Chancellor Jeremy Hunt delivered his first Autumn Statement last week.
The Statement, aimed at addressing the hole in public finances caused by the Covid-19 pandemic and the energy crisis consequent on Putin’s aggression in Ukraine, was pre-briefed as strong medicine; and so it proved.
Benefits and pensions will rise with inflation. The Triple Lock will be preserved, thereby addressing the fears of pensioners, who were understandably worried about the impact of rapidly rising prices.
The cost of this will be borne by the rest of us; taxes will increase, largely through the phenomenon of fiscal drag: tax allowances will not keep pace with rising incomes. While this is arguably justifiable in the short to medium term, it is not an indefinitely sustainable position. Lower tax economies are usually the most efficient. The Government must therefore do all it can to encourage growth across the entire country, with a view to reducing the tax burden.
The Chancellor, to his credit, recognised the importance of growth in his Statement. He intends to address it primarily through the tools of energy, infrastructure and innovation.
Energy independence is clearly a priority. Putin has weaponised energy supply in the wake of the Ukraine war and is brazenly using it to hold Western Europe to ransom. The UK, fortunately, relies little on Russian gas, but the Russian action must nevertheless be seen as a wake-up call.
It was welcome, therefore, that the Chancellor announced that the Sizewell C nuclear plant will be built (an optimistic signal for those of us in North Wales who support the Wylfa Newydd project). A further £6 billion was pledged to support increased energy efficiency: the best way to reduce the cost of energy is not to use it in the first place.
Support was announced for a wide range of infrastructure projects, including gigabit broadband and Round 2 of the Levelling Up Fund – both of significant importance for North Wales.
Innovation will be encouraged by the remit to Sir Patrick Vallance, the Chief Scientific Adviser, to focus on how most beneficially to adapt the regulation of emerging technologies, especially in the fields of digital technology, life sciences, green industries, financial services and advanced manufacturing, where the UK already has significant strengths.
The Chancellor also made the important point that growth depends to a huge extent on the skills of the workforce, which in turn depend on the strength of the educational system. In this respect, there is, it must be acknowledged, much to do. The Programme for International Student Assessment (PISA) rankings regularly show the UK lagging far behind countries such as China, Singapore and Japan in the crucial areas of maths, science and reading – the essential skills of modern economies. Wales, in turn, lags behind the rest of the UK.
It was therefore good news that the Chancellor will invest an additional £2.3 billion in education in England. There will be Barnett consequentials for Wales, which I hope the Welsh Government will apply to positive effect in our own schools.
