The Human and Social Impact Could Be Both Devastating and Wasteful ... the Real Cost Could Be with Us for Generations; CUTS BIGGEST CHALLENGE SINCE DEVOLUTION, WARNS CARWYN

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FIRST MINISTER Carwyn Jones last night presented his "urgent" vision for how Wales can weather the coming cuts and survive the "biggest challenge since devolution began".

In his first major response to the Comprehensive Spending Review, the Labour leader promised "radical change" to reduce costs and improve services.

Speaking ahead of the draft budget published on November 17, he warned of the storm ahead, saying: "The human and social impact could be both devastating and wasteful: the real cost could be with us for generations."

The Bridgend AM is braced for pounds 860m cuts next year. By 2014-15 the Assembly Government budget will be pounds 1.8bn less than it is today.

Fearing that households across Wales will be pushed into poverty, he said services will have to "intervene earlier and more effectively to break the long-term cycle of deprivation, ill-health and low skills".

Mr Jones said the Assembly Government was "reviewing which local government services are best delivered locally, regionally and nationally".

But he dismissed any suggestion that flagship policies such as free prescriptions will be ditched, saying: "[We] have been planning for a long time for this budget. We have confirmed our commitment to keep our job-creating capital investment programmes this year...

"We have been clear that we will be protecting investment in schools, skills and healthcare, and we remain committed to maintaining progressive universal entitlements - including the successful concessionary fares scheme, free prescriptions, free swimming and free breakfasts and milk for primary school children.

We are committed to ensuring that our budgetary decisions do not disproportionately impact on our least-advantaged people."

The First Minister's speech came as a new analysis by the House of Commons library suggested Wales was liable to lose 27,800 public sector jobs over the next three years.

The paper also revealed that 5,000 private sector jobs have been lost over the past year, casting doubt on Government claims that the private sector can create jobs to make up for losses in the public sector.

Pontypridd MP Owen Smith, who commissioned the research, said: "Wales will be hit harder than anywhere in Great Britain.

"There will be more job losses in the public sector, fewer jobs likely to be created in the private sector and more people on benefits - the legacy of our industrial past - being asked to pay the price for a recession caused by the casino banker pals of the Conservative Government."

Mr Jones meanwhile left his audience in no doubt that he believed that the Conservative-Liberal Democrat Westminster Government has taken the wrong approach to cutting the deficit.

He said: "We did not need to be where we are. I believe the UK Government is going too far and too fast with its spending cuts.

"They will undermine fragile economic recovery within Wales, and undermine our last 10 years of investment in schools, hospitals and critical infrastructure. …