27
What the Spending Review and Draft Welsh Budget mean for public services and benefits in Wales : joint presentation from Wales Public Services 2025 and Bevan Foundation.
What the Spending Review and Draft Welsh Budget mean for public services and benefits in
Wales : joint presentation from Wales Public Services 2025 and Bevan Foundation.
Government Expenditure categories
Departmental Expenditure Limits (DEL)
- Resource DEL – day to day operating expenditure by public services, grants etc- Capital DEL – Construction, infrastructure
Annually Managed Expenditure (AME)
Resource AME - Demand-led expenditure such as pensions, benefits, debt interestCapital AME
Resource Del Real UK
Forecast
-8
-6
-4
-2
0
2
4
6
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Year-
on-y
ear re
al g
row
th rate
s
November 2015
July 2015
March 2015
Note: RDEL series excludes major historical switches with AME. Details are in the supplementary fiscal tables on our website.
Source: OBR
Sources Deficit Reduction 2015-16
to 2019-20
-1
0
1
2
3
4
5
PSNB
(2015-16)
Debt interest Capital
spending
(CDEL)
Other spending Receipts Welfare Public services
spending
(RDEL)
PSNB
(2019-20)
Per ce
nt o
f G
DP
Source: ONS, OBR
£6.4, 21%
£4.1, 13%
£1.8, 6%£5.5, 18%
£6.7, 22%
£6.1, 20%
Wales Identifiable Spending 2014-15 £bn
Health Education Social Services
Pensions Other Welfare Other spending
Departmental Expenditure Limit (Resource) cash £000
2015-16 Net Change % 2016-17
Health and Social Services 6,486,592 244,646 3.8% 6,731,238
Local Government 3,432,187 - 87,784 -2.6% 3,344,403
Communities and Tackling Poverty 336,614 - 3,022 -0.9% 333,592
Economy, Science and Transport 612,974 - 25,341 -4.1% 587,633
Education and Skills 1,579,609 1,201 0.1% 1,580,810
Natural Resources 294,083 - 16,323 -5.6% 277,760
Central Services and Admin 292,783 7,594 2.6% 300,377
Total WG MEG Allocations 13,034,842 120,971 0.9% 13,155,813
2015-16 2016-17 2017-18 2018-19 2019-20
Total DEL (£ million cash) 101.3 106.8 110.2 112.7 115.8
Real terms growth rate 1.6% 3.6% 1.3% 0.4% 0.7%
NHS England spending review figures
Welsh Government funding for Local Government
• WAO – fell 10% real terms 2010-15
• WLGA – aggregate external finance fell 16% real terms 2009-16
• OBR – significant drop 2014-15 to 2015-16
• Welsh Draft Budget – aggregate external finance cut 1.4% 2016-17
Real Terms changes in local authority service spending (2014-15 prices), aggregate, £ thousands
Education46%
Social26%
Other28%
2009-10
Education
Social
Other
Education48%
Social28%
Other24%
2015-16
Education
Social
Other
2009-10
Education £2,833,476
Social £1,575,413
Other £1,702,898
2015-16
Education £2,630,069
Social £1,563,977
Other £1,320,513
Council Tax Trends
Welsh Police Funding 2010-2016
0
100000
200000
300000
400000
500000
600000
700000
2010-11 2011-12 2012-13 2013-14 2014-5 2015-16
Real Budget requirement Real HO Grant Real RSG/NNDR Real Council Tax
Third Sector
• Shift to commissioning not grants for services providers
• 84% local authority income now service payments, especially social services, young people, education – protected areas
• Most relevant grant lines in draft Welsh budget cash flat
• Social housing role in Wales unchanged – implications of housing benefit changes?
Pay Bill
• 1% cap on pay rises
• National Insurance – pensions cost
• National Living Wage
• Public Sector Employment Wales 6%ish fall between 2010 - 2015
Some Key Messages
• Reports of demise of Austerity exaggerated – 4 more years
• Growing Wales-England divergence
• Continued pressure on public service innovation and change
• Continued push down to the community
• Concerns about impact on low income families and vulnerable unchanged
The Spending Review & Changes to Benefits:the u-turn that wasn’t
Victoria Winckler
The Spending Review and the Welsh Budget: Wales Public Services 2025
10th December 2015
Context
Benefits underpin social fabric of Wales:
• 651,900 get state pension.
• 619,885 children receive child benefit.
• 237,000 working-age adults get out of work benefits.
• 164,000 families in-work get benefits.
• £10.7 billion in 2014/15
CSR - what’s changed?
Cancelled:
× Tax Credits (while they still exist):
× cut in income threshold
× increase in earnings taper
Staying from Summer Budget:
Tax Credits:two child limit abolition of family element
benefit cap
main benefits frozen
ESA-WRAG cut to JSA rate
Changes to Housing Benefit
Cuts to income threshold and increase in earnings taper still apply to Universal Credit
Effect of Tax Credit ChangeShort term: Pain eased for poorest
Long term: Marginal - poorest still hit hard
Impact on Wales
Summer 2015 Budget forecast still stands:
• Macro - loss of £600m to 2019/20
• Micro - average £459 per household = 2% income
• Distribution – highly uneven impact ...
Source: James Browne (2015) The Impact of the UK Government's Tax, Welfare and Minimum Wage Reforms in Wales, IFS.
By income decile
By household type .…
Implications & questions
• Significant increase in hardship and poverty. Is there sufficient and appropriate action proposed to reduce poverty?
• Likely increased demand for public services esp. child & family. has the Welsh budget got the balance right?
• Growing social divisions – age, family type. can pensioner freebies be justified?
21%
15%
21%
22%
15%
6%
Wales Identifiable Spending 2010-11 £m
Health Pensions Other Welfare
Other spending Education Social Services
21%
18%
22%
20%
13%
6%
Wales Identifiable Spending 2014-15 £m
Health Pensions Other Welfare
Other spending Education Social Services
Reshaping the State?
