Rows over austerity not gone away

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Media captionDavid Phillips of the Institute for Fiscal Studies said ministers face difficult choices

Austerity has fallen off the news agenda lately with Brexit taking the top spot unchallenged.

But the two issues have come together with the latest report by the Institute of Fiscal Studies into financial prospects for the Welsh Government.

An IFS report has a degree of importance because of the way the figures tend to be used as a benchmark.

Many of the points were familiar, such as the degree of vulnerability of some public services if a number of expensive ones are protected.

So for example if the Welsh government gives health a 2% real term increase every year and protects social services and schools, then unprotected areas like higher education and the environment face cuts of 18% over the next three years.

Budgets

What brought things bang up to date was Brexit. The IFS says the Welsh Government will have to find £500m a year to make up for the loss of EU funds. If ministers have to fund that money from their own budgets then the cuts will be higher.

Of course we are expecting the UK government to make up much of that loss. The extent to which it does so will be a matter of intense debate.

The other point to make on Brexit is that the IFS's figures are based on George Osborne's plan to balance the nation's books by 2020.

We now have a new chancellor who has hinted strongly that he will take a different attitude to austerity because of Brexit.

We won't know how different his attitude will be until the autumn statement in November but the key point from the IFS is that even if Phillip Hammond delays all departmental budget cuts for the next three years, the Welsh government would still face tough choices.

Health

On the previous model of increasing health by 2% and protecting social services and schools, it would still leave cuts of 8% in other services.

In other words, even if austerity comes to a temporary but dramatic halt later in the year then it still won't be an easy ride.

The failure to fully protect health budgets at the beginning of the last administration created an almighty political row.

It is difficult to see the same thing happening again, which means that local authorities are likely to be facing the brunt of the bad news.

Ministers insist things have not been as bad for local authorities in Wales as they could have been but nevertheless I'm told there's intensive council lobbying of the Welsh Government to give them a break, particularly with local authority elections round the corner.

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Media captionAlun Cairns says the Welsh Government should be 'scaling back' the number of 'bureaucrats'

In the meantime, Welsh Secretary Alun Cairns dished out some advice by calling on Welsh government to off-load civil servants in the same way that Whitehall has.

That provoked a testy response from the Welsh government, saying Mr Cairns should get his facts right, claiming that the civil service headcount in Cardiff has already been reduced significantly.

So a reminder then that while the debate surrounding austerity may have dropped off the radar, it hasn't gone away.

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