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Posts Tagged ‘budget’

Budget live blog

I think most of you who follow this blog also follow the ITV Wales blog and our twitter feeds, but I still should have mentioned earlier that updates from me and from my colleagues have been appearing here throughout the day and are continuing to appear. Follow my twitter feed   or the ITV Wales feed for all the latest reaction.

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When he stands up to deliver his budget tomorrow (Wednesday), the Chancellor George Osborne will do so in very bleak circumstances.

The military is engaged in a new conflict which will have to be paid for whilst at home, the latest figures show inflation is rising and borrowing higher than anticipated.

All of which gives Mr Osborne very little room for manouevre, let alone to deliver what David Cameron predicted last week would be ‘the most pro-growth budget in a generation.

Almost certainly it will disappoint Welsh Labour and Plaid Cymru. Both parties have made their wishlists known.

Labour says it wants Mr Osborne to reverse the planned VAT increase on fuel and it may get some joy here. It’s expected the Chancellor will ‘do something’ to ease rising fuel prices which could inlcude postponing the VAT increase.

Welsh Labour and Plaid Cymru have both called on the Chancellor to reform the way Wales is funded. Fat chance of that happening.

Plaid also wants the Treasury to overturn an earlier decision to prevent the Assembly Government spending unused money at the end of the financial year. Again: fat chance.

Most likely Wales can expect to see no specific spending but rather the knock on effect of increased spending in England on apprenticeships, colleges and schools.

There’s been plenty of speculation  over the last few days, some of which seems better-informed than others. Let me add to it.

A possible merger of national insurance and income tax. There have been a lot of hints about this and there have been many calls for it to happen over the years. It’s thought to be extremely complicated to do and throws up a number of questions such as what happens to pensioners who pay no National Insurance? And what about employer’s contributions? What’s most likely is that Mr Osborne will signal the beginning of the process.

Income tax threshold. Last year the level at which you start paying tax was raised from £6,475 to £7,475. It’s likely to be raised at least to £8,000 in line with the coalition government’s aim of raising it to £10,000. But it’s also likely that the level at which people pay higher rate (40%) tax will be brought DOWN to pay for it.

Corporation tax. There’s some speculation tonight that Mr Osborne has a surprise tax cut planned and that it could be corporation tax which he cuts.

Pensions. At the moment, those whose state pension is below the minimum income guarantee (about £140) are eligible for benefits which bring it up to that level.  Bringing the basic level of pension up to that level would be a way of generating good headlines and stopping those pensioners from feeling like benfits claimants.

Fuel. As I mentioned, there have been very strong hints that the Chancellor will ease the burden on motorists by postponing or reducing the fuel duty increase planned for next month. Watch too for a possible answer to a request from the Wales Office that rural parts of Wales are included in a pilot scheme

Cigarettes and alcohol. You can expect a 17p increase on a packet of 20 cigarettes. Look for 3p per pint on strong lagers but a possible cut in duty on low-strength beer.

Troops. A possible £250 pay rise for 50,000 troops earning less than £21,000.

Online CD selling. A loophold which allows VAT-free CDs, DVDs etc to be imported from the Channel Islands is expected to be closed. That could mean up to £2 extra on such online CDs.

We’ll know soon enough. Remember, if these predictions come true, you read them here. If they don’t: nothing to do with me guv.

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At Welsh Labour’s special policy conference which was held at the weekend, the party launched its own Yes campaign for next year’s powers referendum. One of the main messages used to win over doubters within Labour was that the UK government would only look at reforming the way Wales is funded – the notorious Barnett formula – once a Yes vote had been secured.

But using that tactic has become a lot more difficult today after the Chief Secretary to the Treasury, Danny Alexander, effectively ruled out any change to the formula even after the referendum.

Questioned repeatedly on this by AMs on the Finance Committee, Mr Alexander said ‘At a time when our most pressing priority is to sort out the deficit, this is not the time to start opening up debate on reform of the Barnett formula.’

What, asked Plaid’s Janet Ryder, even if there’s a Yes vote? Once again the reply was that all of (the UK government’s ) attention had to be devoted to the problem of getting the public finances under control, not opening up discussion on a funding formula.

Some of the committee members noted that Mr Alexander is a Scot representing a marginal Scottish constituency and that any change would hit funding to Scotland.

But the Chief Secretary stuck to his insistence that getting out of the deficit came first.

A few other snippets. Plaid’s Chris Franks claimed that all the big spending projects seemed to start or end in London. In response Danny Alexander listed other projects outside of London, but which were all in England.

‘You’ll mention Wales in a minute,’ Chris Franks interrupted.

And get ready to hear a lot about End of Year Flexibility. It’s a technical bit of financial jargon but former finance minister Andrew Davies knows a thing or two about that. He struck home a fair few times, accusing the Treasury of seizing for itself money that had been voted by parliament to go to Wales.

Tense and heated in some parts then, but when I grabbed a word with Danny Alexander on his departure he still said he’d found it a ‘positive discussion.’

