The Welsh Government’s budget of £24 billion a year is not small change. So why aren’t Labour using their full firepower to support businesses? Why aren’t they putting growth at the heart of everything they do?
Combined with devolved tax powers – yes, they have power to raise and lower taxes in Wales - Labour have the opportunity to make meaningful changes to the economic fortunes of the people of Wales. Hard work and aspiration should be the currency to succeed in Wales, however it's clear that this currency holds no value under Labour.
For 25 years, successive Labour Governments have short-changed the people of Wales, underfunding our public services, over taxing businesses and failing our young people. It is important to note that spending per pupil is £100 less than in England when it should be 20% more – meaning that each student in Wales is missing out by more than £1,000 per year thanks to Labour.
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It is vital that we ensure our young people have an equal chance at achieving their career aspirations compared to their UK counterparts. Labour are disadvantaging Welsh students - and that's a fact.
As a result of Labour’s financial failures, Wales has 5% of the UK’s population but only produces 3.4% of the UK’s wealth. Furthermore, Wales only has one business in the FTSE100. Aspiration is simply a word that Labour don’t understand.
Contrary to what Labour think, profit is not a dirty word. When Welsh businesses thrive, hard working people benefit. It is of the utmost importance that the Labour Government in Cardiff Bay creates a business environment where hard work and determination are rewarded.
Wales is a nation of small family-run businesses – a fact of which I am incredibly proud. Comprising 95% of all businesses in Wales, these entrepreneurs make up the backbone of the Welsh economy, employing an estimated 1.2 million people. Their success is Wales’ success.
Welsh workers have the lowest pay packets in the United Kingdom, taking home almost £3,000 a year less than elsewhere. Is it any wonder that child poverty is only rising in Wales?
Since the dawn of devolution, the Labour Government has been given more levers in order to direct the growth of the Welsh economy, a responsibility that they continually refuse to use.
An important tool of Welsh ministers has been the ability to dictate business rates in Wales. At 53.5p, businesses in Wales pay the highest rate in Great Britain with small businesses in Wales paying a higher rate than large businesses in Scotland. Labour’s aggressive use of this tax smothers the growth of smaller, family-run businesses in Wales.
It is vital that this changes. Today I am leading a debate in the Welsh Parliament to ensure that Businesses in Wales have the ability to compete fairly with their counterparts across the United Kingdom. The Welsh Conservatives have long called for the cutting of business rates in order to allow these businesses the opportunity to flourish and grow, providing more jobs for local people and more opportunities for our next generation.
By cutting business rates, we would empower businesses -ensuring that they can determine how to reinvest their profits. More jobs would mean better pay, and more money into the pockets of Welsh communities.
The situation is even more dire for businesses in the tourism industry. Not only are these businesses recovering from the devastating impact of the pandemic, but they now face the bleak prospect of a tourism tax in Wales. With many in the United Kingdom looking to holiday at home rather than abroad, the last thing businesses in Wales need is visitors being deterred as a result of having to pay up to £75 to visit our beautiful nation.
The simple fact is that if people are double taxed to visit Wales, they will choose to go elsewhere. It is astounding that Labour and their nationalist coalition partners are choosing to ignore this fact.
Unfortunately, Labour’s desire to tax aspiration in Wales is not limited to businesses alone. Ever since Land Transaction Tax has been devolved to Wales, there has been no relief for first-time buyers.
Because of the UK Conservative Government’s decision to slash stamp duty, Labour received £70 million and has been able to increase the threshold at which people pay Land Transaction Tax in Wales. Whilst what the Welsh Government is currently planning is better than it was, it doesn’t recognise first time buyers in the same way as Stamp duty does in England and doesn’t recognise the average price of houses here in Wales.
With house price increases far outstripping the increase in wages, the dream of home-ownership is becoming just that - a dream. The next generation of homeowners need support from Labour, not be used as a cash cow.
The Welsh Conservatives have pledged to completely abolish Land Transaction Tax for those new to buying a property, giving them a stake in society. While first-time buyers have to scrape together bigger and bigger deposits, abolishing Land Transaction Tax for them would ease their financial burden.
What Labour ministers need to do is stop dampening the Welsh economy and use devolved levers to fire it up by supporting hard-working people and struggling businesses. We need to end Labour’s expensive vanity projects now. Wales needs decisive and radical financial action - not damaging tax and spend policies.
Peter Fox is the Member of the Senedd for Monmouth and the Welsh Conservative’s Shadow Minister for Finance.
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