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Statement on the Pre Budget Report

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Sue Essex , Minister for Finance, Local Government and Public Services
The Chancellor of the Exchequer presented his Pre Budget Report to Parliament on Monday 5 December. It included a range of measures that will support the Assembly Government in delivering its strategic agenda as set out in Wales: A Better Country.  The measures will help to address specific issues relating to promoting a fairer society and increasing economic prosperity.  They will build on the programmes that announced by the Government last week as part of the Final Budget proposals to be debated today.

The Assembly Government is committed to building a strong and sustainable economy for Wales.  The following Pre Budget Report measures will complement the strategy of the Government to create a diverse, productive and innovative Welsh economy:

• Reducing the administrative burdens arising from taxation will help over 30,000 small Welsh businesses, while simplifying the tax banding will benefit 170,000 small firms;
• At least 300 companies should benefit from the new Small Firm Loan Guarantee scheme
• Major improvements in the delivery and administration of Research and Development will build on the £228 million already spent in Wales.

The Chancellor’s intention to continue the Winter Fuel payments for the rest of this Parliament will be worth £200 for those aged over 60 and £300 for those aged over 80 and over.  630,000 pensioners in Wales will benefit.  This is a substantial addition to the Assembly Government’s Final Budget proposals relating to financial support for heating and security for pensioners.

Families in Wales are also set to benefit from the Pre Budget Report. The 4.2% rise in the child benefit element of the Child Tax credit will help around 126,000 families in Wales. Around 60,000 people in Wales will benefit from the increase in the National Minimum Wage to £5.35 from October 2006. And almost 150,000 families will gain from the uprating of the Working Tax Credit in line with inflation while over a quarter of a million families will benefit from improvements that will make the Tax Credit system work better.

In addition to these new measures, the Pre Budget Report also provided the Assembly with consequential allocations of £28 million in the current three year spending period.  About half of this extra money is consequential upon the extension of the support for heating and insulation in homes in England – an extension which follows developments which have been in place in Wales for the last few years.  The majority of the funding is to support capital expenditure and is profiled as follows:

£ millions 2005-06 2006-07 2007-08
Funding 1.234 14.042 12.986

These funds will be available for allocation in next years budget.  Consideration will be given to emerging pressures on the budget and proposals for the most effective use of this additional money.