I recognise the significant challenges that the Welsh Government has faced in the past year, and it is positive that the draft budget for 2021-22, published in December 2020, emphasises the importance of a green and just recovery.

I have provided analysis of the draft budget to Government and to the Senedd Finance Committee, including areas where I consider progress has been made as well as key areas I think should be prioritised for increased investment.  


Positive improvements 

I am pleased to see that spending on sustainable travel continues to increase – it has increased by 63% since 2019-20, alongside increases in investment in active travel, Metro and rail schemes and Electric Vehicle Infrastructure. However, in terms of how this funding is delivered, Government should consider multi-year allocations for active travel schemes to enable them to be properly planned and delivered. 

I consider there have been some positive decisions made in relation to funding the decarbonisation of homes, building on the Optimised Retrofit Programme developed in the past year, although there is a pressing need for a longer-term plan for funding the decarbonisation of housing stock. Government should increase investment in housing retrofit and secure multi-year long term commitments to scale up action over the next decade.  


Areas for further consideration 

There are several other areas that I have consistently highlighted as key opportunities for a green and just recovery, in which I consider there to be a funding shortfall in the draft budget.  

The key area is investment in skills and employability, which has to underpin Wales’ recovery from the pandemic. I think there is a particular opportunity for Government to make the links with the climate and nature emergencies and invest in the development of skills in sectors that are shown to have significant job creation for a green and just recovery. As outlined in my analysis I am concerned that the allocations set out in the draft budget are insufficient to keep pace with both rising demand and the rapidly changing labour market and I am recommending some specific areas for increased investment. Government should consider how it can guarantee greater investment in skills and employability for a zero-carbon economy, particularly through enhancing access to sectors well placed for a green recovery.  

I also highlight opportunities for investment in town and city centre regeneration to support increases in remote working; for investment in the culture sector and creative industries as a core part of recovery; and further investment in nature-based solutions. Government should ensure that investment achieves benefits in relation to as many of the well-being goals as possible – for example considering how their spending proposals for town and city regeneration can better support remote working, can involve the culture sector and can create green infrastructure.  

Whilst the pandemic has been devastating and challenging in many ways, it has also brought benefits, including new ways of working innovatively, digitally and collaboratively, which have the potential to become a change in the culture of how we do things in Wales. Government should ensure that investment across portfolios ‘sustains the good’ through supporting new positive ways of working when we move into recovery mode and the temptation might be to fall back to the ‘old normal’. 

I am pleased that Government have started a programme of work to better understand the level of carbon emissions that result from budgetary decisions. Government should assess the carbon impact of their spend, especially major capital spend, and publish details of the overall carbon impact of their budget and major investment and infrastructure decisions.  

Annex 1 – Advice to Government on priorities for investment in a green and just recovery 

Annex 2 – Advice to Government on priorities for capital spend