Analysis: Spending Review impact in Wales

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BBC Wales specialist correspondents assess the decisions taken in the Spending Review and look at the impact for Wales.


BBC Wales Education Correspondent Ciaran Jenkins:

The Chancellor tried to put a positive spin on education funding in the spending review as he pledged to increase funding for schools in England.

Image caption,
There is a challenge to match the school spending commitment or see the gap rise

That poses a challenge for the assembly government, who must at least match this commitment or see the £527 per pupil funding gap with England increase.

At the same time the Assembly Government's capital budget is being cut by 41%.

This will place considerable pressure on its school building programme, which is set to allocate funds to councils next year.

It's unlikely the £3bn councils claim is required can be found.

The Chancellor also announced cuts to public funding for universities in England, who will see their teaching budgets slashed by 40%.

Responsibility for funding Welsh universities rests with the Assembly Government, but they will have to find the cash from a shrinking pot overall.

Research funding will be protected in cash terms, which means around a 10% cut after inflation.

This still presents a challenge for the bigger universities who rely on research income, though the greatest test for the university sector in Wales will be how to compete if universities in England are allowed to set their own tuition fees.

BBC Wales Health Correspondent Hywel Griffith:

In his speech, George Osborne made a direct link between protecting spending on the NHS in England and how much money will be handed down to Wales, Scotland and Northern Ireland.

What he didn't say is that while he can afford to ring-fence the Health Service from deep cuts, the Assembly Government in Wales can't.

Health and social services account for 39% of the assembly government's spending - that's too high a proportion to protect it from cutbacks.

To make things worse, inflation in the NHS can be around double the rate in the real world, so even a small increase in funds can feel like a cut.

In reality, the Welsh NHS faces cutbacks of over a billion pounds by 2015 - and that figure could be closer to two billion if the Assembly Government want to ease the pressure on other departments.

There is an argument to say this is an opportunity to modernise and improve by building a more efficient NHS that can cope with other pressures such as an ageing population.

But the tension between Wales and Westminster has now been increased - with ministers here having to explain to voters ahead of next year's Assembly elections why the Welsh NHS is feeling greater pain than in England.

BBC Wales business correspondent Nick Servini:

A big impact in Wales from the changes announced by the chancellor will be in areas of welfare spending.

Employment and Support Allowance, the successor to incapacity benefit, is being abolished for some claimants after one year which will raise £2bn.

It will inevitably affect many people in Wales, where nearly 190,000 people claim those benefits.

That figure is a rate of nearly 10% of the working age population, the highest in Britain.

There was also confirmation from the chancellor that nearly half a million public sector workers are likely to lose their jobs over the next few years across the UK.

With 344,000 public sector workers in Wales, that equates to 34,000, which is less than the 50,000 estimate from public sector unions.

Nevertheless, it looks likely that tens of thousands of public sector jobs will be lost in Wales over the next four years.

The big question, which today's spending review cannot answer, is how many new private sector vacancies will help fill the gap.