Cabinet meeting: 2 December 2024

• Rt Hon Eluned Morgan MS (Chair)
• Huw Irranca-Davies MS
• Jayne Bryant MS
• Mark Drakeford MS
• Rebecca Evans MS
• Jane Hutt MS
• Julie James MS
• Jeremy Miles MS (from item 4)
• Lynne Neagle MS
• Ken Skates MS
   
• Dawn Bowden MS
• Sarah Murphy MS (from item 4)
• Vikki Howells MS
• Jack Sargeant MS

Officials

• Andrew Goodall, Permanent Secretary
• Rachel Garside-Jones, Transition Director Office of the First Minister
• Victoria Jones, Principal Private Secretary, First Minister
• Toby Mason, Head of Strategic Communications
• Kevin Brennan, Special Adviser
• Sarah Dickins, Special Adviser
• Madeleine Brindley, Special Adviser
• Haf Davies, Special Adviser
• Victoria Evans, Special Adviser
• David Hooson, Special Adviser
• Kirsty Keenan, Special Adviser
• Jackie Jones, Special Adviser
• Stephen Jones, Special Adviser
• Philippa Marsden, Special Adviser
• Martha O’Neil, Special Adviser
• Maddie Rees, Special Adviser
• Victoria Solomon, Special Adviser
• Mary Wimbury, Special Adviser
• Christopher W Morgan, Head of Cabinet Secretariat (minutes)
• Damian Roche, Cabinet Secretariat
• Helena Bird, Permanent Secretary’s Office
• Kath Hallett, First Minister’s office
• Tracey Burke, Director General Climate Change & Rural Affairs
• Sioned Evans, Director General, Education, Culture and Welsh Language
• Tim Moss, Chief Operating Officer
• Judith Paget, Director General Health and Social Services
• Andrew Slade, Director General, Economy, Energy and Transport
• Neil Buffin, Deputy Director Legal Services
• Andrew Jeffreys, Director Treasury (items 4&5)
• Thomas Nicholls, Chief Economist (item 4)
• Dean Medcraft, Director Finance (item 4)
• Emma Watkins, Deputy Director Budget & Government Business (items 4&5)

1.1 Cymeradwyodd y Cabinet gofnodion y 18 Tachwedd 2024 / Cabinet approved the minutes of 18 November 2024.

CBI Dinner and investment summit for Wales

2.1 The First Minister informed Cabinet that she, along with the Cabinet Secretary for Economy, Energy and Planning, had attended the CBI Wales Annual Dinner the previous week. During the event the First Minister announced a major investment summit for Wales in 2025, which would showcase the country to global industry leaders and potential investors, highlighting the many opportunities and strengths in key industries.

2.2 At the dinner, the Secretary of State for Wales announced the intention to set up a Welsh Economic Growth Advisory Group, which had met earlier that day.

British Irish Council

2.3 The First Minister informed Cabinet that she and the Cabinet Secretary for Economy, Energy and Planning would be attending the British Irish Council in Edinburgh later in the week, where the theme would be Financing and Just Transition.

3.1 Cabinet considered the Plenary grid and noted that voting time was scheduled for 6:20pm on Tuesday and around 6.25pm on Wednesday.

4.1 The First Minister invited the Chief Economist to provide an economic update.

4.2 Thomas Nicholls informed Cabinet that his presentation would focus on the challenging period ahead and outlook for economic growth, with subdued productivity, and concerns about the recent trends in economic inactivity. There would also be an opportunity to consider the implications of the recent UK government spending increase, with additional resources for Welsh Ministers in the short term but plans for later years still suggested very tight spending rounds.

4.3 The latest economic position indicated subdued UK economic growth with a loss of £14,000 real GDP per head of the population in 2023 when compared to previous trends, and OBR forecasts suggested that this would continue until at least 2029. Living standards were also growing much slower than previous trends, with data indicating a reduction of £10,500 in 2029-2030 in real household disposable income per person when compared to trends prior to 2008. Furthermore, productivity growth was down across the UK but at least Wales was performing better against other parts of the UK, albeit still well below the average prior to 2008.

4.4 Wales had maintained its relative level of prosperity compared to most parts of the UK, however the acceleration in London was impacting the UK average. Inflation was significantly lower than in recent years, however the OBR was forecasting that partly as a result of the recent UK Budget, it would remain slightly above the target for longer. Nevertheless, prices for some items such as food and fuel remained significantly higher, which was having an impact on households. Employment rates in Wales were steady but not as high as pre-pandemic rates. There appeared to be suggestions that economic inactivity rates were improving, but there were still large numbers of people classed as long-term sick in Wales, much higher than the number who were unemployed.

4.5 In terms of the impact of the UK government’s recent Budget, the tax share as a percentage of GDP was higher than in recent years and expected to increase further but was similar to other comparable countries. Borrowing was continuing to fall, but at a slower rate, and debt was relatively high but stable following the inclusion of public sector net financial liabilities. This would allow the UK government to borrow more.

4.6 The Welsh block grant in 2025-2026 was now over £1 billion higher than expected based on March 2024 assumptions, with real terms increases of 5% for resource and 7% for capital, compared to 2023-2024. Nevertheless, the outlook for public finances from 2026-2027 appeared challenging, with uplifts expected to be lower with higher costs to service debt.

4.7 Cabinet welcomed the presentation and recognised recent high inflation levels were still having a disproportionate impact on households and living standards.

4.8 The UK was still dealing with the impact of austerity measures and Brexit, which had suppressed the economy.  

4.9 Cabinet thanked the Chief Economist for his presentation.

5.1 The Cabinet Secretary for Finance and Welsh Language introduced the paper, which asked Cabinet to approve the Draft Budget Package 2025-2026, including MEG level allocations, for publication on 10 December. Cabinet was also asked to approve the decisions in respect of devolved taxes, agree the focus of the messaging to support the Draft Budget and note the next steps for finalising the budget and the proposed additional in-year allocations 2024-2025.

5.2 The paper also outlined all the budget material that would be published on 10 December.

5.3 Cabinet welcomed the paper and the additional in-year and Draft Budget allocations.

5.4 Cabinet approved the paper.

Cabinet Secretariat
December 2024