Autumn Statement: Wales gets £227m capital windfall

George Osborne's capital promise was welcomed by the Welsh government although it said it still faced budget cuts

The Welsh government will get a £227m windfall of capital from Chancellor George Osborne's Autumn Statement.

Business groups said it gave Welsh ministers an opportunity to rebuild infrastructure.

The Welsh government welcomed the money, but said its budget was still facing big cuts that will hinder attempts to help the economy.

The UK government said it was promoting investment, but opponents said its austerity policies were failing.

Labour said Mr Osborne's plans for the economy were in "tatters" after he was forced to extend austerity measures to 2018. Plaid Cymru said the chancellor had been forced into a "humiliating climb-down".

The Welsh government - which has an annual budget of around £15bn - will also receive an additional £52m of day-to-day revenue funding.

Its extra capital funding, which pays for spending on buildings and infrastructure, comes from a squeeze on UK government departments.

It will be available to spend over the next two financial years until the end of the UK government's spending review period in 2014-15.

Start Quote

The reality of this Autumn Statement is Wales is still facing a very tough public spending environment for years to come”

End Quote Carwyn Jones First Minister

First Minister Carwyn Jones said he was pleased the UK government had listened to calls for more infrastructure investment.

But even with extra money, he said his government's capital budget will be 39% lower in real terms in 2014-15 than it was in 2009-10.

"The reality of this Autumn Statement is Wales is still facing a very tough public spending environment for years to come," Mr Jones said.

The UK government pointed to other aspects of the chancellor's statement that it said would benefit Wales, such as a decision to cancel the 3p rise in fuel duty planned for January.

The Treasury says 13,000 people will be lifted out of income tax and 1.1m will pay less thanks to an increase in the personal allowance - the amount people can earn before their income is taxed. No tax will be paid on earnings under £9,440.

About 640,000 pensioners in Wales will see a rise of £2.70 a week in the basic state pension from next April.

There will be funding for faster broadband connections in 12 small cities around the UK, including Newport.

Tax breaks will be offered to businesses that invest in plant and machinery in enterprise zones in Ebbw Vale and on the Haven waterway in Pembrokeshire.

Welsh Secretary David Jones said: "The announcements made today will have a strong impact in Wales.

"From businesses to individuals, the Autumn Statement demonstrates that this government promotes investment and rewards hard work."

He said he would urge the Welsh government to spend the extra £227m on "high-quality infrastructure and help us drive growth in the Welsh economy".

The Liberal Democrats hailed their influence within the Westminster coalition.

'Investment'

Welsh Lib Dem leader Kirsty Williams said: "Rather than constantly moaning about their budget, the Welsh Labour government must now put the people of Wales first by taking decisive action to get our economy moving."

Employers' group the CBI said a relief road to ease congestion on the M4 near Newport was a "clear priority". Talks are continuing between the UK and Welsh governments about ways to fund improvements to the M4 in south Wales.

CBI Wales director Emma Watkins said: "The importance of infrastructure projects should not be overlooked; they deliver short and long-term jobs and can be a material consideration in new inward investment."

The Federation of Small Businesses (FSB) called on the Welsh government to spend the £227m available to it "intelligently, and for the benefit of the Welsh economy".

Janet Jones, chair of the FSB's Welsh policy unit, said: "Additional funds earmarked for capital spending should have a positive effect across the construction industry and help boost the productive potential of the Welsh economy."

'Bleak'

Mr Osborne delayed by a year the target date by which debt would start falling because of the worse than expected state of the economy. The economy is expected to shrink this year by 0.1%.

Plaid MP Jonathan Edwards said: "This Autumn Statement is a humiliating climbdown for a chancellor in denial who is now being forced to admit the failure of his austerity experiment".

The children's charity Barnardo's Cymru said that by deciding to increase some benefits by less than the rising cost of living, Mr Osborne was offering a "bleaker and bleaker future for Wales' poorest families".

TUC Wales said the chancellor had not delivered a vision for creating jobs beyond London and south-east England.

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