Budget 'lifts 42,000 more workers in Wales out of income tax'

An additional 42,000 people in Wales are expected to pay no income tax as a result of the Budget.

George Osborne has lifted the threshold at which tax is paid, due to rise to £8,105 next month, to £9,205 in 2013.

The chancellor also said businesses in an enterprise zone in Deeside will be able to write off the cost of plant and machinery against tax.

The Welsh government called it "disappointing" and "not a Budget for jobs and growth."

Some government departments will have the option to introduce more local pay for civil servants whose wage freezes end this year, the chancellor announced.

Britain is going to earn its way in the world”

Mr Osborne previously asked independent pay review boards to examine the scope for introducing regional pay deals in the public sector.

Regional pay is strongly opposed by the Welsh government and by unions who say it will leave Wales worse off.

Mr Osborne said the Treasury would publish its own evidence for the boards, which are due to report in the summer.

Delivering his third Budget, he said he would "reward work", adding: "Britain is going to earn its way in the world."

Raising the income tax threshold is a key policy for the Liberal Democrats.

The UK government said the latest rise in the personal allowance means 95,000 people have been taken out of income tax in Wales since the coalition came to office. More than 1m people will benefit overall, the Wales Office said.

Welsh Lib Dem leader Kirsty Williams said she was pleased her party "have been able to persuade the chancellor to increase the personal income tax threshold".

Pensioners having their personal allowance frozen will hit thousands of older people across Wales while millionaires enjoy a multi-thousand pound bonanza”

"This will give hard working people in Wales more of their money back in their pockets and it will also incentivise people to get off benefits and into work," she said.

Among other measures highlighted as beneficial to Wales were:

The Deeside zone will focus on advanced manufacturing and includes the Airbus wing factory at Broughton.

Capital enhancement in enterprise zones have been the subject of negotiations between the Treasury and Welsh government Budget Minister Jane Hutt. Deeside is one of five zones being set up by the devolved administration.

The UK government said it rail electrification of the South Wales Valley lines had been singled out as a "key infrastructure project".

The Treasury said it will continue to work with the Welsh government on the project "subject to value for money and an agreement on financing", with a final decision announced in the summer.

Plans to electrify the Great Western line from Paddington to Cardiff have already been announced, but the Welsh government wants it extended to Swansea and into the valleys.

Mr Osborne also announced the 50p top rate of income tax, paid on earnings over £150,000, will be cut to 45p from April 2013, saying it damaged competitiveness and raised a third of the £3bn expected.

Shadow Welsh secretary Peter Hain said: "Pensioners having their personal allowance frozen will hit thousands of older people across Wales while millionaires enjoy a multi-thousand pound bonanza."

Plaid Cymru Treasury spokesman Jonathan Edwards said the Treasury had "passed the buck on regional pay" allowing it to be decided by individual departments.

"Regional pay proposals will mean real term cuts for public sector workers in Wales and institutionalise low pay and low ambition," he said.