Why we need Fair Funding for Wales  

Published date
People in Wales are enduring the worst cost of living crisis for a generation. Welsh Government has described the context of their latest Budget as “a perfect storm of fiscal and budgetary pressures.” Real pay has been falling steeply, especially in the public sector, driven by the policies of consecutive UK governments which have failed to deliver for working families.

The UK Government’s Chancellor will deliver his spring budget in the context of very high inflation, rising unemployment and falling household income.

Added to the pressure in Wales is the fact that the devolved government has also had to deal with 12 years of the UK government’s relentless efforts to underfund public services.

The failure to mitigate the impact of inflation on departmental budgets has left Welsh Government’s budget severely under-resourced. Wales’s settlement could be worth up to £3bn less in real terms over the three years covered by the Spending Review and £1bn less in 2023-24 alone.

The impact of under-resourcing for 12 year

The impact on working families has been huge. The Bevan Foundation found that:

  • 14% of households either sometimes, often or always do not have enough for all the basics.
  • Four in 10 are going without heating in their home.
  • A quarter of people are eating smaller meals or skipping meals in their entirety.
  • 13% of those surveyed were in arrears on at least one bill.
  • 11% are concerned about the prospect of losing their home over the next three months.

They have also highlighted that this is not being felt equally. People in receipt of benefits, disabled people whose condition limits them a lot, social renters, households with children, adults under the age of 65 and unpaid carers are the most significantly affected.[2]

Over a decade of public service cuts, weak employment rights and the wider costs of living crisis have left workers with no other choice than to act. In recent months workers from a range of sectors have been on strike for better pay and conditions.

The UK government’s budget is an opportunity to start righting some of the wrongs.

How the Spring Statement can make a difference to workers in Wales

Wales TUC wants to see the UK Chancellor announce measure that will:

Boost pay across the economy

  • Fund decent pay rises so that all public service workers – including those in devolved services - get a real-terms pay rise that protects them from the soaring cost of living and begins to restore earnings lost over the 12 years.
  • Get the UK on a path to a £15 minimum wage as soon as possible.
  • Follow the example of New Zealand and Australia by introducing fair pay agreements to allow unions and employers to negotiate minimum pay and conditions across sectors.
  • Pay outsourced public sector workers at least the Real Living Wage and give them pay parity with directly-employed staff doing the same job. This must be additional funding so that devolved governments receive an equivalent uplift to implement pay rises for outsourced workers.   
  • Strengthen the gender pay gap reporting requirements, and introduce ethnicity, LGBT+ and disability pay gap reporting, requiring employers to publish action plans on what they are doing to close the pay gaps they have reported.

Deliver a plan for strong public services and fair taxation

  • A new funding settlement for public services, with adjusted spending plans that mitigate the impact of high inflation on departmental budgets and provide for fully-funded pay rises that keep pace with the cost-of-living. The consequentials from this for Wales would enable Welsh Government to do the same.
  • Ensure those with the broadest shoulders pay their fair share in tax. Equalise capital gains tax rates with income tax to start ensuring the fairer taxation of wealth and tax windfall gains experienced by oil and gas giants at a higher rate, removing loopholes that allow businesses to avoid paying their fair share.
  • Deliver a new economic vision that respects the role of devolved institutions in relation to economic development and provides adequate funding for this which reflects relative levels of need.

Protect workers from hardship

  • Cancel the imminent hike in energy bills. The Energy Price Guarantee (EPG) must not be raised beyond the current £2,500 - government should either reduce the EPG to £2,000 or accelerate the introduction of a social tariff. Government should increase domestic energy efficiency spend by £6 billion over the next two years, funded by planned EPG spending coming in significantly under budget due to falling gas prices. 1
  • Implement a short-time work scheme to protect jobs in the event of economic downturn.
  • Set a path to significant and permanent improvements in the levels of social security.     
  • Commit to maintaining the State Pension triple lock for the rest of this parliament to help reverse increases in pensioner poverty rates and to reduce income inequalities among households in retirement, which has reached record levels. 2

Ensure decent jobs and growth for everyone

  • Ensure that businesses prioritise sustainable growth and jobs, reforming corporate governance to promote long-term sustainable investment rather than a short-term focus on shareholder returns.
  • Invest in a just transition to the secure green energy future we need, slashing dependence on volatile imported gas, and introducing public ownership to the energy sector.
  • Get productivity rising investing in skills, with barnetised consequentials for devolved nations
  • Drop plans to threaten EU-derived employment rights through the Retained EU Law bill.
  • Scrap the Strikes (Minimum Service Levels) Bill that would undermine workers’ right to strike.
  • Introduce industrial and trade policies that promote good jobs and workers’ rights globally and ensures that businesses compete on a level playing field.
  • Institute the Green Jobs Taskforce with a long-term remit and regulatory capacity to co-ordinate planning for decarbonising our economy, between governments, industry, unions, and skills sector, building on the work of the current Green Jobs Delivery Group.