A budget analysis report on Welsh Government's spending plans sparked a political row over claims they are "hoarding" £655m.
Wales Fiscal Analysis team at Cardiff University’s Wales Governance Centre published its report last week.
One line stood out, with the briefing stating: "Unallocated funding for dealing with Covid-19 for this financial year now stands at an estimated £655m".
This was seized on by the Welsh Conservatives who claimed it was a "scandal" although the report did add that support in Wales now "far exceeds" the funding flowing from equivalent business support in England.
Here Business Live looks at the claim, Welsh Government's response and why the Wales Fiscal Analysis have said it needs to be taken into the context of various uncertainties.
What the Welsh Conservatives are claiming:
Andrew RT Davies – the Leader of the Welsh Conservatives in the Senedd – said: "People in Wales will rightly be shocked at the findings of the report that show a scandalous £655m is still sitting waiting to be spent as we remain in the grip of this wretched pandemic.
“Businesspeople, especially in the SME and hospitality sectors, who have seen trade dry up quite literally overnight in some cases, will find it hard to fathom that Labour is hoarding this amount of cash when it should be allocated and spent to protect both Welsh lives and livelihoods, and not be handed out as a sweetener as we approach the Senedd election in May.
“A failure on this scale by a government is unforgivable.”
How the Welsh Government responded:
“We have consistently provided the most generous business support package anywhere in the UK throughout this pandemic.
"The report cited confirms that we have committed more in funding for business support than we have received as Wales’ share of similar spending in England."
They added: "There are still the best part of two months left this year and it would not have been sensible to have allocated all of the money available already. The last time the UK Government provided details of their spending plans this year, in November, they were still holding COVID reserves of £25bn."
What the Wales Fiscal Analysis team had to say:
- £655m is our estimate of available Covid-19 funding left to allocate before the end of March. There are important debates to be had around the best use of available funding, both in 2020-21 and 2021-22.
- However, this unallocated funding is in the context of uncertainties around consequentials (funding from the UK government), funding pressures on public services, and budget flexibilities, for example, how much the Welsh Government will be able to use reserves this year and next. All of these factors could change over coming weeks.
- Given these uncertainties, unallocated funding is to be expected. At the Spending Review, the UK government itself had a £25 billion Covid-19 reserve for 2020-21 and £600m of the Welsh Government’s Covid-19 funding guarantee had not yet been triggered by allocations in England.
- The Welsh Government’s allocated fiscal response to Covid-19 now broadly matches the £5.2 billion Covid-19 funding guarantee from the UK government – the unallocated funding left also reflects funding it’s found from within its budget, as well as repurposed EU funding.
- There have been calls to “pass on” more funding to businesses – however we estimate allocated Covid-19 grants and reliefs to businesses in Wales (approximately £2.3bn) now far exceeds the funding flowing from business support in England (approximately £1.9bn).
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