Spring Budget 2024: Welsh Economy — [Peter Dowd in the Chair]

– in Westminster Hall am 11:27 am ar 17 Ebrill 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

[Peter Dowd in the Chair]

Photo of Ruth Jones Ruth Jones Shadow Minister (Environment, Food and Rural Affairs) 2:30, 17 Ebrill 2024

I beg to move,

That this House
has considered the impact of the Spring Budget 2024 on the Welsh economy.

It is a pleasure to serve under your chairmanship, I think for the first time, Mr Dowd. I am delighted to be able to bring this debate before the House today, but I want to start by acknowledging the seriousness of the situation in the middle east. My hopes and those of my constituents are for a more peaceful world and a meaningful de-escalation.

As we consider the impact of the spring Budget 2024 on Wales and the Welsh economy, I want to acknowledge the voices, views and concerns of the people of Newport West. My constituents have shared their worries and concerns with me in recent weeks since the Chancellor delivered his Budget. Of course, I am also thinking about people right across Wales who are dealing with the consequences of a Conservative Government that are out of touch and out of time.

The recent Budget could and should have been a unique opportunity to unlock Wales’s promise and all the potential we see in and around our communities, but instead it was more decline and decay. It is clear to everyone in the Chamber, and I suspect to the Minister too, that this Government have decided to continue papering over the cracks of almost 14 years of Conservative economic failure, rather than giving us the change we need.

As we consider the impact of Budget 2024, we need to think about where we are thanks to this Government. Every colleague in this Chamber will know that, after 14 years of Conservative Government, people in Newport West, Monmouth, Clwyd East and Bridgend, and indeed right across Wales, as well as in the rest of the United Kingdom, are worse off. Families continue to struggle with the cost of living crisis, higher taxes and eye-watering energy bills.

The list is depressing and long: debt and interest rates are much higher; Britain’s standing in the world is diminished; economic growth is stagnant; our much-needed and valued but seriously underfunded public services are on their knees; and taxes are higher than at any time since the second world war—indeed, never have a British Government asked their people in Wales and across the UK to pay so much for so little.

Let us take a moment to talk about the Tories’ unfunded plans to abolish national insurance contributions, and the Chancellor’s promise of £46 billion of unfunded tax cuts, which would leave a gaping black hole in the public finances. That reckless approach exposes the clear risk of five more years of the Conservatives. They will gamble with the public finances, and working people will be forced to pay the price yet again.

This Tory Government clearly have not learned anything since the former Prime Minister, Elizabeth Truss, crashed the economy and sent people’s mortgages spiralling, as we heard this morning during Prime Minister’s questions. I welcome the approach of the Leader of the Opposition and the shadow Chancellor, Rachel Reeves, who have been very clear that Labour will never play fast and loose with the nation’s finances.

On average, households in Wales will be £700 worse off under the Tory tax plan, which gives 5p for every 10p taken from people across the country. The Budget confirms that the UK has the highest tax burden in 70 years, rising every year of the forecast period. The Office for Budget Responsibility figures speak for themselves: for every 10p extra working people pay in tax under the Tories plan, they will get only 5p back as a result of the combined national insurance contribution cuts. That includes the OBR’s revised estimate for the impact of tax threshold freezes, which raise £41.1 billion over the forecast period and will create 3.7 million new taxpayers by 2028-29.

As we go back to the people in this general election year, we will be closing the door on the worst Parliament on record for living standards—the only Parliament on record where living standards have fallen. I welcome the Minister to her place, but it is important to remind her that real pay has gone up by just £17 a week over 13 years of Conservative Government; under the last Labour Government, wages rose by £183 a week over 13 years. The spring Budget reveals that growth in GDP per capita is negative this year, and has been downgraded in the four years of the forecast period.

The OBR confirmed what may be called “Rishi’s recession”, with GDP per capita smaller than when our unelected Prime Minister moved into No. 10, taking over from the former Prime Minister, who was beaten by a lettuce. The Conservatives have wrecked the public finances, debt has almost tripled under them, from £1 trillion to just under £2.6 trillion, and borrowing has been revised up for the next five years of the forecast period. That is the legacy handed down to the people of Wales after 13 years of Conservative Government.

Mr Dowd, you will not be surprised to hear me note that this is not just about the impact on Wales, as part of the United Kingdom; the Government have presided over the biggest drop in living standards in Wales since records began, but the same is true for England, Scotland and Northern Ireland too. That will obviously have a huge impact not only on the economy in our part of the United Kingdom, but right across the country.

In recent months, more than 7,000 homeowners across Wales have faced a Tory mortgage bombshell as their fixed-term mortgage rates have come to an end. The average estimated hike is approximately £240 per month; that is the real cost of the Conservative party. Under this Prime Minister, the Conservatives do not have a plan for our future. They crashed the economy and now they expect working people to pay the price.

