The Price of Independence - 3

Projected Expenditure:

Health
In 2003/2004 the UK Health budget was £72 Billion, or £1,210 per head, which allowing for inflation would be around £1,285 today. On this basis, Wales’s proportionate Health budget would be £3.8 Billion. In a written question to Parliament on 25 Jun 2006, it was stated that the NHS expenditure per head for England, Scotland & Wales was as follows: England £1,228; Scotland £1,374; Wales £1,154. Contrary to popular misconception, it would appear that the cost of health services in Wales is actually cheaper than the UK average, and on this basis, Wales's health budget could be reduced to 3.5 Billion. However, I would prefer to increase this and will use the proportional figure instead, ie £3.8 Billion

There are contradictory statistics published by the Institute of Fiscal Studies – Survey of Public Spending in UK - which states a slightly higher health costs for Wales, but I believe that this includes programs which are included within the Social Security budget so I will deal with this there.

Transport
In 2003/04 the UK Transport budget, was £15.9 Billion, or £266 per head, which would result in a proportionate Welsh budget of £0.75 Billion. However, Wales does not have a sophisticated transport infrastructure with no major airports or ports, and this figure could be reduced significantally. The Institute of Fiscal Studies reported that Welsh expenditure in this area was around 75% of the UK figure, resulting in a Welsh budget of £0.6 Billion

Education
In 2003/04 the UK Education budget, was £59.5 Billion, or £992 per head, which would result in a proportionate Welsh budget of £2.9 Billion. The Institute of Fiscal Studies reported that Welsh expenditure in this area was around 4% higher than the UK figure, resulting in a Welsh budget of £3.0 Billion

Public Order
In 2003/04 the UK Public Order budget which includes Fire & Rescue; the Courts; & the Police, was £27.7 Billion, equivalent to £464 per head, which would result in a proportionate Welsh budget of £1.4 Billion. While the costs of Fire & Rescue in Wales are comparable to UK costs, the cost of Courts and Policing are considerably lower, as both of these are heavily London based. The Institute of Fiscal Studies report referred to above identifies Welsh expenditure as 95% of the UK figure, which would reduce the Welsh budget to £1.3 Billion

Defence
In 2003/2004 the UK defence budget was £28 Billion, which rose in 2005/2006 to £32.2 Billion, equivalent to £481 per person. Wales’s proportionate share would be £1.4 Billion. Following independence, Wales should probably adopt a similar military strategy as our nearest peaceful neighbour – Ireland. The Irish defence budget is E522, equivalent to E126 or £87 per person. If Wales followed Ireland’s example, we could cut our defence budget to around £0.25 billion


Social Security
In 2003/04 the UK Social Security budget, which includes pensions, unemployment, sickness benefits etc was £129.5 Billion, or £2,169 per head, which would result in a proportionate Welsh budget of £6.4 Billion. Unfortunately, due to our poor economic performance and levels of deprivation, the per capita spending in Wales is higher than the UK average, and the Institute of Fiscal Studies reports this as being 20% higher. This would result in an expenditure of £2,600 per head, and a Welsh budget of £7.7 Billion.

The biggest challenge facing a new Welsh government would be to reduce this social services budget by addressing the causes of deprivation.

‘Other’ Expenditure
Within the UK budget there is a large ‘black hole’ of ‘other’ expenditure equal to £80.2 Billion, or £1,343 per head, which would result in a proportionate Welsh budget of £3.9 Billion. This budget includes the cost of government itself, including the royal family, and overseas embassies, civil service pensions etc. It also includes the cost of nuclear industry subsidies; the security services; and other expenditure which the government would prefer you not to scrutinize too closely. Without a detailed breakdown it is difficult to accurately apportion these costs within an independent Wales but I am certain that it will be massively less than the UK figure. For sake of argument, I have conservatively adopted a figure of 50% of the UK figure, which would result in a proportionate Welsh budget of £1.95 Billion.

Remaining Items
For the remaining items, I have assumed that these would be generally proportional to the UK budget, which would result in the following Welsh budgets:
Environment £0.4 billion
Housing £0.4 billion
Enterprise £0.4 billion
Culture £0.3 billion
Agriculture £0.3 billion
Science & Technology £0.1 billion

Total Projected Expenditure
Adding these to the figures above, I conclude that the required budgeted expenditure of an independent Wales would be £20.5 Billion based on 2003/04 figures.