Draft budget: Defining moment for Welsh Government
"The forthcoming budget is a defining moment for the Welsh Government."
“The UN Climate Conference COP26 and the launch of the Net Zero Wales plan for 2021-25 has focused minds on the epic challenges we must all face and tackle to ensure our planet has a sustainable future.
It is the first budget since the 2021 Programme for Government and the publication of the Welsh Government’s new well-being objectives and it is an opportunity for the Government to demonstrate how the commitments they made at COP and through their Net Zero Plan will be actioned. Governments across the world have been criticised for actions not matching commitments on climate and the way in which funding is allocated is one of the biggest tests of whether politicians are serious about addressing the climate and nature emergencies we face.
Covid-19 and a disappointing settlement from the UK Government present ongoing challenges especially to health and social care sectors with over half of the Welsh Government’s budget is spent in this area. But under the Future Generations Act the Government have legal duties to consider the long term – and there is no greater threat to the future than climate change. Investing in meeting decarbonisation targets can also have multiple wins by improving the quality of people’s homes, creating new green jobs and improving people’s health through reducing levels of air pollution from transport.
So I really want to see how the Government are making the most of their investment especially in the following areas for 2022-23:
- Increased and targeted investment in skills and training for the green economy
- Decarbonisation of homes
- Responding to the nature emergency
- Assessing every aspect of their spend to understand whether it is helping with decarbonisation or adding to the problem
- Taking action on the climate emergency through a better understanding of the carbon impact assessment of its budget.
Investment in skills and training
Earlier this year I published my report with the New Economics Foundation looking at the potential for investment in green jobs and skills versus how prepared our current skills, training and employability programmes are to cope with these changes.
The report highlighted how over 60,000 jobs could be created in the green economy in Wales over two years with infrastructure investment.
However, the current skills pipeline is not prepared for this demand with our analysis suggesting low apprenticeship and training numbers in key sectors compared to potential job growth. There is a mismatch between levels of existing employment and potential; the level of job creation is significant compared to existing numbers.
Currently, funding to deal with this shortfall is insufficient to cope with demand and scale and targeted sustained action is needed to ensure green growth industries provide entry for Black, Asian and minority ethnic people; women; disabled people and those furthest from the labour market.
I am keen to see Welsh Government exploring all possible levers and financing mechanisms aimed at increasing investment in upskilling and retraining, especially in their forthcoming Net Zero Skills plan.
Investment in the Decarbonisation of homes
A few months ago I published my “Homes Fit For the Future: the Retrofit Challenge” report. This looked at the financing needs of the major home retrofit challenge faced in Wales, an investment essential both for meeting our climate goals, addressing fuel poverty and quality of life in Wales. It identifies a government investment need of around £5.3bn over the next ten years – £1.7 bn and £3.6 bn from Welsh and UK Governments respectively.
While pre-existing expenditure can meet some of this requirement, and recent announcements suggest an additional £150m is forthcoming, a very significant gap remains. I will be looking to this draft budget to begin to put the foundations in place for a significant upscaling of our home retrofit programme, supporting by a long-term plan that addresses all housing sectors, that is urgently needed over the next few years.
Responding to the nature emergency
Addressing the nature emergency is critical to protecting the well-being of future generations, and action cannot be isolated from the climate crisis. While I welcomed Welsh Government’s declaration of a nature emergency in June 2021, the action and steps being taken in response are less clear. Spending on the nature recovery has been somewhat stagnant in recent Welsh Government budgets, with focus on the migration of EU agricultural spending into domestic budgets and progress in other areas stalling.
I was also disappointed to see relatively limited financial support in last year’s budget for the recommendations set out by the Green Recovery Taskforce, being led by Natural Resources Wales.
The Dasgupta Review highlights how our unsustainable engagement with nature is endangering the prosperity of current and future generations. This is why I believe better connecting people and communities with nature lies at the heart of tackling the nature emergency.
I am therefore keen to see plans for a National Nature Service (NNS) in Wales progressed with support and some financial investment from Welsh Government. I called for this in my ‘Fit for the Future Programme for Government’ report earlier this year.
Overall Carbon impact of the Welsh Government budget
In advice to Government in 2020 we recommended that it needed to forensically analyse every aspect of their expenditure, especially capital spend, in terms of carbon impact and publish details on the overall carbon impact of their budget in a ‘Carbon Impact Account’. The Parliament’s Finance Committee echoed my call in a recommendation in their report on the draft budget 2020-21.
Until a comprehensive assessment of the Welsh Government budget is made available, it is not possible to know whether budget decisions are in fact having a net positive (or indeed negative) impact on decarbonisation in Wales. However, with support from the New Economics Foundation, I have been conducting my own highly-simplified approach to assessing changes in carbon spend. This analysis shows positive year-on-year improvements in the level of spending in key areas of the budget relevant to decarbonisation.
I understand that the Welsh Government will undertaking the carbon impact assessment of the draft budget and I look forward to seeing for further clarification on how this has been done, and also how they’re ensuring that the policies and priorities in the forthcoming Net Zero Wales plan are being considered within the budget process.
This budget represents an opportunity to align action with rhetoric at a time where never before has action been so necessary. I look forward to a positive response from the Welsh Government, and a defining budget to match.”
For further information please contact Matt Aplin at email@example.com / 07557 682 938