Our country needs change, and that is why I am proud that the defining purpose of the next Labour Government, if we are fortunate enough to win the trust and support of people across Wales and our United Kingdom, will be to grow Britain’s economy so that we can invest in our future. Labour’s plan for growth is about making working people better off, boosting the Welsh economy and moving our country forward. We will put economic stability first by introducing a new fiscal lock to bring economic security back to family finances. We will back British business. Importantly for me, as a former president of the Wales TUC, Labour will make work pay.

The impact of Budget 2024 on the Welsh economy also shows how important it is that colleagues of mine standing for Labour across Wales are elected to this place. Many are strong Welsh women, such as Becky Gittins in Clwyd East, my neighbour Catherine Fookes in Monmouthshire—a constituency I know very well indeed—and Jackie Jones over in west Wales. They stand alongside colleagues such as the shadow Secretary of State, my hon. Friend Jo Stevens, and my hon. Friends the Members for Newport East (Jessica Morden), for Gower (Tonia Antoniazzi), for Pontypridd (Alex Davies-Jones), for Swansea East (Carolyn Harris) and for Llanelli (Dame Nia Griffith). Their re-election to this place will help ensure that better days lie ahead, and that any future Budgets under a Labour Government will have a significantly better impact on Wales and our economy than Budget 2024.

I have several questions for the Minister. Figures from Citizens Advice Cymru show that the number of people in Wales unable to top up their prepayment meters has increased by 36 times since the last general election. Will the Minister tell us how many households in Wales still have prepayment meters, and whether any have been forcibly installed since the ban in February 2023? I appreciate that she may not have the figures to hand, so perhaps she will write to me about that.

A recent Which? survey found that one in five working-age parents in Wales are skipping meals due to high food prices. Has the Minister had any recent conversations with supermarkets in Wales about keeping the cost of food down?

This year, 62,000 homeowners in Wales will face a Tory mortgage bombshell as their fixed-term rates expire. A Labour Government would require banks to protect homeowners, so what is the Minister doing to help owners with the bills caused by her party’s disastrous economic mismanagement?

The Conservatives have crippled working people with the highest tax burden since the second world war. The Prime Minister’s latest gimmick means that if a British person pays £10 in tax, they will get just £5 back. Does the Minister agree with Iceland boss Richard Walker that Labour is now the right choice for his customers?

You will be pleased to hear that I am drawing my remarks to a close, Mr Dowd. It will come as no surprise that, in my view, the best thing to do is to change course, deliver for our people and move forward with a Labour Government—and the sooner, the better.

Photo of Nia Griffith Nia Griffith Shadow Minister (International Trade), Shadow Minister (Cabinet Office) 2:38, 17 Ebrill 2024

I am afraid the Conservative spring Budget was a real smoke-and-mirrors affair, and people in the Llanelli constituency are not taken in by it. The Prime Minister, and indeed the Minister, may boast that they have cut the rate of national insurance, but people in Llanelli know that we do not get something for nothing. They feel worse off, and that is because they are worse off. We have had the biggest fall in living standards in our history, with the UK economy remaining stagnant. The latest Office for National Statistics figures show that GDP per person has fallen in each of the last seven quarters—the longest period of stagnation since the 1950s.

People in Llanelli and across the UK are worse off under the Conservative Government, and they are now bearing the highest tax burden in 70 years. For every 5p the Conservative Government have given back in tax, they have in fact taken away 10p. People have pointed out to me that they have been hit by the freezing of the tax threshold. As their incomes have increased over the past few years—although never by enough, of course, to keep up with the rampant inflation that this Conservative Government have presided over—people have found that they are reaching the tax threshold for the first time or that more of their income is now subject to tax.

The freezing of the basic threshold has brought 3.7 million more people across the UK into paying tax, and more taxpayers are being squeezed by having to pay the higher rate of tax as more of their income is in that bracket, often because of a pay rise that has not even kept pace with inflation. So there is a double whammy of more tax and less purchasing power.

We have seen another sneaky trick: the devolution of the increasing cost of the burden of public services to the Welsh Government and local councils. As we know, a large proportion of what councils spend on local services comes from central Government—UK Government—taxation, to which we all of course contribute, whether it is allocated directly to councils in England or via the Welsh Government to councils in Wales. As the Conservative Government have squeezed and squeezed the Welsh budget, with the latest Welsh Government settlement some £3 billion less than if it had grown with GDP since 2010, the Welsh Government have had to pass on swingeing Conservative cuts to Welsh councils. Local councils in Wales are faced with the difficult balancing act of having to either cut services or raise council tax, at a time when councils, just like households, face huge inflation in their costs.

