Leaders hope budget funding will boost Labour in next year’s Scotland and Wales elections

Labour leaders in Edinburgh and Cardiff sought credit for the most progressive measures in Rachel Reeves’ budget on Wednesday, pinning their hopes for next year’s critical elections on a package that increases funding for Scotland and Wales by nearly £2bn. That funding boost and the abolition of the two-child limit for universal credit recipients were seen as a relief in both capitals. Anas Sarwar, the Scottish Labour leader, said: “I demanded a Labour budget rooted in Labour values and that is what the chancellor has delivered. This budget means child poverty down, energy bills down, wages up and austerity rejected.” The Welsh first minister, Labour’s Eluned Morgan, said: “This is a budget which will help people across Wales. It will mean more money in the pocket of people who need it the most. “We called on the UK government to continue to support us with more money for hard-pressed public services and they have delivered.” Opinion polls have consistently suggested the Scottish and Welsh Labour parties both face humiliating defeats in May’s devolved parliament elections, largely because of voter anger over the actions of Keir Starmer’s government at Westminster. In Scotland, Labour has trailed in second or third place behind the SNP and Reform UK in polling. In Wales, where Labour has dominated for a century, the party is predicted to come in behind Plaid Cymru and Reform. Related: Budget 2025: key points at a glance The Welsh and Scottish parties lobbied the prime minister and the chancellor to tackle the cost of living crisis, particularly on energy bills and for low-income households, to combat surging polling support for their opponents. Sarwar’s optimistic take was boosted by the Scottish TUC leader, Roz Foyer, a repeated critic of the UK government, who said raising the national living wage, cutting energy bills, scrapping the “pernicious” two-child cap and increasing taxes on the wealthiest were welcome. “By staving off short-term cuts, the chancellor may have just played Labour’s ‘get out of jail free’ card,” Foyer said. “For working people still reeling from a pandemic, cost of living crisis and Tory austerity, the increase to the living wage, cuts to their energy bills and uprating welfare offers a lifeline when they need it most.” After name-checking Sarwar in her budget speech, Reeves said her decisions would release an extra £820m in funding for the Scottish government over the next three years. There will be an extra £1bn for the Welsh government to spend on services and capital projects. Reeves announced a £505m boost to the Welsh administration’s budget and it will also be able to borrow more and take extra from its reserves – another £425m. Prof Laura McAllister, of the Wales Governance Centre, said she doubted the budget would help Labour at May’s elections. She said: “It’s hard to imagine that the announcements will make a material difference to Welsh Labour’s prospects. Overall, it’s a case of too little, too late and whilst the two-child benefit will play well, the rest is too intangible.” The power-sharing government in Northern Ireland will get an additional £370m in day-to-day and capital, plus £16.55m for Stormont over the next three years to boost its post-Brexit trade with the rest of the UK. The Fraser of Allander Institute, an economics thinktank at the University of Strathclyde, said scrapping the two-child cap would release another £120m for ministers in Edinburgh because their scheme to scrap it in Scotland would no longer be needed. However, Shona Robison, Scotland’s finance secretary, insisted the budget was a “chaotic mess” that fell short of meeting Labour’s promises to cut energy bills by £300, while the increase in its Treasury funding would not cover the cost of meeting the increased national insurance bill for the public sector. Robison said a new mileage rate for electric cars would penalise green motorists, and would have a disproportionate impact on rural drivers. She also said the chancellor’s refusal to scrap the energy profits levy on North Sea oil and gas would risk thousands of jobs. She welcomed the end to the two-child cap, but said: “The complete chaos around this budget gets to the heart of the fact that we should not be leaving crucial decisions around the economy, public finances and household bills in the hands of a deeply incompetent Westminster UK government.” The Plaid Cymru leader, Rhun ap Iorwerth, said Wales was being “short-changed”. He claimed the Treasury was withholding more than £4bn owed to Wales because it got no benefit from the HS2 project and there had been no progress on devolving the Crown Estate.