Wales’ Finance Minister urges UK Govt to introduce windfall tax and fears “big holes in our budget”

Finance Minister Rebecca Evans MS has said she is ‘looking forward’ to a ‘positive relationship’ with the new Prime Minister Rishi Sunak.

The comments came as she was speaking this morning preparing the ground for what could be very challenging financial times in the years to come.

The Minister said: “….this year, we will be preparing the budget in the most challenging and extra ordinary circumstances that we’ve ever faced” blaming ‘the reckless actions of the UK government and its mini budget’

The Minister focused on Wales “…because the majority of our funding comes as a block grant from the UK Government”.

“I’ll start with what we know, our capital budget was already due to fall year on year over the three years of this spending review period because of inflation and the way the UK Government has mishandled the economy, our budget next year could be worth 1.5 billion pounds less in real terms than we expected.

“We also know that the UK Government will be clawing back 114 million pounds over the next two years and that was the funding which had been earmarked to pay for employers of higher National Insurance contributions but now it won’t be available to help us meet other pressures.”

Looking ahead she said, “On top of these big holes in our budget, the Chancellor has said that fresh spending cuts are coming, he said decisions of eyewatering difficulty will need to be made.

“We don’t yet know how big the cuts will be or where they’ll fall but the direct travel is clear. We could easily be facing bigger real terms reductions in in any year of austerity. Those earlier cuts were made after they had been growing.

“Even then, making spending cuts was difficult enough. Today after a decade of austerity and two years of the pandemic there are no easy cuts to me. If the Chancellor starves public services in England, he will be starving public services in Wales to a fresh round of austerity will threaten jobs, businesses, public services and our economy.”

The Minister requested four things, protection of public services from inflation and spending cuts – although now detail on ‘how’ was provided. Secondly a call on UK Government to “honour its own commitment to increase benefits in line with inflation”.

“Thirdly, a request for a ‘real plan for economic growth’, and finally a repetition of regular calls for the Welsh Government’s borrowing powers to be increased “to give us more flexibility to deal with a crisis”.

Later the Minister in response to questions added, “We are seeking that level of reassurance there are options for the UK government, they could look to increase the windfall tax on those really excessive and unexpected profits that we’ve seen in the energy sector, for example, and they could look to raise taxes in a more equitable way”