Photo of Alex Davies-Jones Alex Davies-Jones Shadow Minister (Domestic Violence and Safeguarding)

My hon. Friend is making a really powerful point about the cost burdens being imposed on local councils. My own local council of Rhondda Cynon Taf faces some of these burdens, and we have the extra burden of having to fund the remedial work to improve coal-tip safety in Wales—a legacy that predates devolution. We have had hundreds of years of mining in Wales, and that work should be the responsibility of the UK Government, but they are failing to take responsibility for the costs, which should not be borne by my constituents when it was the UK that benefited from the coalmining industry of south Wales.

Photo of Nia Griffith Nia Griffith Shadow Minister (International Trade), Shadow Minister (Cabinet Office)

Indeed—my hon. Friend is absolutely right to bring up that point. It is something that we have been raising, and I hope the Minister, who has some former mines in her own constituency, will take that message back to her colleagues.

As I was saying, councils are having to make very difficult decisions; in fact, they have to both cut services and raise council tax. But make no mistake—these cuts in services and rises in council tax are a direct result of the way in which central Government have squeezed the Welsh budget. That leaves people in Wales paying more for poorer services.

Not only is the Welsh Government budget for 2024-25 £3 billion lower than if it had grown in line with GDP since 2010, but it is £700 million lower in real terms than was expected at the time of the 2021 spending review, which of course means that the Welsh Government have to manage even more cuts than had been expected. The Minister may point out that the Welsh Government will receive an additional £168 million in resource funding for 2024-25, but that is the result of spending decisions made in England and relates to funding for NHS pay and local government adult social care, which have already been factored into Welsh Government spending plans.

People in Wales are still seeing costs rise. Although inflation may have slowed, there is still inflation, which means that prices are still rising, and the price rises are for essential household costs such as food. That has left people really struggling.

Some 62,000 homeowners in Wales are also facing a mortgage bombshell as fixed-term agreements come to an end, because of the totally irresponsible mini-Budget the Tories pushed through—collectively—in the autumn of 2022, when Elizabeth Truss was Prime Minister, which sent interest rates soaring. Homeowners will have to find hundreds of additional pounds year on year to cover their mortgage interest, which of course has a knock-on effect on rents as well, with increasing numbers of people finding that their rent is simply unaffordable.

People in Wales also face higher energy bills, and the UK Government’s failure to roll out renewables more quickly has made that situation all the worse, which has meant the loss of yet more precious time in the race to bring down bills and combat climate change. Last year, the fiasco of the UK Government’s handling of the bidding process meant that no proposals came forward for floating offshore wind projects.

There is no help for the least well-off. The Conservative Government have been squeezing household incomes for 14 years. Back in 2011, the Tories increased VAT to 20%, which increased household bills, hitting the poorest in particular. In an unprecedented move, they also broke the historic link between benefits and inflation. They have cut and cut the benefits paid to the least well-off in society, many of whom, of course, are in work, leaving many people with not enough to live on and not even enough to cover their essential costs. It is shocking that the Joseph Rowntree Foundation and the Trussell Trust have had to call for the implementation of an essentials guarantee to ensure that those in receipt of universal credit are able to meet their essential costs. Benefits should always cover essential costs.

On regeneration and the replacement of the European structural funds, it is disappointing that the UK Government have rowed back on devolution and cut the Welsh Government out of the consultation on the way that funds should be used and managed. The result is a tendency for the money to go to one-off projects in specific geographical areas, rather than us looking at the real levers that will drive up GDP and prosperity, such as apprenticeships and skills training.

What worries me in particular is that there is little in the Budget to suggest that the UK Government are serious about growth. Every Conservative Budget since 2014 has promised higher wages, higher skills or higher growth, but a year on from the so-called Budget for growth, the economy has actually shrunk, as have wages. We have some world-class manufacturing in Llanelli—Tata Steel, car component companies such as Gestamp, engineering firms that supply companies such as Aston Martin and so on—but the international competition for business and investment is fierce.

The lack of a UK Government industrial strategy makes it difficult to compete for investment with other geographical locations abroad, whether that is because of cheaper energy costs in neighbouring European countries or the Inflation Reduction Act in the US, where we now see growth forecast to be twice that of any other country in the G7. The Government are investing £500 million in an electric arc furnace in Port Talbot, but there has been no attempt by the Government to encourage investment in the technologies needed for green primary steel production.

