£45bn Mini-Budget tax cuts money could have ‘levelled-up’ Wales, says think-tank

Measures in Friday’s ‘mini-budget’ are a ‘generational missed opportunity,’ and the ‘eye-watering’ £45bn in tax cuts could have been used to truly ‘level-up’ Wales, think-tank the Institute of Welsh Affairs (IWA) has said.

“We believe that communities across Wales desperately need government investment in the things that were lost in the austerity era such as bus routes, community centres, and hubs on their high street such as libraries,” the IWA said.

“New ideas such as government-backed remote working hubs on high streets can also help to rejuvenate people’s places. Public services are also struggling under the strain of an ageing population, shrinking working-age population, and a decade of below real-terms funding increases and pay rises.”

The IWA stressed the ‘terrible impact’ of the mini-budget has had on the financial markets, which is “already intruding on people’s lives, with first-time buyers seeing their mortgage offers withdrawn as banks reel from the impact of panicking markets”. 

“However, perhaps the greatest regret is the opportunity cost of this investment. The IFS [Institute for Fiscal Studies] estimates that the Chancellor’s tax cuts will cost £45bn a year, an eye-watering amount that, if invested wisely, could truly ‘level up’ Wales and other nations of the UK in a tangible, visible manner.” 

‘Badly-targeted cut’

Investment could have been made in things that actually spur long-term increased productivity and economic growth, the IWA said. 

“Instead, the UK Government has chosen to row back on long-term stability for the NHS and other public services via the NI rise, to pursue an expensive and badly-targeted cut in the basic rate of income tax, and a wholly unjustifiable tax cut for those on the highest incomes at a time when many people in Wales are struggling to make ends meet.  

“The annual £45bn cost of these tax cuts could change the course of the country and many people’s lives. The UK Government should reconsider its direction and seek to prioritise investment in a strong, green, and successful economy for the United Kingdom rather than tax cuts that disproportionately favour the wealthiest.”

‘Economic fallout’

The IWA’s Auriol Miller said: “The economic fallout from the mini-budget speaks for itself. The priorities of all the governments of the United Kingdom should be delivering for people and investing in a public realm that was so critically eroded during the austerity era.

“An eye-watering £45bn annual spend could be put to much better use than tax cuts that disproportionately favour the wealthiest. ”

Chancellor Kwasi Kwarteng’s economic policies have attracted fierce criticism, most notably from the International Monetary Fund, and the Bank of England have had to intervene to steady a part of the financial markets.

Parliament must be recalled after the Bank of England intervened to offset UK economic instability caused by “right-wing economic fantasists,” Plaid Cymru has said.

Mini-budget defence

Prime Minister Liz Truss has insisted the Government’s tax-cutting measures are the “right plan” in the face of rising energy bills and to get the economy growing despite market turmoil sparked by the Chancellor’s mini-budget.

Welsh Secretary Robert Buckland has urged people to remain “calm” amid the turmoil sparked by the Government’s mini-budget announcement.