 

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The dust is beginning to settle on yesterday’s draft budget from the Assembly Government, but a lot of that dust is still obscuring the details of spending cuts. In tonight’s Sharp End, we’ll try to sweep up some of that dust for you. I’ll be interviewing the First Minister Carwyn Jones and my guests in the studio are the Conservative AM/MP Alun Cairns and Plaid Cymru’s economics guru Eurfyl ap Gwilym.

Meanwhile Lynne Courteney’s report focusses on Blaenau Gwent. Is there a more interesting Welsh constituency in political terms? It’s been a Labour safe seat, lost by Labour, held by an Independent and won back (at Westminster) by Labour. Now the cancer drugs campaigner Jayne Sullivan is going to try to win it as an independent although Labour in the shape of AM Alun Davies has been doing its best to win it back.

Lynne’s report also features performances from some amazingly talented youngsters at the  inauguration show for Blaenau Gwent’s Youth Mayor which was held earlier this week.  I’ve been priveleged to be invited to present the chains of office each year for the last five years. This year’s show was no exception in terms of astonishing talent and enthusiasm.

Join me on Sharp End just after 11pm on ITV1 Wales. Even if you don’t fancy the politics, watch out for the singing and dancing!

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I won’t even attempt to give you a comprehensive round-up of the Welsh Assembly Government’s Draft Budget: you can get that from Gareth Hughes here. Instead here are a few random notes and snippets from an intense day.

* The fact that the Higher Education budget has been cut by nearly £37bn is surely a sign that higher tuition fees are now inevitable. If so, what sort of level will they be set at? Rumour has it that the plan was to set Welsh tuition fees at somewhere between the current £3k and England’s £9k, maybe at around £5k. Is that still likely or possible?

* Ministers already have a pretty good idea which individual programmes they’ll be cutting; we’ll all know by Christmas.

* Was the reason that Wales hasn’t followed Scotland’s idea of a pay freeze for higher earners in the public sector because all the pay settlements that the Assembly Government can influence have already been agreed meaning a new pay freeze would have affected practically nobody?

* RIP SCIF. I may be the only one who cares about this: the Assembly Government’s SCIF programme is dead and buried. SCIF was a pot of £400m of capital funding available to ‘innovative, cross-cutting and strategic capital projects.’ Amongst these projects were schools in Wrexham, Newport and Blaenavon; a scheme to build 400 affordable homes across Wales; another to transform the Heads of the Valleys into a low carbon region; a pan-Wales network of anaerobic digestors; rail investment, part of the Heads of the Valleys dualling scheme;  flood and coastal defences. Finance minister Jane Hutt said all the projects which had won SCIF funding would continue to be invested in. But the move which would have delivered “a step change in the Assembly Government’s approach to planning and delivering capital investment strategically” is over.

 

 

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‘Apprehensive.’ That was the answer the Deputy Minister for Children, Huw Lewis, gave when I asked him how he was feeling ahead of the publication tomorrow of the Assembly Government’s draft budget. ‘Anyone who works in the public realm would be apprehensive about spending in the future,’ he added.

I had been asking him about the possible effect of spending cuts on the Heads of the Valleys dualling scheme , but he refused to speculate on that or any other details before publication which is expected at 3pm tomorrow.

I’d thought that project  might be a target for delay or cutbacks simply because the one thing we know for certain before tomorrow is that capital spending (in other words spending on long-term projects like buildings or transport) is going to see the biggest reduction.

It’ll be cut by 41% over the next four years with the majority of that cut next year. Not only that but, as part of its response to the recession, ministers have already spent part of the capital budget for the next two years.

In an early sign of the political position that you can expect the Labour-Plaid Cymru coalition to take after tomorrow, Mr Lewis said that ministers are ‘not simply going to throw up our hands and say we are victims of a bully’  (exactly what the Assembly Government’s critics say it HAS been doing since the UK government’s spending review).

Well no longer, according to Huw Lewis. He said tomorrow will show that ‘we are not passive victims. We have devolution, we have the Assembly government and we have the option of a referendum next year to enhance our power.’

On the other side of the political divide, the Welsh Conservatives have already made their position clear.

They think the health budget alone should be protected from cuts. I asked their leader Nick Bourne if he agreed with estimates made by his opponents that ringfencing health would mean cuts of 20-25% on every other budget.

Yes, he said. And he acknowledged that not protecting health would mean reductions would be more in the order of 11% to each department.

He won’t say, though, where the 20% cuts would come although he insists that his party has ‘done the work’ of identifying potential savings.

The Welsh Liberal Democrat leader, Kirsty Williams, is also refusing to spell out where her party would make cuts if they were making the budget decisions.

What she has said is that she and her colleagues have identified ‘additional waste and capacity’ in Assembly Government spending.

Expect her to keep the focus on the way ministers have spent the money they’ve  had over the last ten years.

So the battle lines are drawn. Bring on the budget.

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