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Wales left in the shadows by Labour’s Budget

The first Budget of the Labour government falls far short of addressing Wales’s needs, maintaining austerity-era policies while providing inadequate funding for critical services and infrastructure, writes LUKE FLETCHER MS

LABOUR’S Budget will still feel like austerity to many.

The Chancellor’s recent Budget promised a clean break from Tory austerity. Labour governments in England and Wales promised a “partnership of power” — two governments working together — but there was little good news in Wednesday’s announcements for Wales.

After 14 years of relentless cuts to public services, massive transfers of wealth from public to private hands, stagnant wages not seen since the Napoleonic era, a revolving door of prime ministers and a mini-Budget that triggered a severe cost-of-living crisis, Rachel Reeves’s Budget held some promise to deliver the transformative change that, during the general election, we were told would come.

This Budget was an opportunity for Labour to redress inequalities deepened by years of destructive policy.

Instead, it has left Wales standing in the same shadows, with only minimal adjustments that will do little to ease the harsh realities Welsh communities continue to face.

For a nation long ready for change, this Budget falls far short of what Wales needs.

Despite the rhetoric, Labour’s Budget doesn’t go far enough to reckon with the legacy of Conservative austerity. Reeves’s reluctance to get at the real concentrations of wealth in Britain ultimately spares the wealthiest at the expense of the poorest.

For Wales, an additional £1.7 billion in Barnett consequentials, a boost welcomed by the Welsh government, must be seen for what it is against a backdrop of deprived HS2 cash and the wealth that would accrue from the devolution of Crown Estate assets: a letdown that speaks volumes about the priorities at play.

The Office for Budget Responsibility confirmed that Wales will see only a 1.3 per cent increase in day-to-day spending — a figure that lags behind the 2.3 per cent increase in Scotland and the 1.5 per cent boost for the north of Ireland. Adding to this, the Welsh capital Budget will face a 2.3 per cent cut next year.

People will not be fooled by the Chancellor’s claim that this is a Budget that spells good news for Wales. The Welsh Budget for this year is already worth £700m less in real terms while our councils across Wales grapple with immediate spending pressures and a £559m Budget gap in 2025-26, leaving front-line services ill-equipped to meet escalating needs.

And so, an opportunity to address the historic injustice of the Barnett Formula has been missed yet again. As analysis from Cardiff University’s Wales Governance Centre has aptly put it: “The additional consequentials deriving from the Budget will be warmly welcomed by the Welsh government. But the Barnett Formula is, of course, a reflexive tool linked to spending announcements for England. Beyond these automatic adjustments, there is little evidence of Welsh government influence in Labour’s new corridors of power at Westminster.”

Indeed, while the Chancellor announced a new 24 per cent needs-based multiplier boost to the north of Ireland’s Budget via the Barnett Formula, Wales’s consequentials amounted to a mere 5 per cent increase.

The burden of underfunding is nowhere more evident than in Wales’ neglected transport infrastructure.

Wales’ share of Barnett consequentials for transport projects has been reduced to 33.5 per cent. This is especially striking given First Minister Eluned Morgan’s push for equitable HS2 funding, which has yielded limited returns, underscoring the limited influence the Welsh Labour government seems to exercise over Westminster counterparts.

Westminster is, however, beginning to address the impact of the coal industry on Wales, a longstanding issue predating devolution.
The one major Wales-specific announcement was £25 million for coal tip safety — an important commitment for which campaigners have long worked.

But given estimates that over half a billion pounds would be needed over the next 10 years to prevent landslides from disused coal tips, the scale of the funding is modest, to say the least.

The funding Wales received is not even 5 per cent of the funding needed to properly address the problem.

And for those living across Wales, many in the former coalfield communities now littered with the disused tips that once generated significant wealth for Britain, people are bracing for a tough winter.

Labour’s choice to uphold key Conservative welfare cuts, including the two-child benefit cap and axed winter fuel allowances, will deepen financial hardship, particularly among children and the elderly.

Approximately 540,000 people in Wales are directly affected by cuts to the winter fuel payment, and approximately 65,000 children in Wales feel the crushing weight of the two-child cap.

With no commitment to the reversal of these policies, no sign of the cash owed from HS2, and not even a modicum of discussion on the devolution of the Crown Estate’s assets to Wales, our needs and interests have been relegated to the sidelines yet again.
After 14 years of Tory austerity, Wales needs far more than this.

Luke Fletcher is MS for South Wales West and the Plaid Cymru economy spokesperson. Follow him on Twitter @FletcherPlaid.

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