PUBLIC bodies in Wales may not receive full compensation from the UK Government for the cost of employer national insurance increases unlike in England, a committee heard.

Mark Drakeford told the Senedd’s finance committee the cost of workers within the Office for National Statistics definition of a public sector employee will be covered by the UK treasury.

Andrew Jeffreys, director of the Welsh treasury, explained the UK Government plans to use the Barnett formula to decide how much Wales will receive based on the costs in England.

But Prof Drakeford said: “That’s not my position … if public authorities in England are getting 100% compensation then public authorities in Wales should have 100%.

“The Barnett share may turn out to be less than we need in Wales.

“That would seem to me fundamentally unfair if English public authorities know they’re getting everything covered and in Wales we’re left filling gaps.”

He added: “If things worked out in the way we just described where Wales doesn’t have full cover but English public authorities do …, I won’t simply be leaving it there.”

Peredur Owen Griffiths, who chairs the committee, raised a warning from Ynys Môn council of a “gaping hole” in the budget that leaves local authorities facing an existential crisis.

He said councils could be put in an invidious position of having to balance books, potentially making jobs redundant, in the interim before clarity on compensation in May or June.

Pointing to the example of extra cash from UK pay deals, Prof Drakeford stated ministers took a risk-based decision to plan for the funding coming to Wales despite some uncertainty.

He told the committee: “I think local authorities will want to do that. They will look to see the ONS definition … and make assumptions against that. I equally think there will be organisations who … will need to plan on the basis they won’t get help from the treasury.”

Prof Drakeford, who was appointed finance secretary in September, said he would be loath to use money that comes to Wales to “substitute for responsibilities held elsewhere”.

Giving evidence after unveiling his £26bn draft budget, including a £6bn planned settlement for councils in 2025/26, Prof Drakeford said local government funding will increase by 4.3%.

The former First Minister told Senedd Members headline figures on how much funding each council receives often disguise the fact some are doing well on a per-head basis.

Prof Drakeford said he would look if anything more can be done to assist councils at the bottom end before the final budget is published on February 25.

He said the mission has not simply been to restore the position before wide-ranging cuts across almost every Welsh Government department were announced in October 2023.

He told the committee: “I’ve resisted with my colleagues suggestions that what we should be doing with the money we’ve got available next year is go back and fill the holes that we had to create in order to make this year’s budget viable.”

Pressed about tough decisions he has had to make, Prof Drakeford said: “There’s very little in this budget where people have had to deprioritise …. Last year we were using that term to denote the fact we were having to cut budgets, there’s very little of that in this budget.”

He suggested he would have liked to have allocated more than an extra £20m for childcare due to pressures to raise the hourly rate for providers and extend the Flying Start scheme.

Conservative Peter Fox questioned whether enough funding would be provided to the NHS in the draft budget to tackle the record 618,000 people in Wales on waiting lists.

Prof Drakeford replied: “There’s no ceiling here where you could say ‘well, the health service has now got everything it needs’ because there is always more demand…. I am satisfied that there is adequate funding … to make inroads into those waiting lists.”

Mike Hedges asked for an update on introducing a vacant land tax after talks with the Tory UK Government on devolving powers requested nearly five years ago broke down.

Prof Drakeford told his Labour colleague plans for a vacant land tax had completely stalled but he had a positive meeting with James Murray, exchequer secretary to the UK treasury.

He said he was given a commitment to revisit the proposal which aims to test arrangements set out in the 2014 Wales Act to devolve powers for new taxes to Wales.

Pressed about talks with the UK treasury on the Welsh Government’s borrowing powers and flexibility with reserves, Prof Drakeford warned the issue becomes more pressing every year.

He said if capital borrowing continues at the current rate of £150m a year, the Welsh Government will hit the £1bn cap during the next Senedd term from 2026.

THE WELSH GOVERNMENT’S draft budget has sparked debate, with the Welsh Liberal Democrats labelling it a “missed opportunity” for failing to deliver on childcare, while Labour officials defend their record on supporting families.

The Welsh Liberal Democrats have argued that the government missed a “golden opportunity” to support Welsh families during the ongoing cost-of-living crisis while delivering a boost to the Welsh economy. They claim that high childcare costs are forcing more parents out of work, and the extra £20 million allocated in the budget will only “paper over the cracks.”

The Liberal Democrats have proposed a universal offer of 30 hours of funded childcare per week for all children in Wales aged 9 months to 4 years. Welsh Liberal Democrat Leader Jane Dodds MS expressed disappointment, stating:

“Instead of taking this opportunity to steer Welsh families away from sky-rocketing childcare costs, the Welsh Government has instead left them to fend for themselves. Thousands of people from across Wales are being forced to make the difficult choice between paying out of pocket for childcare or leaving work.

