WALES IS SOCIAL DEMOCRATIC

‘New era of austerity threat to Wales due to UK Government’ says Finance Minister

25 Oct 2022 

PA video grab image of Chancellor Jeremy Hunt speaking to the nation from the Treasury in London, during an emergency statement as he confirmed he is ditching many of the measures in the mini-budget, including the planned cut to income tax. Picture date: Monday October 17, 2022.

Wales is facing a new era of damaging austerity cuts because of the UK Government’s mismanagement of the economy, Finance Minister Rebecca Evans has said.

The combination of soaring inflation which is eroding the Welsh Government’s budget, and spending cuts threatened by the latest Chancellor of the Exchequer, could starve public services of funding, stifle economic growth and lead to job losses, she said.

The Welsh Government’s budget is now worth up to £4bn less in real terms than it was when the three-year funding settlement was set last year, their own figures show.

The Chancellor of the Exchequer, Jeremy Hunt, has said that all UK Government departments must redouble efforts to find savings and warned some areas of spending will be cut to fill the hole created in UK public finances by the fallout from the mini-budget a month ago.

This could mean more cuts in funding for the Welsh Government, as it prepares its draft Budget, which is set to be published on 13 December.

The Chancellor is due to produce his medium-term fiscal plan on 31 October.

Speaking at a Welsh Government press conference later today, the Finance Minister will warn against another round of destructive austerity and outline alternative options the Chancellor could take to boost growth and support public services.

Rebecca Evans, Minister for Finance and Local Government, is expected to say: “By announcing reckless uncosted tax cuts for the rich, the UK Government lost control of the economy. Now the new Chancellor wants us all to pay for its failures with deep spending cuts.

“We are facing a new damaging era of austerity, which would threaten jobs, businesses and public services.

“The Chancellor could protect public services by using his tax levers more fairly and increase investment to get the economy moving in the right direction. He could help people pay their bills by increasing benefits in line with inflation.

“As we look ahead to our Budget, we need the UK Government to take action to avoid the type of destructive austerity that will further damage our economy and the public services so many of us rely on.”

‘Difficult’

Chancellor Jeremy Hunt, who was brought in to steady Ms Truss’s ailing Government and has been working towards a highly-anticipated Halloween fiscal statement, is widely expected to keep the keys to No 11 under Rishi Sunak to try to stabilise the jittery markets.

He has warned of “eye-wateringly difficult” decisions on tax and spending signalled a shift away from Boris Johnson’s 2019 promise of an end of austerity.

Yesterday he tweeted: “This is a time for honesty about the huge economic challenges we face, and courage in addressing them. We have a PM who can be trusted to do just that”.

Last week, Jeremy Hunt said universal energy support for households, which has capped bills for a typical household to £2,500 a year, will end after six months and then be replaced by more targeted support.

Mr Hunt also scrapped a number of policy announcements from predecessor Kwasi Kwarteng’s mini-budget, such as plans to reverse a proposed corporation tax rise, after it had resulted in a sell-off of Government bonds, called gilts.