On Wednesday we saw a new economic package unveiled, the size of which we have not seen before in this country. Rishi Sunak has announced a package worth 30bn for the UK, of which Welsh Government will get an extra 500m, this is on top of the 2.8bn extra given to the Welsh Government during the Covid-19 pandemic. On top of this extra money we saw a 50% discount for diners in August, a VAT cut for the hospitality sector and a new kick-starter scheme to help with the creation of jobs for young people. However, not all the schemes will apply to Wales, stamp duty was cut in England yet in Wales this decision comes from the Welsh Government, this could prove detrimental to the housing market if we don’t see action taken from Drakeford and his ministers.
There were positives to be taken from the ‘mini budget’. The announcement of a cut in VAT down to 5% for the hospitality sector is a lifeline which could prove pivotal to the industry here in Wales, as we see so many jobs in Wales are reliant on a thriving tourism sector. CWS were also pleased to see the ‘Eat out to Help Out’ scheme. For the month of August the Government will give a 50% reduction, up to £10 per head, on sit-down meals and non-alcoholic drinks, this scheme will be pivotal for encouraging people to go out and contribute to the economy, now more than ever we need to support those reopening after being shut down through no fault of their own.
It is now absolutely essential that Wales’ world-class tourism and hospitality industry can properly open for business. Unfortunately, there is no date is set for pubs, cafes and restaurants to reopen indoors here in Wales, although plans are for them to use outdoor spaces from 13 July, this still isn’t enough. We need to see a relaxing of the 2m social distancing rule, re-opening of indoor dining and the rest of the tourism sector. There appears to be very little logic and reasoning behind decisions to re-open some businesses while keeping others closed, we now see caravan parks can open, so why can’t campsites? And if a hairdresser can go back to work, then it would make sense that a beauty therapist should too.
If Wales chooses to take a slower route than England – which is seems evident from the phasing out of lockdown that that is Wales policy. They must accept the risk this poses the Welsh economy, people on the border may well decide to move to England or start up a business over the border and not in Wales, which will have knock-on effects in Wales for decades to come. Everyday we see job losses in Wales, whether it be job cuts at British Airways in south Wales or 1,435 redundancies at Airbus in Broughton in Flintshire, this pandemic has had a devastating affect on our economy and the Welsh Government aren’t doing all they can to help.
For all the positives we saw in this statement, we must remember how much is being borrowed and spent, we will have to pay this money back for generations to come. We must now see a clear plan in place for how the UK government will bring down the debt over the coming years, as continual higher and higher borrowing cannot last forever, and this will affect the whole Union. Let’s not forget that we are now going to borrow more as a share of GDP than we ever did at the peak of the financial crisis. Of course, this is not just a normal recession and we understand that it this is the deepest in history but even so we cannot forget there is the issue of value for money being spent. We saw the government committing £15bn for PPE which may be necessary, but is this value for money or have we overpaid and seen the taxpayer feel the brunt of that overpayment? We still need realism during this time of panic and economic hardship.
To conclude, there were some policies to be very pleased with for Wales from the VAT cut to the ‘eat out’ scheme but for the true potential of these schemes and tax cuts to be realised then we must see real action from the Welsh Government. We need a real reopening of Wales with indoor dining and working allowed, along with the adoption of new schemes and tax cuts announced in England such as a cut in land transaction tax. Without these changes from the Welsh Government we may just find Wales way behind on the economic recovery curve and hit harder with job losses.