Wales’ response to the Covid-19 pandemic was “hampered” by the UK Government’s financial restrictions, according to the Finance Minister Rebecca Evans.
She alongside the finance ministers Scotland and Northern Ireland, is urging Chancellor Rishi Sunak to use today’s emergency mini-budget to devolve more fiscal powers to the governments in Scotland, Wales and Northern Ireland.
In an unprecedented joint message to the Chancellor ahead of his summer statement in the Commons, Rebecca Evans, Kate Forbes and Conor Murphy asked for capital spending to be moved over to day-to-day revenue and for an end to “arbitrary” limits on borrowing.
“Our response to the COVID-19 crisis has been hampered by UK imposed rules that limit our ability to get more resources to the frontline,” Wales’ Finance Minister Rebecca Evans said.
“There is no clear rationale for these rules, which undermine good budget management in Wales.
“The Welsh Local Government Associaton, Wales TUC, FSB Cymru and Institute for Fiscal Studies and, more recently, the Senedd’s Finance Committee, have all made the same calls for change.
“The crisis has made the issue urgent. It’s time for the UK government to act and provide the flexibility we need to respond and invest in Wales’ recovery.”
Scotland’s Finance Secretary Kate Forbes said that without this any funding used to secure the recovery and pay for public services, funds would need to be found from elsewhere in its budget.
“The powers we are seeking will enable the Scottish Government to respond to Covid-19 more effectively and reboot our economy,” she said.
“They are relatively limited powers, but would ease some of the immense pressures on our budget and give us more tools to kick-start our recovery.
“At the moment, any extra money spent bolstering services and supporting the economic recovery must be taken from other areas. That creates risks for our essential public services, jobs and businesses.
“I am therefore calling on the Chancellor to ease these rigid fiscal rules, and give us the flexibility we need to properly address the monumental challenges our economy is facing.
“I also want to see greater ambition in the level of investment in our economy. Last week the Scottish Government set out a proposal for an £80 billion UK-wide stimulus package. What is needed at this time of crisis is bold and practical policies that will boost consumption, promote investment and protect jobs.”
Northern Ireland’s Finance Minister, Conor Murphy added that it was “crucial” that the devolved administrations are equipped to respond swiftly and effectively to the challenges arising from COVID.
“More financial flexibility can help us deal with these challenges and use our budgets to support public services, protect the vulnerable, and deliver an economic recovery,” he said.
The Chancellor is also coming under pressure to extend the furlough scheme.
Figures released yesterday revealed that by Sunday, there were 9.4 million workers furloughed by 1.1m employers, with the Treasury’s bill currently standing at £27.4 billion. It’s set to start winding down at the end of this month, with firms expected to start contributing towards the cost of wages.
This tapering has already prompted a number of job losses.
Yesterday, the OECD warned that unemployment could reach 14.8% – one in seven of all workers – if there is another spike in cases of the deadly disease.