 2015-16.

12. Key Messages WG Budget ‘A “Priorities for Wales” Budget – fair & responsible, sticking to clear Welsh Government principles’ Priority – Health & the NHS - responding to Francis Report implications for Wales and clinical advances. With £570m in additional funding package for the NHS in Wales over 3 years, including £150m for this year. £50m of both revenue & capital will be invested to bring about changes that need to be made to health and social care. This however does not remove the need for change nor does it relieve all the pressures. Priority - to support growth and jobs. We are investing an additional £617.5m in key infrastructure projects across Wales, in line with priorities set out in the Wales Infrastructure Investment Plan and utilising financial transactions. Major investments – further details will follow in tomorrow’s Statement on Capital Allocations – in housing, transport, education, energy efficiency & health will create and support around 11,000 jobs. Priority – to support young people. Extending Jobs Growth Wales into a fourth year, will now create over 16,000 jobs in total; and extending our commitment to apprenticeships with £20m of support. Priority – to tackle poverty. Protecting funding for Flying Start – providing an additional £11m over the next two years, bringing our total additional investment over 4 years, to £115m together with an injection of extra capital funding. Priority – to extend funding to enable 500 Community Support Officers to “stay on the beat” next year. Priority – to improve educational attainment and break the link between poverty and educational achievement with a £35m boost to the Pupil Deprivation Grant in 2014/15. Priority - to protect Universal Benefits – free prescriptions, free school breakfasts and milk, free swimming and concessionary fares.

13. Key Messages LG Settlement The average reduction in Aggregate External Finance (AEF) is published as 3.5% (or was it 4%?) for 2014-15 and 1.5% in 2015-16. For 2014-15, individual council settlements range from -4.6% for authorities caught by the floor to -1.2% for Newport. The Minister has stated that she expects Council Tax rises to be ‘balanced’ without signalling a threshold above which she would consider capping. Protection for education continues to be tied to the Welsh Government Budget. The Minister’s letter to Leaders states that for 2014-15 this equates to a 0.9% increase but it seems that part of the protection funding is provided through the pupil deprivation grant. Grant funding transferring into the settlement includes the PFI Grant, the First Steps Grant Improvement, Council Tax Reduction Scheme Administration grant, and the Public Facilities Grant. More detail on the overall levels of other specific grant funding will be announced at time of the final settlement announcement although there are aggregate figures for 26 out of 42 grants. The Minister has commissioned a review.

14. Authority allocations…..

15. ………and over a long period

16. Autumn/Winter Timetable WPS Reports and Conference26 September Finance Sub Group30 September Draft WG Budget published8 October Provisional LG Settlement 2014-1516 October WLGA Evidence to Finance Committee17 October Partnership Council for Wales5 November Chancellor’s Autumn Statement4 December Final WG Budget debated at Plenary10 December Final Local Government Settlement 2014-1511 December (anticipated)