The Welsh government will get an additional £104m from the new United Kingdom budget to spend over the next two years with cuts in day-to-day revenue funding.
The new budget was announced by the Chancellor George Osborne yesterday.
Small businesses would be the big winners as the result of Chancellor’s Budget. Around 35,000 Welsh companies are set to profit from his decision to exempt them from the first £2,000 of National Insurance contributions.
Wales counts with an annual budget of around £15bn. It will lose £57m over the next two financial years due to the reductions announced in the Budget.
Capital spending however, which is used for long-term infrastructure and building projects, is being boosted by £161m in Wales.
According to Wales Office, Welsh Secretary David Jones said the Chancellor’s announcements will support the people of Wales who aspire to work hard and get on, assist Welsh businesses which want to grow and help people get their foot onto the property ladder.
Mr Jones is currently undertaking a series of business and education themed visits in Hanoi, as part of his trade and investment mission to Asia. Speaking from Hanoi, where he was marking the UK’s accession to the Southeast Asian Ministers of Education Organisation (SEAMEO) yesterday, he said:
“The measures announced by the Chancellor today are intended to stabilise the country’s finances, restore business confidence, and ensure private sector growth. They show that the UK Government is laying the foundations for economic growth by taking decisive action.
“I was pleased to see that the Welsh Government will receive an additional £161million of capital funding as a result of this Budget. It is now up to the First Minister and his team to set their own priorities and use this funding to invest in high-quality infrastructure, including any shovel-ready projects waiting for the financial backing to get off the ground.
However, Welsh Finance Minister Jane Hutt described this budget plan in an official statement to the press as “a disappointing Budget for Wales”.
“We have repeatedly called on the UK Government to boost infrastructure investment to stimulate the economy. In response they have reduced our revenue budget-these revenue cuts are on top of those in last year’s Autumn Statement. In total we will now have to find savings of £32 m in 2013/14 and £81 m in 2014/15,” she said.
“The price for additional capital investment is high and will be paid for by cuts to our revenue for the next two years. This is a real blow and will place our crucial public services under further pressure,” she added.
Miss Jane also said in a press release that the Welsh Government welcomes the capital allocations given by the UK government, pointing out that there are many strings attached with the capital which can only be used for loans or equity investment and a proportion will have to be repaid.
“Although we are committed to boosting the housing sector in Wales, this falls far short of what we called for and urgently require.
At a time when we are trying to support the Welsh economy and boost growth, this level of cuts is unacceptable,” she concluded.
Miss Jane also referred to the recent loss of triple A status of the UK. She said that borrowing costs remain very low despite the loss, the Welsh government would like to see the UK government take advantage of this to support capital projects.
“Analysis by the IM F concludes that the right time to reduce debt is when the economy has recovered. The time now is right to boost the economy – especially with the disappointing jobs figures today,” she said.
The Welsh government welcome the acknowledgement in the Budget of the need for funding improvements to the M4 in South Wales.
“The intergovernmental talks on this need to be concluded quickly – I look forward to reaching agreement on this major infrastructure project,” said Miss Jane.
Last month, the First Minister of Wales warned that Wales could lose £400m in funding after EU leaders agreed a budget limit for the next seven year.
The budget will be 3% lower than the current seven-year period, summing up to 908bn Euros (around £787bn) from 2014 to 2020.
The First Minister of Wales said that they are disappointed that the agreement fails to deliver the level of investment in jobs and growth needed in Wales.
Budget 2013 coverage: http://www.hm-treasury.gov.uk/budget2013.htm
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