Budget 2023: What does it mean for Wales?

Jeremy Hunt announced his "budget for growth" on Wednesday

The chancellor has announced an extension to energy bills support and £180m for the Welsh government in his budget.

Jeremy Hunt's phased extension of childcare to children from nine months old in England has put Labour ministers under pressure to match the plans.

Other announcements include £20m to restore Holyhead Breakwater.

Wales' First Minister Mark Drakeford said the chancellor delivered "less than a bare minimum budget".

The extra £180m over two years was said by the leading think tank the Institute for Fiscal Studies (IFS) to be triggered mostly by the extra English spending on childcare, a matter which is devolved in Wales.

Meanwhile people on pre-payment meters have been promised energy charges more in line with direct debits bills, and work capability assessments for disability benefits are to end.

Calling his announcement a "budget for growth", Mr Hunt said government experts believe the UK will not enter a technical recession this year.

That means the economy will not shrink for two seasons (three-month periods) in a row.

• Budget 2023: Key points at-a-glance

• UK economy to avoid recession, says Hunt

• What help is there with childcare costs in Wales?

Fuel duty has been frozen for another year, and alcohol duty will rise by inflation but will be cut for beer sold in pubs.

Childcare in Wales is controlled by the Welsh Labour government, which already offers 30 hours free childcare for three and four year olds to parents in work or training.

It has plans to extend it to all two year olds, and some provision is available from age two in Flying Start areas.

Childcare

The Welsh government is under pressure from the Conservatives and Plaid Cymru to bring its childcare plans more into line with the UK government's in England.

Extending the scheme has not been ruled out - Labour ministers want to crunch the numbers before making a decision.

Mr Hunt's promise of 30 hours for working families from the age of nine months would fully come into force from September 2025, but only in England.

The Welsh and English schemes are different and the Welsh government offers more support for parents in training.

Ben Lake, of Labour's co-operation agreement partners Plaid Cymru, said: "The Labour government must now go faster and commit to using new funds to deliver Plaid Cymru's policy of universal childcare in full."

Welsh Conservatives called for the Labour Welsh government to use the additional funding to guarantee "people in Wales have the same opportunity to reach their full potential".

In response, Finance Minister Rebecca Evans said the Welsh childcare package had previously been the "most generous offer anywhere in the UK".

She told BBC Wales: "Obviously we'll be looking to see what consequential funding has flowed through and what our choices are."

Energy

The UK government has decided to extend its key energy support package for another three months.

Typical energy bills in Britain had been due to rise to £3,000 a year, but will be kept to an average of £2,500.

Costs will still rise though, as a £400 winter fuel payment will not be renewed.

About 200,000 households use pre-payment meters.

The chancellor promised the premium paid on the meters - meaning the energy can be more expensive than when bought through direct debit - will be removed.

Extra £180m for Welsh government

The announcement saw an extra £180m for the Welsh government over two years.

This is what is known as a consequential - the result of a complicated funding formula and a knock-on from new money being spent in England.

It is a tiny sum in the overall budget for Wales, which stands at roughly £20bn.

David Phillips of the Institute for Fiscal Studies said it was triggered mostly by childcare spending, plus some funding for specific things.

By 2026-27, the policy would generate £250m a year for Wales. "But this is in the context of a wider squeeze on spending planned from 2025 onwards," he said.

The Welsh government can, as always, spend the money as it sees fit.

Last week the first minister told the Senedd that if there was extra money in the Budget the priority "at the very top of this government's list will be pay demands in the public services".

Benefits

Work capability assessments for people on disability benefit will be scrapped.

Currently claimants face a questionnaire to be completed and a medical assessment. Instead the UK government said eligibility for the health top-up in universal credit will be "passported" from the personal independence payment benefit.

However Daniel Tomlinson from the Joseph Rowntree Foundation tweeted that the law to make this happen will not be introduced until after the next general election.

The UK government said it is "strengthening" the way sanctions for universal credit are applied, in part by automating part of the process.

Meanwhile support for childcare costs in universal credit - which includes claimants in Wales - will be made available upfront and the maximum potential benefit for parents will increase.

Just over 6,200 families in Wales were eligible for help for childcare through universal credit in November last year, according to Citizens Advice Cymru.

Anglesey and infrastructure

The UK government has offered the Welsh government £20m to support the restoration of the Victorian, grade 2 listed, Holyhead Breakwater.

"This will ensure the long-term viability of this vital transport hub and trade links with the island of Ireland, as well as safeguard the hundreds of jobs this port supports in Wales," the Treasury said.

Vaughan Gething, Welsh Labour economy minister, said the money was "welcome but long overdue".

Meanwhile he chancellor announced that a new organisation called Great British Nuclear, to help develop the UK's nuclear power market.

It raises the possibility a decision will come soon on proposals for a new nuclear power plant at Wylfa.

Chief Secretary to the Treasury John Glen said money had been committed to GBN and that there would be "more to come, quite imminently", on UK ministers' nuclear ambitions.

Freeports and investment zones

Welsh and UK government ministers on Wednesday said an announcement on where Wales' freeport will go is coming soon.

Both governments have been working on the proposals, which aim to create economic activity by allowing companies to import and export goods outside normal tax and customs rules.

At least one investment zone - which will offer tax incentives to companies to establish themselves - has also been promised for Wales.

What are Welsh politicians saying?

Conservative Welsh Secretary David TC Davies said the budget "supports the UK government's ambitions for Wales while continuing to tackle the huge challenges we face".

Mr Lake said it was "surprising that no commitment was made to ensuring fair pay increases for our public sector workers," and said that chancellor "missed an opportunity to offer much needed support to off-grid households".

Ms Evans told BBC Wales it was a "disastrous budget" for Wales, "in the sense that we only have £178m additional funding over the next two years".

"There was absolutely nothing to grapple with the real big challenges that we're facing. Nothing for the NHS, not a word on social care, and absolutely nothing for public sector pay."