Budget 2020: Give Wales the ‘fiscal firepower’ it needs

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Plaid Cymru Treasury Spokesperson, Ben Lake MP, has called for Wales to be given the “fiscal firepower it needs for these increasingly uncertain times”, ahead of the 2020 Westminster Budget.

His call for the devolution of tax powers are part of a three-point plan that Plaid Cymru has called for the Westminster Chancellor to include in the Budget, which are:

  • A rebalancing of the economy aimed at fixing the deep geographic economic divides
  • Upgrading Wales’s fiscal firepower with the devolution of taxes including corporation tax, APD and VAT
  • A package of measures to address the uncertainty created by recent floods, the Coronavirus and the ongoing EU-UK trade talks

Before the Chancellor’s annual statement to the House of Commons on Wednesday (11 March), the Ceredigion MP said that the Westminster Government must honour its promise that Wales would receive new powers as result of constitutional change brought about by the UK’s EU exit.

Alongside new tax powers, Ben Lake has also called for certainty over the Shared Prosperity Fund – the supposed multi-billion pound replacement for EU Structural Investment Funds, that made up a significant amount of the Welsh Government’s Budget.

Despite talk of ‘levelling up’ the nations and regions, Ben Lake said the Westminster Government is “compounding the inequality” between different parts of the UK as things stand. Mr Lake pointed at transport spending, where Wales (£208) gets three times less per head when compared to London (£655), and the core research budget with almost half (46%) of it going to three cities – London, Oxford and Cambridge.

“A fundamental rebalancing” in how the Government invests is needed, Mr Lake argues, if it is going to level up anywhere other than London. If the Government were to ‘level up’ transport investment spending per head across the UK to the current London level, it would mean spending an extra £19bn per year.

With the Coronavirus crisis likely to worsen, Mr Lake has floated the idea of following Italy’s example in providing tax credits for businesses in affected areas and suspending mortgage repayments for affected individuals. He said this could be done alongside implementing measures adopted by the UK during the foot-and-mouth epidemic, including deferring tax deadlines and providing emergency grants.

Workers on zero-hour contracts and self-employed people were signalled out as needing specific support by the Plaid MP.

Ben Lake said:

“The Budget comes on the back of devastating flooding in many parts of the UK, and there is little let-up as the economy faces serious headwinds in the form of ongoing EU-UK trade negotiations, the Coronavirus and global economic turbulence.

“Our public services are fundamentally not equipped to deal with these potential and unfolding crises. Years of austerity has stripped organisations like our NHS of the capacity to deal with such issues.

“Plaid Cymru has put forward a three-point plan ahead of the Budget to address these issues.  

“As things stand the Westminster Government’s approach is compounding the inequality between the different nations and regions of the UK. Talk of ‘levelling up’ places outside of London is simply not credible when they spend three times per head on transport in the English capital when compared to Wales.  

“The same is true of research spending – almost half the core funding for research goes to three cities in England. So the second thing we need to see today, if the Government is serious about their ‘levelling up’ agenda, is a fundamental rebalancing of where Westminster invests.

“The Westminster Government must first give Wales the fiscal firepower it needs for these increasingly uncertain times. That means powers to create a tax system that will give the Welsh economy the shot in the arm that it so desperately needs.

“The spectre of Coronavirus is also going to play a big part in today’s Budget.

“Italy has already announced a multi-billion Euro package for its economy, including measures such as tax credits and freezes on mortgage payments. And so finally, we are calling for the UK should explore similar steps, as well as measures adopted during the foot-and-mouth epidemic such as deferring tax deadlines and providing emergency funding.

“Today, the health of our people must be a priority, but I fear the health of our economy is far from fighting fit and ready to face down the challenges ahead.”

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