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The Conservatives have called for tax cuts to boost the Welsh economy but Labour ministers warned the “unfunded” plan would blow a £669m hole in the budget.

Samuel Kurtz, the Tory shadow economy secretary, called for a 1p cut to the basic rate of income tax and the scrapping of business rates for small businesses.

He said: “Families here are taking home smaller pay packets than their counterparts in England or Scotland. Businesses are struggling under the heaviest business rates in Britain.

“Young people see fewer opportunities to build a career and too often feel forced to leave the communities where they grew up.”

Mr Kurtz warned the Welsh and UK economies are “stuck in the mud”, with chancellor Rachel Reeves “poised to raid pension pots” in the budget on November 26.

‘Tinkering’

The ex-journalist said cutting the basic rate of income tax by 1p to 19% in Wales would give 1.7 million people a tax break and leave the average working family £450 a year better off.

Mr Kurtz said scrapping rates for small firms, which he described as the “backbone of our economy”, would help 245,000 businesses employing more than 500,000 people.

But Plaid Cymru’s Luke Fletcher accused the Conservatives of simply wanting to “tinker” with the tax system, warning an “ownership gap” is the central problem.

He told the Senedd: “The reality is that there are too few Welsh businesses, assets and institutions that are meaningfully Welsh owned.

“That limits investment, it slows business growth and it reduces the quality and availability of jobs. It also means that innovation struggles to take hold and far too much profit leaves our communities. We need to change that.”

‘Structural problems’

His colleague Cefin Campbell was “aghast at the hypocrisy”, saying the Tories’ reputation as the “guardians of the economy” was trashed by Liz Truss tanking the economy.

Mike Hedges, a Labour backbencher, described the Tory strategy as seeking to cut the Welsh Government’s income while increasing spending.

But he accepted the Welsh economy has problems – many of them structural – having performed poorly versus the rest of Britain for many years.

Mr Hedges pointed to a shortage of employment in higher-paid sectors, with Wales weak in areas such as ICT, real estate and professional services.

He told Senedd Members: “We need to have a successful economy. We need to know how we’re going to do it and quite frankly, what the Conservatives said will not work”.

‘Huge cuts’

Rebecca Evans said cutting the basic rate of income tax by 1p would cost £299m – nearly 8% of all Welsh income tax revenue. She added that scrapping business rates for small firms would cost up to £370m, bringing the total to £669m.

Wales’ economy secretary told the Senedd: “All of this without even beginning to tell us how they would pay for it, and the level of cuts that they would have to implement would be huge.

“They would have to cut the entire transport revenue budget.”

She claimed Wales is outperforming the UK average on employment.

Ms Evans pointed to December’s planned Wales investment summit in Newport but rejected Conservative calls to release a list of companies that have registered an interest.

She said: “We have had huge, huge interest from across the globe, and particularly in the sectors that we’re particularly keen to grow: compound semiconductors, tech and digital, clean energy, life sciences, advanced manufacturing and defence.”