Statement shows ‘compassionate UK Conservative Government,’ say Welsh Tories
Welsh Tories have said they are proud of the support given to the most vulnerable by the “compassionate UK Conservative Government,” following Jeremy Hunt’s Autumn Statement.
Chancellor Jeremy Hunt has outlined a package containing “difficult decisions” that amounts to a “substantial tax increase” in an autumn statement he said would put the UK on a “path to stability”.
The package represents a significant change from his predecessor Kwasi Kwarteng’s unfunded tax cuts in the disastrous mini-budget less than two months ago, which was widely blamed for having spooked the markets.
Welsh Conservative Shadow Minister for Finance, Peter Fox MS said: “The measures announced today will instill stability in the UK economy in the face of rising global pressures as verified by the OBR [Office for Budget Responsibility].
“As a result of Putin’s deplorable war in Ukraine, rising inflation is sadly taking its toll on our public services.
“I am proud of the support that this compassionate UK Conservative Government is guaranteeing support to the most vulnerable in society across Wales and the rest of the United Kingdom – ensuring that benefits and pensions rise in line with inflation as called for by the Welsh Conservatives.
“This, along with the historic support for energy costs, will continue to ensure people in Wales are protected from the worst of the global economic climate.
“The Chancellor has been honest with the British people, laying out his plans for a path to growth, increasing the NHS budget and supporting schools in England.”
Detailing the Barnett formula funding, Jeremy Hunt had said there would be an extra £1.2bn for the Welsh Government.
Peter Fox said: “As a result of this decisive action, the Labour Government in Wales will benefit from an additional £1.2 billion.
“While the NHS budget and other public services in England are being protected, Labour in Wales remain the only government in Great Britain to have ever cut an NHS budget by an astonishing £800 million.
“It is clear that Labour must use this additional funding to support our NHS and boost our education system rather than continue to run our services into the ground.”
Welsh Tory leader Andrew R T Davies said: “We have a duty not to leave our debt to the next generation.
“The Prime Minister and the Chancellor have today taken decisive action to get our public finances back in order.
“In particular, the Welsh Conservatives welcome the extra £1.2bn for Wales in consequential funding.
“While we all have our role to play in this national effort to pay our way, the Government has acted to protect the most vulnerable.”
First Minister Mark Drakeford took a different take on the Autumn statement.
“This Autumn Statement puts further pressure on millions of people already struggling with the cost-of-living crisis.
“We will continue to do everything we can to help people through this difficult period – but all of us will pay for the UK Government’s mistakes for years to come.”
Plaid Cymru Westminster leader Liz Saville Roberts described the Chancellor’s claims to support the most vulnerable as “insulting empty words”.
She added: “A decade of cuts has shredded the safety net for the most vulnerable people.
“Welsh Government estimated a budget shortfall of £4bn – an additional £1.2bn for Welsh public services won’t touch the sides.”
Welsh Liberal Democrat Leader Jane Dodds MS said: “Every single tax rise and spending cut in this budget has come about because of the incompetence of the Conservative party.
“While Boris Johnson and Liz Truss have trashed our economy, hardworking Welsh people are now being left to pick up the pieces of their destruction, including having their income squeezed like never before and living standards falling.
“Meanwhile Welsh Conservatives in the Senedd have supported this destruction feverishly from the sidelines.
“A recession that is set to wipe out eight years of rising living standards, with standards falling seven per cent over two years, that is the price of a Conservative Government.
“This Conservative chaos will hammer ordinary people and the services they rely on. They should hang their heads in shame.
“People in Wales demand better. Welsh Liberal Democrats are ready to play our part in sweeping the Conservatives away and offering a positive vision for a fair deal for the people of Wales.”
Responding to the Autumn Statement, Plaid Cymru Treasury spokesperson Ben Lake MP said: “The Chancellor was at pains to claim that this statement was not an austerity budget. Let’s be clear – pressures on Welsh public services will continue to worsen after today’s statement due to inflation.
