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Rebecca Evans MS, Minister for Finance and Local Government

First published:
17 October 2022
Last updated:

In the wake of the ongoing turmoil caused by the mini-budget, the new Chancellor has now reversed most of the tax changes made a few short weeks ago in the hope of stabilising the financial markets and reducing the size of the hole fracturing public finances.

The economic outlook was already challenging, as a result of EU exit, the pandemic and cost-of-living crisis.

But the perilous situation which the UK’s public finances are now in is inexcusable. This is a direct result of the flawed and reckless measures announced in the UK Government’s mini-budget on 23 September and which were the central pillar of the Prime Minister’s leadership campaign.

The fall-out from the mini-budget has been mayhem in the financial markets; mortgage costs have risen sharply, as has the cost of government borrowing; the Bank of England has had to take extraordinary measures to prevent a collapse in pension funds; and household budgets have been stretched even further.

Our economy and UK finances are now in a far worse situation than they were less than a month ago as a result.

The Chancellor’s statement today has signalled a new era of austerity.

Those hit hardest will be the households already struggling to make ends meet. Our public services are facing cuts, and jobs could be lost. The actions announced by the Chancellor will shrink the economy and make the recession deeper and last longer – the opposite of the so-called plan for growth.

While the Chancellor stated the UK Government’s priority in making the difficult decisions that lie ahead will always be the most vulnerable, he offered nothing of comfort to them today. The announcement of changes to energy support only creates additional uncertainty for households and businesses which are already worrying about costs.

The UK Government has repeatedly failed to take opportunities to improve our energy security for the future and address the climate emergency. It must be more ambitious on investment in green energy and decarbonisation.

The Chancellor must use his 31 October statement to provide reassurance that we will not see spending cuts that will affect public services, jobs, and our economy. Instead, he has a real opportunity to provide much-needed support to the most vulnerable, funded by using the UK Government’s tax levers more equitably, including taxing the windfall gains in the energy sector.

Inflation has already significantly eroded the Welsh Government’s budget settlement to worryingly low levels. This Statement continues to fall far short of what is needed to meet the very significant challenges faced by our public services and workers. The UK Government must provide us with the additional budget flexibilities to support our response in Wales.

While we will not be able to protect people and services from the full force of the UK Government’s actions, we will do everything we can to help households, services and businesses through this crisis.

We will publish the Welsh Government’s Budget on 13 December and provide a considered and careful response to the crisis taking into account the full fiscal forecast provided by the Office for Budget Responsibility to provide as much certainty as possible for our public services and partners.

While our resources are limited, and today’s announcement will do nothing to alleviate the already challenging funding position facing the Welsh Government, our priority will be to shield the most vulnerable and create a stronger, fairer and greener Wales that safeguards the wellbeing of our future generations.