Reeves tackles cost-of-living and backs Welsh industry at Budget

• Chancellor announces a fair deal for working families with removal of two-child benefit cap, energy bill savings and fuel duty freeze
• Welsh industry backed by investments from Port Talbot to Anglesey, creating jobs and growing the Welsh economy
• Public services backed with extra half a billion and increased fiscal powers for Welsh Government, on top of the largest settlement in the history of devolution

Rachel Reeves recognised Wales's £93 billion annual contribution to the UK economy and its industrial strengths with investments in the M4 semiconductor cluster, Port Talbot's green transition and Anglesey.

Despite wages growing more in the first year of this government than at any point in the 2010s, the Chancellor was clear too many families are still struggling with the cost of living which is why the Budget included a range of measures to cut bills and boost pay packets.   

Saying that the fairest way to help people with the cost-of-living was to cut inflation and increase wages, Reeves also announced a £150 household energy bill saving, a fuel duty freeze, and national minimum and living wage rises. 

The Chancellor announced the removal of the two-child limit. 69,000 children in Wales will benefit from this change. Funded by tackling welfare fraud and long-overdue reforms to the Motability scheme, it will result in the biggest reduction in child poverty at any Budget this century.

Changes to the Welsh Government Fiscal Framework will mean that Welsh Government has an extra £425 million spending power over the next few years. This means more money available to help with rising costs, waiting lists and to invest in local communities.

The Chancellor's new Budget commitments follow the news that nearly 6,500 jobs will be created in North Wales which will host Britain's first Small Modular Reactor and an AI Growth Zone.   

The Budget also ensured that Welsh public services are fairly funded, with an extra £505 million for the Welsh Government, through the Barnett Formula, on top of the largest settlement for the Welsh Government in the history of devolution, which was delivered by the Chancellor at the Spending Review.

Secretary of State for Wales, Jo Stevens MP, said: 

This UK Government has delivered generational investment across Wales – from new nuclear, to AI and rail. This Budget builds on that work.

New funding for Wales's semiconductor industry and for the continued transformation of Port Talbot shows we are investing in Wales's industrial future and the high skilled jobs and growth it will bring.

People across Wales will have more money in their pockets as a result of our measures to help with the cost of living, another increase to the minimum and living wage and the removal of the two-child benefit cap.

Once again there is a significant boost for the Welsh Government to spend on their priorities like the NHS and schools and we are also giving them new powers to invest more in vital public services

Reeves also announced reforms to modernise the tax system, asking those with broader shoulders to contribute more through long-overdue fair reforms.

Backing Welsh industry with billions of investment 

• Welsh semiconductor expertise is recognised with £10 million investment to support high-skilled jobs in the semiconductor cluster along the M4. The money will help small and medium businesses grow. 
• A further £4.2 million will clean up contaminated ‘brownfield' land adjacent to the Celtic Freeport in Port Talbot, to help unlock further investment in the area. This follows a wider package of support for Port Talbot, including a £500 million grant to Tata Steel for greener steel production, and port investment to support floating offshore wind deployment.  
• £25 million for Anglesey Freeport will follow the signing of a Memorandum of Understanding with the Welsh Government. 
• £2.5 billion will back the Wylfa Small Modular Reactor on Anglesey, supporting up to 3,000 good jobs and powering the equivalent of thee million homes. 
• An AI Growth Zone will be established in North Wales with £5 million investment in local adoption and skills, backed with £5 million investment, creating 3,450 jobs. 
• An AI Growth Zone in South Wales will create more than 5,000 new jobs for local communities over the next decade. 
• The UK Government recognises the growth potential of the Cardiff Parkway development. So we will work with Welsh Government and the private sector to develop plans for the delivery and funding of a station to serve the area as soon as possible with UK Government support

Tackling child poverty, the cost-of-living of economic inactivity 

The Budget delivers direct support for Welsh families: 

• 69,000 children in Wales will benefit from the removal of the two-child limit. 
• Slashing energy bills with a £150 average household saving.
• Raising the National Living Wage by 4.1% and National Minimum Wage by 8.5%, building on April 2025 increases that already helped 160,000 workers in Wales. 
• Uprating Universal Credit Standard Allowance by 6.1%, the first ever permanent real terms increase.
• Increasing the State Pension by 4.8% from April 2026, directly raising incomes for 700,000 pensioners in Wales.  
• Extending the fuel duty freeze, and 5p cut, saving the average driver £49.
• Unleashing talent and opportunity with a Youth Guarantee package. This will include ensuring that every eligible 18-to-21-year-old who has been on Universal Credit and looking for work for 18 months in Great Britain will get a six-month paid work placement.

Fairly funding Welsh public services. 

• The Budget provides an extra £505 million for the Welsh Government to spend on their priorities - such as education and tackling NHS waiting times – on top of the largest settlement in the history of devolution, delivered at the Spending Review. 
• The Welsh Government continues to receive over 20% more funding per person than equivalent UK Government spending in England, above its independently assessed relative need of 115%, reflecting the real costs of delivering services across Wales's diverse geography.  Changes to the Welsh Government Fiscal Framework will mean that Welsh Government has an extra £425 million spending power over the next few years. The additional funding comes from increased borrowing limits and more flexibility in how Wales can manage its budget – giving the Welsh Government more options to support people who are struggling, and to invest in communities all over Wales.

More information

• Changes to dividend and savings tax rates apply UK wide. The changes to property income rates will apply to Wales from April 2027. The government will engage with Welsh Government to provide them with the ability to set property income rates in line with their current income tax powers and fiscal frameworks.  
• The changes to the two-child benefit limit, increase in National Minimum Wage and National Living Wage, uprating Universal Credit and increasing the state pension apply GB wide.
• The fuel duty freeze applies UK wide and will significantly benefit the most rural communities across Wales.