“A decade of austerity followed by the pandemic has stretched our public services to breaking point. The Welsh Government estimated that their ability to fund vital services will be diminished by £4bn. An additional £1.2bn is clearly inadequate for the task.
“The Welsh economy urgently needs proper investment in our underlying infrastructure – from energy, to transport, to digital connectivity. I reiterate Plaid Cymru’s call for the UK Government to establish a commission to reform the tax system in a progressive way. That is the only way to provide sustainable funding for our public services.
“A glaring omission from the Chancellor’s statement was the impact that Brexit has had on the economy. Credibility requires honesty about the economic reality facing us. I urge the Chancellor to recognise that our economic prospects are worsened by being outside the world’s largest trade bloc, and to take practical steps to urgently reduce trade friction.
“In allowing energy prices to surpass £3000 in April, the Chancellor will push thousands of Welsh households into fuel poverty. For those living off the gas-grid the increase in the Alternative Fuel Payment to £200 will be little consolation given that the cost of heating oil has more than doubled over the past year and we are still none the wiser about when the money will be delivered.
“It is also concerning that businesses that are not connected to the mains gas grid are also being made to wait to learn when they will receive support with their heating costs this winter. Many are already having to make difficult decisions, and so I fear that the Government is leaving it too late to help thousands of off grid businesses across Wales.”
Natasha Davies, Policy and Research Lead, of gender equality charity Chwarae Teg, said: “Today’s statement is a missed opportunity to deliver an economy that tackles inequality and supports women.
“With the consequences of the cost-of-living crisis disproportionately falling on women, it is unfortunate that the Chancellor has chosen to embark on a journey of austerity-lite. Especially since women and communities across Wales are still struggling with the consequences of the last programme of austerity. The Chancellor’s decisions will again see those who are least well-off in society paying for mistakes they did not make.
“Planned restrictions on public sector spending will do little to support our economy. These measures will disproportionately impact women who are more likely to use and work in public services, making tackling gender inequality even more difficult.
“In order to meet the current economic challenge and deliver an economy that works for women, we needed to see investment in people, skills and vital public services. Supporting more women into and to progress at work is a vital way to ensure both equity and growth in the economy. The Chancellor’s proposals fall well short of this.
“Although commitments to up-rate benefits in line with inflation, increase the National Living Wage and some initial steps towards more progressive taxation of wealth are welcome, restrictions on public spending, increased conditionality for those on Universal Credit and changes to the energy price cap will see many women and families no better off.
“It is vital that the UK Government centres tackling gender inequality in its budgetary decisions in order to better support women, and meet current economic challenges head-on.”
Here are the main points from Chancellor Jeremy Hunt’s autumn statement:
Growth and recession
- The OBR has said that the UK is “now in recession”, Mr Hunt said, but he added “overall this year, the economy is still forecast to grow by 4.2%”.
- Mr Hunt promised his autumn statement will lead to a “shallower downturn” in the UK’s finances.
- Underlying debt as a percentage of GDP is expected to fall from a peak of 97.6% of GDP in 2025-26 to 97.3% in 2027-28.
- Mr Hunt announced two new fiscal rules, that underlying debt must fall as a percentage of GDP by the fifth year of a rolling five-year period, and that public sector borrowing, over the same period, must be below 3% of GDP.
- The energy price guarantee scheme will increase from £2,500 for the average household to £3,000 for 12 months from April, Mr Hunt confirmed.
- The Government will introduce additional cost-of-living payments for the “most vulnerable”, with £900 for those on benefits, £300 for pensioners and £150 for those on a disability benefit.
- The Chancellor said he will cap the increase in social rents at a maximum of 7% in 2023/24, saving the average tenant £200 next year.
- Mr Hunt has accepted a recommendation to increase the national living wage by 9.7%, making the hourly rate £10.42 from April 2023.
