At the start of a new Senedd term, Plaid Cymru Leader Rhun ap Iorwerth has warned of a “winter of deepening hardship”. He accuses Labour and the Tories of “showing more interest in fighting each other than fighting for Wales”.
Wages are not keeping up with the cost of living, and stubbornly high utility bills are already causing anxiety for most households in Wales. The impacts of these issues will be felt even more harshly over the winter months when energy usage rises.
Winter is coming
With people seeing “bills increasing, real terms wages decreasing, and faith in government willingness to help evaporating”, Mr ap Iorwerth proposes a raft of measures that could be implemented quickly to mitigate the worst effects of hardship, bringing about a new sense of optimism. These include:
- Extending the Energy Bills Support Scheme to prevent more households from being dragged into fuel poverty this winter;
- Fair wages so workers in Wales are properly remunerated;
- Ensuring that core benefits will always cover the cost of basic essentials;
- Introducing a Winter Heating Payment, to be paid no matter how cold the weather gets;
- Implementing a windfall tax on banks to fund a mortgage rescue scheme; and
- Legislating in Wales to stop unfair rent increases.
Speaking ahead of the first Senedd sitting since the summer recess, Rhun ap Iorwerth said: “Wales needs politicians to be on their side when times are hard. I know that this isn’t as good as it gets for our nation and in this upcoming Senedd term I will fight for a fairer Wales, a Wales that can fulfil its undoubted potential.”
“My positive vision for Wales has tackling inequalities at its heart. There’s no more important time to dig deep to seek that better future for Wales than … when people need help most.”
Funding for such measures
Increasing capital gains tax to align rates with income tax would simplify the tax system, treating all forms of income the same. There’s no obvious reason why someone going to work should pay more tax on wages than someone living on investments, for example. According to the Office of Tax Simplification, who advocated for this in 2020, it could raise up to £14bn a year.
Instead of focusing on National Insurance (NI) rates, the government should expand the tax base by applying NI to investment income. This would include share dividends, rent from property, and interest on savings. It would equalise and simplify tax treatment of different types of income, and ensure income from wealth is taxed the same as employment earnings. It would raise around £8.6bn. NI-related changes were proposed by LSE researchers in 2021. Additionally, equalising NI on higher earnings with rates paid by lower earners could raise a further £20bn.
Non-domiciled residents (‘non-doms’) receive at least £10.9bn in offshore income and capital gains each year, which they aren’t required to report to HMRC or pay tax on. Taxing them would raise over £3.2bn in additional revenue each year and remove the current disincentive to invest in the UK, according to research.
Based on the £28.93bn pre-tax profits the big four banks (HSBC, Barclays, Lloyds, Natwest) reported for the first half of 2023, it’s estimated that £20.3bn (around £720 per household) could be raised this year by increasing the existing surcharge on bank profits from 3% to 35%, in line with the government’s windfall tax on energy companies.
The New Economics Foundation estimated that an expanded and backdated energy windfall tax could raise £14.3bn. It proposes an increase of 20%, to 45%, which would take total tax on oil and gas to 85%, and scrapping the Investment Allowance.
A moral obligation
Just last month, Citizens Advice warned that a record number of people in England and Wales are already seeking help for energy debt even before winter hits, and that low-income households earning less than £29k will be the worst impacted when winter arrives.
Rhun ap Iorwerth says: “As a new parliamentary term gets underway, the Welsh and UK governments have a moral obligation to focus on preparing a comprehensive plan to support struggling households over the coming months. The UK government must extend the Energy Bills Support Scheme, place a windfall tax on the banks to fund a mortgage rescue scheme, and pay fair wages in the public sector.”
“At the same time, the Labour Welsh Government should legislate with immediate effect to stop unfair rent increases so that no one loses their home this winter. We’re ready to offer help and leadership to our communities and struggling families, but governments need to do so too.”
“A failure to act by both governments will mean we face a winter of deepening hardship, with even more households driven into poverty, unable to make ends meet and accumulating more and more debt. As the Conservatives and Labour show more interest in fighting each other than in fighting for Wales, Plaid Cymru will continue to make the case for immediate action to help our communities through the difficult winter months ahead.”
