The Autumn Budget 2024 provides a relatively modest £1.7 billion for the Welsh Government and announcements on Freeports, hydrogen and decarbonisation with questions on business rates, apprenticeships and planning.
The Chancellor’s first major fiscal statement brings significant economic opportunities for Wales through Barnett-based funding increases, UK-wide investments, strategic regional investments, and green infrastructure projects to boost the net zero economy with new sites and hundreds of high paid jobs.
These measures present a pathway for Wales to transition toward a resilient, sustainable economy if it works with the private sector. The focus on devolved funding aligns Welsh Government’s priorities with a mission-based economy and empowering regional government.
The £700 million of the £1.7 billion delivered in the Budget in Barnett consequential will help support public services in Wales, which should be useful as the Finance Secretary plans his Budget set for December 10.
The Budget had some good news for Wales. Announcements included a boost for Welsh jobs and renewable energy, whilst contributing to the country’s net-zero goals with the support for the HyBont Green Hydrogen Project in Bridgend, which is among 11 UK green projects to share £2 billion in funding. Set to produce 443 tonnes of green hydrogen annually, the project highlights how public and private partnerships can deliver a low-carbon economy.
A £163 million boost for the Industrial Energy Transformation Fund (IETF), which has already enabled Welsh firms to cut their emissions, will, if aligned with similar Welsh schemes, have the potential to make Wales an attractive place for capital investment on net zero projects.
Designating tax sites in the Celtic Freeport in South Wales means businesses will be able to start to benefit from tax reliefs on new investment and employment in those sites in November, supporting the Freeport to create good, highly skilled jobs in an area that needs them.
But there’s no getting around the fact that this was a tough Budget for businesses across Wales. It’s clear that the hike in National Insurance Contributions, alongside other increases to the employer cost base, will heighten the burden on business. These added costs don’t come cheap – they will hit firms’ ability to invest and ultimately make it more expensive to hire people or give pay rises.
There is also the impact it could have on further/higher education costs, and we’ll be interested to see what support may be provided by government to help a sector that is responsible for delivering our workforces of the future.
The average size of agricultural holdings in Wales is 120 acres and, based on current land values, a great many Welsh farms could be captured by the £1 million regressive tax. This at a time when the Welsh Government is spending £260 million on Welsh farms and the typical personal income of farmers is below the national average wage.
The Budget awarded an additional £40 million to the Skills and Growth Levy with the intent to deliver shorter and foundation apprenticeships in key sectors. This is a priority for firms in Wales too and we would welcome the Welsh Government using the funding it will receive from this announcement to implement similar reforms.
Planning reform has long been a major priority for businesses in Wales. The Chancellor announced funding for 300 more planners. This will result in a percentage of funding for Wales, but will the Government allocate this funding in the same way?
The reality is that only the private sector can provide the scale of investment needed to deliver the Government’s growth agenda. That’s a shared mission – uniting politicians and businesses up and down the country. We can only realise our growth ambitions together – so it’s vital that the Government doubles down on its partnership with ‘UK plc’, and continues to work in lockstep with the Welsh Government to unlock the investment that is needed to drive opportunity around the UK.
Right after the Budget, CBI CEO Rain Newton-Smith took to Westminster to deliver that message to journalists and politicians – projecting that much-needed business voice – one that feels more important than ever following last week’s Budget. Our policy team in Wales has also been speaking to devolved ministers and businesses to gauge the impact.
As the dust settles, Welsh firms face the reality of higher taxes putting a further strain on investment ambitions. What’s crystal clear is that we’ve got plenty of work ahead of us when it comes to sustainable growth. Over the coming weeks and months, at CBI Cymru we’ll be rolling up our sleeves, digging deep into the detail of the Autumn Budget, and speaking to our members about what it will take to secure greater economic prosperity for businesses across Wales.
