Osborne Budget tough but fair, says Cheryl Gillan

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Welsh Secretary Cheryl Gillan says the Budget will help Wales and the rest of the UK to a "more prosperous future".

The Welsh Assembly will have 15% less money in five years time

She and Chancellor George Osborne said it was tough but fair, with VAT up to 20% in 2011, child benefit frozen and personal income tax allowance rising.

But Welsh Labour and Plaid Cymru claim the coalition government's measures will hit the poor and vulnerable most.

Welsh Lib Dems said it "struck the right balance" between "essential cuts" and protecting services.

Welsh Secretary Cheryl Gillan Cheryl Gillan says the Budget plans for a "more prosperous future for Wales".

Mr Osborne said his measures would tackle the deficit as well as encouraging an enterprise and growth agenda.

He also placed new limits on housing benefits claims and announces medical assessments for new and existing Disability Living Allowance claimants.

Mrs Gillan said the Budget set out a "balanced" package of measures will help tackle the largest deficit in peacetime history, while safeguarding support for the poorest and most vulnerable in society.

Budget headlines

  • VAT to increase 20% from January
  • Income tax personal allowance to increase by £1000 to £7475
  • 25% cuts to most departmental budgets over four years
  • Child benefit frozen for next three years
  • New limits to housing benefits claims
  • Tax credits to be cut for families earning over £40,000
  • Disability Living Allowance claimants to undergo medical assessments
  • Higher rate of Capital Gains Tax to rise to 28%
  • Levy on banks
  • Corporation Tax to be cut by a penny in the pound for each of the next four years
  • State pension to be linked to earnings (or inflation or 2.5% - whichever is higher) from April 2011
'Freedom and fairness'

Mrs Gillan said: "This unavoidable Budget has been tough but fair, based on the principles of responsibility, freedom and fairness.

"It will help our country pay the bills for the overspending of the past, while restoring confidence in the economy and planning for a more prosperous future for Wales and the rest of the UK."

She said thousands of businesses across Wales would benefit from the budget, giving the example that a three-year scheme would exempt businesses outside London, and south east and east England from up to £5,000 of employer National Insurance contributions for the first 10 employees hired.

Mrs Gillan added: "In Wales almost 1.1m basic rate taxpayers will benefit by up to £170 each by the £1,000 increase in income tax personal allowance for those aged under 65."

Labour's shadow Welsh Secretary Peter Hain said the "scandal" of the budget was that "the poorest will be hit the worst".

Peter Hain

Start Quote

As the Financial Times has said, areas like Wales that rely most on the public sector will be hit hardest by the deep cuts announced to public spending”

End Quote Peter Hain MP Shadow Welsh secretary

The Neath MP said: "Increasing VAT to 20% will affect everyone, most of all pensioners and those in poverty.

"As the Financial Times has said, areas like Wales that rely most on the public sector will be hit hardest by the deep cuts announced to public spending.

"Worse still, these big cuts are based upon a big lie: that the public finances are so terrible, the cuts must be faster and deeper than Labour's very tough deficit reduction plan which would have halved borrowing within four years."

Plaid Cymru's parliamentary leader Elfyn Llwyd warned the budget meant that the number of Welsh public sector jobs under threat has now increased by over 15,000 more than previous estimates.

He said cuts to the social welfare budget would punish the vulnerable disproportionately.

Mr Llwyd said: "We were already facing significant cuts and tax rises coming in as a result of the Labour Party which would have cost 45,000 jobs in Wales - but what we have today is an astonishing increase to that.

"These additional savage cuts from the Conservatives and Liberal Democrats will now put a further 15,000 jobs at risk in Wales - a total of 60,000 Welsh jobs.

Roger Williams MP

Start Quote

No-one likes cuts, but this Budget has struck the right balance between finding essential cuts and protecting front line services”

End Quote Roger Williams MP Liberal Democrat

Mr Llwyd said the Budget contained a number of welcome measures - such as restoring the link between pensions and earnings - but took massive amounts of money out of the economy risking a "double dip" recession.

Brecon and Radnorshire Lib Dem MP Roger Williams welcomed the announcement that 50,000 workers in Wales would be taken out of income tax.

Mr Williams said: "No-one likes cuts, but this Budget has struck the right balance between finding essential cuts and protecting front line services.

"50,000 workers in Wales will be taken out of income tax, with many more receiving a £200 tax cut.

"This is positive action that will safeguard the lowest-paid when the cuts are implemented."

'Particularly bad'

The Welsh Assembly Government cabinet will meet on Wednesday morning to discuss the implications for Wales, and ministers will respond more fully after that.

The assembly government said: "Detailed UK spending plans for the period after 2010-11 are not included in the Budget. So it is still not yet possible to say exactly what our future settlement will be.

"But this Budget - with an unprecedented combination of tax increases, cuts in benefits and public spending- is grim news for most people across the UK and particularly bad for people in Wales."

Peter Harris, Wales secretary of the PCS union, said it was a "Budget of despair" for 375,000 Welsh public sector workers who face losing their job.

He said that with 25% cuts in departmental spending he would expect some 55,000 jobs to be lost in Wales over the next four years.

Steven Madeley, director of St David's Shopping Centre in Cardiff, said it was no surprise VAT had risen, but said it is good that shoppers and retailers will have time to prepare for the change.

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