We see Tata investing in such facilities at our competitor plant at IJmuiden in the Netherlands. I understand that one reason for not bringing that investment to Wales is our high energy costs—something we have been warning this Government about for years. Labour has pledged to invest £3 billion to secure green primary steelmaking in the UK, as well as a national wealth fund, bringing public and private funding together to invest in the green industries of the future, thus creating quality jobs as well as tackling climate change.

People in Llanelli and across Wale are desperate for change and for hope of a better life. That is why we need a Labour Government that will slash energy bills for households and industry, invest in the new green technologies of the future, and invest £3 billion to ensure that we develop primary green steelmaking in Wales—the sooner, the better.

Photo of Liz Saville-Roberts Liz Saville-Roberts Shadow PC Spokesperson (Home Affairs), Shadow PC Spokesperson (Women and Equalities) , Plaid Cymru Westminster Leader, Shadow PC Spokesperson (Justice), Shadow PC Spokesperson (Business, Energy and Industrial Strategy), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Attorney General) 2:47, 17 Ebrill 2024

Diolch yn fawr, Mr Dowd. I congratulate Ruth Jones on securing this debate. The Government have tried to spin the Budget as the deliverer of long-term growth for Wales, but people’s response is at odds with the spin. The lack of faith in the Government’s rhetoric is rooted in what they experience day in, day out, and how little faith they now have in attention-seeking announcements.

The real story is one of stagnating living standards, higher taxes on poorer people, cuts to public services on top of years of austerity, and food banks providing meals to working families. The Budget’s headline announcement of a 2p cut in national insurance plays out in different ways in different places. London wage earners will benefit the most, at £621 on average, while those in Wales will get only slightly more than £1 a day —£380 on average.

This is not a matter of begrudging gains for some people in some communities, but what needs to be called out is the disregard for how the national insurance cuts, as a policy, will entrench inequality in different parts of the United Kingdom. There is nothing in the spring Budget to address the deep economic challenges facing Wales, such as flagging productivity. In Wales, gross value added per hour worked is 84% of that of the UK—the lowest productivity of any of the four UK nations, although it varies within Wales and in the English midlands. It plays out in different places in different ways.

Those indicators also reveal how little effect that worthy, familiar, perhaps misused 2019 election slogan of levelling up has actually had. I know the Tories will delight in telling us that Wales has had more than our per head of population share of levelling up since then.

Photo of Alex Davies-Jones Alex Davies-Jones Shadow Minister (Domestic Violence and Safeguarding)

On that point about the Tories telling us we have never had it so good and Wales is benefiting, will the right hon. Member join me in being disappointed that, apart from the Minister, who is compelled to be here and for whom I have a lot of respect, there is not a single Welsh Conservative MP in this debate? That shows how much contempt and disregard they have for the people of Wales.

Photo of Liz Saville-Roberts Liz Saville-Roberts Shadow PC Spokesperson (Home Affairs), Shadow PC Spokesperson (Women and Equalities) , Plaid Cymru Westminster Leader, Shadow PC Spokesperson (Justice), Shadow PC Spokesperson (Business, Energy and Industrial Strategy), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Attorney General)

They must be content with the crumbs that we get from the table with levelling up, frankly.

Is the per head of population distribution really a good measure of success? Under the European funding schemes, Wales also got the highest per head of population contribution for a reason, and the reason was recognised deprivation—proven need. How has the Tory levelling-up agenda grasped the challenge of replacing the European money previously distributed specifically to lift the poorest communities out of poverty? I will tell hon. Members how it has done that. It has done it by invoking the United Kingdom Internal Market Act 2020 to undermine the Senedd and any pretence at strategic working. It has done it by setting cash-strapped local authorities in direct competition with one another, like supplicants begging for pennies. It has done it by providing money without sufficient time even to use it to best effect. And it has done it by ensuring that there is scant effective evaluation of money used, so that we do not even know whether it is levelling anything up for anybody.

Of course, that is not the point. Levelling up was never about ensuring that Wales got not a penny less than it did under European funds. We know that we are getting £1.3 billion less. Levelling up has become a byword for cynical short-termism, lollipops for a Government to hand out with an eye to the next election—pork barrel politics. That is clear from the fact that the Budget included Canary Wharf in the £242 million of London levelling-up cash. Canary Wharf, of all places! That is hardly somewhere that needs further investment and levelling up when compared with other places in the UK.

The Chancellor announced departmental spending cuts of up to £20 billion in the spring Budget. Let us be clear that those cuts will make a wasteland of our public services, and they will do so in a country, our country—Wales—where we place a high value on how a community works for everyone. I fear for the future of Welsh public services. We have already seen the Welsh Government’s refusal to step in when they defended cuts to Wales’s National Museum. I am sad that, rather than demonstrating the political courage to protect our cultural institutions, First Minister Vaughan Gething tells us to wait patiently for a future Labour Chancellor to start properly funding Wales. I fear that he is referring to the same shadow Chancellor, Rachel Reeves, who drops heavy hints that Labour will go ahead with public spending cuts if it forms the next Government.