This shouldn’t be the case. We want to see a universal offer of 30 hours of funded childcare per week for every single child in Wales between the ages of 9 months and 4 years old. By taking away the burden of childcare costs, we can help people get back into work, which will give our economy a huge boost.

The UK Labour Government has been talking about encouraging more economic growth, but it appears as though their colleagues in Cardiff Bay didn’t get the message.”

However, the Welsh Government has countered these claims, highlighting existing childcare support schemes and their broader efforts to ease financial pressures on families. A Welsh Government spokesperson said:

“Our government remains committed to supporting families across Wales. Our existing childcare offer provides up to 30 hours a week of funded childcare for working parents of 3- and 4-year-olds during term time, which we extended to include support during the school holidays.

In addition, we are investing £20 million to enhance childcare provision further, ensuring families who need it most can access support. We are continually working to develop policies that benefit Welsh families and strengthen our economy.”

The debate comes amid growing scrutiny of government policies as families grapple with the rising cost of living. Critics and supporters alike will be watching closely to see how the draft budget evolves and whether further measures are introduced to address childcare costs.

PLAID CYMRU called for Wales to be given parity with Scotland on devolved powers.

Rhun ap Iorwerth warned Wales remains the “poor relation” among devolved nations in policy areas ranging from rail, justice and tax to welfare benefits and the Crown estate.

He said: “Our democratic rights as parliamentarians in Wales can’t be considered to be inferior when compared to legislators in other devolved legislatures. But that is the position that we currently find ourselves in.”

Leading a debate, Mr ap Iorwerth warned billions of pounds-worth of investment is being withheld because of a lack of powers over rail infrastructure.

The Plaid Cymru leader criticised Eluned Morgan for “batting away” questions deemed to be beyond the powers of the Senedd “week after week” at First Minister’s questions.

He said: “Let me decode what she is saying: ‘I’d rather not cause a problem for Keir Starmer than try to do what’s right by the people of Wales.’ It’s weak, it’s weak, it’s weak.”

Mr ap Iorwerth accused Labour of talking the talk on pushing the boundaries of devolution but “remaining resolutely passive when it comes to actually agitating for change”.

He : “If the union is to prove its worth … then at the very least, surely, Wales deserves parity of status with Scotland.

“And regardless of our differences on the ultimate constitutional journey for Wales … it is inconceivable that any party purporting to represent the interests of our nation should not support this very basic principle.”

He added: “The real danger is that any snail-paced incremental change – Labour’s general state of constitutional being – is watered down even further to satisfy party orders.

The Conservatives’ Paul Davies called for a focus on making better use of the powers already devolved rather than “tinkering” and “pushing for more”.

He said: “It’s also very much our view that Wales should not just be a carbon copy of Scotland just because Plaid Cymru says so.

“And to be frank, Plaid aren’t interested in having the same amount of powers as Scotland; they want independence, and we all know that that will in turn destroy the United Kingdom.

“That is their objective; that is their objective, the destruction of the United Kingdom.”

Criticising constitutional naval-gazing, Mr Davies added: “We have to urgently address the apathy for the Senedd by getting on with the job of delivering on the people’s priorities.”

Adam Price said he had never heard such a passionate defence of the status quo.

The former Plaid Cymru leader asked: “Why defend that status quo? Look at Wales as it is. You talk about broken public services. Look at the criminal justice system. That’s a public service. You’re right, it’s broken but not because of any decision made in this chamber.”

Labour’s Mike Hedges warned: “Wales has had three devolution settlements and we’re no closer to a long-term settlement than we were before the first.”

The former council leader suggested more devolution within Wales, saying: “The question should be where decisions are best made and it isn’t always in Cardiff.”

Mr Hedges added: “Everything does not have to be devolved to Wales, Scotland, Northern Ireland or the English city regions at the same time. “

Responding to the debate on December 11, Huw Irranca-Davies raised concerns about a “for Wales, see Scotland”-style approach.

The Deputy First Minister told the Senedd that the Welsh Government’s guiding principle will always be what is in the best interests of the people of Wales.

He said: “We don’t want to copy and paste the devolution settlement from somewhere else,” adding: “That would actually be imitation, not devolution.”

Mr Irranca-Davies pointed out that the Welsh Government accepted the recommendations of the independent commission on the constitutional future of Wales.

In the final Senedd vote of 2024, members rejected the Plaid Cymru motion, 37-12, before a version as amended by the Welsh Government was agreed 26-12 with 11 abstaining.