Written - Final budget 2009-10

I have today tabled in the National Assembly the Final Budget for 2009/10, which I am confident will provide a sound basis for the Welsh Assembly Government to continue to drive forward the One Wales agenda.  

We are facing the prospect of operating in much more challenging economic times over the coming years than we have experienced since the Assembly was established. In the Draft Budget Proposals, published at the start of October, we took a strategic approach to releasing the limited funding available from reserves in 2009-10 and 2010-11 to progress One Wales and help people where it matters most.

The constructive scrutiny and discussion that followed served to confirm that the Draft Budget did indeed adopt the right approach, and the Final Budget tabled today therefore corresponds closely to the Draft Budget. Some departments have made modest changes within their budgets, and a number of small technical transfers have been made between departments. Reserve levels are similar to those set in the Draft Budget.

In these tough economic conditions the focus of the Assembly Government in delivering this Final Budget will continue to be helping people where it matters most. The Final Budget enables a wide range of activities to be taken forward, aimed at helping businesses, families and individuals through these difficult times.

In particular, the Assembly Government is seeking to use its capital investment to help support employment in the Welsh economy, and thereby provide a counter-cyclical fiscal stimulus. This includes bringing forward capital expenditure and focusing it on labour-intensive investment projects.

The UK Government’s Pre-Budget Report provided the Welsh Assembly Government with the opportunity to bring forward £140m of capital expenditure from 2010/11, primarily into 2009/10 but also, to a limited extent, 2008/09. The Assembly Government intends to make use of this opportunity, which supports work on bringing forward capital projects that was already underway as a result of the All-Wales Economic Summits in October and November.

The exact profile of brought forward expenditure over 2008/09 and 2009/10 will reflect analysis of opportunities and needs across the two financial years. The resultant additional allocations in 2008/09 and 2009/10 will therefore be made through in-year Supplementary Budgets. I will say more on the how the bringing forward of capital investment will benefit the Welsh economy later this week, at the Economic Summit planned this Friday.

In addition to direct departmental allocations, the Final Budget also provides for the funding underpinning the Strategic Capital Investment Framework (SCIF). The SCIF stems directly from the One Wales agenda, and will deliver a step change in the Assembly Government’s approach to planning and delivering capital investment strategically. A budget of £400m has been set aside over the period 2008/09 to 2010/11 to enable innovative, cross-cutting and strategic capital projects to be taken forward.

The operation of the SCIF is overseen by a dedicated Cabinet Committee on Strategic Capital Investment, and advised by a new independent expert panel which I have established. The members of the advisory panel bring a wealth of experience of planning, developing, financing and delivering large capital projects and programmes, and have already been able to add considerable value to the development of our investment agenda. The SCIF also embeds a robust new approach to investment appraisal, which will help to ensure best value is obtained from our capital expenditure.

Much work has been undertaken to identify and work up potential investment opportunities, and today I am pleased to be able to announce the first tranche of projects that will be taken forward under the SCIF.

This first tranche comprises 19 capital projects or programmes that will help to deliver major improvements in public services across Wales. They are spread across six strategic themes, which have shaped the prioritisation of projects.

Regeneration – projects helping to create a positive future for disadvantaged communities, with SCIF contributions up to :

• £42m to deliver an estimated further 400 affordable homes across Wales;
• £12m to transform the Heads of the Valleys into a low-carbon region, through supporting the development, manufacture and installation of low carbon technologies and measures; 
• £10m support for the local authority South East Wales Shared Services project.  This exercise will develop shared HR, payroll and training services.  The invest to save project will release substantial resources for re-investment in front line services. 
• £2m for a new all-Wales cultural heritage initiative, providing work in heritage building conservation and stimulating cultural tourism.

Positive lifestyles – projects helping to improve the health of people across Wales, with SCIF contributions up to:

• £70m towards a major investment to enhance hospital services in Swansea;#
• £16m towards a new programme to improve primary healthcare across Wales; and
• £8m towards the construction of a new health and wellbeing centre in Merthyr Tydfil.

