Fiscal statement is a mixed bag for Wales

The Bevan Foundation reacts to the Chancellor’s fiscal statement on 17th November.

The Chancellor’s announcements on taxes, benefits and public spending are a mixed bag for people in Wales. It gives away with one hand and takes away with the other. 

Most welcome is the news that most benefits and pensions will be uprated by inflation from April and that the benefit cap – the maximum amount that any household can receive – will be lifted by inflation also. An inflation-linked rise is usual practice and the fact that it is welcomed shows the effectiveness of the threat of a lower uplift.

This wasn’t the only welcome news: the Chancellor announced £900 help with the fuel bills of low-income households and we shouldn’t forget the rise in the National Living Wage which will benefit thousands of workers in Wales. 

But at the same time, low income households lose out considerably.

Low income families already live with a rate of inflation that is higher than the 10.1% uplift that’s been awarded in benefits. It will be made all the worse by prices rises in the pipeline – social housing rents up 6.5% in Wales, freezing of the rates of Local Housing Allowance and the raising of the so-called energy price cap to name just a few.  All of these will more than offset any gains. 

Low-income working households face a really significant squeeze.

We are already hearing about people just above eligibility to receive Universal Credit who are really struggling. With the tax threshold fixed, more and more working people will find themselves either having to pay income tax or paying more than they previously did. With inflation likely to continue at a high rate yet little if any state help, the ‘working poor’ are likely to be hard hit. 

And public services look set to be hit hard

Public services are already struggling to meet demand and cover soaring costs. With an increase of £1.2 bn reported over two years, behind the pound signs there will undoubtedly be cuts to a wide range of Welsh Government and local authority services.

The Welsh Government must do everything it can to reduce the pressure faced by families – as set out in our recent report. This includes uplifting Welsh grants and allowances by inflation just as the Chancellor has done, and setting out a progressive budget for the next year. 

Our briefing on the cost of living, which includes the implications of the fiscal statement, will be out next week.