My party believes that the people of Wales should have the ability to grasp the means to build our own economic destiny. Why should we not take control of our natural resources through the devolution of the Crown Estate? Why should we not create a funding system that addresses our needs and makes best use of our fair share of money from HS2 and other projects?

After covid and in the face of a future of global unrest and accelerated climate change, the Chancellor should have prioritised long-term investment in our public services, infrastructure and communities, yet the Budget and its aftermath seem to have produced a consensus between the Tories and Labour on spending cuts, with the Institute for Fiscal Studies calling support for spending cuts a “conspiracy of silence” between the two main parties. The message should come loud and clear: as things stand, Wales gets crumbs from the table, and we can do so much better. Diolch yn fawr.

Photo of Jessica Morden Jessica Morden Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Shadow Minister (Wales) 2:53, 17 Ebrill 2024

I congratulate my neighbour, my hon. Friend Ruth Jones, on securing this very important debate; in fact, I believe that this is the second year running that she has secured it. As always, she made her points well, as did all the speakers so far. I echo her comments on Gaza and the middle east. We share the city of Newport, and I know that that is a matter of great concern.

As my hon. Friend and neighbour set out, this is a Government clinging on to power, having presided over 14 years of managed decline. They lack the interest, vision and appetite to deliver the fundamental change that our country needs. We have had some excellent contributions from Members who will have had direct feedback from their constituents, be it on the doorsteps in places such as Monmouth, or in their surgeries. I certainly have: over the Easter recess we carried out a cost of living survey in Newport East, and people told us very strongly just how held back they feel by this failing Tory Government.

My hon. Friend put it well when she said that “never have a British Government asked their people…to pay so much for so little.” Having played fast and loose with the public finances, the Conservative party is passing on the cost of its incompetence to those who can least afford it just as public services, on which so many of them rely, are crumbling under the weight of its cuts. My hon. Friend Dame Nia Griffith is quite right: the spring Budget is smoke and mirrors, and people are not taken in by it.

Let us take ourselves back to 2019, when those on the Government Benches stood on manifesto commitments not to raise taxes; to reduce debt; to reduce poverty; and to help people with cost of living pressures. Three Prime Ministers and five Chancellors later, and with the Tory chaos almost halving the Government’s parliamentary majority, those promises lie in tatters. As hon. Members have already said, it is the case, despite cuts to national insurance, which we support, that the income tax threshold freezes mean that taxes are rising at a record pace. They are now at a 70-year high, and rising in each year of the spring Budget’s forecast period. That will make households in Wales £700 worse off, as my hon. Friend the Member for Newport West said. I was very struck by what was said to me by a constituent I met in Magor on Saturday on the issue of the income tax threshold freezes, which was raised by my hon. Friend the Member for Llanelli. The constituent described to me how her small monthly pension was hit by the impact of that and how unfair that was.

Photo of Nia Griffith Nia Griffith Shadow Minister (International Trade), Shadow Minister (Cabinet Office)

I am sure that my hon. Friend will mention what I forgot to mention, which is that pensioners do not pay national insurance, so they have had no benefit whatever from the NI cut.

Photo of Jessica Morden Jessica Morden Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee), Shadow Minister (Wales)

I thank my hon. Friend for making that very pertinent point. There is a big impact on pensioners, as she has said.

The UK debt to GDP ratio is at its highest in 70 years, with no sign of falling. The number of people living in absolute poverty is expected to increase this year to 12 million, with 4.2 million children living in poverty. This year, 62,000 householders in Wales will face the Tory mortgage bombshell—which hon. Members have mentioned—as their fixed-term rates expire, with the average homeowner expected to face a £240 hike in their monthly bill. As hon. Members have said, this is the first Parliament on record for which living standards are set to be lower by the end than they were at the beginning. The Tory Government are breaking promises and breaking records—and all to the detriment of Welsh people struggling to make ends meet. The Prime Minister has joined his predecessor in backing the sort of enormous and entirely unfunded tax cuts that led to the swift demise of her premiership—this time in the form of the abolition of national insurance. Perhaps the Minister will explain to us in this debate, because the Prime Minister could not—he repeatedly failed to answer the question at Prime Minister’s questions today—what the Tory Government will cut to find the £46 billion needed every year for their new policy, or whether they plan to extend their tax-raising record by piling further costs on to Welsh working people.

