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The Budget: anything for Wales?

David Cornock | 14:11 UK time, Wednesday, 23 March 2011

Life was so much easier when Budgets were predictable. A middle-aged Scot would claim to have pulled off the trick of combining higher public spending with lower taxes, Labour MPs would cheer as their opponents jeered.

The inbox would swiftly fill. "Smoke and mirrors" said the Tory press releases; "nothing in it for Wales," said Plaid Cymru. And "nothing in it for rural Wales" said the Welsh Liberal Democrats.

These days a slightly younger Englishman gets up, combines tax cuts for some with tax rises for many, and confirms some public spending cuts while protecting other programmes.

Policy schemes in England, on apprenticeships, housing and potholes give the Welsh assembly government an extra £65m to spend during the next five years on its own priorities (and a chance for jargon-hungry politicians to say "Barnett consequentials").

Raising personal tax allowances is a £48 tax cut for those on up to £115,000 a year, and takes 10,000 people in Wales out of income tax (even if it does more for some on six-figure salaries than the very poorest who don't pay tax).

Changing the default way in which thresholds are increased (CPI not RPI if you want the jargon) allows the Chancellor to claw back some cash.

The reaction is swift but no longer predictable. Conservatives in the Welsh assembly, who have yet to outline overall reductions in the assembly government budget, hail "welcome relief to families, pensioners and small businesses across Wales, who have had to tighten their belts to meet rising fuel prices."

And the Liberal Democrats say: "The cut in fuel duty is extremely welcome for those in rural Wales who have seen prices rocket in recent months."

Yes, fuel duty is falling by a penny a litre as of 6pm, although this is less than the increase caused by the UK government's decision to raise VAT. The Chancellor is also scrapping next month's scheduled above-inflation increase in fuel duty.

The Chancellor gives with one hand, and takes with the other. The spin has highlighted the £48 tax cut (through raised allowances) that will also benefit those on more than £42,000 who pay 40 per cent tax and won't drag others into the 40 per cent net.

They shouldn't spend next year's £48 cut all at once if they have children - as they'll be losing their far more valuable child benefit (£1,000 a year for first child tax-free) from 2013.

Plaid Cymru delivered a mixed response, welcoming the proposed fuel duty stabiliser, but adding: "This was a Budget of small beer compared to the cuts announced last year and the destructive effects that those will have on our communities."

For Labour, shadow Welsh Secretary Peter Hain targetted his successor: "This was Cheryl Gillan's big test and she flunked it. Wales is still being hit disproportionately hard by the Tory-led Government.

We recognise the need for cuts.... there would have been cuts under Labour. What we are saying is that, by going too far and too fast, the government is doing something no other government around the world is doing."

Arguments that may yet become well-rehearsed between now, the assembly elections on May 5 and George Osborne's next Budget.

UPDATE: Plaid Cymru is now claiming the credit for the redoubling of the Stroud to Kemble railway line. The party doesn't normally involve itself in English issues but did lobby for this work, which helps deliver faster journey times to and from south Wales. Perhaps the party's election slogan should now be "Plaid Lloegr: for a better England".

UPDATE 2: Plaid Cymru's Treasury spokesman tells the ´óÏó´«Ã½ of the Budget "has absolutely nothing in it for Wales". Old habits die hard.

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