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- Economy turning a corner, with inflation expected to fall to target next quarter, wages consistently rising faster than prices and better growth than European neighbours.
- Chancellor capitalises on progress with Budget for Long Term Growth, sticking to the plan by putting 640 a year back into the pocket of Welsh workers thanks to changes at Autumn Statement and a second National Insurance tax cut in April for over 1.2 million working people in Wales.
- High Income Child Benefit Charge to be assessed on a household-basis by April 2026, with immediate support for working families by increasing the threshold to 60,000 and halving the rate at which Child Benefit is repaid representing a 1,260 boost on average for around half a million working families across the UK.
- The average car driver will save 50 this year as the 5p cut and freeze to fuel duty is maintained until March 2025, while pubs, breweries and distilleries in Wales will benefit from a further freeze to alcohol duty until February 2025 also saving consumers money on their favourite tipple.
- New tax reliefs and investments will help establish the UK as a world leader in high-growth industries such as the creative sector, advanced manufacturing and life sciences, while the future of nuclear in Wales has been secured through a deal to acquire the Wylfa site in Anglesey.
- Welsh Government to receive around 170 million additional funding through the Barnett formula, on top of the additional 820 million it has received through its operation since its record 18 billion per year settlement at Spending Review 2021.
- Budget for Long Term Growth sticks to the plan by delivering lower taxes and more investment, while increasing size of economy by 0.2% in 2028-29 and meeting fiscal rules taking the long-term decisions needed to build a brighter future.
More tax cuts for working people and more investment in high-potential industries headlined Chancellor Jeremy Hunts Budget for Long-Term Growth today, Wednesday 6 March.
With the independent Office for Budget Responsibility (OBR) confirming inflation is set to fall to target a year earlier than previously expected, wages rising consistently and the economy outperforming European neighbours, the Chancellor said he would stick to the plan to improve living standards by rewarding work and growing the economy.
Welsh Secretary David TC Davies said:
This is a hugely significant Budget for Wales which signals this governments continued ambition to deliver for people across the country.
The acquisition of Wylfa as a site for new nuclear development is fantastic news for Anglesey and the wider Welsh economy. Its the next step on our path to an energy secure and net zero future, while also laying the foundations for a huge economic boost.
Over 1.2 million working people in Wales will benefit from todays announcement of a National Insurance cut and families will be better off as we raise the threshold for claiming Child Benefit.
We are also continuing to invest directly in communities with 20 million for Rhyl, 5 million for Newport, 1.6 million in Theatr Clwyd and 10 million for Venue Cymru. And we have announced 5 million for an agri-food Launchpad which will support projects focused on issues like net zero farming across mid and north Wales.
There will also be around 170 million in Barnett consequentials for the Welsh Government, on top of its record block grant, to spend on devolved responsibilities like health and education.
This is a Budget that puts more money in the pockets of millions of people and shows that the UK Government continues to deliver for people across Wales.
Building on the 2 percentage point cut to Employee National Insurance at Autumn Statement, Mr Hunt announced a second 2p cut from 10% to 8% from April. The Chancellor also went further with tax cuts for the self-employed, having reduced Class 4 NICs from 9% to 8% and abolished the requirement to pay Class 2 NICs at Autumn Statement. Today he announced a further 2p cut to Class 4 NICs for the self-employed to 6%.
Combined with changes at Autumn Statement, todays announcements represent a UK-wide tax cut of over 20 billion per year that amounts to a 640 average annual tax cut for over 1.2 million workers in Wales. They also chart a path towards continued cuts to National Insurance when doing so can be achieved without increasing borrowing or compromising high-quality public services. The OBR says these reductions will lead to the equivalent of around 200,000 extra full-time workers by 2028/29, as people increase their working hours and move into work. This boost is why the Chancellor has prioritised NICs cuts in his Budget for Long Term Growth, and why he will continue to do so when fiscally responsible. He set out that his long-term ambition is to end the unfairness of double taxation of work.
