Welsh Government promises to fight negative effects of Brexit and austerity

21 Nov 18

The Welsh Government has worked hard to protect frontline services from the effects of austerity but there is still more to do, the Welsh cabinet secretary for finance Mark Drakeford says. 

Wales

 

As Cabinet Secretary for Finance, I am responsible for looking after the Welsh public finances, including tax and spending.

This includes setting the Welsh Government’s annual budget, overseeing public accounts and setting spending priorities in line with our commitments.

Since 2016, I have also taken a leading role, on behalf of the Welsh Government, in the negotiations with the UK government to secure a fair deal for Wales when the UK leaves the European Union in March 2019.

During these long years of austerity, the Welsh Government has worked hard to protect frontline services from the worst impacts of the UK Government’s ongoing and damaging policy.  

As a result of our hard work, spending on health and social services in Wales is 11% higher than it is in England – this is equivalent to an extra £290 being spent on health and social services per person in Wales. The increase in spending on the NHS and social services combined in Wales grew by 3.8% in 2017-18, the highest rate of the four countries in the UK.

We have continued to protect spending on education, with spending in Wales rising by 1.8% in 2017-18, the fastest growth of the four UK countries. We spend an extra £65 per person on education than in England.

Local government are a key priority for the Welsh Government – they deliver many of the services which so many people rely on every day.

Local authorities in Wales are spending £400m more than they were in 2010-11, however I recognise the pressures they are facing and we will continue to do all we can to protect them from the worst effects of austerity.

This year has been a busy one – we have taken another significant step on our devolution journey with the introduction of the first Welsh taxes in 800 years – land transaction tax and landfill disposals tax, which replace stamp duty land tax and landfill tax.

This has provided us with an opportunity to replace two existing UK taxes with alternatives more geared to the circumstances of Wales.


‘As Welsh Government budgets have been cut with austerity, my approach to setting tax rates has been guided by the principle that there should be no less funding available for public services as a result of tax devolution.’


These devolved taxes are helping to fund public services in Wales. As Welsh Government budgets have been cut with austerity, my approach to setting tax rates has been guided by the principle that there should be no less funding available for public services as a result of tax devolution.

This year, land transaction tax is set to provide £240m and landfill disposals tax £44m for public services.

The next stage of tax devolution will see the introduction of Welsh rates of income tax, in April.

With Welsh rates of income tax, the decisions about some £5bn in tax revenue will be made in Wales. This gives us the ability to think more widely about how tax policy can work with the Welsh Government's wider ambitions for Wales.

There is always a question about how interested people are in tax policy. But I was struck by the level of interest shown when I launched a national debate about new tax ideas for Wales last summer – we received hundreds of ideas in letters, emails and via social media.

Following this influx of ideas, we drew up a shortlist of four ideas for further exploration – a vacant land tax; a disposable plastics tax; a social care levy and a tourism tax. We are continuing to work on each of these ideas and are discussing whether the powers to introduce a vacant land tax should be devolved to Wales. We will work with stakeholders as we explore each tax idea in more detail.

As we look ahead to how the Welsh taxes – and how all our responsibilities – develop in the future, there is of course one very large shadow lying across every aspect of life in Wales: Brexit.

In the two years since the referendum, I have worked hard to put forward the Welsh Government’s clear view that a ‘no deal’ Brexit should not be an option the UK government should entertain, nor should it be a choice between a bad deal or no deal.

The UK government must act – and fast – to prevent the potential economic and social chaos of not having future arrangements in place with the EU.

We believe the UK should remain part of a customs union in the long term to enable friction-free trade with the EU and with more than 50 other countries beyond the EU.

There is no evidence that the potential economic benefits of free trade deals with other countries would outweigh the economic cost of customs barriers between the UK and EU.

Looking forward, it is clear austerity will not disappear overnight.

We will continue to face hard choices but the Welsh Government will continue to work to protect our vital public services and invest in our economy, while seeking to achieve greater fairness in society.

Mark Drakeford is the keynote speaker at the CIPFA Wales annual conference in Cardiff tomorrow.  

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    Mark Drakeford

    Mark Drakeford is the Welsh Government cabinet secretary for finance and local government

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