1. Pre-budget stakeholder engagement
When? Usually in the summer term.
What? Typically an informal session with stakeholders, often held away from the Assembly.
It's expected to cover longer term strategic scrutiny and public engagement such as: Welsh Government strategy, funding, priorities going forward, and incorporate the views of stakeholders prior to budget setting.
Why? The pre-budget scrutiny will inform the public consultation held by Finance Committee over the summer, and will be utilised in the scrutiny of the draft Budget.
2. Public consultation
When and who? Over the summer, led by the Finance Committee.
What? A request for views on the previous year's budget, expectations of the coming budget, and on the particular areas for consideration emerging from the Committee’s pre-budget stakeholder engagement.
How? A consultation document will be issued describing what the Committee is looking for, and a list of questions the Committee is seeking views on. General views on the draft budget are also welcomed.
Why? This will provide the Finance Committee with stakeholder views, and inform the direction provided by the Finance Committee to the policy committees on specific areas of interest for their draft budget scrutiny.
3. Outline draft Budget published
Who? The Welsh Government will 'lay' the Outline draft Budget before the Assembly; this is the process whereby documents are placed formally before the Assembly, and are available publicly.
What? The outline draft budget proposals will set out the high-level strategic spending and financing plans of the Welsh Government.
What's included? Proposed expenditure allocations to the different portfolios (known as Main Expenditure Groups, or MEGs), how these are financed (including taxation), and overall levels of borrowing and debt.
What's a MEG? The Budget is broken down into categories for monitoring and control purposes. E.g. Health and Social Services; Education; Economy and Transport, each with a Cabinet Secretary, these are the MEGs.
What else might be expected? The rationale for taxation levels; a range of relevant economic statistics and analyses for Wales; how the Programme for Government (Taking Wales Forward), National Strategy (Prosperity for All), and Well-Being of Future Generations (Wales) Act 2015 have influenced the budget allocations; a report outlining the independent scrutiny and assurance in relation to forecasts for devolved taxes.
4. Scrutiny of the Outline draft Budget
How long? The Finance Committee will normally be given eight weeks for its scrutiny of the Outline draft budget.
How is it done? The Committee will run a series of formal evidence sessions in the Senedd.
- The Cabinet Secretary for Finance will usually attend at the very beginning, and the very end of the process.
- Input is sought from a number of organisations, which may include those such as the Future Generations Commissioner, HMRC, Welsh Revenue Authority, Office for Budget Responsibility.
What? The focus of the Finance Committee's scrutiny is the high-level spending strategies, tax rates, overarching processes and principles behind the budget, and National economic indicators.
5. Detailed draft Budget published
Who? The Welsh Government will 'lay' the detailed draft Budget before the Assembly.
What is it? A more detailed budget proposal for each portfolio (MEG) at the Budget Expenditure Line (BEL) level, with appropriate supporting explanations.
What's a BEL? Each portfolio (or MEG) is broken down first into Actions, e.g. Delivery of Core NHS Services or Education Standards. And then each of these is broken down further into BELs, such as Public Health Wales or Raising School Standards. This allows for better 'monitoring and control' of the budget.
How? The Welsh Government will usually publish the BELs (how much funding each area is to be allocated), alongside its reasoning behind the allocations.
6.Scrutiny of the Detailed draft Budget
Who? The policy Committees, such as Children, Young People and Education Committee; Equality, Local Government and Communities Committee; will normally be given five weeks for their scrutiny.
What? Policy committees can consider the Welsh Government’s detailed budget proposals, scrutinising the detailed spending plans for relevant Ministerial portfolios, and are able to report their views on these proposals if they wish.
Oversight. The Finance Committee maintains an oversight role of the other committees’ scrutiny.
Who? The Finance Committee, and any of the policy committees who wish to report.
When? A week before the draft Budget debate.
How? The reports will usually summarise the evidence received, as well as the evidence provided by the relevant Ministers. This will be accompanied by the views of the committee itself, and will often contain recommendations for the Welsh Government.
Recommendations? The reports typically include a number of recommendations. These may request changes to the budget, to future budget approaches, budget presentation, or simply seek clarification on elements of the Budget.
Government responses? The Welsh Government will usually formally respond to the recommendations in the committee reports in the New Year.
8. Draft Budget Debate
How? The Welsh Government will table a motion to note the draft Budget. Any reports produced by committees on the draft Budget, are added as supporting documents for the draft Budget debate.
Who? The Cabinet Secretary for Finance will usually move the motion, with Chairs of the Finance, and policy committees who reported on the budget usually amongst those called to speak to the motion.
Amendments? Members may table amendments to the motion, but cannot amend tax rates, which are a matter for the Welsh Government.
What? The debate will focus on the both the outline and detailed draft Budgets, and will draw on the draft Budget reports from Committees.
9. Final Budget published
Annual Budget Motion? This is the formal means by which the Assembly authorises Welsh Ministers to utilise resources.
What is laid? In supporting the Annual Budget Motion, the Welsh Government agrees to provide, at the same time as laying the Annual Budget Motion, its final budget incorporating spending plans and any changes to financing plans proposed in the draft budget.
A reconciliation to changes at the BEL level (detail of what has changed between the draft Budget and the final Budget at the BEL level) should also be provided.
10. Final Budget debate
What? An annual budget motion must be laid by a Welsh Minister. No amendments may be tabled.
What about income tax? The annual budget debate must not take place until the Assembly has agreed the Welsh Rate Resolution for the financial year concerned, which sets the Welsh Rate of Income Tax for that year.
What? The Government will usually produce two supplementary budgets, showing in-year changes to the budget.
Why? The supplementary budget covers transfers from the UK Government, new allocations from central reserves, transfers between portfolios, as well as major transfers within portfolios.
When? Supplementary budgets are usually laid in February and June, though this is not required.
How the Welsh Government gets its money
There are four main sources of finance for the Welsh Government:
- Money allocated by the UK Government. HM Treasury determines overall public expenditure levels for the UK as a whole, and a portion of this is allocated to Wales, this is the block grant. Changes to this are calculated using the Barnett Formula.
- Money raised in Wales by means of taxation and other charges. This includes land transaction tax, landfill disposals tax, and a portion of income tax.
- Money received from the European Union
The current arrangement is set out in the Fiscal Framework agreed between the Welsh and UK Governments.
The UK Budget occurs in Autumn, during Wales’ Budget process, but its exact timing is up to the UK Government.
The UK Budget may directly affect the amount of money available to the Welsh Government through consequential changes of changes to English spending in areas which are devolved.
It may also affect other elements of Welsh life, such as threshold and allowance changes for income tax.
These changes, because of timings, may not be reflected until the final Budget, or supplementary budgets.