Welsh government faces cuts as inflation bites

First Minister Mark Drakeford is asking his ministers to find cuts from their departments as inflation puts the squeeze on government budgets.

He will spell out the financial difficulty his government finds itself in later.

BBC Wales was told members of his cabinet would be looking at both this current year and the next.

The Labour-run administration has said it was £900m short in its £20bn budget on where it thought it would be.

It is not clear at this stage where the cuts might fall.

The NHS, education and council-run services like social care are among the public services the Welsh government funds.

Most of its cash comes from the UK government, although it raises some from tax.

The Welsh government's budget is generally set by the start of the financial year in April and having to make significant savings mid-year is unusual.

In recent weeks the Welsh government has faced criticism for cutting free school meals help over the holidays - a policy thought to cost about £15m.

The Welsh government also suddenly scrapped £4.4m for monitoring sewage for Covid, despite a minister having officially opened a research centre in Bangor just months before.

Both were blamed on financial problems.

A government source said the decision not to extend free school meals over the holiday showed how serious the situation was.

Among the pressures ministers face are pay deals ministers have agreed with NHS workers and teachers, and clearing waiting lists in the NHS.

Like the rest of society the government has rising costs. Although it has come down from recent peaks, inflation remains higher than it was a few years ago, with the rate of consumer prices increasing by 7.9% in the year to June.

Members of the Senedd, who are currently on recess and are not attending Cardiff Bay, are expected to receive a statement on the issue from Mr Drakeford on Wednesday morning.

The written statement will probably make the case that public services are fragile after a decade of austerity, Brexit, record inflation and last year's mini-budget.

The source said the Labour cabinet will be working over what is left of the summer to "mitigate" the pressures on its budgets, and protect frontline services as far as possible.

Earlier this year Mr Drakeford said the Welsh government's financial position was £900m lower in real terms than what had been expected at the UK government's spending review in 2021.