The Welsh Government published its Second Supplementary Budget 2024-25 on 18 February. It shows changes since October’s First Supplementary Budget and includes almost £1bn of additional revenue and capital for departments. While many of the allocations relate to things that have already been announced, such as £264m of funding for pay deals, the budget allocates more funding for day-to-day activities than we normally see this time of year.
In this article we take a look at some of the allocations across departments and how funding has changed. The Senedd will debate the Second Supplementary Budget on 18 March.
Unseasonable level of funding
The Cabinet Secretary for Finance and Welsh Language, Mark Drakeford MS, told the Finance Committee, the Supplementary Budget was “no different in character” from any other supplementary budget, but it was different in terms of the scale of funding included.
There’s increases and decreases, but the Supplementary Budget outlines £629m extra revenue funding (for day to day spending) and £257m more capital (for spending on things like infrastructure), among other changes. Most of this is a result of decisions in the UK Government’s Autumn Budget (30 October 2024).
There’s around £254m unallocated in the Supplementary Budget, although only £81m of that is associated with funding for day to day activities. The Welsh Government can carry some money from year to year, subject to certain rules.
More funding across departments
Discretionary funding for departments, made up of revenue and capital, has increased by 4.1% or £999m. All of the Welsh Government’s departments are allocated more funding than in the First Supplementary Budget.
There’s an extra £388m (3.2%) for Health and Social Care, and both Education and Transport get double digit percentage increases. However, £151m of the increase in Education relates to non-cash student loans.
Departmental Expenditure Limit (DEL) includes the discretionary part of the budget that the Welsh Government chooses how to spend.
Annually Managed Expenditure (AME) is the non-discretionary part of the budget.
Education includes allocation of £428 million of non-fiscal revenue due to student loans resource budget provision. This accounts for £151 million of the increase in this Supplementary Budget.
Source: Senedd Research and Welsh Government (Second Supplementary Budget 2024-25)
Money for pay and pensions
The Supplementary Budget makes £264m of allocations for already announced pay awards. The First Minister set out the Welsh Government’s agreement on public sector pay on 10 September. In 2024-25, NHS staff, teachers and public sector workers in many devolved services are receiving pay rises of between 5% and 6%.
Alongside pay there’s £25m associated with changes to figures used to calculate contributions to certain pension schemes. We saw a much larger allocation for something similar in the First Supplementary Budget 2024-25.
Other key allocations to Welsh Government departments
The Supplementary Budget outlines £208m to “support delivery of the First Minister’s priorities”. This includes already announced allocations. Among the allocations there’s:
- £50m for waiting times;
- £27m for reducing pathways of care;
- £21m to support a programme of investment in diagnostic equipment and medical devices across NHS Wales;
- £20m for school standards; and
- £20m for school and college repairs and maintenance through the Sustainable Communities for Learning programme.
The Supplementary Budget also highlights £297m of other net allocations. This includes £147m for Transport for Wales relating to inflation and changes in delivery profile associated with the Core Valleys line. The Welsh Government has also provided £18.5m of capital “in recognition of the significant financial challenges facing higher education”. This follows comments by the Minister for Further and Higher Education, reported earlier in February, suggesting:
There wouldn't be any additional Welsh government funding available, unless we were looking to cut back from other areas such as the NHS, education, or public services that we all rely on.
There’s a number of other allocations, including things we see regularly such as allocations for the immigration health surcharge as well as technical changes, like £75m associated with the Social Housing Grant.
There’s also £215m of non-fiscal resource DEL movements, including the £151m for student loans, mentioned above, and £62m for depreciation relating to Transport for Wales.
What next?
The Chancellor is due to deliver the UK Spring Statement on 26 March. Not too long after that we’ll get the results of the UK Government’s Spending Review, which is due to conclude on 11 June. Both of these could have implications for Wales, but the latter might have a broader impact on the tools the Welsh Government has to manage its budget.
The Cabinet Secretary has outlined his desire for changes around borrowing limits and how the Wales Reserve can be used, something the Senedd’s Finance Committee has supported. The UK Labour manifesto for the 2024 General Election also noted the Welsh Fiscal Framework was “out of date”. It’s been suggested these discussions are part of the Spending Review.
So while this Supplementary Budget might draw to a close how the Welsh Government spends its money in 2024-25, the conversation around funding for Wales and its fiscal powers goes on.
You can watch the debate on the Second Supplementary Budget 2024-25 on SeneddTV on 18 March. A transcript of proceedings will also be available around 24 hours later.
Article by Owen Holzinger and Helen Jones, Senedd Research, Welsh Parliament
