The way the Welsh Government spends public money is restricted because of the way it has to report to the UK Government, according to a report from the the Assembly’s Finance Committee.
The UK Government’s Budget Exchange System requires the Welsh Government to declare any planned underspends by November each year, in order to carry them over into the next financial year.
But a report from the National Assembly’s Finance Committee says the system is restricting financial flexibility in Wales, because it makes the Welsh Government less able to respond to unanticipated events and pressurises it into spending public money.
The report says that the system risks depleting Welsh Government reserves by creating pressure to spend remaining cash not declared as a planned underspend.
It also calls for the Welsh Government to take steps to improve the transparency and presentation of information associated with the budget process.
Plaid Cymru South Wales East AM Jocelyn Davies is the Finance Committee Chair.
She said: “In the current financial climate, it is more critical than ever that the Welsh Government is held to account for its budgetary allocations and plans.
“Therefore we urge it to negotiate with the UK Government for greater flexibility in its application of the Budget Exchange System so that possible underspends can be identified and declared as ‘planned’ by a much later deadline in the financial year than November.
“The tight economic and fiscal pressures put an even greater onus on Government to utilise public money effectively and, while we welcome the open and transparent approach with which the Welsh Government has facilitated our scrutiny of its first supplementary budget for 2011-2012, there is still room for improvement so that the figures are as clear as possible for scrutiny purposes.”