Wales budget: Public spending cuts will ‘pile more pressure on those struggling' warns charity

A leading charity has described the Welsh Government's draft budget as "sobering" and said it will "pile yet further pressure" onto people already struggling with the cost of living.

Oxfam Cymru voiced its concern after the draft budget revealed long-anticipated cuts across most areas of the Welsh economy.

The charity urged the next first minister to prioritise "tackling the country's shameful and stubbornly high poverty rate."

It said dealing with the issue would require "a bold, comprehensive and binding strategy which sets out clear targets and timescales."

Oxfam Cymru was amongst numerous organisations across different sectors in Wales reacting to the draft budget, which was unveiled on Tuesday by Finance Minister Rebecca Evans.

Health and local councils are the only areas which will not be hit by cuts in the year ahead.

Widespread cuts were expected after First Minister Mark Drakeford confirmed inflation means the Welsh Government budget is worth £1.3 billion less than when it was originally set.

Finance Minister Rebecca Evans had warned of "tough decisions" ahead of delivering the draft budget.

The UK Government laid out the 2024-25 budget for Wales in 2021, prior to inflation soaring into double figures.

The Welsh Government criticised the Conservatives in Westminster, who they said could have given Wales greater priority when Chancellor Jeremy Hunt unveiled his Autumn Statement in November.

The core Local Government Settlement, which funds things like schools, is getting a 3.1% uplift.

However, education is not immune from cuts, with reduced spending on the Apprenticeship Programme, although there will be more funding for higher education but students going to university will have to pay more.

Colleges Wales said the draft budget announcement was a “devastating blow to apprentices, employers and communities."

Teaching union NASUWT Cymru was critical of the UK Government for not providing more money.

It said: “Whilst the Welsh Government is trying their best to protect key public services, including schools, their efforts are being significantly hampered by the Westminster Government’s continued real term cuts to funding for Wales, which are a direct consequence of political choices made in London."

It added: “A 0.9% increase in funding for Education and Welsh Language is wholly insufficient in the face of rising levels of need and increased real terms cost pressures. As a bare minimum, funding should increase with inflation."

The Association of School and College leaders welcomed "attempts to protect the education budget," but said the "very difficult financial position" many Welsh school are in will not "change as a result of today’s announcement."

The Local Government Settlement will also affect the homelessness services provided by councils. Tuesday's budget ensures no local authority will see an increase lower than 2%.

However, spending remaining the same on the Housing Support Grant amounts to "a real-terms cut" in funding, according to the Chartered Institute of Housing Cymru.

Describing the budget as "disappointing," the Institute warned it "could impact work to tackle homelessness in Wales."

With the use of temporary accommodation rising in Wales, it said now was not the right time to keep funding at the same level.

The institute said more than 11,000 people, including 3,500 children, are in temporary accommodation across Wales.

It said: "The best way to reduce the use of temporary accommodation is preventing homelessness in the first place."

Cymorth Cymru, a representative of groups housing some of the most vulnerable people in Wales, also said the draft budget is "bad news for homelessness and housing support services across Wales," which it warned could have "devastating consequences."

Hospitality is an area which came off poorly from the budget, with hikes in business rates.

Business rate relief for pubs, restaurants and shops - brought in during the pandemic - will be cut from 75% to 40%. It means they will have to pay higher taxes, with less of an exemption than previously.

Business rate relief remains at 75% in England.

The Welsh Independent Restaurant Collective said the change will put hospitality businesses in Wales at a "direct disadvantage" to those across the border.

It added: "Many of us will already be facing rent hikes, crazy energy bills, [the] ongoing cost of paying off Covid loans and of course the massive increases in wages since 2019," and said "Good luck to us all, it’s going to be a very tough start to the new year."

According to the Welsh Retail Consortium (WRC), the picture in their sector is not much brighter, although there is some cause for optimism.

The head of the WRC, Sara Jones, said: "The Welsh business rate will move to a 25-year high and a fifth higher than at the start of the previous decade, and is higher than anywhere else in Great Britain."

She added: “Whilst we are encouraged by the Finance Minister’s recognition of the challenges faced by the retail industry it is vital that decision makers use all levers available to reform the rates system and keep the cost of doing business down by removing unnecessary burden."

Ms Jones said "further support" will be needed "in the short to medium term" to help retailers manage costs and to "keep down prices for consumers."

The UK Government said: "The Welsh Government bears ultimate responsibility for the decisions that it makes today on spending.

"It can choose where to allocate its resources in devolved areas as it sees fit, and it is accountable to the Senedd and the people of Wales for those choices. This is an important principle of devolution."

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