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Monday, November 27, 2006

Funding devolution

The warning by the Institute of Welsh Affairs that the Assembly faces a much tougher financial regime in its third term than in the previous two is very timely. They argue that Treasury forecasts show that year on year increases in the Assembly's block grant during the third term will drop from the current 3% a year to less than 2%, leaving very little room for manoeuvre. The average increase between 2000 and 2005 had been 6.6%.

The point that there is an urgent need to establish an Assembly Finance Committee, where spending decisions would face rigorous scrutiny is also well made. There is no doubt that the institution would have benefitted from such a Committee from its inception and it was a mistake for Ron Davies to leave out such provision from his original Government of Wales Bill.

This omission is being redressed from next May but it may already be too late. Labour's fundamental review of the Assembly's budget and prioritisation exercise, which took place two or three years ago, effectively froze half of the budget headings in the then £11 billion budget, amounting to real term cuts. The scrutiny of that process was minimal, not because the opposition and the media were ineffective but because the opportunities to go into the changes in any depth were just not there.

The IWA's warning is also a wake-up call for parties like Plaid Cymru who have already come up with a list of half-costed measures on the basis of them being paid for out of growth in the Assembly's budget. On these figures not only will that growth not be there but what increases we do get will be need to be used to maintain services. I have already indicated that Plaid are in danger of bankrupting the Assembly with unachieveable promises, this publication underlines that point.

This does not mean that there will be no potential for new initiatives, just that we will have to work harder and make more difficult decisions in bringing them about. It is incumbent on all the parties that they are rigorous in how they cost their manifestos and realistic in what they promise. To do otherwise will leave pledges unfulfilled and undermine the democratic process still further.
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