What does the budget mean for Wales?
Speech in the Senedd, November 6th 2024
Llywydd, Rachel Reeves inherited a broken economy and has begun the work of repair.
This was a necessary budget.
Necessary, because austerity failed. And again it has been left to a Labour Government to repair the damage.
And let's remember the policy of Austerity was a political choice. Other choices were available in 2010, but the Conservative and Liberal Democrat Government chose an approach that history will show caused real harm to our country.
They not only shrunk the State, but they shrunk the economy - a fall in GDP of 2%
Their austerity policy made us poorer. And made key services poorer.
Spending fell in real terms, per person, every year between 2010 and the start of covid.
At the time an ageing population demanded greater investment in the NHS and social care, Tories flatlined spending budgets.
And it was the key workers who had to absorb that through frozen wages.
This Labour budget has thrown a lifeline to our frontline services.
Pay rises to key workers to start to make up for those years of sacrifice.
But the Tories have learnt nothing from their wipeout.
No contrition. No acknowledgement of the consequences of their chaos.
Today’s Tory motion condemns rises in taxes. AND calls for even more spending
But as the Institute for Fiscal Studies points out, if the Tories had won the election their first budget would have implemented sharp cuts to spending.
A £20 Billion cut according to the Resolution Foundation
And yet they criticise this budget.
No wonder voters are cynical about politics.
Llywydd, no budget is perfect. There are aspects I’d like to have seen done differently, but I applaud Rachel Reeves for getting the big call right.
I regret that we have stopped making the case for progressive taxation- the idea that the more you earn, the more you should contribute - “the price we pay for a civilised society".
It is an idea with a strong Welsh tradition.
It was Jim Griffiths who put in place the national insurance system that funded the welfare state after the war.
And Lloyd George in his People’s Budget who placed death duties at the centre of efforts to tackle intergenerational inequality.
There is a strong Welsh progressive tradition of using the tax system to advance fairness. I’d hope the Liberals and Plaid Cymru would remember that. Inheritance tax is a progressive tax.
But the thing about inheritance tax is that even though very few people pay it - only about 4% of people get captured - polls show that ten times as many think it will effect them.
And that’s what we’re seeing again.
Claims this budget will destroy the future of family farms are getting way ahead of the facts.
Paul Johnson, the highly respected head of the Institute for Fiscal Studies, says the complaints are “massively overdone”.
The tax change will affect a very small number of large farms he says. And they’re still going to be better treated than anyone else in terms of inheritance tax.
Those of us who are not farmers will face death duties of 40% on anything over £325,000 that we pass on.
That will not apply to farms.
There will be no inheritance tax to pay on any estate worth under £1 Million. A huge tax advantage for farmers.
The Financial Times says last year just 462 inherited farms across the UK were valued above £1m.
And the Government points out when you add in the other allowances, the real threshold is nearer £2 Million.
The tax specialist Dan Neidle says it could capture as few as 100 large landowners.
And not many of them - if any - will be in Wales.
When wealthy farms are eligible for inheritance tax they will face a rate of 20% rate instead of 40% like everyone else.
So let's get this in proportion.
I’ve heard much angst from the rural community about companies and rich individuals buying up farms to exploit tax loopholes. Well this change is designed to tackle that.
If there are genuine issues, if there are unintended consequences, let's address them as they arise.
And let's remember the huge contribution this budget will make to starting to repair our economy and our public services. Because of this budget our Senedd will have £21 billion a year to invest in Wales – the largest settlement in real terms in the history of devolution.
.
Llywydd, Rachel Reeves inherited a broken economy and has begun the work of repair.
This was a necessary budget.
Necessary, because austerity failed. And again it has been left to a Labour Government to repair the damage.
And let's remember the policy of Austerity was a political choice. Other choices were available in 2010, but the Conservative and Liberal Democrat Government chose an approach that history will show caused real harm to our country.
They not only shrunk the State, but they shrunk the economy - a fall in GDP of 2%
Their austerity policy made us poorer. And made key services poorer.
Spending fell in real terms, per person, every year between 2010 and the start of covid.
At the time an ageing population demanded greater investment in the NHS and social care, Tories flatlined spending budgets.
And it was the key workers who had to absorb that through frozen wages.
This Labour budget has thrown a lifeline to our frontline services.
Pay rises to key workers to start to make up for those years of sacrifice.
But the Tories have learnt nothing from their wipeout.
No contrition. No acknowledgement of the consequences of their chaos.
Today’s Tory motion condemns rises in taxes. AND calls for even more spending
But as the Institute for Fiscal Studies points out, if the Tories had won the election their first budget would have implemented sharp cuts to spending.
A £20 Billion cut according to the Resolution Foundation
And yet they criticise this budget.
No wonder voters are cynical about politics.
Llywydd, no budget is perfect. There are aspects I’d like to have seen done differently, but I applaud Rachel Reeves for getting the big call right.
I regret that we have stopped making the case for progressive taxation- the idea that the more you earn, the more you should contribute - “the price we pay for a civilised society".
It is an idea with a strong Welsh tradition.
It was Jim Griffiths who put in place the national insurance system that funded the welfare state after the war.
And Lloyd George in his People’s Budget who placed death duties at the centre of efforts to tackle intergenerational inequality.
There is a strong Welsh progressive tradition of using the tax system to advance fairness. I’d hope the Liberals and Plaid Cymru would remember that. Inheritance tax is a progressive tax.
But the thing about inheritance tax is that even though very few people pay it - only about 4% of people get captured - polls show that ten times as many think it will effect them.
And that’s what we’re seeing again.
Claims this budget will destroy the future of family farms are getting way ahead of the facts.
Paul Johnson, the highly respected head of the Institute for Fiscal Studies, says the complaints are “massively overdone”.
The tax change will affect a very small number of large farms he says. And they’re still going to be better treated than anyone else in terms of inheritance tax.
Those of us who are not farmers will face death duties of 40% on anything over £325,000 that we pass on.
That will not apply to farms.
There will be no inheritance tax to pay on any estate worth under £1 Million. A huge tax advantage for farmers.
The Financial Times says last year just 462 inherited farms across the UK were valued above £1m.
And the Government points out when you add in the other allowances, the real threshold is nearer £2 Million.
The tax specialist Dan Neidle says it could capture as few as 100 large landowners.
And not many of them - if any - will be in Wales.
When wealthy farms are eligible for inheritance tax they will face a rate of 20% rate instead of 40% like everyone else.
So let's get this in proportion.
I’ve heard much angst from the rural community about companies and rich individuals buying up farms to exploit tax loopholes. Well this change is designed to tackle that.
If there are genuine issues, if there are unintended consequences, let's address them as they arise.
And let's remember the huge contribution this budget will make to starting to repair our economy and our public services. Because of this budget our Senedd will have £21 billion a year to invest in Wales – the largest settlement in real terms in the history of devolution.
.
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