Page last updated at 14:31 GMT, Wednesday, 12 May 2010 15:31 UK

UK coalition: what now for Wales?

David Cornock looks at what the new coalition government means for Wales

By Mark Hannaby
BBC Wales

What will the Conservative-Liberal coalition government mean for Wales?

For the first time since devolution the Westminster government is of entirely different political colours to parties governing in Wales.

If its not yet possible to predict the full implications of that shift for Wales, then some of the areas where change may happen are already clear.

Most significant is surely the impact on funding for Welsh public services.

If spending decisions are made by the assembly government, then the Welsh block grant - the amount of money it has to allocate - is set by the Westminster treasury.

The Conservatives have pledged to cut £6bn in public spending across the UK this year and Wales will have to take its share.

In opposition they promised to give the Welsh government the option to protect this year's Welsh budget from its share of those cuts - estimated at around £220m worth.

When will cuts fall?

Cuts not sustained this year would be carried forward to the next.

The Conservatives say their offer regarding the cuts still remains but Plaid Cymru Leader and Deputy First Minister Ieuan Wyn Jones has publicly cast doubt on it.

He said: "I think there was an offer but I think it's been withdrawn. If they are going to cut £6bn from the budget this year they can't insulate Wales, Scotland and Northern Ireland from those cuts.

If they are going to cut £6bn from the budget this year they can't insulate Wales, Scotland and Northern Ireland from those cuts
Plaid Cymru Leader and Deputy First Minister Ieuan Wyn Jones

"I think its going to be extremely difficult to do those in year cuts because we've already set the budgets."

Conservative AM for Preseli Pembrokeshire Paul Davies said he was confident the new government would deal with Wales' need "very sensitively".

He said: "We'll need to see the details of any forthcoming budget... there will be difficult decisions to be made in the coming months... I'm confident that they will deal with Wales' needs very carefully indeed."

Welsh Liberal Democrat Leader Kirsty Williams and her colleagues are emphasising the positive implications for Welsh workers arising from what the coalition deal proposes about tax.

The Lib Dem policy on increasing the income tax threshold to £10,000 has been accepted as a "longer term policy objective".

She said: "This means over 200,000 people in Wales will pay no income tax at all and over 800,000 will get a £700 tax break."

The coalition has agreed to establish five year fixed term Westminster parliaments, meaning that the next scheduled UK election will occur in the same month - May 2015 - as an assembly election.

Wylfa power sation on Anglesey
Provision for new nuclear power stations is in the coalition agreement

It has also agreed to offer "a referendum on further Welsh devolution" though questions remain about how quickly the new government will facilitate a vote on full powers in devolved areas for the national assembly.

The Deputy First Minister has said he will demand assurances that the referendum will be held at a date of the assembly and Welsh ministers' choosing.

Those wondering about the prospects of a new nuclear power station for Anglesey to replace Wylfa might have been concerned by the coalition parties' differing perspectives on nuclear power, but the coalition agreement document makes provision for new nuclear construction to go ahead.

Nuclear power is opposed by the Lib Dems and the coalition parties have agreed to disagree on the issue.

A Lib Dem spokesman will speak against any nuclear planning statement but their MPs will abstain on that vote.

The person in charge of whether new nuclear plants are built, as Energy and Climate Change Secretary, will be leading Lib Dem Chris Huhne.

A spokesman for Horizon Nuclear Power, the company behind plans to build a new nuclear power station at Wylfa says that as far as they are concerned, and until they hear differently, government policy on nuclear energy has not been changed.

Bid for powers

Perhaps the first test of the relationship between the administrations in Westminster and Cardiff might be a renewed Welsh bid for powers to be transferred over housing.

The Welsh government intends to table the housing legislative competence order (LCO) again and demand it gets through parliament this time.

The LCO was rejected by the last Westminster parliament amidst Conservative concerns that it would facilitate the right to buy council houses.

Those concerns are unlikely to have disappeared so quickly, so it may be revealing to note the UK government's attitude to the bid for powers next time.

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