Climate change – projects helping to reduce our emissions of greenhouse gases and safeguard our country and planet for future generations, with SCIF contributions up to:

• £4m for a pan-Wales network of anaerobic digestion waste treatment plants;
• £26m for an all-Wales low carbon building project to promote energy efficiency and the use of renewable energy in homes and businesses; and
• in addition, wood energy schemes will be incorporated, wherever appropriate, in the projects in this first tranche.
• Sustainable transport – projects helping to  improve our transport networks to improve access to employment, leisure and key public services in a sustainable way with SCIF contributions up to:
• £27m for major investment in rail infrastructure to improve north-south services;
• £20m to double the rail track between Gowerton and Loughor; and
• £9m towards the pre-construction development costs of dualling the Heads of the Valleys road between Tredegar and Brynmawr.

Resilience – projects aimed at ensuring Wales is prepared for new, 21st century challenges, with SCIF contributions up to:

• £59m to the the all-Wales pandemic flu preparedness project, which will develop a strategic national asset to help Wales in the event of a flu pandemic;
• £3m towards creating hazard area response teams, enhancing the capability of the ambulance service to respond to significant emergencies such as chemical or biological incidents; and
• £8m for accelerating improvements to flood / coastal defences across Wales.

Skills development and the knowledge economy - projects helping people and businesses to thrive through improving skills and our knowledge base. SCIF will help to initiate a new long-term 21st century schools capital programme, which will underpin a transformation of the learning environment for children across Wales.

Within this schools capital programme, three exemplar projects in Wrexham, Newport and Blaenavon will receive early funding, with contributions from SCIF of up to £5m, £15m and £4m respectively. These projects will help to integrate public services for local communities – for example, the Blaenavon Education and Community Campus will provide educational, health, leisure and community services from a single facility.

Further details on the individual projects will be provided by the lead Ministers in due course.

Overall, these projects are expected to receive investment from SCIF of around £350m, but this figure will be more than doubled once investment leveraged from existing departmental capital budgets, other parts of the public sector, and the private and voluntary sectors is factored in.  Nearly £50m SCIF funding will be invested this year, of which around £30m is expected to offer immediate benefits to the Welsh economy in these difficult times.  Further, we will ensure that all SCIF programmes and investment more widely include reference to community benefits and/or social requirements as set out in the Welsh Assembly Government’s Sustainable Procurement Policy.  

With the exception of the pandemic flu preparedness project, specific allocations have not been made to individual projects at this stage, and so are not included in the departmental allocations in the Final Budget. Inclusion in this first tranche means that the projects will be able to be taken forward quickly to full business case. Allocations to projects and departments will be made on the back of appraisal and approval of the full business cases, and formalised through Supplementary Budgets at the appropriate time.

The announcement of this first tranche of projects to be taken forward within the Strategic Capital Investment Framework represents a significant milestone, and will deliver benefits for people across Wales. Announcements on future tranches will be made in due course.

Further to the announcements on the Strategic Capital Investment Framework, I am also detailing the first set of projects offered funding from the Assembly Government’s Targeted Match Fund. The Assembly Government has established the Targeted Match Fund to provide central match funding, as a last resort, to projects seeking support from the 2007-13 European Structural Funds Programmes. In addition to providing support to legacy projects from the last programmes, I have made the following funding offers, totalling over £23m, to new projects:

• £10m to the Wales Council for Voluntary Action for two projects that will help people to move from economic inactivity into employment; 
• £5m to support community groups, voluntary sector organisations and social enterprises address digital exclusion;
• £4.2m to Chwarae Teg in support of a project that will help address gender inequality in the workplace across Wales; 
• £2.6m to the Wales Co-operative Centre in support of a project that will help to create more sustainable social enterprises across Wales;
• £1.1m to the Furnace Farm Centre for Food Excellence in the Conwy Valley, to develop a facility to showcase Welsh food; and
• £0.6m to the Nant Gwrtheyrn Welsh Language Centre in Gwynedd in support of a project to upgrade the residential learning facilities.

Through focusing on significant and innovative projects I am confident that the Targeted Match Fund will help to enable the EU Structural Funds to make a real difference to people and communities across Wales.

The Final Budget and associated announcements made today are the result of some tough decisions, reflecting the challenging times in which we are now operating. But the Final Budget will provide the investment needed to continue to implement the ambitious and progressive One Wales agenda, focusing on improving the health of the people of Wales; tackling poverty; meeting housing needs, improving public services; increasing employment and enhancing skills; and regenerating disadvantaged communities. It will also support the collective aims agreed at the Economic Summits, helping people and companies through the tough conditions arising from the global downturn.

Our approach will ensure that we are best placed to use our resources strategically and imaginatively, and that we maximise the benefit of every Welsh pound to help people where it matters most.