Budget 2021: Welsh government cash boost as families squeezed

An extra £2.9bn will be available to spend on public services in Wales by 2024, according to an analysis of the chancellor's budget.

But finance experts at Cardiff University warn families face an expensive winter as the cost of living and energy prices rise.

Rishi Sunak's spending review broadly set the size of the Welsh government's budget for the next three years.

The outlook has "significantly improved" largely thanks to increased health spending in England.

Core funding for services is expected to grow by 3.1% a year, according to Cardiff's Wales Governance Centre.

It means Welsh Finance Minister Rebecca Evans will have an additional £1.6bn to spend when she publishes her budget on 20 December.

That is higher than previously expected, but the figures do not include the billions of pounds of emergency funding Wales has received to fight the pandemic.

Extra Covid funding is due to end this year.

Tax devolution is paying off too, the analysis says, with Wales in line for a £200m windfall in three years' time as a result of the income and property tax powers handed to Cardiff Bay.

After Rishi Sunak's statement, Ms Evans said: "While the spending review does give us some medium term financial certainty and some additional investment, it is more than offset by the inflationary and system pressures that we are facing."

On Thursday, report author Guto Ifan said: "Our analysis demonstrates that increased spending on the NHS and public services in England, and a turn away from austerity, has led to a welcome boost in the size of the Welsh budget.

"But cost of living pressures remain a huge concern and the actual story for households in Wales going into 2022 might be far more negative than yesterday's budget announcement would suggest."

Mr Sunak announced changes to universal credit (UC) that will allow recipients to keep more of their payments if they are working.

But the Wales Governance Centre report says that will not fully compensate people who lost a £20 weekly top-up to universal credit last month - especially those on the lowest income.

The average household in every income bracket will be worse off than they were under the £20 uplift, with the poorest 10% losing the most, the report says.

From December an improved taper rate means people will only lose 55p from their universal credit for every £1 they earn, instead of 63p at present.

A Treasury spokesperson said the UK government "is taking decisive action to make sure work pays" and that the "system ensures that people on the lowest wages are given the support they need to thrive and fulfil their potential".

Households on UC who are in work and have children or caring responsibilities will also get an increased work allowances - the amount they earn before the taper rate kicks in.

Taken together, the changes were a £2.2bn tax cut, the Treasury said.