Budget 2023: What does it mean for Wales?
Many of the changes announced by the Chancellor of the Exchequer will directly affect us in Wales: things such as the energy bills cap, an end to higher charges for those on pre-payment meters, the freezing of tax on fuel. Others are the responsibility of the Welsh Government which doesn’t have to follow suit.
Changes to welfare rules and payments to encourage more people to return to work will affect thousands of claimants in Wales, both in terms of new sanctions as well as new incentives.
His decision to reduce the tax paid on draught beer and cider in pubs should benefit pubs in Wales. It will see tax on supermarket booze at a higher level than that sold in pubs, but that’s the effect anyway of the Welsh Government’s minimum unit alcohol pricing rules which means shops can’t sell booze for cheaper than 50p a unit.
Welsh Government budget
Spending decisions by the UK Government for policies in England trigger increases in the overall budget for the Welsh Government, which isn’t obliged to spend that money on the same things.
As a result of this budget, there’s £180m directly for the Welsh Government set out in the budget, added to its £23bn budget. That’s not a gift, rather it’s what the UK Government would have spent in Wales if there were no devolution.
The UK Government says that’s on top of an already announced increase of £1.2bn in the Welsh Government budget over the next two years.
However that amount is less than the effects of inflation. According to Cardiff University's Wales Fiscal analysis, even after the increase of £1.2bn announced in November, inflation will mean an effective reduction in spending power of £1.4bn - £800m in 2023/24 and £600m in 2024/25.
Childcare
Jeremy Hunt announced major changes to the childcare system in order to encourage parents back into work.
Childcare itself and the rules around it are devolved, meaning it will be up to the Welsh Government to decide if it will change the staff-child ratio and follow suit in providing incentive payments to people becoming child minders.
The biggest change came on the offer of free childcare in England. The Chancellor said he would gradually introduce 30 free hours a week for parents of children over nine months.
Currently, free provision in both Wales and England is 30 hours a week for working parents of three or four year olds unless a parent earns more than £100,000 a year, although in Wales the offer is for 48 weeks of the year compared to 38 in England.
Nuclear power
Categorising nuclear power as “environmentally sustainable” will be controversial with those who are opposed to expanding nuclear power but the Chancellor says it will open up nuclear power developments to similar incentives as renewable power.
He pointedly mentioned Ynys Môn because that’s where there is a strong campaign for a new nuclear power station to be based, on the site of the Wylfa power station, so it’s seen too as a boost for that campaign.
Investment zones
Jeremy Hunt said too that there will be 12 “investment zones” across the UK. Similar to free ports, investment zones would bring tax breaks and other measures to encourage businesses in those zones.
He announced eight in England and promised that there would be “at least one” in Wales. The UK Government says it will work with the Welsh Government to deliver that promise.
Reaction in Wales
The budget has received mixed reaction from the political parties here in Wales.
It was warmly welcomed as “a budget that will deliver growth and prosperity for families and businesses,” by the Welsh Conservative Shadow Finance Minister Peter Fox MS.
He added: “This is a UK Government which is helping the lowest paid in society to stay in work and be a part of the team to continue our economic growth following the pandemic and Putin’s illegal war in Ukraine.
“Once again, it is the Conservatives who are working to deliver on the people’s priorities, growing the economy and making sure hard work pays off.
“Now it is the turn of the Labour Government in Wales to fully use the additional funding to provide the same expanded childcare offer as England, guaranteeing that people in Wales have the same opportunity to reach their full potential.”
Labour’s Shadow Welsh Secretary, Jo Stevens MP, said: “With this budget, the Tory government had the opportunity to unlock Wales’s promise and potential, but instead chose simply to paper over the cracks of their 13 years of economic failure.
“With our mission to secure the highest sustained growth in the G7, a UK Labour government will work hand-in-hand with the Welsh Labour government to create good jobs, productivity and growth right across Wales.”
Plaid Cymru’s Treasury Spokesperson, Ben Lake MP, welcomed the extension to the Energy Price guarantee for three months but said it was “disappointing that the Chancellor failed to extend the Energy Bills Support Scheme or the Alternative Fuel Payments in today’s Budget."
“By opting for the status quo, the Chancellor has missed an opportunity to offer much needed support to off-grid households, and families that are already struggling with higher living costs.”
He also said: “It is surprising that no commitment was made to ensuring fair pay increases for our public sector workers, and it is appalling that no mention was given in the Chancellor’s speech to improving digital connectivity.”
Welsh Liberal Democrats leader Jane Dodds MS said the budget showed that “the Conservative party is completely out of touch.”
She added: “This was an opportunity to cut energy bills and give households a real helping hand. They could have borrowed Liberal Democrat plans to cut bills by an average of £500.
“Likewise, there is nothing here to future-proof homes against future energy price rises. Wales and the UK has some of the least energy-efficient homes in Northern Europe. Without a real insulation programme families will remain vulnerable to price shocks.
“Beyond the energy crisis the UK Government has continued to deprive Wales of billons of pounds in HS2 funding it is owed, setting up our poor public transport systems for continued failure.”
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