Wales politics

Budget: Extra £65m over five years for Wales

Chancellor of the Exchequer George Osborne leaves 11 Downing Street for Parliament
Image caption Chancellor George Osborne leaving Downing Street ahead of his Budget

Chancellor George Osborne has cut fuel duty in a Budget delivering an extra £65m to the Welsh Assembly Government.

The assembly government said it was "disappointed" the Chancellor did not do more to help hard-pressed families.

Welsh Conservative and Liberal Democrat politicians welcomed the help for motorists, amid rising petrol prices.

But Labour criticised the scale and speed of spending cuts, while Plaid Cymru warned of economic stagnation.

Fuel duty will be cut by 1p per litre from 1800 GMT. A planned inflationary rise in fuel duty has been delayed from next year until 2012.

As part of what he called a "Budget for growth", Mr Osborne scrapped Labour's fuel duty escalator for the rest of this Parliament, paying for it with a £2bn tax on oil companies.

But he also revealed Britain's economy will grow at a slower rate than previously expected this year. The Office for Budgetary Responsibility downgraded its 2011 growth forecast from 2.1% to 1.7%.

The assembly government will receive up to £65m over five years, including up to £34m next year, as a consequence of spending decisions on housing, apprenticeships and potholes in England.

'Good deal'

The Wales Office said changes to personal tax allowances will take 10,000 people in Wales out of tax and benefit a total of 1.13m Welsh taxpayers. It said 52,000 people have been taken out of paying tax since the coalition government took office in Westminster.

Welsh Secretary Cheryl Gillan said the budget was a "good deal for Wales", adding: "In the devolved areas it is up to assembly ministers in Cardiff to deliver the same opportunities we are providing for companies in England."

But assembly government finance minister Jane Hutt said: "Today, the Chancellor had an opportunity to take action to help hard pressed families across Wales who are suffering from rising prices, as well as rising taxes and falling benefits. I am very disappointed that he didn't take this opportunity."

She welcomed the fuel duty cut, but said it "only goes a small" way to make up for January's VAT rise to 20%.

The revised growth forecast showed how "fragile" the economy was, she said. While there were some welcome measures - such as plans for regulatory reform - "the overall package is extremely limited given the challenges we face", she said.

She added that Welsh ministers would consider how to use the extra £65m handed to them - equivalent to a 0.1% increase in the assembly government's resources.

Conservative assembly leader Nick Bourne said cutting corporation tax, simplifying the tax system and reducing the burden of regulation on businesses showed "that Wales and the rest of the UK are open for business".

Liberal Democrat MP Roger Williams said increasing the tax threshold would help people on lower incomes. The fuel duty cut was a "sensible way of ensuring that prices stay stable," he said.

Shadow Welsh Secretary Peter Hain said Wales was being hit disproportionately hard - an allegation denied by Prime Minister David Cameron - and that Mrs Gillan had "flunked" her "big test".

"There would have been cuts under Labour," Mr Hain said.

"What we are saying is that, by going too far and too fast, the government is doing something no other government around the world is doing.

Plaid MP Jonathan Edwards welcomed the fuel price stabiliser, but said the Treasury had failed to reform the Barnett formula which sets the size of Wales' devolved budget.

"The truth is that the UK government has no plan B, and worryingly there is a very real threat of a decade of economic stagnation," he said.

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