The Treasury and ministers in Cardiff Bay dispute the way Wales’ budget settlement is calculated The assembly government says it has been short-changed by hundreds of millions of pounds following the UK government’s Spending Review.
The Treasury says Wales’ budget will fall by £400m next year but Welsh ministers say it is nearer £900m.
Assembly ministers said Wales has fared worse than Scotland or Northern Ireland in the allocation of funds.
Welsh Secretary Cheryl Gillan has said the UK Spending Review was a “fair funding settlement for Wales”.
The Welsh Assembly Government cabinet is meeting early on Thursday to discuss the impact of the UK spending cuts.
By the assembly government’s own admission, the figures for ministers’ day-to-day spending are better than they had feared, with a small increase, in cash terms.
But it claims overall its budget will be cut by £1.8bn in real terms, taking inflation into account, over the next four years.
Ministers have called the Spending Review a “hammer blow for Wales” with cuts that were “too fast and too deep”.
The assembly government said: “They will endanger the fragile economic recovery and threaten devastating and long-term consequences for the most vulnerable people in our society.
“They will undoubtedly hit Wales harder than other parts of the UK because we are already underfunded, as recently demonstrated by the independent Holtham Commission.”
Ministers in Cardiff Bay claim the Treasury in effect changed the goalposts when it came to allocating them their share.
Deputy First Minister Ieuan Wyn Jones told BBC Wales that Wales’ could see up to 25,000 public sector job losses over four years with the same number in the private sector.
‘Prosper’
However, Conservative and Welsh Lib Dem politicians say the settlement, while tough, should not mean large scale cuts or job losses.
Cheryl Gillan told Radio Wales that Chancellor George Osborne had laid out a “spending plan for four years”.
She said: “There is safety and security in the stability of the economy and that is the background against which business can do well, jobs can be created and the Welsh economy can prosper.”
Welsh Lib Dem finance spokesman Peter Black AM said: “The [UK coalition] government has in place plans to try to bring jobs and improve the economy and I’ve seen projections that the economy may take a small hit but we will avoid that [double dip] recession.”
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