14. What assessment he has made of the potential impact of inflation on the devolved budget for Wales.
The Secretary of State for Wales (David T. C. Davies)
The Welsh Government are well-funded to deliver public services in Wales. As a result of the autumn statement, Welsh Government funding is increasing by around £1.2 billion over the next two years. That is on top of the additional £2.5 billion a year on average announced at spending review. The Prime Minister has also been clear that we will halve inflation to ease the cost of living.
The Secretary of State says that the budget is increasing by £1.2 billion over the next two years, but inflation has already eroded the purchasing power of the Welsh Government in the current year by £1 billion. Since the UK Government are responsible for approximately 80% of the resource base of the Welsh Government, what further representations does he plan to make to the Chancellor of the Exchequer to ensure that that purchasing power for essential public services in Wales is made good?
David T. C. Davies
The overall funding amounts for the devolved Administrations, including the Welsh Government, have still increased in real terms over the period despite the impact of inflation. If the hon. Gentleman is serious about dealing with inflation, I hope he will support this Government as they propose to halve inflation over the coming year. In doing so, we will need to carefully control public spending in areas such as pay.
The Institute of Welsh Affairs says that budgetary pressures highlight the impotence of Welsh devolution and that tax scheme changes by the Scottish Government are a model that would help Wales’s financial situation. If the UK Government will not provide vital increases to devolved budgets, will the Secretary of State explore devolving similar tax-varying powers to Wales, as in Scotland, to help the Welsh Government mitigate the Tory mismanagement from this place?
David T. C. Davies
I am not quite sure I follow what the hon. Gentleman is saying, because of course the Welsh Government do actually have tax-varying powers. They have chosen not to use them, because the Welsh Government recognise that taxes have already increased as far as is sensible, and that means that all of us have to deal with the constraints that have come about as a result of the very difficult economic situation we face due to covid and the impact of a land war in Ukraine.
Inflation, of course, causes pressure, but it is also true that Wales gets £1.20 per head for public services for every £1 in England. Yet the Welsh Labour-run Government spend less than that on their public services. Does my right hon. Friend agree with me that ruinous Welsh Labour Governments should stop wasting money on things like the Senedd expansion and instead spend money where it is needed: tackling backlogs in hospitals and stopping the decline of education in Wales?
David T. C. Davies
I agree absolutely with my hon. Friend; he is absolutely right. Money is being wasted in the Senedd, for example on spending up to £100 million on increasing the number of Senedd Members at a time of economic difficulty. [Interruption.] I hope Opposition Members who are chuntering are listening carefully to what my hon. Friend has to say.
6. What recent discussions he has had with Cabinet colleagues on the impact of the cost of living crisis on households in Wales.
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13. What discussions he has had with Cabinet colleagues on the impact of rising costs on (a) businesses and (b) households in Wales.
The Secretary of State for Wales (David T. C. Davies)
I understand that people across the UK are worried about the cost of living, which is why we have taken decisive action to support households and businesses across the UK, while remaining fiscally responsible. That support includes a £26 billion package for the next financial year, which will be targeted at protecting the most vulnerable.
Almost half of adults UK-wide say the cost of living crisis is harming their mental health, and that rises to 61% of Welsh adults. Devolved initiatives such as the fuel support scheme in Wales help, but inflation and UK Government cuts put such schemes in jeopardy. How does the Secretary of State justify his Government’s repeated refusal to support devolved Governments in tackling the crisis his party has created?
David T. C. Davies
First, I fully acknowledge that there is a cost of living crisis at the moment. It has come about because the UK Government rightly had to spend hundreds of millions of pounds dealing with the covid pandemic. We then saw inflation increase through the roof as a result of a land war in Ukraine. I recognise that there is a cost of living crisis being faced by countries across the whole of the western world at the moment. The UK Government have certainly not cut funding. We have increased funding for the devolved Administrations. We have increased money for the national health service. It is a shame that in Wales that funding is not being fully passed on to the national health service. Frankly, on the NHS, the Welsh Labour Government are getting more money and delivering a lower service.
My constituent Sarah and her children could not celebrate Christmas this year: they were crippled by the fear of bailiffs and of being made homeless in the minus 2° weather. The toll this has taken on her mental health is unimaginable. She said to me, “My children and I will just break.”
A YouGov poll, out this week, shows that this Tory-made cost of living crisis has had a huge impact on people’s mental health in Wales—significantly more than elsewhere. Thirteen years of Tory Government have crippled this country. Cardiff Council is already £23 million worse off. Is the Welsh Secretary going to push my constituents to breaking point?
David T. C. Davies
There is a cost of living crisis going on all over the world at the moment. This Government have acknowledged that and faced up to it. That is why we have prioritised help for the least well-off. That is why this Government have made sure that the minimum wage has risen in line with inflation, that pensions have risen in line with inflation and that benefits have risen in line with inflation. People on benefits will receive a £900 payment, pensioners are getting a £300 payment and households with a disability are getting a £150 payment. At all times through these crises, which have not been caused by this UK Government, we have targeted our help at the most vulnerable in society.
The Government have announced that support for homes and businesses connected to the mains gas grid will be extended for another year, but it seems that the single round of alternative funding announced for off-grid homes will be expected to last for the full 18 months. Notwithstanding the fact that the first payment to off-grid homes is still to be made, will the Secretary of State push colleagues in the Department for Business, Energy and Industrial Strategy and the Treasury for a second round of alternative funding to provide support for off-grid premises ahead of next winter?