- The Chancellor told MPs the Office of Budget Responsibility (OBR) has confirmed “global factors” are the “primary cause” of inflation.
- The OBR forecasts the UK’s inflation rate to be 9.1% this year and 7.4% next year.
- He said the autumn statement will cause inflation to “fall sharply from the middle of next year”.
- The Chancellor confirmed the Bank of England’s remit will not be changed and it has his “wholehearted support in its mission to defeat inflation”.
- Mr Hunt reduced the threshold at which the top rate of income tax is paid from £150,000 to £125,140, but said he was not raising headline rates of taxation. He said those earning £150,000 or more will pay just over £1,200 more a year.
- Mr Hunt said he would protect the increases in departmental budgets already set out in cash terms, before growing resource spending at 1% a year in real terms over the next three years. He said public spending would grow “slower than the economy”.
- Electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025 to make the motoring tax system “fairer”.
- Mr Hunt increased the windfall tax on oil and gas giants from 25% to 35% and imposed a 45% levy on electricity generators to raise an estimated £14 billion next year.
- On business rates, Mr Hunt said the Government will proceed with the revaluation of business properties from April 2023.
- The stamp duty cuts announced in the mini-budget will remain in place but only until March 31 2025. Mr Hunt told the House the OBR expects housing activity to slow over the next two years.
- On business taxes, the Chancellor said he had decided to freeze the Employers National Insurance Contributions threshold until April 2028. “We will retain the Employment Allowance at its new, higher level of £5,000,” he said.
- The Chancellor rejected calls to put VAT on independent school fees.
- Mr Hunt said he will increase the NHS budget by an extra £3.3 billion in each of the next two years.
- The NHS will be asked to “join all public services in tackling waste and inefficiency”.
- Mr Hunt said the NHS would publish an independently-verified plan for the number of doctors, nurses and other professionals needed in five, 10 and 15 years’ time.
- He allocated for adult social care additional grant funding of £1 billion next year and £1.7 billion the year after.
Spending and benefits
- Mr Hunt said “with just under half of the £55 billion consolidation coming from tax, and just over half from spending, this is a balanced plan for stability”.
- The Chancellor said he will invest an extra £2.3 billion per year in schools over the next two years.
- It will “not be possible” to return to the 0.7% overseas aid target “until the fiscal situation allows”, Mr Hunt said.
- He said he will maintain the defence budget at at least 2% of GDP.
- Mr Hunt said he would move back the managed transition of people from employment and support allowance on to Universal Credit to 2028.
- The implementation of the Dilnot reforms will be delayed for two years, Mr Hunt confirmed, announcing an increase in funding for the social care sector of up to £2.8 billion next year and £4.7 billion the following year.
- The Barnett consequentials of the autumn statement mean an extra £1.5bn for the Scottish Government, £1.2bn for the Welsh Government, and £650m for the Northern Ireland Executive.
- The Chancellor said he would not cut “a penny” from Government capital budgets over the next two years, and would then maintain them at that level for the next three years.
- Working age and disability benefits will increase in line with inflation, with a rise of 10.1%, costing £11 billion.
- State pensions will increase in line with inflation in April, as Mr Hunt announced the “biggest ever cash increase in the state pension”.
Climate and energy
- Mr Hunt said “we remain fully committed to the historic Glasgow Climate Pact agreed at COP26 including a 68% reduction in our emissions by 2030”.
- The Chancellor said he would add an extra £6 billion of investment in energy efficiency from 2025 to help meet a new ambition of reducing energy consumption from buildings and industry by 15% by 2030, adding this could – according to today’s prices – save £28 billion from the national energy bill or £450 off the average household bill.
- The Government will proceed with the new nuclear plant at Sizewell C.
Support our Nation today
For the price of a cup of coffee a month you can help us create an independent, not-for-profit, national news service for the people of Wales, by the people of Wales.