A stark divide is emerging in Wales between official economic indicators and the daily financial reality experienced by households across the nation. Despite falling inflation and interest rates, a deep-seated sense of insecurity persists, with the cost of living crisis becoming a structural problem rather than a temporary one.
Public Pessimism and Political Priorities
Recent YouGov research reveals growing public concern, with 35% of voters believing their financial situation will worsen over the next 12 months. This pessimism presents a critical challenge for the Welsh Government as it enters the final stretch of the current Senedd term. Voters are likely to judge success not on macroeconomic data, but on whether their own lives feel more affordable.
The question of what can be done is pressing. While many economic levers remain in Westminster, the Welsh Government commands a substantial £27bn annual budget. Critics argue that a recent opportunity was missed when £380m of unallocated funding was directed into health and local government as part of a Labour-Plaid Cymru budget agreement, rather than being targeted at the cost of living, which families cite as their main priority.
Targeting the Twin Pressures: Energy and Childcare
Analysis suggests that two areas dominate household budgets more than any other: energy and childcare. While transport is also significant, fuel bills and day care costs hit low-income households and families with young children hardest and fastest.
Wales has focused on long-term solutions like energy efficiency, spending around £100m per annum. However, this does little for those facing unaffordable bills today. A more direct intervention, some argue, would be a targeted energy bill credit, initially for households on Universal Credit and Pension Credit. Delivered via suppliers, this could immediately reduce fuel poverty with minimal bureaucracy.
On childcare, progress through the ‘Childcare Offer’ has been slow and has not addressed the most punitive costs for children under three. This remains a major barrier to work, particularly for women, stifling economic participation. Targeting provision in areas with the greatest need and lowest labour market activity could put money back into family budgets while boosting the economy.
Finding the Funds: The Unseen Billions in Government Spending
The inevitable question is how to pay for such support without pretending spare cash exists. The uncomfortable answer lies in examining the significant sums tied up in how the Welsh Government itself operates. Procurement consolidation, reduced agency spend, better back-office automation, and improved contract management are rarely political flashpoints, yet they offer the most realistic room for manoeuvre.
Procurement is a powerful example. Even a small reduction in costs—achieved through tighter controls, better data, consolidated contracts, and fewer low-value renewals—could release tens of millions of pounds. The same principle applies to central administration, consultancy, professional services, duplicated IT licences, travel, and corporate overheads. Firmer controls in these areas can free up resources without touching frontline services.
Here, technology moves beyond buzzword status. Advances in digital systems and artificial intelligence mean many routine government processes can be automated or streamlined, delivering services at lower cost and with fewer errors, not necessarily with fewer staff.
The potential prize is significant. A systematic reform driven from the centre could yield savings of around 5% of total spending over the next five years. This equates to over £1bn per annum—a fund that could be redirected to tackle fuel poverty and expand childcare, if made a priority.
A credible plan would start with what matters most and what can be funded first. As digital reform and smarter purchasing embed, the savings generated could then be channelled to where the pressure is felt most acutely in Welsh homes.
There is also a longer-term opportunity. By scaling up public involvement in renewable energy and securing a fair share of revenues from Welsh natural resources, Wales could begin to fund energy affordability from its own assets, helping to prevent future crises.
None of this is easy. It demands political discipline, a willingness to challenge established spending patterns, and an acceptance that reform is not painless. However, it demonstrates that Wales still has choices in addressing the cost of living crisis. The decisive question remains whether those in power are willing to make them.
