GLEE, sorrow, calm satisfaction, anger, disappointment, and smug self-satisfaction: the responses of Wales’s politicians to Rachel Reeves’s budget speech were as you might expect.
Labour concentrated its messaging on the measures that appeal most to its base, or at least Labour in Wales’s perception of its base:
- More money for the Welsh Government
- An increase in the National Minimum Wage
- Gestures towards renewable energy
- Investment in infrastructure
- Soaking business owners for cash
- Clobbering farmers
Welsh Liberal Democrat MP David Chadwick said: “The Chancellor chose to increase taxation for the small businesses that are the lifeblood of the Welsh economy instead of aiming for the enormous profits of the banks, oil and gas giants and big tech.
“The Chancellors Family Farm Tax risks being a death knell for local farmers who have already faced attacks on their livelihoods by the Welsh Labour Government, who have shown time and time again they have no understanding of the rural economy or the work that goes into making sure the public have food on their plates.”
THE DIVISION OF THE SPOILS
It’s important to qualify the claims that more money will necessarily go to the crisis-stricken Welsh NHS. The Welsh Government’s budget settlement from Westminster will rise to £25bn next year, an increase of £1.7bn on the previous year. However, it is up to the Welsh Government to decide where it spends the proportion of that money that consists of extra NHS funding for England delivered as a consequential payment for Wales.
The Welsh Government faces competing claims for a share of the spoils from other parts of its budget.
After previous protests about cuts to the agriculture budget and the content of its Sustainable Farming Scheme, the Welsh Government might decide to tread carefully before throwing the Rural Affairs budget under the bus again. That’s particularly pertinent as Eluned Morgan’s administration faces an election in less than eighteen months.
Add in the prospect of Labour’s tax raid on family farms, and the agriculture industry could rise again to disrupt the Welsh Government and give it cause to think again. Plaid Cymru, the Welsh Conservatives, and the farming unions have already sounded war drums over the issue.
Against that, Labour might calculate that voters in its heartlands will take one look at farmers sitting on a potential £1m in tax-free assets and decide the political risks of a countryside in revolt are worth risking.
THE BENEFITS OF LABOUR FOR LABOUR
To allow Labour in the Senedd to claim a benefit to Wales in having Labour in power in Westminster, the Chancellor announced £25m in funding to tackle the problems of coal tips and a plan to right the injustice of the government trousering the surplus from the Miners’ Pension Scheme.
It has been assessed that it would cost £600 million to clear up coal tips completely.
The latter means a boost to the annual pensions of 112,000 former mineworkers by just under a third: an average increase of £29 per week for each member.
Eluned Morgan said: “Over the past fourteen years, the Welsh Government has tried again and again to have productive conversations with our UK counterparts. It has been like wading through mud.
“Meaningfully engaging with the UK Government in this process shows once again that this UK Government respects devolution, and our two Governments are working together to deliver for the people of Wales.
“We knew that this Budget, tough choices would have to be made. But Rachel Reeves has set out her plan to fix the foundations of the economy, and look to the future.”
The Welsh Government’s Finance Secretary, Mark Drakeford, saw only good things in the Budget.
He said: “It marks the first steps in the right direction after 14 years of economic mismanagement by previous UK governments and the impact its decisions have had on people and communities.
“It is clear the Chancellor is listening to what Wales needs. I look forward to working with the UK Government on our other priorities, including securing fair funding for rail.”
Ah, the fly in the ointment.
Labour screamed blue murder about £4bn the Conservatives owed from HS2 funding. As soon as Labour looked likely to win an election, those screams became whimpers, then whispers, and now the Welsh Government doesn’t like talking about it at all.
Their position contrasts with that of every other party in the Senedd. All of them, including the Welsh Conservatives, have been vocal and consistent in calling for consequential funding for HS2 and the devolution of Air Passenger Duty. Labour in Wales was once as determined. It isn’t now.
MORGAN FAILS FIRST TEST OVER FAIR FUNDING
Rhun ap Iorwerth said it “blew a gaping hole” in Eluned Morgan’s promise that having two Labour governments working together would benefit the people of Wales.
The Plaid Cymru leader said: “People will not be fooled by the Chancellor’s claim that this is a Budget that spells good news for Wales.”
Mr ap Iorwerth continued: “The Welsh Budget for this year is already worth £700m less in real terms whilst our councils face a shortfall of more than half a billion.
“First Minister Eluned Morgan claimed that she was ‘pushing hard for HS2 cash’. It’s now clear that she didn’t push hard enough. This was the first test of the First Minister’s leadership – a test which she has failed.
“As England is promised further rail electrification, Wales is still saddled with twentieth-century infrastructure – an injustice that Labour has no interest in addressing.
“Our nation is still being short-changed to the tune of billions. No end to the unfair Barnett funding formula, no U-turn on the winter fuel allowance, no plan to scrap the cruel two-child benefit cap, and no let-up for the small businesses already being hit by Labour in Wales.
“The Chancellor had an opportunity to chart a new course, but instead, she blew a gaping hole in the promise that having two Labour governments working together would benefit the people of Wales.”
A ‘SMASH-AND-GRAB’ BUDGET
Welsh Conservative leader Andrew RT Davies said, “Labour’s smash-and-grab Budget will have a devastating impact in Wales.
“This Budget is built on the back of keeping pensioners cold this winter, and the rise of national insurance will be an incredibly destructive jobs tax for Wales’ economy, which is already struggling after decades of labour rule.
“Nobody is surprised that the UK Labour Government has cut business rates relief, just as they have done in Wales. Just like their assault on rural communities in Wales, Labour’s change to inheritance tax rules risks marking the end of the family farm.
“While extra money for our health service is always welcome, it must be ringfenced to cut NHS waiting lists. However, the lack of money for social care reform is a worrying omission from this Budget and is, in effect, kicking tough choices into the long grass.
“The Welsh Conservatives will defend our businesses from tax raids and will always fight to keep pensioners warm.
“In the short term, we will provide a voice to those businesses that will close as a result of these measures, and the employees who will sadly lose their jobs.”
Welsh Conservative Shadow Minister for Finance, Peter Fox MS added: “This budget is nothing but a cash grab from Labour politicians who seem to love nothing more than spending other people’s money.
“Labour’s pledge to not raise tax on working people was clearly disingenuous at best. Tax rises affecting small businesses are most definitely taxes on working people, as is the new tax on the family farm, which will deal a crushing blow to rural communities across Wales.
“Labour Ministers in Cardiff Bay need to stand up for the people of Wales and not let their colleagues in Westminster continue to pick people’s pockets.”
