First Minister warns looming budget is “the most difficult we have ever seen”

MSs quizzed the first minister about how the Welsh Government will ensure people are warm and fed this winter.

Mark Drakeford said the budget this year and next is the “most difficult we have ever seen”, with ministers having £1.3bn less in purchasing power in 2023-24.

The first minister told a Senedd scrutiny committee that funding for warm hubs and a free school breakfasts pilot will not be extended.

He warned that budget pressures mean ministers are driven to reducing preventative services because “you need the money to deal with the here and now”.

Labour’s Jack Sargeant highlighted that residents in north Wales pay the highest energy standing charge rates in the UK, calling for the “unfair, arbitrary” fees to be scrapped.

He said: “Residents in my constituency in Alyn and Deeside pay more than Russian billionaires in the middle of London.”

Pointing out that north Wales is a huge net exporter of energy, Prof Drakeford said the Welsh Government will be submitting a formal response to Ofgem’s review of standing charges.

He said: “My own view is that standing charges should simply be removed for certain categories of customer. I don’t necessarily believe you can abolish them altogether.”

‘Scrape and save’

The first minister told committee members he has seldom seen people more angry than prepayment customers who “scrape and save” to feed their meter.

He warned: “Before a single ounce of energy comes their way, they are being charged for all those days when they couldn’t afford to feed the meter at all.”

Prof Drakeford argued the cost of removing standing charges should be absorbed from energy companies’ profits. He backed calls for a new social tariff for vulnerable people.

Russell George, for the Conservatives, asked whether the contract for the revamped Warm Homes programme has been agreed.

Prof Drakeford said the final touches are being put on the contract, which is worth up to £250m, as he stressed the importance of ensuring that procurement is watertight.

He accepted that the programme should have been in place by November, telling the committee it should be up and running by April 1.

He told the committee that funding for the Nest scheme, which provides energy advice, was increased last year and the budget will be protected this winter.

Fuel poverty

Asked by Mark Isherwood about warm hubs, Prof Drakeford said there is no plan to replicate last year’s £1m scheme which saw 700 hubs set up.

He told the Conservative that councils are continuing to invest in warm hubs, raising the example of a £500,000 scheme in Swansea.

On support for “off-grid” households offered by the Fuel Bank Foundation, Prof Drakeford recognised that take-up was slow at the outset but it has since accelerated.

Mr Isherwood questioned a lack of targets in ministers’ tackling fuel poverty plan.

Prof Drakeford said the Welsh Government has not turned its back on setting targets but “we’re not in a position yet where we think we are sensibly able to do so”.

He told members the Welsh Government is having to consider whether it continues providing funding for purposes that are not Welsh ministers’ responsibility.

He cited the example of £11m a year for the single advice service: “Other than debt advice, which is a fraction of it, all the rest of it is a responsibility that lies at Westminster.”

‘Last resort’

On support for rising energy bills for swimming pools and leisure centres, Prof Drakeford said there will not be a specific stream of funding this winter.

Asked about the discretionary assistance fund, he said the scheme shows the Welsh Government’s commitment to helping the least well off.

He told MSs £38m has been allocated this year – an £18m uplift on last year – due to “enormous” pressures on the fund, which is the “welfare state of last resort”.

Labour’s John Griffiths raised concerns about rising rents and eviction rates.

Prof Drakeford pointed to reforms in the Renting Homes Act, which came into force in 2022, saying the minimum notice for “no-fault” evictions is now six months rather than two.

During the scrutiny session on Friday December 8, he argued it is a considerable step forward in security for renters.

The first minister added that landlords need to provide two months’ notice of rent increases rather than one and it can only be done once in 12 months.

Cost of living

Plaid Cymru’s Llyr Gruffydd pressed the first minister on his response to a report by the Wales expert group on the cost-of-living crisis.

Prof Drakeford said the Welsh Government has addressed four of the report’s five recommendations but he warned that ministers do not have funding to invest.

Pressed by John Griffiths about the expert group’s calls for targeted payments for low-income households, the first minister said ministers cannot meet the £28m cost.

“I don’t see any immediate prospect of us being able to do that,” he said.

Prof Drakeford said he hopes to publish a formal response to the report before Christmas.

Food

Highlighting the equality committee’s report on unsustainable debt and the cost of living, Jenny Rathbone asked about work to ensure everybody has access to healthy food.

Prof Drakeford pointed out that a community food strategy is being developed.

He agreed about the importance of cooking skills but said: “What people who are poor need is money…. They have to manage every day – it’s not that they lack skills or commitment.”

Prof Drakeford pointed to the investment in providing universal free school meals in primary schools, with more than 20 million more meals already served.

He warned that there is little prospect of free school meals being extended to older pupils, saying a pilot of free school breakfasts for children in year seven will not be extended.

By Chris Haines, ICNN Senedd reporter