Jane Hutt, Minister for Finance
The Chancellor of the Exchequer has today made an Autumn Statement on the outlook for the UK economy and the UK Government’s tax and spending plans. This Written Statement sets out the implications for Wales.
While today’s Autumn Statement shows that the economy and public finances have improved relative to expectations at the time of the March Budget, the economy is much weaker than the UK Government expected when it launched its fiscal austerity plan in June 2010. By 2015-16, the economy as measured by GDP is now expected to be close to 7% smaller than expected in 2010. The budget deficit is expected to be almost £60 billion higher and net public debt is expected to be £135 billion higher.
The Autumn Statement has done little to change the challenging public finance outlook for Wales. This Statement, which comes after three and a half years of budget cuts, means that the Welsh Government still faces very tough decisions in delivering our priorities of growth and jobs, tackling poverty, protecting the vulnerable and ensuring high quality services for the citizens of Wales.
Overall, the scale of revenue reductions is significantly less than those we faced in the last Autumn Statement. In the detail of the Statement there are increases and reductions in the Welsh Government’s funding package. Specifically, the consequential that we have received for education and the business rates announcement are countered by reductions elsewhere. The net effect is of marginal change to our budget allocation for 2014-15 and 2015-16 which means there is little additional resource available. As a Government, we will need to reflect on the details and the choices that it involves and we will respond in due course. We cannot replicate increases without replicating reductions. Our decisions will reflect our priorities for Wales.
There were several announcements in the Autumn Statement about Business Rates in England – which account for a significant proportion of our revenue uplift. The announcement of an extension to the Small Business Rate Relief Scheme is something that Welsh Government Ministers have pressed for. The Welsh Government will now take stock before determining the way forward in Wales.
The Financial Transactions facility has been increased by £5.750m in 2014-15 and £38.640m in 2015-16. Whilst this is positive news the way in which this funding can be used is restrictive. We continue to manage the financial transactions facility in the context of the Wales Infrastructure Investment programme. The Welsh Government’s Final Budget proposals reflect the additional capital investment package of £552m I announced in October to support the delivery of the Wales Infrastructure Investment Plan. This is on top of the additional £65.5m for immediate investment this year. I will continue to explore options for the alternative ways of maximising the use of existing resources. Since publication of the Wales Infrastructure Investment Plan, £2bn of additional investment has been steered into the Welsh economy and public services through our Invest for Wales Programme of innovative finance and allocations from capital reserves.
Overall, in 2014-15 the total revenue increase will be £66.7m. The total capital increase is £9.775m of which £5.750m is ring fenced for Financial Transactions. In 2015-16 the total revenue increase will be £74m. The total capital increase is just over £41m of which £38.6m is for Financial Transactions.
We also welcome yesterday’s announcement of the UK Government’s support for the financing of Wylfa Newydd. This investment is a key part of Wales ‘Energy Island Programme’. We are working in partnership with all key stakeholders to develop supply chain activities and ensure maximum benefit for the Welsh economy.
On 3 December, I published the Welsh Government’s Final Budget proposals for 2014-15. These were shaped by our Government’s priorities and reflected the tough decisions that we had to make. The outlook for public spending is not significantly changed by the announcement today. Our priorities are also unchanged, and we will be reflecting on how we respond to today’s announcement to maximise the benefits for the Welsh economy and the people of Wales.