Chancellor Jeremy Hunt unveils investment in Wales in last budget before general election

• Jonathan Hill breaks down the headlines from today's budget

If there was any doubt this was one of the most political of budgets, Jeremy Hunt made it clear that as well as setting out spending plans, he was creating political dividing lines.

Tax cuts are designed to persuade doubtful voters it is worth sticking with the Conservatives in this year’s UK General Election, while moves such as scrapping non-dom status aim to make spending pledges difficult for the Labour Party.

It can be difficult to untangle what it all means for us here in Wales, particularly because many of the commitments spelled out by the Chancellor are in areas devolved to the Welsh Parliament and Welsh Government.

Here are the main headlines:

• Tax cuts

The main personal tax cut - 2p off national insurance, which is paid by everyone in employment - will affect more than 1.2m people in Wales, according to the UK Government, which says it will add an extra £640 a year “back into the pocket of Welsh workers” combined with the 2p cut announced at last year’s Autumn Statement.

But even with today’s announcement, overall taxes are still higher than they have been since records began 70 years ago, according to the respected Institute for Fiscal Studies.

Freezing the planned increase in alcohol and fuel duty will be welcomed by drinkers, landlords and motorists but neither will lead to a reduction in prices - rather avoid further increases.

When it comes to overall spending on public services, the Chancellor said planned growth in day-to-day public spending will be kept at 1% in real terms but the Government will “spend it better” with a new “productivity plan.”

It had been thought he might cut spending to 0.75% so that change will be welcomed, but inflation and rising costs continue to eat into the value of funding for all public services.

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I put the accusation that the overall tax burden remains the highest it has ever been to the Chancellor's second-in-command, the Chief Secretary to the Treasury Laura Trott.

She said: “I disagree with that Adrian. I think it's really important to take a step back and think about what's happened in the last few years.

"We've had to spend, we wanted to spend £400bn supporting people through Covid, through schemes like furlough; we spent around £100bn pounds helping people with Putin's energy, price shock. Those things have to be paid for, so we had to take some difficult decisions.

But she added: "The economy's turning a corner. We've seen inflation come down from 11% to 4%. The OBR says that we're going to reach that 2% target a year faster than we thought previously, so what we're doing in a responsible way, is starting to reduce people's taxes.

"This will mean that if you're an average earner, you will have the lowest effective tax rate since 1975. From April, a full time national living wage worker's take -ome pay will be 35% greater in real terms than in 2010 due to changes in national living wage, personal taxes and thresholds.

"This is a really significant change for people on average and lower incomes particularly.”

What does the Budget mean for families and consumers? ITV Wales journalist Megan Boot reports.

• Welsh Government funding

There’ll be an extra £170 million going to the Welsh Government as a result of announcements spelled out in this budget.

Conservatives will put pressure on Labour ministers in Cardiff to commit to spend on similar things and straight away Peter Fox, the Welsh Conservatives’ shadow finance minister said: “It’s now vital that the consequential funding from this budget is spent on fixing Wales’ public services, not diverted by the Welsh Government into Labour and Plaid Cymru’s pet projects.”

However, the Welsh Government does not have to follow suit. It also says inflation and UK Government spending squeezes have eaten into the Welsh budget by more than £1 billion, making £170 million a drop in the ocean.

It gets around £18 billion from a combination of UK Government funding and the taxes it raises here in Wales but it’s entirely up to ministers in Cardiff what they spend it on.

• Wylfa

Mr Hunt also said the UK Government has reached agreement on a £160 million deal with Hitachi to purchase the Wylfa site on Anglesey.

That will be welcomed by campaigners for a new nuclear power station to be built on the site, but it’s only a step in a long journey. The site has been identified as a potential location for a new nuclear plant since 2008 and previous plans fell through.

Following the government's purchase of the site, Labour's Shadow Welsh Secretary Jo Stevens said: “A belated purchase is one thing but without a timeline and process for new nuclear at the site, it is more jam tomorrow from this tired government.

“We have lost five years since ministers watched the last project fall apart. That project would have been 50% completed by now, and we’d be seeing the benefits of thousands of construction jobs with 900 permanent jobs on the way.

