Money for buildings and other infrastructure in Wales could be cut by as much as £30m within the next year because of UK government defence plans, the Welsh government has estimated.
On Tuesday the Welsh government said that it expects to lose money from its £3.7bn capital budget because of the Defence Investment Plan – but it was not clear how much.
The Welsh government said it expects further cuts in further years with a “direct impact for schools, hospitals and transport”.
If £30m was cut, that would be about 0.8% of the capital budget, but current figures suggest all bar £29,000 is allocated under existing plans.
The UK government said any changes to the Welsh budget would be “minor”.
A Welsh Labour source close to the UK government described the cut as “minuscule” on Tuesday.
In a letter to the Welsh Secretary Jo Stevens, First Minister Rhun ap Iorwerth said his “capital budgets are facing cuts this year and in following years to fund the Defence Investment Plan (DIP)”.
It followed an announcement from the Prime Minister, Sir Keir Starmer, who said a £15bn increase in military spending will be funded by cutting investment budgets in other areas.
The Welsh government’s budget is mostly funded by the UK government, based on a calculation of what is spent on public services in England.
If budgets are cut in England, that can mean less money for Welsh ministers.
The Welsh government said that its own estimates were that, if a 1% cut to UK government capital budgets was applied evenly across all UK departments, it would lead to £25m-£30m less in the capital budget this financial year.
They said they expect further reductions in future years up to April 2030.
“This would cumulatively be significant for the Welsh government’s budget with a direct impact for schools, hospitals, and transport connectivity,” the Welsh government said.
“We are also mindful that the UK government has indicated there is a further £4.7bn to be found at the autumn budget – so this is the minimum cuts we expect to face – and could be much larger.”
As things stand, the Welsh government has not said how it might find the extra money from its capital plans to cope with the savings.
For comparison, £25m is the amount ministers plan to spend on surgical and diagnostic hubs.
On Tuesday, Elin Jones told a committee the Welsh government was “close to committing the entirety of the capital budget”.
She has said that only £29,000 is left in capital from her mid-year budget, which will be voted on by the Senedd on 14 July.
But she said there was a reserve of £50m that the Welsh government has access to, “if there were issues that needed to be dealt with additionally within the financial year”.
A Welsh Labour source had said on Tuesday that Plaid’s response “to safeguarding the country’s defences is disappointing but not surprising”.
“Protecting the public should be the first priority of any government, and they should never play fast and loose with national security.”
A UK government spokesperson said: “The £298bn Defence Investment Plan is about keeping people across the UK, including in Wales, safe.
“People in Wales will benefit from higher defence spending through strengthened national security and thousands of skilled well-paid jobs in our crucial defence industry.
“The Welsh government was engaged on this matter in line with existing protocols, including a confidential briefing prior to the announcement, with the view that governments across the UK should work together on matters of national security.
“Any changes to the Welsh government’s budget to contribute to our shared objective of keeping Wales safe would be minor compared to the largest settlement in devolution history secured for this spending review, including nearly £6.5bn in additional spending power for the Welsh government.”
