Spring Statement ignores ‘significant change’ to economic outlook

Chancellor must act to protect small businesses and households as Iran war hits energy prices – Ben Lake MP 

Responding to the Chancellor’s Spring Statement today, Plaid Cymru Treasury spokesperson, Ben Lake MP, has said the escalating war involving Iran and the resulting surge in gas prices represent the very “significant change to the economic outlook” that the Chancellor previously said would require action. 

Gas prices have almost doubled since the outbreak of hostilities. Because gas sets the UK’s wholesale electricity price around 90% of the time, this spike is already feeding directly into higher electricity costs – placing small businesses and households across Wales under renewed financial strain. 

With small and medium sized businesses account for over 99% of firms in Wales, Plaid Cymru warned that failing to act now risks undermining jobs, investment and the viability of high streets and rural enterprises. 

In November, Chancellor Reeves said the Spring Statement would include an “interim update on the economy and public finances” from the independent public finances watchdog, the Office for Budget Responsibility (OBR), and that there would be no policy changes unless there is “a significant change to the economic outlook that requires a response.” 

 

Plaid Cymru Treasury spokesperson Ben Lake MP said: 

"The Chancellor said there would be no policy changes unless there was a significant shift in the economic outlook. There are mounting fears that prolonged conflict in the Middle East will impact gas prices and deal a significant blow to today’s forecasts. 

"As gas continues to set the wholesale electricity price most of the time, this surge risks impacting Welsh businesses and households. Small firms – the backbone of our economy – are already struggling with the cumulative impact of higher energy prices, increased staffing costs and taxation, and are ill-equipped to absorb any further price increases. 

"The UK Government should have used this statement to address some of these pressures, including by extending the 75% Renewable Obligation reduction to non-domestic users. This would have at least helped to shield small businesses from high energy costs. Plaid Cymru also urged the Chancellor to consider a cut to VAT for hospitality and tourism, increase the Employment Allowance to ease National Insurance pressures, and introduce a statutory duty to rural proof the Treasury’s policies. 

"At a time of renewed global instability and rising energy costs, we need to be bold. The Chancellor must now bring forward targeted measures to support small businesses and provide reassurance to households facing yet another squeeze on living standards." 

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SUPPORTING OUR SMALL BUSINESSES

Plaid is set to utilise business rates multiplier to tip the scales in favour of smaller businesses.

Plaid Cymru leader Rhun ap Iorwerth has criticised the support offered to Welsh hospitality businesses by the Labour Welsh Government.

From April, every pub in England will get 15% off its new business rates bill, and bills will then be frozen in real terms for a further two years.

The support offered by the Labour Welsh Government is only for the 2026/27 financial year, a period of time that does not provide the sector with the same level of longer-term certainty, according to Plaid Cymru.

Plaid Cymru called on the Labour Welsh Government to go further by utilising the business rates multiplier to support smaller businesses and designing a tax system that is ‘on the side of SMEs’.

Plaid Cymru leader, Rhun ap Iorwerth MS, said:

“Whilst welcoming today's announcement - as called for by Plaid Cymru in recent days, this is only a short term solution that gives little long term assurance to a sector worth £4bn to the Welsh economy that cannot survive on a one-year settlement basis alone.

“In Wales, it’s clear that Labour has no long term plan - something that is essential for the viability of the hospitality industry.

“It’s clear that the business rates system in Wales is fundamentally broken and that the hospitality sector is facing an existential crisis. Which is why a pro-business Plaid Cymru government would prioritise the radical reform needed.

“A Plaid Cymru Government would utilise the business rates multiplier to tip the scales in favour of smaller businesses by designing a tax system that is firmly on the side of SMEs.

“Plaid Cymru is serious about giving Wales’ economy the fresh start it needs with real plans to support those businesses that need it the most.”

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ACROSS THE DIGITAL DIVIDE

The ongoing rolling programme of bank closures affects all of us, but, certainly not equally - Age Cymru, have raised concerns about the impact of bank closures on older people (across our Wales). Some people find themselves the wrong side of the digital divide, older people may struggle to access their money as they are unable to access branches and some are unable to use or access on-line banking. 

Age Cymru research has noted that over half of over 75’s still do not have access to the internet and fewer access internet banking. Older people also may find themselves living on a limited budget, and some prefer to use cash, as it’s easier to budget their finances week by week, to pay for services. 

Our few remaining High street banks actually enable older people to access and manage their accounts through the post office network, but, the number of post offices has been reduced in recent years. This is a consequence of the pre privatisation re-education post office closure programme that was carried out by New Labour and the Conservative - Liberal Democrat coalition government. 

The closure of high street banks also makes it difficult for small businesses and shops  to operate on local high streets, which are also places which some older people find easier to visit, rather than out of town shopping centres. Access to cash on the high street plays an important part in ensuring that older people have much more financial inclusion, security and social interaction. 

Bank numbers have fallen over recent years, down nine percent up until March 2020, from 405 to 370 - a trend the Age Cymru and others believe is only going to continue. The ability to make deposits and withdrawals for basic, current and business accounts that are held with high street banks and building societies is important and should be retained. 