Mr Hunt also announced that the High Income Child Benefit Charge will be assessed on a household basis by April 2026, with a consultation to come on achieving this.
To ensure working families benefit from increasing their earnings before this change is made, the threshold to start paying back Child Benefit will increase in April from 50,000 to 60,000 a 20% increase which will take 170,000 families UK-wide out of paying the charge this year while Child Benefit will no longer need to be repaid in full until earnings exceed 80,000. This represents a 1,260 boost on average for around half a million working families, rising to nearly 5,000 for some families when combined with tax cuts since Autumn Statement. This will put an end to the current unfairness, where two parents earning 49,000 a year receive the full Child Benefit while a household with a single earner on over 50,000 does not. The OBR says the immediate changes to the HICBC will lead to an increase in hours worked equivalent to around 10,000 more people entering the workforce on a full-time basis.
New tax breaks and investments will help to establish the UK as a world-leader in high-growth industries. The UKs creative industries will be backed by over 1 billion, including higher tax reliefs to lower the cost of producing visual effects in high-end TV and film, a 40% relief on gross business rates until 2034 will be introduced for eligible film studios, and a new tax credit for independent British films with a budget of less than 15 million. Orchestras, museums, galleries and theatres will also benefit from a permanent 45% tax relief for touring productions and 40% relief for non-touring productions. The UK Government will also provide 10 million for Venue Cymru, Conwy through the Levelling Up Fund and 1.6 million towards the redevelopment of Theatr Clwyd, helping to secure the future of the largest producing theatre in Wales, known for its world class theatre productions and support of the Welsh Language.
A 360 million package will support innovative R&D and manufacturing projects across the life sciences, automotive and aerospace sectors, with a further 45 million of funding to accelerate medical research into common diseases like cancer, dementia and epilepsy while the Green Industries Growth Accelerator will be allocated an extra 120 million to build supply chains for offshore wind and carbon capture and storage.
Opportunity will be spread across Wales, with millions in funding for Rhyl through the Long-Term Plans for Towns and the vital rural economy across Mid and North Wales. The future of Welsh nuclear has also been secured after the UK Government came to an agreement with Hitachi to acquire the Wylfa site in Ynys Mn. North Wales and Ynys Mn have a proud history in the nuclear industry, and the skills and expertise to support future projects with the potential to transform the local economy.
The Chancellor also took steps to make the tax system simpler and fairer. The non-dom tax regime will be abolished and replaced with a fairer system from April 2025 where new arrivals to the UK pay the same tax as everyone else after four years raising 2.7 billion a year by 2028/29. As the oil and gas sectors windfall profits from higher prices are expected to last longer, the sunset clause on the Energy Profits Levy will be extended by a year to March 2029, raising 1.5 billion while encouraging investment in the UKs energy security by promising to legislate for its abolition should market prices fall to their historic norm sooner than expected.
As a result of decisions at Spring Budget, the Welsh Government is receiving around 170 million in additional funding in 2024-25 through the Barnett formula. This comes on top of its record 15 billion per year settlement at Spending Review 2021 and the 820 million of additional funding it has received since then through the operation of the Barnett formula.
Accompanying forecasts by the OBR confirm that the combined impact of decisions taken at Spring Budget and the preceding two fiscal events will increase the size of the economy by 0.7% and increase total hours worked by the equivalent of 300,000 full-time workers by 2028-29- with the combined impact of government policy since Autumn Statement 2022 reducing the tax burden in the final year of the forecast by 0.6%. Todays announcements will reduce inflation in 2024/25, bring the equivalent of over 100,000 people into the workforce by 2028-29 and permanently grow the economy by 0.2% - with borrowing falling in every year of the forecast.
Lower taxes
With the economy turning a corner and debt on track to fall as a share of GDP, the Chancellor delivered further tax cuts for working people rewarding work, boo