Summer Budget 'will increase wealth gap' in Wales

By staff writers
July 8, 2015

Plaid Cymru's treasury spokesperson, Jonathan Edwards MP, has responded to the Chancellor's budget today by warning that tens of thousands of workers in Wales remain trapped in a low income economy.

The Labour Party in Wales has also criticised the Summer Budget policies presented by George Osborne.

Mr Edwards said that the cut to tax credits would hit around 120,000 Welsh families, driving them into 'in-work poverty' that will only be rectified by a genuine living wage.

Despite the Chancellor raising the minimum wage and renaming it a so called 'National Living Wage', low earners' incomes will still be hit by cuts to tax credits, says the Party of Wales.

Mr Edwards commented: "This Budget signals the latest chapter in the Tory party's efforts to rewrite the role of the State. The Chancellor announced £37 billion worth of cuts but only outlined £17 billion.

"The £12 billion of cuts announced to social protection will cost the Welsh economy over £500 million a year, with cuts to tax credits likely to punish thousands of working families.

"The only way to rectify this is to end the subsidising of low pay and legislate to ensure workers receive a genuine living wage - a key Plaid Cymru commitment, the party says.

"People will not be fooled by the spin," said Mr Edwards. "The new National Living Wage is only a higher minimum wage. It is a long way off a genuine living wage and does not offset the damage done by cuts to tax credits.

"The regional benefits cap also threatens a dangerous precedent which may lead to geographical benefits. This would see people in Wales paying in the same as everyone else but receiving less, creating ghettos of low pay, low employment and low opportunity."

As a result of the UK Government’s austerity programme, the Welsh Government’s Budget is £1.3 billion lower in real terms in 2015-16 than in 2010-11.

The Finance Minister, Labour MP Jane Hutt, said: "I called for investment in our infrastructure, backed by business in Wales to boost the economy and continue to invest in schools, health and housing. We haven’t seen that today.

“Despite today’s £4 million consequential, we are still £46 million down on the Final Budget we agreed last December. The Welsh Budget has been hit year on year since 2010, resulting in our Budget being lower by eight per cent in 2015-16 than in 2010-11.

"On top of this, only last month the Chancellor announced a further cut of £50 million to our in-year Budget. In advance of the Budget I wrote to the Chancellor to say that the in-year incremental cuts we’ve already had, including on capital, makes planning difficult – this is bad news for business and our public services.

“While we cautiously welcome the National Living Wage and have in fact already delivered it for NHS staff in Wales, it is unlikely to cover the cuts to tax credits for most families. Let’s be clear freezing working age benefits for four years will hit low income households hardest.

“Our initial estimates show that around 5,000 households in Wales will be affected by the lowering of household benefit cap to £20,000 A further 1,200 claimants in Wales could be affected by the changes to the entitlement of Housing benefit for 18-21 year olds.

“We welcome the commitment to the ‘funding floor’ to deliver fair funding for Wales and will expect immediate action to secure this as part of the Spending Review.”

* Full 2015 budget coverage and commentary from Ekklesia at: http://www.ekklesia.co.uk/budget2015

[Ekk/3]

Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.