We need a risk free Post Office Savings type  bank – it is a pity that it was recklessly sold off by a previous Conservative government on the cheap - separate from the big four commercial banks. Now this is not about living in the past, we are where we are because of the demise of the regional banks, which was as part of  the relentless rise of the big 4 banks which also led to the growth of the reckless casino banking and cheap credit that brought about the financial crash. 

We cannot turn the clock back, nor should we try, but, we do need to think and act differently.  We need to be honest with ourselves sorting the mess out is not going to be easy, but, it can be done, and there is no reason why it can be community beneficial  –  as has been said before we need some sort of community owned community beneficial  Wales savings bank or perhaps even a Bank Cambria.

FRIARS WALK AND DEBENHAMS

The loss of Debenhams in Friars Walk is a bitter blow - while covid has not helped matters very much - the Debenham’s retail model was failing for some years. The priority has to be for former workers need as much help as can be given to find nw jobs and training. The Friar’s walk development itself was too small and failed to create the retail space for local businesses to set up from the start. While there have been some tentative steps towards that in recent weeks, at a fundamental level that has to change from now on - there has to be a blend of local businesses and the usual suspects - there is room enough to make this work. One basic economic fact is that if you spend ten pounds in local business it will circulate three times longer locally in the local economy that ten pounds spent in a chain outlet. Newport has suffered because of the obsession with directly competing with Cardiff and Cribs Causeway. We need to focus on growing small local businesses that supply our needs as well as hosting the usual suspects to bring economic life back to our city centre. If we can do this then we can bring sustainable economic growth and life back to our city centre.  

SUPPORTING OUR SMALL BUSINESSES

For too long far too many small and medium sized businesses in our country have been denied access to credit by banks and this has prevented the growth of our private sector. Our over centralised dividend driven pretty much rootless London based banking model that has been followed in the UK is incapable, indifferent or simply unwilling to deliver or support economic development in our country. In Germany, the Sparkasse and Landesbanken operate on a geographical basis, and have developed special expertise in the local industries so that they are better equipped to make investment decisions and should offer a real alternative. We need to develop Industrial Innovation Clusters in key areas of our economy and to expand the role of the Development Bank of Wales and support the creation of a Community Bank to help  domestically owned businesses grow their market share and to put down deep roots in our communities. The Welsh economy needs to be locally owned and to pay higher wages. Jobs and investment need to be shared across the whole country. Our economy needs be more balanced and much more diverse and our public finances need to be stronger. If we can accomplish this then the talent we have in Wales will be developed and retained.

SUPPORT OUR SMALL BUSINESSES

The Labour Government is treating Welsh businesses with “contempt” by not providing enough support and a clearer route map out of lockdown, Plaid Cymru Leader Adam Price has said.

 

Mr Price said that whilst the Labour Government was ready to go the “extra mile” for large multinational companies like Aston Martin, Amazon and Ineos they were not giving “near enough support” for grassroots and independent Welsh businesses.

 

The Plaid Cymru Leader added that Welsh business had been “left in the dark” when it came to re-opening with no targets or dates on when they can expect to re-open safely for trading and called for a clearer roadmap to provide businesses with greater clarity.

 

Mr Price also called for more financial support for Welsh hospitality and leisure businesses in the form of one-off restart grants to help with the costs of re-opening.

 

Applications for the Labour Welsh Government’s Restrictions Business Fund will close on 31 March 2021 with no successor scheme announced yet. The Scottish Government has already pledged grants of up to £7,500 for retailers and up to £19,500 for hospitality and leisure businesses paid in April to help businesses re-open progressively

 

Leader of Plaid Cymru, Adam Price MS said,

 

“The Labour Government – always ready to go the extra mile for multi-national companies like Aston Martin, Amazon and Ineos – is treating Welsh home-grown independent business with contempt by not providing them with enough financial support or a route map out of lockdown. The lack of a level playing field for small non-essential retail is also part of this wider syndrome of letting Welsh business down, while spouting platitudes about the foundational economy. 

 

“With the latest round of economic support ending on 31^st March and with no real certainty on when they can be expected to re-open for trade, Welsh businesses have been left in the dark to wither on the vine. Where’s the practical support for Welsh businesses wondering whether they should recruit or retain staff and take on additional risk? There’s nothing but stony silence.

 

“Meanwhile, the Scottish Government has said it will provide restart grants to help Scottish businesses with the costs of reopening alongside a much clearer route map, without resorting to false assurances or premature certainty.

 

“The Welsh Government must follow suit and provide financial support for Welsh hospitality and leisure businesses in the form of one-off restart grants to help with the costs of re-opening.

“The balance between providing hope and raising unrealistic expectations is a fine line to tread. But what Welsh businesses, particularly the hospitality sector, currently face is a prolonged guessing game with vague plans, more roadblock than roadmap.

 

“We’re not calling for an arbitrary date for the ending of all restrictions – only greater transparency between now and the end of June on what’s likely to happen to allow businesses room to plan ahead. To not provide that level of openness means Labour is badly failing Welsh business and the workers and communities that depend on them.”

 

DIWEDD / ENDS