A Tight Squeeze

Like it or not, yesterday’s Welsh Government budget is very much about spending cuts, although they’re delivered as a tight squeeze rather than the swing of an axe.  There’re no big changes to any area of expenditure, rather a bit of trim here and a bit of an easing there.  But the squeeze is very much on, because although the pounds may be broadly static the costs of delivering services are not.  Demand for health and social care and many other services is ever upwards while costs (other than wages) are rising. So it’s still about real cuts.

In the absence of any policies that radically reform public services, the pressure is on public bodies to do more with the same or slightly less. There’s no transforming initiatives like free schools or privatising services that (at least in theory) reduce public spending on a  large scale.  So it’s down to public service managers to find ways to get a quart out of a pint pot.  Can they do this without major changes to services? We shall see.

The Welsh budget also shows what a half-baked bun the Finance Minister has to deal with.  No scope to raise income, only to allocate what the Treasury hands out. Spending dominated by the imperatives of health and local government, with only a little left over for everything else.  No control over spending on big chunks of Welsh life, from policing, to broadcasting to social security.  And all this while economic and social problems escalate as the global and UK economies flat-line, and with no majority to deliver any radical changes even if she wanted to.  The words rock and hard place seem to sum up the Minister’s position nicely.

These are the real dilemmas that face the Welsh Government and indeed the Assembly.  With so little wriggle room, not only financially but politically, legislatively and economically, it is inevitable that the modus operandi is to squeeze not cut, to ease not splash the cash.  But squeezes can become strangleholds in the long-term.  It’s becoming clear that whoever wins the 2015 UK election there will be no spending spree, and so the pressure on the Welsh Government’s budget will not go away.  Sooner rather than later some more dramatic changes will have to be made.

Victoria Winckler is Director of the Bevan Foundation