Not only have the tired Tory Government lost any semblance of economic competence—driving down business confidence—but they have lost their moral compass. Over the last few days, my constituents Colin and Janet Smith have been sharing with the media the story of their decades-long fight for justice for their son, Colin, who tragically died aged seven, having contracted AIDS and hepatitis C from contaminated blood administered by the NHS. For years after his death they faced bullying, abuse and the loss of employment, due to the stigma surrounding his illnesses. I know the family very well, and the absolute tragedy of what he was put through. Members of the House will know that the Smith family’s story is not unique. They have campaigned tirelessly alongside so many others for the truth and for just compensation, so I would like the Minister to tell us why, despite the final recommendations on compensation having been delivered to Ministers by Sir Brian Langstaff, chair of the inquiry, more than a year ago, when he said the Government could get on with making the compensation payments, there is not a single word about it in the spring Budget. I think that is an absolute disgrace.

Welsh steelworkers are right to feel betrayed by a Government willing to countenance 3,000 redundancies across south Wales while our European steelmaking competitors make historic investments in green steel. The almost-overnight end to our virgin-steelmaking capability in Port Talbot is not an inevitability. Rather than relying on imports from across the world, exposing us to the same global risks that precipitated the energy crisis, Ministers must revisit the multi-union plan, described by Tata itself as credible, to work with our steelworkers towards a just transition to the greener future for steel that we all want.

As my hon. Friend the Member for Llanelli mentioned, a Labour Government in Westminster would invest £3 billion in green steel within the first term, protecting livelihoods and the future of our sovereign British steel manufacture, which is vital for our plan to make Britain a clean energy superpower by doubling onshore wind, tripling solar and quadrupling offshore wind.

It is not too late for the Government to change direction on this, and it would be particularly important for my hon. Friend the Member for Newport West, with the Llanwern steelworks in Newport. It would not be the first time a Conservative press release has sounded suspiciously familiar to Labour colleagues. Whether it is the narrowing of the non-dom tax loophole or the half-hearted levy on oil and gas giants, the Prime Minister appears to be slowly realising that the path to a fairer, brighter future for Wales and Britain is through the progressive policies of a Welsh Labour Government working with a Labour Government in Westminster.

The consequential funding that will flow from a UK Labour Government to Welsh public services will be critical. Importantly, my hon. Friend Alex Davies-Jones mentioned the cost burden on local government too. Our public services face intense challenges, particularly in the context of the value of the Welsh Government’s budget having dropped by £1.3 billion in real terms as a result of the Tories’ economic mismanagement.

Some progress was to be welcomed from the spring Budget. We have repeatedly called on the Government to get a move on with the new nuclear site at Wylfa. The purchase of the site is therefore good news, but we are still nowhere near seeing the prospect of clean energy and thousands of good jobs returning to Anglesey. Had they not dithered for five years, we could have seen the plant 50% complete, with up to 8,500 construction jobs under way, around 900 permanent jobs to follow and £400 million for the local economy in wages.

What we saw in the spring Budget was a Conservative Government without a proper plan to grow the economy, without an industrial strategy to match the ambition of our talented Welsh workforce and without the appetite for investment in a greener Wales. Those will only be achieved with a UK Labour Government working with a Welsh Labour Government and a Secretary of State for Wales who stands up for Welsh interests.

Photo of Fay Jones Fay Jones The Parliamentary Under-Secretary of State for Wales 3:02, 17 Ebrill 2024

It is lovely to see you in the Chair, Mr Dowd. May I start by congratulating Ruth Jones on securing this debate? I thank all right hon. and hon. Members for taking part. I hope the hon. Lady knows that I have great affection for her. We have been on opposite sides of many a Bill Committee over the last few years, and while we have often disagreed, we have always had fun doing so. It is a pleasure to respond to her debate. I very much enjoyed her speech and will refer to it throughout my contribution, but my favourite bit was the love letter to Labour women standing in marginal seats across Wales, which I thought was charming, if transparent. I congratulate all hon. Members who have taken part in this afternoon’s debate, who all happen to be women—

Photo of Fay Jones Fay Jones The Parliamentary Under-Secretary of State for Wales

Indeed. It shows what Welsh women can do when we get together.

Turning to the matter at hand, it is absolutely clear that the Conservative Government have a plan to deliver the long-term change that our country needs and that that plan is working. We have seen yet again today that inflation has fallen by over half its recent peak. The cost of living pressure is easing, and economic growth is more resilient than previously suggested. Debt is also forecast to fall. But the recovery is not over yet, and it is at risk from other political parties that do not have a plan for the economy and are instead making unfunded promises that will take us back to square one.

With the economy now turning a corner, the Chancellor has been able to make further tax cuts responsibly to boost growth across Wales and the UK by ensuring that working people keep more of their hard-earned money. Thanks to announcements made in both the autumn statement and the spring Budget, we have seen national insurance cuts benefit 1.2 million workers in Wales.

