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Rachel Reeves presented the spending review in the Commons on Wednesday, announcing additional funding for Wales. However, experts have warned that some public services may face cuts as a result. Despite the budget expected to increase over the next three years, tough decisions are on the horizon.
The Welsh government primarily relies on grants from the Treasury, with the funding set to average £22.4 billion annually over the next three years following the spending review. The Institute for Fiscal Studies (IFS) highlighted that funding for daily operation of public services is projected to rise by approximately 1.2% above inflation. This increase could potentially lead to real term cuts in some services, especially if most of the increase is absorbed by the Welsh NHS.
Following the chancellor’s announcement of a 3% real-terms increase in day-to-day NHS funding in England, additional funds will be allocated for Welsh ministers to utilize. However, concerns have arisen about potential implications for other sectors in the budget if these funds are channeled towards healthcare. Guto Ifan from the Wales Governance Centre cautioned about the need for careful consideration to prevent cuts in services outside the health sector.
In addition to the funding update, Reeves unveiled £445 million for new rail projects in Wales, which includes plans for five new stations in Cardiff, Newport, and Monmouthshire, as well as rail upgrades in north Wales. While this investment was welcomed by some, others criticized the ten-year timeline for the initiative and argued that it fell short of what Wales truly needed. Plaid Cymru and Welsh Conservative leaders expressed concerns about potential cuts to public services and labeled the rail funding announcement as inadequate for the region
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