Spending review could mean cuts in Wales

Some public services are likely to face cuts if the NHS swallows extra funding announced for Wales in Chancellor Rachel Reeves’s spending review, experts have said.

There is a warning that “tough choices loom”, even though the budget is expected to grow over the next three years.

Labour said it was investing in public services by boosting the Welsh government’s budget.

But Plaid Cymru accused Wales’ First Minister Eluned Morgan of “asking for very little and getting exactly that”.

The Welsh government can raise taxes, but most of what it spends comes in a grant from the Treasury.

Its funding will be £22.4bn a year on average over the next three years as a result of the spending review.

The Institute for Fiscal Studies (IFS), an independent think tank, said funding for the day-to-day running of public services would grow about 1.2% above inflation.

“While an increase overall, that will likely require tough choices and indeed real terms cuts for some services,” the IFS’s David Phillips said.

“Increases in funding for the Welsh NHS could easily absorb most, if not all, of this increase.”

He said Welsh Finance Secretary Mark Drakeford will “have to decide carefully which areas to prioritise and which to cut back”.

About half the Welsh government’s budget is already spent on healthcare.

Waiting times for hospital treatment have risen to record highs in recent years.

On Wednesday, the chancellor announced a real-terms increase of 3% to day-to-day funding for the NHS in England.

That will result in extra funding for Welsh ministers to spend as they wish.

However, Guto Ifan from the Wales Governance Centre warned: “If the Welsh government decided to transfer that money to the health service in Wales, which would still be below the historical growth in health spending, it would mean difficult settlements for everything else in the budget.

“I would imagine that the Welsh government would have to make cuts to services outside health under this settlement.”

Reeves’ spending review reveals how much funding will be available after next May’s Senedd election.

She also announced £445m for new rail projects in Wales, following years of complaints that Wales has not had a fair share of spending.

She backed plans for five new stations in Cardiff, Newport and Monmouthshire, and rail upgrades in north Wales.

First Minister Eluned Morgan said: “Wales will see significant extra investment in rail infrastructure, coal tips safety and Welsh communities will see real benefits that improve lives and create opportunities.”

Treasury minister Torsten Bell said there would be “record levels of spending happening in the Welsh government” and said previous Conservative governments “consistently let down Wales” on capital spending which pays for infrastructure.

Opponents said the cash fell short of what Wales needed and criticised a ten-year timeline for the scheme – Labour sources said most of the cash would be spent much sooner.

Plaid Cymru finance spokesperson, Heledd Fychan, said: “Public services, already teetering on the brink in Wales under Labour face further cuts as a consequence of Labour’s First Minister asking for very little and getting exactly that.”

Welsh Conservative Senedd leader Darren Millar said the amount of rail funding was “shameful”.

“Today’s rail spending announcement is an insult to the people of Wales,” he added.