Photo of Nia Griffith Nia Griffith Shadow Minister (International Trade), Shadow Minister (Cabinet Office)

Does the Minister accept that while national insurance cuts help all working people, they give a lot of money to the better off and are therefore a very blunt, not at all targeted way of helping people?

Photo of Fay Jones Fay Jones The Parliamentary Under-Secretary of State for Wales

The hon. Lady will not be surprised to know that I do not agree. I point her to the fact that at the end of 2010, a worker earning a wage of £15,000 was paying around £1,700 in taxation. Today—after 14 years of a Conservative Government—that amount is around £500. That shows that the Conservative party will deliver for working people.

Thanks to announcements made at the autumn statement and the spring Budget, we have seen national insurance cuts of about £701. Further tax cuts have been announced, included the freezing of fuel duty for yet another year, further easing cost of living pressures and saving the average car owner about £50 over a year. I believe that that is the 14th time since the Conservatives came to power in 2010 that we have frozen fuel duty. Alcohol duty has also been frozen once again to support Wales’s crucial hospitality industry. There was great news for Welsh SMEs, with the UK Government raising the VAT registration threshold to £90,000, building on last year’s autumn statement announcement that the UK Government are backing Welsh business through the British Business Bank’s £130 million investment fund for Wales.

I have listened to a lengthy list of complaints about the Conservative Government, but I remind Labour Members that while we are backing Welsh businesses, their own Government—their own colleagues in Cardiff Bay—have slashed business rates relief from 75% to 40%, meaning that hospitality businesses in Wales will pay thousands more in comparison to their colleagues in England.

The spring Budget also outlined the UK Government’s commitment to securing a diverse energy system with Wales at its heart, through the decision to purchase the Wylfa Newydd site on Ynys Môn. I welcome the shadow Minister’s rather muted celebration of that announcement. New nuclear developments have the potential to transform the north Wales economy, creating thousands of jobs while contributing to our net zero and energy security ambitions. Beyond nuclear, the renewable energy sector is also flourishing in Wales. The Government are supporting floating offshore wind by securing a long-term pipeline of projects in the Celtic sea and unlocking port infrastructure investment through the £160 million floating offshore wind manufacturing investment system. The Chancellor has also announced that the Crown Estate will bring forward an additional 12 GW of floating offshore wind in the Celtic sea in the 2030s.

The Budget was also a great moment for the creative industries—a sector that is hugely important to Wales’s economy. I am mindful of how many Members represent south Wales, so I am surprised this was not mentioned. Cardiff is now one of the UK’s largest media productions centres outside London. I was thrilled to see that the UK Government continue to back the creative sectors in Wales, with £500 million of new tax reliefs for the UK industry, as well as—a cause close to my own heart —a further £5 million for the agrifood industry in mid and north Wales, supporting research and development in our rural heartlands and helping to develop a more sustainable future for our vital agriculture sector. Again, this stands in stark contrast to the actions of the Welsh Labour Government, who have cut the rural affairs budget.

Photo of Fay Jones Fay Jones The Parliamentary Under-Secretary of State for Wales

I will not.

Indeed, this Government are working hard to ensure that Wales’s sector strengths are empowered to move to the next level. That is why we confirmed at the autumn statement that there will be two investment zones in Wales: one located across Cardiff and Newport—again, a surprising omission from the speeches of the hon. Members for Newport West and for Newport East (Jessica Morden) ; and a second zone located across Wrexham and Flintshire. The Chancellor confirmed at spring Budget that the programme has been extended in Wales from five to 10 years, with each receiving £160 million in funding over this period. This will supercharge key sectors across both locations, creating jobs delivering growth and prosperity across Wales.

A determination to create new jobs has also been spearheaded by Wales’s freeports programme, and here —the hon. Member for Newport West will be surprised to hear me say this—I will praise the Welsh Government for working hand in hand with the UK Government. The freeports programme was further supported once again at this Budget by the Chancellor when he announced that there would be an extension in tax relief from five years to 10 years, providing greater certainty to businesses looking to invest, delivering growth and jobs, and levelling up the economy.

The Chancellor’s spring Budget has provided Wales with substantial additional funding, as I think was mentioned by a number of hon. Members this afternoon. Back in 2021, a record-breaking £18 billion block grant was secured at the spending review. This year’s Budget announced almost £170 million of additional funding through the Barnett formula for 2024-25. That is on top of the £820 million already provided to the Welsh Government since that record-breaking grant in 2021—blowing away Labour’s and Plaid Cymru’s argument that Wales has been underfunded. This is almost an extra £1 billion in additional funding for the Welsh Government. On top of this record funding, the Prime Minister recently announced £60 million for apprenticeships in England. That will result in yet more money for the Welsh Government.

