Budget Q&A: What it could mean for Wales

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Philip HammondImage source, PA
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What will Chancellor Philip Hammond's autumn budget mean for Wales?

Philip Hammond presents his Autumn Budget as chancellor on Wednesday but what does it mean for Wales?

What is the Budget?

It is a speech by the chancellor of the exchequer in which he updates MPs on the economy, the UK government's spending plans and how he plans to pay for them. His decisions affect all of us.

They also give the government a chance to set the political weather after months when it has been beset by difficulties.

This is Philip Hammond's second Budget but his first in the autumn. He has decided that from now on all Budgets will be delivered in the autumn.

What do we know already?

Housing will be a priority. The prime minister, who said solving the housing crisis was her "personal mission", used her party conference speech in October to announce an extra £2bn in affordable housing for England over five years.

The Wales Office confirmed the Welsh Government will get a population-linked share of this but ministers in Cardiff can decide how to spend the cash.

There has been speculation Mr Hammond may cut stamp duty for first-time buyers. From next April, stamp duty will be replaced by a land transaction tax in Wales.

The Treasury has already announced some elements of Wednesday's Budget including money for "artificial intelligence", next-generation 5G mobile networks and moves to put driverless cars on UK roads by 2021.

It is unclear how much of any extra cash will be spent in Wales but devolved governments get a share of spending on the National Productivity Investment Fund in England.

We do know that the chancellor does not have a lot of money to throw around and is reluctant to borrow more to pay for higher spending.

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Finance Secretary Mark Drakeford has said home sales up to £150,000 will be tax free next year

Public sector pay

The pay cap has already been lifted for police and prison officers, although that money had to be found with existing budgets - and there could be further flexibility for some departments, possibly teachers and nurses. One to watch.

Other things to look out for

Mr Hammond is under renewed pressure to find more money for the NHS and social care in England to deal with winter pressures. Wales can expect a population-linked share of any increased cash he finds.

Some Conservative MPs are unhappy with school funding in England. Wales, under what's known as the Barnett formula, could get a share of any increase.

Universal Credit, which combines six existing benefits, will soon be introduced in more areas of Wales and the rest of the UK.

Mr Hammond has resisted calls for its roll-out to be paused but may be more amenable to reducing the wait some claimants face for payment from the current six weeks.

A north Wales growth deal?

Mr Hammond's predecessor, George Osborne, announced in his March 2016 Budget that it was "opening the door" for a growth deal for north Wales.

These mirror the regional city deals in Cardiff and Swansea, agreements between different levels of government and business to bring in extra investment.

One of the interesting things about the north Wales growth deal is that the package would cross the Wales-England border.

Image source, TLP
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More than 100 businesses have signed a letter urging Mrs May to back the tidal lagoon in Swansea Bay

What about the Swansea tidal lagoon?

Supporters of the proposed tidal lagoon in Swansea Bay may also be disappointed by the Budget.

They may see the Budget as a deadline but the signs are that the chancellor does not.

The Department for Business, Energy and Industrial Strategy is still considering a report that recommends the project be given the go-ahead.

Its exclusion from the Budget should not necessarily be seen as bad news.

It means ministers and officials are still trying to find a way to make the sums add up and deliver the project.

What do Welsh MPs want?

  • The lagoon (see above)
  • Swansea East Labour MP Carolyn Harris has continued her campaign to stop councils charging for children's funerals. The Welsh Government announced in March that it would scrap fees in Wales but Mrs Harris wants to see the policy introduced across the UK. Theresa May has suggested there are other ways of helping bereaved parents
  • Plaid Cymru wants the Welsh Government to have full responsibility for income tax, corporation tax and Air Passenger Duty
  • They also want "full electrification of all railway lines in Wales". They may be disappointed

What does the Welsh Government want?

More money and policy changes. Finance Secretary Mark Drakeford wrote to his UK counterpart to demand more spending on infrastructure, giving the go-ahead to the lagoon and reversing its decision to cancel rail electrification between Cardiff and Swansea.

In a letter to Chief Secretary Liz Truss, he said: "I urge the UK government to make it a priority to set aside funding in the Budget to address the very significant under-investment in Wales' rail infrastructure.

"Equally, with the devolution of the Wales and Borders franchise in 2018, it is only right that we receive a fair and equitable funding settlement."

Although there has been talk of extra rail investment and new stations, Mr Drakeford is unlikely to get the answers he wants in the Budget.

There is also no sign the UK government is ready to agree to his request to reverse its decision to rule out the devolution of Air Passenger Duty.

Image caption,
The successful Wales and Borders franchise bidder will run all local trains, excluding intercity services

Brexit

In normal times, the Budget would be the big political event of the year. But these are not normal times and Brexit overshadows everything.

In his letter, Mr Drakeford foreshadowed a battle over EU funds currently spent in the poorest parts of Wales.

"We must have the same level of funding as we benefit from currently and this funding must not be subject to any new UK government constraints or top-slicing," he wrote.

"Any attempt to claw back this money to Whitehall and run it as a UK government programme would fundamentally disrespect devolution."

The UK government plans to set up a UK-wide "shared prosperity fund" to replace EU grants but slow progress of Brexit negotiations means, again, that Mr Drakeford is unlikely to be satisfied by the Budget.

What's in a name?

Will Mr Hammond live up to his "Spreadsheet Phil" nickname?

It may be a tribute to his accountant's eye, but as nicknames go, it is so last Budget. He has also been known (sarcastically) as "Box Office Phil" for his dry delivery but, apparently, he also answers to the more neutral "Fiscal Phil".