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What Philip Hammond’s Budget Means for Wales

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Yesterday, Philip Hammond, Chancellor of the Exchequer, announced details of the Autumn Budget. In his first budget since the General Election, Hammond placed great focus on North and Mid Wales, promising an additional £1.2bn to Welsh Government over the next four years.

This money comes to Wales as a result of extra spending on projects in England; seeing the Treasury work in line with the Barnett formula when allocating national spend.

Resulting in a 2% rise in Welsh Government money, the announcement gathered mixed responses.

Welsh Secretary Alun Cairns said Mr Hammond's Budget “delivers for Wales”.

However, some Welsh ministers felt the additional cash would “do little to ease the pressure” on public services struggling after “successive cuts to our budget”.

Welsh growth plans 

Promising to put pillars in place to boost the Welsh economy, the subject of growth played a key role in announcements of the day.

Budget documents confirmed UK ministers would “begin formal negotiations towards a north Wales growth deal” and “consider proposals for a mid-Wales growth deal”, working with local partners and the Welsh Government.

Stamp Duty  

One of the biggest talking points of the day was Stamp Duty, with UK ministers scrapping the tax for first time buyers. This means buyers will not pay Stamp Duty Land Tax on homes worth up to £300,000; a measure that aims to help get more people on the property ladder.

The documents stated that the proposal for stamp duty relief “applies in Wales until April 2018, when it is devolved and the Welsh Government's new Land Transaction Tax is introduced”.

“It will be for the Welsh Government to make any decisions about introducing future reliefs in Land Transaction Tax,” the UK government said. 

However, details of how this will be rolled out in Wales are yet to be revealed to the Assembly.

Wales' Finance Secretary, Mark Drakeford said: 

“We will look at stamp duty. We have left ourselves with space if we need to make changes.”

Personal Taxation and Wages

The Chancellor delivered a huge boost to lower earners after confirming the National Living Wage will rise from £7.50 to £7.83 per hour from April. The 4.4% increase will mean a £600 per annum pay rise for all full-time workers.

In addition, both the tax-free personal allowance and higher-rate tax threshold have both increased. The tax-free personal allowance will rise in line with inflation to £11,850 whilst the new higher-rate threshold is now set at £46,350.

Business and digital

Dubbed as the Budget set to get Britain ‘fit for the future', the Chancellor put significant focus on new-age technology. Mr Hammond pledged a further £2.3bn for investment in research and development, £540m to support growth in electric cars and a further £500m in artificial intelligence, full fibre broadband and 5G mobile networks.

The VAT threshold for small businesses will be frozen at £85,000 for at least two years.

Transport

Transport was also a prevalent theme, with the Budget detailing plans for rail line upgrades across Wales. One of the main objectives is to create direct connections between Pembroke Dock and London via Carmarthen on the new Intercity Express trains.

The Department for Transport will therefore continue to develop proposals for a variety of rail schemes. These will include station improvements at Cardiff Central station and Swansea, upgrading Cardiff to Severn Tunnel Junction Relief Lines, and improving journey times between: Swansea and Cardiff; South Wales, Bristol and London; and on the North Wales Main Line.

“The government will also consider proposals to improve journey times on the Wrexham-Bidston line and provide necessary funding to develop the business case” the document read.  

Mr Cairns commented on the message these Budget details signalled across the UK.  

“The move to improve rail services for businesses, workers and visitors from both sides of the Wales-England border, taken with the abolition of the Severn Tolls is also a clear demonstration of the UK government's ambition to move the Welsh economy into the fast lane.”

The overarching theme of the day was to ease the pressures on frontline public services, with conversation centred on improving the Welsh transport industry as a whole.