Chancellor’s Spending Review ‘Lacked business focus’, say Welsh business leaders
Chancellor’s Spending Review ‘Lacked business focus’, say Welsh business leaders
Chancellor Rachel Reeves’ latest Spending Review has come under fire from Welsh business leaders and political figures, who claim it falls short of delivering the necessary support to drive private sector growth and meet the challenges facing small firms across Wales.
In total, £445 million will be spent on rail infrastructure in Wales, with key priorities including fixing level crossings, constructing new railway stations, and upgrading existing rail lines to improve journey times and capacity.
While the Welsh Government has welcomed the funding—along with the additional money allocated for coal tip remediation—the other three parties in the Senedd, namely the Welsh Conservatives, Plaid Cymru and the Welsh Liberal Democrats, have all criticised the announcement and its 10-year time frame.
Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB), criticised the review for overlooking the needs of the UK’s 5.5 million small businesses. “Small businesses will be wondering when they will feel the benefits of today’s Spending Review,” she said. “It was not the business-focused day they had hoped for.”
McKenzie noted that key announcements, including increased statutory sick pay and new funding for housing, defence, and household energy efficiency, came with little or no clarity on how small firms would be supported.
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She welcomed a significant uplift in funding for the British Business Bank but warned that much more is needed. “You can’t grow the economy and tax revenues without growing small businesses,” she added, calling for reforms to business rates, the Employment Allowance, and statutory sick pay in the upcoming autumn Budget.
“Ministers must buckle down on this over the summer and through to the autumn, putting small businesses at the heart of the Industrial, Trade and Small Business Strategies. This includes addressing business rates, Employment Allowance expansion and Statutory Sick Pay in the autumn Budget, and proper legislative reform in the King’s Speech,” McKenzie said.
“The benefits will only come if the Government takes these challenges seriously through to the autumn.”
FSB Wales Chair John Hurst echoed those concerns, saying that small firms in Wales “continue to face relentless pressure from rising employment costs, ongoing changes to employment legislation, and sustained high energy bills.” He urged the Welsh Government to use the newly announced local growth funding to enhance the business support system and empower entrepreneurs to “innovate, invest, and grow.”
In contrast, First Minister Eluned Morgan welcomed the Spending Review as a milestone in intergovernmental cooperation—an opportunity to repair the perceived fractured relationship between the two Labour governments at either end of the M4.
Showcasing harmony between the administrations will be key to reversing recent polling data suggesting Welsh Labour may not be the largest party in the Senedd following next year’s election—for the first time in Welsh devolution.
Morgan highlighted the £445 million rail investment and £118 million for coal tip safety as major wins for Wales, stating: “These are all significant steps forward that we can build on.”
She added: “The additional funding for coal tip safety shows how our governments are working together to protect communities living in former mining areas, investing in their future. We are now investing more than £220 million to address the legacy of coal tips.
“After years of calling for fair rail funding for Wales, we welcome this step forward. Building on our own success delivering new Welsh-built trains, this begins to address historic underinvestment in rail infrastructure and will help to realise our ambition to better connect communities.”
Morgan said the extra £5 billion in funding for Wales over the next three years would support critical investments in schools, hospitals, and transport infrastructure.
However, opposition politicians were less convinced. Welsh Conservative Shadow Transport Secretary Sam Rowlands MS accused Labour of “rewriting history,” arguing that past Conservative-led governments delivered greater support for Wales. “While any investment is welcome, this announcement falls short of what was done previously,” he said.
Plaid Cymru’s Finance spokesperson, Heledd Fychan MS, was even more critical, calling the £445 million rail investment “a drop in the ocean” compared to what Wales is owed. “This announcement won’t change the fact that Wales has been short-changed by successive Westminster governments,” she said, adding that only full devolution of rail powers and fair funding would address the long-standing infrastructure gap.
With business confidence low and economic uncertainty looming, Welsh business leaders say the real test will come in the second half of 2025, when the government will be under pressure to deliver SME-focused growth reforms. Until then, many in the business community remain unconvinced that the Chancellor’s review has done enough.