“The fact is, this government’s dither and delay with Wylfa is just one more example of 14 year of Tory economic failure.”

• Second homes

The Chancellor says he will scrap tax breaks which make it more profitable for second home owners to let out their properties to holiday makers rather than to long-term tenants to rent. Mr Hunt said he will abolish the furnished holiday lettings regime.

Under the Furnished Holiday Lets regime, there have been tax reliefs for furnishing holiday properties and reductions in capital gains tax on properties that are available for holiday letting for at least 210 days a year.

This change will affect second home owners here in Wales, adding to measures already in place here which mean they face higher bills as part of efforts by the Welsh Government, supported by Plaid Cymru, to prevent people living in popular coastal and countryside areas.

Holiday let owners now have to pay council tax instead of business rates unless they fill the property for 182 days instead of the previous 70 days. At the same time, councils here in Wales can charge up to 300% council tax for second or empty homes. Most local authorities are imposing the council tax premium.

• Vaping

A one-off levy on the import and manufacture of vape products will, as well as raising hundreds of millions of pounds for the Treasury, be part of UK-wide attempts to crack down the growing use of vapes amongst children and young people.

It was announced last year that disposable vapes will be banned across the UK, to protect the increasing number of children using them. The Welsh Government is introducing the same ban as in the other nations of the UK. It is also supporting the UK Government plan to increase the legal age for smoking and vaping by a year every year until eventually both will be illegal.

• Theatr Clwyd

Other announcements directly affecting Wales include £1.6 million towards funding the renovation of Theatr Clwyd in Mold. This money passes through the Levelling Up Fund which enables the UK Government to direct funding to local projects in Wales without involving the Welsh Government. The total cost of renovating the theatre is thought to be around £50 million.

There’s similar funding to Rhyl which will receive £20 million from the Twins fund, £10 million for Venue Cymru in Llandudno and £5 million for culture projects in Newport.

• Political response

The UK Government’s Welsh Secretary, David TC Davies said that “This is a hugely significant Budget for Wales which signals this government’s continued ambition to deliver for people across the country.

“The acquisition of Wylfa as a site for new nuclear development is fantastic news for Anglesey and the wider Welsh economy. It’s the next step on our path to an energy secure and net zero future, while also laying the foundations for a huge economic boost.

“Over 1.2 million working people in Wales will benefit from today’s announcement of a National Insurance cut and families will be better off as we raise the threshold for claiming Child Benefit.”

Welsh Conservative Leader Andrew RT Davies welcomed the budget as he said: “This is a budget that will get Wales moving.

“While Labour in Wales’ budget is characterised by cuts to key areas to fund pet projects, the UK Conservative budget is delivering on the people’s priorities.

“The choice in front of us is clear: stick with our plan, or go back to square one with Labour.”

However, First Minister Mark Drakeford said the Budget offered "no new money" for Wales.

He said it contained "only previously announced schemes along with tax cuts that make little difference to those most in need."

Reacting to the Budget on social media, Mr Drakeford added: "Nothing announced by the Chancellor changes the fact that real incomes will not have risen at all during this parliament."

Responding to the Budget, Plaid Cymru’s Treasury spokesperson Ben Lake MP said: “The Chancellor’s Budget confirmed suspicions that the Government has little intention to address the many pressing issues facing society."

He added: “Rather than tackling this long term weakness in the UK’s economy, the Chancellor prioritised the short term electoral fortune of the Conservatives.”

Welsh Government Finance Minister Rebecca Evans said Mr Hunt had "failed to provide the critical investment that is needed in the health service and in schools."

Ms Evans added the Welsh Government had taken "difficult decisions" following a "poor settlement [of money] from the UK Government," and added the chancellor had "failed to present a convincing plan for growth that backs Wales' economic potential in a fairer UK economy."

The finance minister, who is the MS for Gower, also said: "Yet again our call for an Essentials Guarantee to ensure that people on Universal Credit can meet their essential costs was not heeded by the Chancellor. Instead, he has chosen to cut employee National Insurance Contributions by 2p."

“Apart from a few small announcements, there was nothing in this Budget for Wales. Our core priorities for UK Government investment in coal tip safety and re-classification of HS2 have, once again, been ignored," she added.

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