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Comprehensive Spending Review

I will take your advice, Mr Owen, and cut my speech in half. I will concentrate only on the effect of the CSR on Wales rather than engaging in the wider debate on fiscal consolidation, on which I was eager to have my say. It is obvious that the cut of 11.4% in real terms over the next four years, which is an accumulative sum of £4.6 billion, will have a massive impact on the ability of the Welsh Government to deliver the services under their remit. Without the ability to borrow or increase their revenue, the Welsh Government have had little choice but to make some seriously difficult decisions over the course of the spending review. The scale of the cutbacks will inevitably result in job losses in the Welsh public sector and a reduction in services. The case has been made in the CSR for Barnett reform. Leaving aside the fact that the formula underfunds Wales by at least £300 million per annum, it gave Wales a worse deal than any other devolved Government because of the way that it calculates the consequentials on non-domestic rates. I have read Gerry Holtham’s excellent article on this on the Institute of Welsh Affairs blog a number of times, but I still can’t get my head around it, to be perfectly honest. Essentially, because national non-domestic rate payments are devolved in the case of Scotland and Northern Ireland they had better settlements under the CSR than we did.