Ahead of the UK Government’s budget, Welsh Liberal Democrat Leader Jane Dodds writes on what we hope will be included in the budget and the Wales we hope it will help to create.
When Chancellor Phillip Hammond rises in the House of Commons to deliver his latest budget, he will do so at a pivotal time in Welsh and UK politics.
Across the country, people are waiting for policies that make a real difference to their lives. People are facing hard times and they’re looking to government to make their lives just that little bit easier.
For many, the situation is dire. Homelessness, food bank usage and child poverty are all far too high yet continue to rise. We need to ask ourselves what kind of society we are if we’re comfortable with this level of deprivation.
The budget is an opportunity to think about what kind of country we want Wales to be and to take the steps needed to make it a reality.
We want a society that looks after its most vulnerable citizens. A society that gives people a helping hand when they fall on hard times. A society where no-one is enslaved by poverty.
If the UK Government shares this vision, then this budget is an opportunity to realise it. The Chancellor can fund our public services properly and kickstart the Welsh economy to create prosperity Wales needs.
However, we cannot have both a prosperous Welsh economy and Brexit, something I think the Chancellor already knows. He’s unsuccessfully tried to shield the UK economy from the hard Brexit his colleagues advocate so feverishly.
Brexit will be disastrous for the Welsh economy; the UK Government’s own figures predict it will lead to a fall in Wales’ GDP of up to 9.5%. Businesses from Airbus to the family farm will be hurt and prompted to consider their futures.
Make no mistake, Brexit will cost livelihoods, worsen inequality and push more people into poverty. The Conservatives cannot claim to be the party of business whilst they remain the party of Brexit.
There is understandably uncertainty, concern and fear about the impact of Brexit on the Welsh economy. Some of these concerns relate to post-Brexit funding and could be alleviated by the Chancellor providing more details on the Shared Prosperity Fund.
However, no fund can make up for the damage Brexit will do to our economy. The UK Government must give the people the final say and the opportunity to choose an Exit from Brexit. Nothing else will protect the Welsh economy from devastation.
But this budget must be about far more than Brexit. It must address issues so far ignored by this government. It should address the inequality, lack of opportunity and feelings of being left behind that led many to vote to leave.
The Chancellor should start by fixing Britain’s broken tax system. Too many wealthy individuals and organisations still don’t pay their fair share of tax, whilst those struggling to get by do so without complaint despite seeing the services they rely on and pay for cut to the bone. The Liberal Democrats have a clear plan to fix our tax system.
We’d replace the loophole-ridden death tax that is inheritance tax and instead tax people who receive large gifts progressively, using the same rates as income tax, above a generous tax-free lifetime allowance.
We’d tax work and wealth in the same way by taxing capital gains and dividends through the income tax system. We’d reform Pension Tax relief so low-income workers are encouraged to save for their retirement and highest earners are no longer given generous tax relief. These steps would raise an additional £15 billion pounds a year.
Furthermore, we would restore Corporation Tax to 20%. This would still mean the UK had the lowest rate in the G7 and one of the lowest in the OECD, whilst raising an extra £7.5 billion in 2020/21.
Together these steps will give us the tax system we need to truly end austerity. The UK Government would be free to increase its spending, giving the Welsh Government the increased budget it needs to properly fund health, social care, education and local government.
Crucially, these taxes would also give the UK Government no excuses not to pause and fix Universal Credit. We supported the concept of Universal Credit in Coalition because the concept was and is a good one. It makes sense to simplify the system, combine multiple benefits and ensure work always pays. The catastrophic issues with Universal Credit have resulted from the shambolic way the Conservatives have attempted to implement it.
Work should always pay because there should be secure, full-time jobs for people to take. You shouldn’t do what George Osborne did and cut billions from Universal Credit so it is no longer enough for some people to live on.
You also shouldn’t force claimants to manually migrate to Universal Credit, prevent housing benefit from being paid directly to landlords, make claimants wait weeks before receiving payment and exclude those unable to register digitally. The UK Government must immediately stop the rollout of Universal Credit, ensure it is properly funded and these absurd rules are fixed before it is relaunched.
The taxes we propose would also allow for more funding for non-devolved public services. Few, if any services need this more than the police, who’re struggling to deliver an effective service in the face of a 4% fall in full-time equivalent police officers in England and Wales. The Home Office’s own leaked report states these cuts “likely contributed” to the rise in serious violent crime. The Liberal Democrats are therefore calling for an additional £300 million per year for local police forces in England and Wales.
The Chancellor should also use this budget to give Wales the investment and infrastructure it has been denied for too long. Last year the UK Government committed to a North Wales Growth Deal and revealed their openness to a Mid Wales Growth Deal. We welcomed both these announcements but urged the Growth Deals to be innovative, ambitious and transformational.
In the following year precious little progress appears to have been made on either deal. The government should prove us wrong by announcing a North Wales Growth Deal and a firm commitment to developing a Mid Wales Growth Deal.
Furthermore, the Chancellor should use this budget to right some of the Government’s greatest mistakes of recent years. It’s not too late for the government to change course by giving the Swansea Tidal Lagoon the green light and electrifying the mainline to Swansea.
Both the lagoon and electrification should go ahead, but their rejection cannot be an excuse for the UK Government to deprive Wales of the investment it needs. If the UK Government won’t back these projects, it must fund other transformational projects to ensure Wales doesn’t lose out.
This could be a pivotal budget for Wales and the UK, if only the Chancellor heeds our calls to stop Brexit, fix our broken tax system and invest in our communities.
We can do better and the Welsh Liberal Democrats demand better. We demand a better welfare state, so we never have to accept as inevitable rising homelessness, food bank usage and poverty. We demand better public services, services that are properly funded and properly serve their communities. We demand a better tax system, a fairer system that provides the tax revenues we need. We demand a free, fair and Liberal Wales.