GovWire

The Chancellor has delivered a Budget to fix the foundations to deliver on the promise of change after a decade and a half of stagnation. She set out plans to rebuild Britain, while ensuring working people across Wales dont face higher taxes in their payslips.The UK Government was handed a challenging inheritance; 22 billion of unfunded in-year spending pressures, debt at its highest since the 1960s, an unrealistic forecast for departmental spending, and stagnating living standards.

This Budget takes difficult decisions to restore economic and fiscal stability, so that the UK Government can invest in the economic future of Wales and lay the foundations for growth across the UK as its number one mission.

The Chancellor announced that the Welsh Government will be provided with a 21 billion settlement in 2025/26 the largest in real terms in the history of devolution. This includes a 1.7 billion top-up through the Barnett formula, with 1.5 billion for day-to-day spending and 250 million for capital investment.

Secretary of State for Wales Jo Stevens said:

This Budget has delivered for Wales for the first time in a generation.

The biggest settlement since devolution will provide a record boost to spending for the Welsh Government to support public services like the NHS while thousands of working people across Wales will benefit from todays increases to their wages.

Little more than a week after the anniversary of Aberfan disaster it is fitting that we have committed 25m to make coal tips safe. It is testament to the new relationship between the UK and Welsh government, based on cooperation, respect and delivery.

We will also drive economic growth and support our world-leading Welsh industries with Investment Zones, Freeports and funding for communities across Wales.

We have prioritised money to support our steel communities, with nearly 100m to support workers and businesses.

This Budget delivers on whats important to the people of Wales, and shows the differencewe can make when two governments work together for the benefit of all.

Protecting working people and living standards

While fixing the inheritance requires tough decisions, the Chancellor has committed to protecting the living standards of working people. The decisions taken by the Chancellor to rebuild public finances enable the UK Government to deliver on its pledge to not increase National Insurance or VAT on working people in Wales, meaning they will not see higher taxes in their payslip.

• The National Living Wage will increase from 11.44 to 12.21 an hour from April 2025. The 6.7% increase worth 1,400 a year for a full-time worker is a significant move towards delivering a genuine living wage.
• The National Minimum Wage for 18 to 20-year-olds will also see a record rise from 8.60 to 10 an hour.
• Working people will benefit from these increases, with there estimated to be over 70,000 minimum wage workers in Wales in 2023.
• The Chancellor has made the decision to protect working people in Wales from being dragged into higher tax brackets by confirming that National Insurance Contributions thresholds will be unfrozen from 2028-29 onwards.
• The Chancellor is also protecting motorists by freezing fuel duty for one year - a tax cut worth 3 billion, with the temporary 5p cut extended to22 March 2026. This will benefit an estimated 2.1 million people in Wales, saving the average car driver 59, vans 126 and Heavy Goods Vehicles 1,079 next year.
• To support Welsh pubs and smaller brewers in Wales, the UK Government is cutting duty on qualifying draught products by 1p, which represent approximately 3 in 5 alcoholic drinks sold in pubs. This measure reduces duty bills by over 70 million a year, cutting duty on an average strength pint in a pub by a penny. The relief available to small producers will be updated to help smaller brewers and cidermakers.
• Over 600,000 Welsh pensioners will benefit from a 4.1% increase to their new or basic State Pension in April 2025. This is an additional 470 a year for those on the new State Pension and an additional 360 a year for those on the basic State Pension.
• Households eligible for Pension Credit will get 465 a year more for single pensioners and up to 710 a year more for couples due to a 4.1% increase in the Pension Credit Standard Minimum Guarantee, benefitting 80,000 pensioners in Wales.
• Around 1.1 million families in in Wales will see their working-age benefits uprated in line with inflation - a 150 gain on average in 2025-26.
• Reducing the maximum level of debt repayments that can be deducted from a households Universal Credit payment each month from 25% to 15% will benefit a Welsh family by over 420 a year on average.
• The weekly earnings limit for Carers Allowance will be increased by 45 a week from April next year, expanding support to more carers in Wales and helping them balance work and caring responsibilities. This is the largest ever increase to the earnings limit and provides certainty for carers with a commitment that the earnings limit will increase with the National Living Wage in the future.

Rebuilding Britain

This UK Government will not make a return to austerity and will instead boost investment to rebuild Britain and lay the foundations for growth in Wales. This includes 160 million of targeted funding for the Welsh Government, of which 150 million is in capital investment.

• The UK Government will deliver 88 million for City and Growth Deals, unlocking growth and investment across Wales.
• The government also confirms 80 million funding for the Port Talbot / Tata Steel Transition Board, with work already underway to support workers and businesses affected by decarbonisation at Tata Steel.
• 29 million of funding will be provided to the Welsh Government for the necessary build costs of border facilities in Holyhead and Pembrokeshire.
• Essential work being undertaken by the Welsh Government to keep disused coal tips maintained and safe will be supported by 25 million of funding in 2025/26.
• The Budget gives certainty to local leaders and investors, confirming funding for the Investment Zones and Freeports programmes across the UK - including the Celtic Freeport where tax sites will be operational from next month.
• The Chancellor committed the UK Government to working closely with the Welsh Government on the Industrial Strategy, 10-year infrastructure strategy and the National Wealth Fund - to ensure the benefits of these are felt UK-wide and as part of the relationship reset between governments. These will mobilise billions of pounds of investment in the UKs world-leading clean energy and growth industries.
• Under-served parts of Wales will benefit from the rollout of digital infrastructure enabled by over 500 million of UK-wide investment in Project Gigabit and the Shared Rural Network.
• A corporate tax roadmap will provide businesses with the stability and certainty they need to make long-term investment decisions and support our growth mission. It confirms our competitive offer, with the lowest Corporate Tax rate in the G7 and generous support for investment and innovation.
• The UK Government will also proceed with implementing the 45%/40% rates of the theatre, orchestra, museum and galleries tax relieffrom 1 April 2025to provide certainty to businesses in Wales thriving cultural sector.

Repairing public finances

The Chancellor has made clear that, whilst protecting working people with measures to reduce the cost of living, there would be difficult decisions required. The Budget will ask businesses and the wealthiest to pay their fair share while making taxes fairer. This will go directly towards fixing the foundations of the UK economy.

• The rate of Employers National Insurance will increase by 1.2 percentage points, to 15%. The Secondary Threshold the level at which employers start paying national insurance on each employees salary will reduce from 9,100 per year to 5,000 per year.
• The smallest businesses will be protected as the Employment Allowance will increase to 10,500 from 5,000, allowing Welsh firms to employ four National Living Wage workers full time without paying employer national insurance on their wages.
• Capital Gains Tax will increase from 10% to 18% for those paying the lower rate, and 20% to 24% for those paying the higher rate.
• To encourage entrepreneurs to invest in their businesses Business Asset Disposal Relief (BADR) will remain at 10% this year, before rising to 14%on 6 April 2025and 18%from 6 April2026-27.
• The lifetime limit of BADR will be maintained at 1 million. The lifetime limit of Investors Relief will be reduced from 10 million to 1 million.
• The OBR say changes to CGT will raise over 2.5 billion a year and the UK will contin
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