Welsh shops and pubs facing higher taxes

Wales has announced a raft of cuts to public services to cope with surging inflation
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The increase will be included in a new budget plan to aid the struggling health sector in part of the UK

Wide-ranging cuts to public services have been announced by the Welsh government amid what it calls the “toughest financial situation” in more than two decades. The draft budget, published this week, attempts to protect the National Health Service (NHS) and support local councils while reducing business rate relief for pubs, restaurants and shops.

The areas that will see cuts include education, rural affairs, sport and culture. The Welsh government indicated the possibility of increases in the cost of NHS dental care, university tuition fees, and home care for elderly people, noting that rail fares will also have to rise.

This means that many public service sectors will be facing rises in bills from April. According to the government, the increase in the business rates multiplier will be capped at 5% for the next financial year, which is lower than the 6.7% increase that would otherwise apply, and is the “maximum level of support affordable.” Finance Minister Rebecca Evans said there would be an extra £450 million ($570 million) for the NHS, and the core local government settlement would jump by 3.1%. Nevertheless, she warned that even with these hikes, health boards and councils face a “very difficult” year.

“We have had to take some really difficult decisions to radically redesign our spending plans to focus funding on the services which matter most to the people of Wales,” Evans said. “This is the toughest financial situation Wales has faced since the start of devolution. We have been presented with the most stark and painful budget choices in the devolution era.”

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The Welsh government highlighted that the overall budget was worth £1.3 billion less in real terms than when it was set in 2021 due to soaring inflation.

The public services sector in the broader UK has also been struggling with tight budgets and the effects of inflation. In a statement in autumn, Prime Minister Rishi Sunak announced a £9 billion cut in national insurance contributions by reducing the main rate by 2% to 10%, and an £11 billion cut in business taxation. Hunt expects the measure to boost the long-term performance of the UK economy, and experts say it signals the possibility of further tax cuts in the spring budget.

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