The Welsh government has unveiled a draft budget which outlines plans to invest £420m into health and social services, alongside funding to protect the economy, build a greener future, and create change for a “more equal” Wales.
In the first budget since the onset of the COVID-19 pandemic, Finance minister Rebecca Evans said investment in affordable and social housing will grow to £200m in 2021 (an additional £37m), which the government says will support jobs and training while providing 3,500 additional new homes.
Further, social housing investment will be supported by a 1% increase in the higher residential rates of Land Transaction Tax, after what the government calls “a difficult financial year”.
This will mean that moderately higher taxes paid on the purchase of additional properties, such as second homes and buy-to-let investments, will support new social housing and jobs.
A targeted tax reduction will also seek to help businesses recovering from the worst of the pandemic. Most businesses purchasing non-residential properties costing less than £225,000 won’t pay any Land Transaction Tax, as the threshold is raised by 50%, the government has said.
Together, the government says, the changes will generate around £13m per annum for investment in social housing priorities.
The Welsh government’s mission to end homelessness will also be boosted by an extra £40m for the Housing Support Grant, the minister revealed.
Services, sustainability, and jobs
Aside from housing, the draft budget also promises an extra £176m for local government to support schools, social care, and local services that have been “critical” to Wales’s response to the pandemic.
The package includes a £10m boost to the Social Care Grant, which now stands at £50m, in recognition of the “significant impact” the pandemic has had on the sector.
To help build a greener future, an extra £40m will be put toward for modern education infrastructure, including £5m for a net-zero schools pilot and a further £5m to develop Wales’s National Forest and invest in wider biodiversity.
The budget also reaffirms the government’s commitment to the decarbonisation of transport, boosting the funding for active travel by £20m, and providing a total investment of £274.7m in rail and metro.
A further £20m will also be dedicated to tackling fuel poverty and supporting renewable energy programmes.
For education, over £20m has been provided to support predicted growing student numbers across sixth form and Further Education as more people stay in post-compulsory education, investing in Wales’ future, and £9.4m will support community and school mental health services.
The budget also promises an additional £13.4m to support children and young people, including £8.3m to take forward the government’s flagship curriculum reform alongside targeted support for the most vulnerable – all in an effort to “drive forward change for a fairer and more equal society”.
Meanwhile, the government has said it is to provide additional support to help workers on low incomes upskill and retrain, with a £5.4m boost to the free and flexible courses offered through Personal Learning Accounts.
The Welsh government is also today providing an initial COVID-19 response package of £77m to provide certainty where it is most needed, including ensuring essential schemes such as free school meals and contact tracing are extended next year.
Finance minister Rebecca Evans, who unveiled the draft budget, said: “As we plan for our first steps beyond the pandemic, this Budget is designed to protect health and our economy, build a greener future and create change for a more prosperous, more equal, and a greener Wales.
“Despite the most challenging circumstances we have ever faced as a government, I am proud to announce a budget that delivers on our values and provides sound foundations for the next administration.
“While like for like funding per person in Wales remains below 2010 levels, our priorities will steer a course for stability, protecting what matters most and creating the change that is essential to a good recovery.”
CIH Cymru response
CIH Cymru – the Welsh arm of the Chartered Institute of Housing – has published its response to the announcement, with national director Matt Dicks saying: “A focus on ‘building’ in today’s draft Welsh government budget for 2021-2022 is strongly welcome in what we recognise as a budget full of difficult decisions.
“Additional investment in social housing, ending homelessness, and the environment will in practice help deliver the homes Wales sorely needs to ensure that everyone has access to a safe, affordable, and accessible place to call home.
“The housing crisis existed long before COVID-19. Whilst the pandemic has brought into sharp focus the impact of both having and not having access to an adequate home, we must ensure that the momentum that will be created by the investments outlined today act as a starting point for supporting the sector over the course of the coming years.”
2020 disruption
Due to the external factors, which have influenced the timing of this year’s budget, the Welsh government has, with the agreement of the Senedd’s Business and Finance committees, triggered exceptional arrangements in relation to this year’s budget process.
Instead of publishing a two-stage budget, this year, the draft for 2021-22 will combine the strategic spending plans for revenue and capital; taxation and borrowing proposals, and the detailed portfolio budget proposals.
The Senedd will debate the draft budget on 9 February 2021.
Budget timeline:
- 21 December 2020 -WG draft Budget published
- 22 December 2020 – Provisional local government settlement published
- 8 January 2021- Finance Committee evidence session
- 12 January 2021 – Finance Minister Oral Statement
- 13-21 January 2021 – Senedd scrutiny committee sessions
- 9 February 2021 – draft Budget debate
- 2 March 2021 – Final Budget published
- 9 March 2021 – Final Budget debate
Image: Rebecca Evans AM minister for Finance and Trefnydd
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