Public services investment call

There are fears the economic downturn could cost Welsh budgets �500m

Trade unions say investment in public services must continue if Wales is to fight its way out of the recession.

It follows warnings from Finance Minister Andrew Davies that the economic downturn could hit assembly government funding further.

It is feared budget cuts could reach an "unprecedented" �500m in 2010.

But Unison's Welsh secretary, Paul O'Shea, has insisted that the public sector remains the "engine room" of the Welsh economy.

"If communities lose public sector jobs, then people stop spending. If people stop spending, then manufacturers stop making things - it's a vicious circle," said Mr O'Shea.

"The public sector is the engine for recovery in this recession."

His comments came after the finance minister told BBC Wales' Dragon's Eye programme that the years of growing budgets to spend in Wales were over.

He put the current assembly government budget growth at around 1.8%, down from 7% for the first four years of the assembly.

"The growth is slowing down, and in the future it may well be reductions, rather than growth," said Mr Davies.

"Clearly as finance minister I have been saying consistently for around 18 months now the years of plenty have come to an end, and we need to be planning for some lean years coming ahead."

'No increase'

Chancellor Alistair Darling announced in his pre budget report (PBR) that to pay for the increase in UK government spending to combat the downturn, value-for-money savings of �5bn would have to be found in 2010-11.

We now have real worries that it will be frontline services that face the brunt of cuts in Wales Mark Serwotka, PCSU

Balancing the books on underspends for NHS capital projects in England could also sting the Welsh health service to the tune of �75m.

Welsh ministers have been told that, at a minimum, they will receive no increases to their budgets for 2010-11.

Mr Davies has told the cabinet that the PBR has "set a challenge" for the assembly government.

Banks

But Mark Serwotka, general secretary of the Public and Commercial Services Union, said the assembly government should not automatically accept budget reductions.

"It is a matter of political priorities and political will," said the union leader.

"There should be a united front with politicians in Wales and unions to argue in Westminster that the cuts should not be made."

Instead, Mr Serwotka said there should be increased investment in major public sector projects as a way of stimulating growth and jobs in Wales.

"I think it resounds with the public that when it came to the banks and the financial system, they were able to find incredible amounts of money," said Mr Serwotka.

"We now have real worries that it will be frontline services that face the brunt of cuts in Wales, in health, education and social care.

"This is going to have a much bigger impact on the Welsh economy."

Despite the downbeat assessment on future assembly government budgets, the finance minister said the Labour-Plaid Cymru coalition was still committed to delivering its One Wales programme.

He also said it was too early to talk about cuts to particular services.

'Gimmicks'

But his comments have angered political opponents, both Conservatives and Liberal Democrats.

Conservative finance spokesman Nick Ramsay AM said: "As the consequences of Gordon Brown's recession hit Wales, the Labour-Plaid government needs to prioritise spending on key areas instead of on expensive pet projects and gimmicks."

Kirsty Williams, the Welsh Liberal Democrat leader added: "By wasting money on gimmicks in times of plenty, the outcome of this is that Wales will now face even longer waiting lists, less repairs to school buildings, council tax rises and all-round cuts in public spending."

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