Welsh Government could raise taxes to avoid austerity ‘choice’ say Plaid Cymru
Plaid Cymru’s finance spokesperson Llyr Gruffydd MS has urged the Welsh Government to explore using the tax raising powers at its disposal to protect public services from the cost-of-living crisis.
Speaking ahead of the publication of the draft Budget for 2023-24 later today, Mr Gruffydd said while Wales’ fiscal powers was limited, it was “not powerless”, adding that the impact of the cost-of-living crisis on household finances and public services was further “proof” that Westminster would never work for Wales.
Describing austerity as a “political choice that must be rejected”, he called on the government to explore the progressive use of tax varying powers to protect public services and improve public sector pay.
“Thousands of families are no longer able to afford to heat their homes or feed their children. Our NHS is at a crisis point with patients waiting days at A&E and nurses forced to use foodbanks. Public services are on their knees,” he said.
“This is the devastating impact of Westminster’s economic crisis on our communities and yet more proof – if we needed it – that Westminster will never work for Wales.
“The Tories will try to claim that cuts are inevitable – but they are a political choice and must be rejected. And, after over a decade of austerity, underinvestment, and plummeting living standards there’s nothing left to cut but basic services.”
Llyr Gruffydd added that the government should “leave no stone unturned” to protect people from some of the worst effects” of what he said was a “Tory- orchestrated economic crisis”.
“The Welsh Government’s draft budget will no doubt be driven by the need to deal with Westminster’s trashing of our economy,” he said.
“The fiscal powers we have to respond to this crisis may be limited – but that doesn’t mean we are powerless. That’s why the Welsh Government should explore how progressive use of tax varying powers could be used to protect public services, improve the pay offer for hardworking public sector workers, and help people suffering the most during this crisis.
“The Government must leave no stone unturned to protect people from some of the worst effects of this Tory- orchestrated economic crisis.
“Plaid Cymru will continue to support the most vulnerable in our society, stand in solidarity with those on strike for better pay and work conditions; and continue to fight for a better future for our communities.”
Minister for Finance and Local Government Rebecca Evans said that despite the “challenging economic and fiscal context”, they remained fully committed to doing all they could to protect the frontline public services that people rely on.
“I am pleased to be able to maintain our commitment to social care workers, and I will be saying more about how we will protect public services when I announce the full details of the Budget later today,” she said.
Deputy Minister for Social Services, Julie Morgan added: “We were proud to be able to provide additional funding in last year’s budget to give social care staff across Wales a much-need pay rise. This further uplift will help to support recruitment and retention.
“Social care continues to face considerable pressure. We are doing all we can to work towards improving employment terms and conditions for the sector.”
Chancellor Jeremy Hunt announced last month that the Welsh Government was to receive £1.2 billion in extra funding as part of a package of measures to stabilise the economy.
The Welsh Government’s budget is now understood to be worth around £3 billion less in real terms than when it was set after the October 2021 spending review.
Other pressures include the increasing cost of social care, homelessness provisions, and public transport which has become more costly due to there being lower demand.
The number of households in financial difficulty and therefore in need of emergency payments has also increased, the government said.
Wales Fiscal Analysis (WFA), a research body within Cardiff University’s Wales Governance Centre, calculates potential losses due to inflation, even after additional funding, at more than £800 million in 2023-24 and £600 million in 2024-25.
The WFA has suggested that if the Welsh Government used devolved income tax powers to increase rates of income tax by 1p it could increase its budget by 1.4% next year and the year after.
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