Despite the negativity of Members opposite, there is no doubt that the Welsh Government are adequately funded to deliver on their responsibilities. It is a question of priorities. While the Conservative Government are pouring billions of pounds into Wales and turbocharging the Welsh economy, it is the decisions of the Welsh Labour Government, propped up by Plaid Cymru, that are undercutting Welsh public services.

I was disappointed by the negative and miserable tone taken by Opposition Members during the debate in relation to levelling-up funding in Wales and was surprised to see them criticise the record amounts of funding received in their own local authorities. An announcement at the Budget added to our commitment of long-term regeneration and growth in Wales. I am thrilled that Rhyl is the latest of five Welsh towns to benefit from £20 million as part of the long-term plan for towns.

Photo of Fay Jones Fay Jones The Parliamentary Under-Secretary of State for Wales

I can assure the right hon. Member that her local council, Gwynedd County Council, will be responsible for the almost £19 million that was received from levelling-up round 2, so there is great accountability there. Local authority leaders across Wales are delighted by the extra support that the UK Government are giving them, which amounts to £440 million over the three levelling-up fund rounds. From the Muni Arts Centre in Pontypridd to Old College on Aberystwyth’s seafront, and from Porthcawl pavilion to the Pontcysyllte aqueduct—I have lived in Wales all my life and I can never say that. [Interruption.] I will work on that one. There are new developments, too, from a new leisure centre in Caerphilly to the development of Cardiff Crossrail, and walkways and cycle paths in the Vale of Neath. Our places across Wales are changing for the better. That work is all building on the foundation being laid across our regions by Wales’s city and growth deals, with £790 million invested in all four of our regional economies. The UK Government back the Welsh economy and deliver on the needs of the people, businesses and communities in Wales.

During this afternoon’s debate, the shadow Minister—the hon. Member for Newport East—and the hon. Member for Newport West, who led the debate, challenged me a number of times on an unfunded tax cut, which I heard mentioned many times at Prime Minister’s questions this morning. I understand that the Labour party’s new argument is that the UK Government have promised to abolish national insurance. I am curious as to where that has come from. No such promise has ever been made and no policy has ever been announced. I heard Keir Starmer make that claim earlier and I would be worried that he could be accused of misleading the House—something I know he would never do. That is Labour’s smokescreen: covering up for that fact that Labour has no plan. The long and the short of it is that this Government have an excellent record to show for themselves in Wales and the spring Budget only boosts it further.

Photo of Ruth Jones Ruth Jones Shadow Minister (Environment, Food and Rural Affairs) 3:13, 17 Ebrill 2024

It is good to be able to wind up and to have a little time before Divisions. I thank hon. Members who are here today. It is interesting that this is a women’s debate—obviously women get things done, so that is fine.

I thank my hon. Friend Dame Nia Griffith, Liz Saville Roberts and my neighbour, my hon. Friend Jessica Morden, who is the shadow Minister. It is great that they are all here to support today. I also thank my hon. Friend Alex Davies-Jones for her interventions.

It was great to have the Minister in her place. I would just like to be able to live in her world, because it seems to be a parallel universe to the one we are living in in Wales. When we knock on doors every week and ask whether people feel better or worse off, the most emphatic answer is, “We are much worse off than we were even a year ago.” That is something she needs to take back to her Government because we are here again—as my hon. Friend the Member for Newport East reminded me, we did this a year ago—and not only have things not got better; they have got worse in Wales. We need to be clear on that.

On my questions about the prepayment meters, supermarkets and other things, it would be really helpful if the Minister could write to me.

Photo of Fay Jones Fay Jones The Parliamentary Under-Secretary of State for Wales

The hon. Member is absolutely right to point out that I was remiss in not responding to that point and I will certainly write to her. If I may, I also neglected to respond to the shadow Minister when she raised the matter of her courageous constituents Mr and Mrs Smith, who have been vocal in campaigning for their son. I reiterate that the Government will publish the findings of the inquiry later this month and I will work with the hon. Lady to make sure her constituents get the answers they need.

Photo of Ruth Jones Ruth Jones Shadow Minister (Environment, Food and Rural Affairs)

As my hon. Friend the Member for Newport East says, the Minister does not have to wait; she can get on with it now.

The smoke and mirrors in the Budget were quite clear. The Welsh people are paying more and getting less. All I would say in conclusion is: bring on a general election and let us show what a difference we can make.

Question put and agreed to.


That this House
has considered the impact of the Spring Budget 2024 on the Welsh economy.

Sitting suspended.