What action does the Government plant to take to address the fact that households in Wales have the third-lowest GDHI out of the 12 UK countries and regions?
As part of Wales’ Economic Mission, we set out a vision of what makes Wales an attractive place to live, study, work and invest. An important element of this is improving GDHI per head in Wales by 2035 and committing to set a stretching growth target for 2050.
However, there many fiscal levers the UK government has that will affect GDHI per head outside of Welsh Government control – principally on taxation, the benefits system and public spending.
A key concern raised on the UK government’s Autumn Statement is stealth tax increases on workers with its decision to freeze income tax thresholds, particularly the personal allowance. As more workers are drawn into higher tax bands, a greater proportion of their pay will immediately be lost. People in Wales are likely to be disproportionately affected by this measure.
Of course, inflation is a major concern and its eroding impact on real incomes and Welsh Government spending. Targeting support to the most vulnerable is an absolute necessity and it was essential that the UKG responded to our call to raise pensions and benefits in line with inflation. There was nothing in the autumn statement about additional measures which could have made a practical difference to the cost-of-living crisis, such as help for those on pre-payment meters, support for credit unions and further action to prevent people becoming homeless.
In terms of Gross Value Added (GVA), the measure used to compare against other UK nations and regions is GVA per head. In 2020, Wales had the second lowest GVA per head of the UK nations and regions. However, when comparing to the UK as a whole, London and the Southeast tend to skew the overall UK figure as their GVA per head is some 80.8% and 7.9% higher than the overall UK figure, respectively. All other regions and devolved nations have recorded GVA per head levels lower than the overall UK figure in 2020.
As a Government, we will continue to work to prioritise our budgets and policies to shield the most vulnerable and maintain our commitment, even in these difficult times, to create a stronger, fairer and greener Wales.