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John Ball on the Latest Westminster Budget

If there was any doubt about the irrelevance of Westminster to us in Cymru, Wednesday’s budget proved it.

The Chancellor – and his government’s economic illiteracy – was brought to the fore. He conveniently disregarded a simple fact, the UK – and by extension – Cymru, is in recession. The idea that from this situation the economy will grow by 2% within a year is nonsense and is clearly a piece of unfounded optimism aimed at the media.

The only way out of recession is to encourage spending, which the Chancellor ignored. The cut in National Insurance is irrelevant, it is based on a percentage of income and consequently will make little difference to low wage earners, of which there are many in Cymru.

Other measures will have little effect on the economy. The increase in the threshold for the payment of VAT will help some businesses reduce the administrative burden associated with this tax, and despite claims that it is a positive move, simply reflects inflation. A much higher threshold would have a positive effect, but the tax is needed.

The increase in child benefit might help lower income families, however, no benefits are paid automatically and must be applied for and assessed.

The announcement of a new tax credit system for businesses with a budget of less than £15m is interesting and may be of benefit to small businesses, of which there are many in Cymru. How this will work is unclear as is the definition of what actually constitutes a budget, an idea that has a political colour to it – pretend to help small businesses.

The extension of the windfall tax on energy companies is to be welcomed, although the was clearly a political stunt aimed at the general public. There were two other political stunts clearly aimed at the Tories supporters. Plans, suitably vague and untimed, to address the so-called non-dom tax status were announced, certainly to placate public outrage at this form of tax evasion. The practicalities of implementing this tax avoidance scheme were not announced, care must be taken not to offend the party’s paymasters.

The reduction in capital gains tax will though be welcomed by the party faithful.

Except for the freeze on fuel duty, which will be welcomed in rural areas, the marginal help with the reduction in National Insurance payment and changes in child credit (which are not automatic and have to be applied for), there was nothing in this budget for Cymru.

And yet there was. The purchase of land at Wylfa was a clear political gesture aimed at saving a very vulnerable M.P.’s seat whilst at the same time no doubt hoping to re-open the divisive debate on the future of nuclear energy. The Senedd is better off by £170million – a drop in the political ocean.

Any budget is carefully dissected by commentators and the media, and despite its irrelevance, this was no different although important issues were ignored – or not understood. The Chancellor failed to mention that the budget deficit – the difference between tax collected and government spending – for the last financial year was £131bilion. A part of the Chancellor’s speech, ignored by the media, threw the state of the UK economy in sharp relief. The UK’s National Debt – the amount of money owed to the rest of the world – is over two trillion (12 noughts!) pounds, the highest on record.

The chancellor announced plans to reduce the debt by some £9bn by 2028. No chancellor has ever successfully reduced the national debt and this one will not!

And finally, a new record. Taxation in the UK is the highest for 70 years and the highest level of personal taxation in all of Europe. And we are told that an independent Cymru would be a high tax economy. This government should know.

This article was written for YesCymru by Dr John Ball

Dr John Ball is a former lecturer in economics at Swansea University. He began work as a mining trainee, before moving on to different occupations before leaving work to attend Cardiff University as a mature student. He has taught at a number of universities both in Cymru and Europe. He is a recognised expert on regional policy who has been an advisor to the former Assembly shadow economic minister and has given evidence on five different occasions to the House of Commons Select Committee on Welsh  Affairs. He is a lifelong, committed nationalist.

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