Thursday, 7 October 2010

Carwyn Jones and Alex Salmond choose the easy path

The first ministers of Scotland, Wales and Northern Ireland have issued a joint statement attacking the UK government's spending plans. The following is the important part of their joint declaration:

"The proposals to cut public spending to such an extent run the risk of stalling any recovery.
Private sector demand remains fragile and access to finance continues to be constrained.
The current plans for fiscal consolidation could therefore have a significant and lasting negative impact on the economy, including people's jobs, which would undermine the very efforts to address the UK's fiscal position.
We believe that promoting economic growth is the best way to restore the health of our public finances and this must be our overriding priority."

Alex Salmond, Scotland's first minister, has been spearheading today's announcement and has taken every opportunity to lampoon the coalition's spending plans on TV and radio news programmes. I would remind him of two things:

  • Firstly, according to the Holtham Report, whereas Wales is underfunded by the Treasury to the tune of £300m a year compared to an equivalent English Region, Scotland by the same calculations is currently overfunded by a whopping £4.2bn per year. This means that as we move into the belt tightening phase, Scotland starts from a better supported position than any other region in the UK.
  • Secondly, if Alex Salmond thinks that the coalition's programme to reduce spending is too severe he has recourse to a very simple means of offsetting the effects of those the cuts in Scotland: he can use the tax-varying powers granted to the Scottish Parliament to increase income tax in Scotland by up to 3p in the pound in order to fund a reduced pace of cuts. Unfortunately Mr Salmond doesn't have the balls to unilaterally adjust income tax in Scotland as he knows the Scottish electorate wouldn't tolerate it -- therefore he's content to demand that the elected Westminster government (which is already overfunding Scotland by £4.2bn) should abandon their much telegraphed plans and instead raise taxes throughout the UK so as to protect the Scottish public services which Mr Salmond himself is too politically cowardly to take action to protect.

Of course unlike Scotland, the Welsh Assembly has no such tax varying powers and therefore Welsh first minster, Carwyn Jones, is able to make the same argument as Mr Salmond safe in the knowledge that he is not in anyway accountable to the people of Wales for the amount of tax they pay. However he is responsible for how efficiently that public money is spent -- and if WAG was a paragon of efficiency and cost-effectiveness I would have great sympathy with Carwyn's position. However we know that public money in Wales has not been well spent and the recent problems highlighted by the leaked McKinsey report into the running of the Welsh NHS are a case in point, as was the decision to maintain for ten years the £50K+ salaries of hundreds of NHS executives who were found to be surplus to requirements following the last Welsh NHS reorganisation. Therefore, although I fully support any calls for the Barnett Formula to be amended as per the Holtham recommendations, I would argue that the first task of the Welsh Assembly Government is to prove that it can manage public money more efficiently before taking the easy option of simply blaming the coalition government's spending plans.

On a related note, I have argued previously (here and here) that the Welsh Assembly should have tax varying powers in order to, amongst other reasons, make our Welsh politicians more accountable to the Welsh electorate. However as per the example set by the Scotland Parliament, which has had such tax varying powers since it was formed but has chosen never to utilise them, I suspect that a Labour/Plaid Cymru-controlled WAG also would probably just take the politically cowardly route of not using them either. The fact is if you continue to do the same old things, you will continue to get the same old results -- its time for some new and radical thinking in Wales if we are to radically improve our economic situation.

14 comments:

Anonymous said...

Lots of politics here now. You'd be forgiven for thinking a blogging prize was in the offing...

The Druid of Anglesey said...

Anon 8:58 - Plenty of Anglesey news these last ten days or so (small holdings, labour's anglesey AM candidate troubles, N.Wales polls -- not to mention GWR's failure to vote on Lein Amlwch and the Phil Fowlie result). I hope you'll indulge me occasionally if I stray into all Wales politics.

Groundhog Day said...

It was a sad day when the Welsh voted for devolution, we have never had politicians of an acceptable standard to run the country, IWJ is a case in point as is Edwina Hart, (a former bank clerk running our health service) to name but two. We now have an inferior health service in Wales even though we receive more per head from the govt than England; the service across the border as we in the North know is far superior to what is on offer from Betsi Cadwalader. I thank heaven for the Christie Hosptial in Manchester for being there to offer me treatment that was not available in YG or Glan Clwyd, this treatment without doubt saved my life.

There has been so much wastage in the name of namby-pambying to the Welsh electorate. We should never have been given free presctiptions. As it was, very few people actually paid for their scripts anyway so it was a nice present for those who worked and could pay for their medication anyway. Free hospital car parking? There was never any need to make it free for all. It would have taken very little adminstration to give free parking to those that needed it - people with out-patient appointments etc, visitor passes could have been given to relatives of long-term in-patients and a nominal charge would have applied to all other users. As for free breakfasts for all our primary school children, since when is the tax payer responsible for feeding other people's children? Have breakfast clubs in the schools by all means but make the parents of the children who use them pay for them. No wonder parts of Wales are likened to a former Soviet republic.

Anonymous said...

Mr. Derwydd,

Of course! We all hope you'll do well in the blog comps, and it's nice to get away from petty local politics as often as we can.

Rebecca getting ready to blow the top off the Kremlin, I'm told.

Avatar said...

I think Betsan’s Powys Blog is also spot on this subject.

See
http://www.bbc.co.uk/blogs/thereporters/betsanpowys/

Anonymous said...

How amusing. Peter Vain is in the shadow cabinet even though more MPs voted against him than for.

Just like Emily Band his leader.

Anonymous said...

11.19

One hopes this will be more effectual than 'The Tapes', or 'This will stuff them' or Councillor ** will bang them to rights!

It has all been heard before, heard but not seen

Anonymous said...

I don't normally comment post comment on blogs, but I have to agree with every word of Groundhog Days post, however I think that he will be given a lot of flack for being utterly correct and saying outloud what most sensible people think.

The Red Flag said...

The problem with Welsh politics is Wales. Wales itself is a divided nation between north and south, and then again here in the north further sub-divided between a heavily 'weklsh' west and a heavily 'anglicised' east - Wrecsam?wrexham being little more than a dormitory town for Chester over-spill and in fact commuting from evenn Colwyn Bay to as far as Chester/Ellesmere Port/Merseyside not being unusual in the least.

This has had dramatic impacts on wage levels, job creation, housing - the list is endless. As an example - houses and rents are cheaper in Greater Manchester than here but wages there are higher.

The average age on Anglesey is moving upwards not just because natural life expectancy is increasing, but also because people retire here and the young are leaving. We are closing pprimary schools because there are literally not enough children (despite the Daily Mail insisting that every 16 year old girl has at least 12 kids by 14 different fathers half of which are asylum seekers or gay).

The A55 has ended up being a curse in disguise as it does not attract inward investment so much as make it easier for the exodus.

Even the port - once it has been redeveloped - will facilitate the speedier exit away.

This is going on all over the western parts of Wales - both north & south.

The cure is simple - the creation of proper jobs at wage levels the same as England. The belief that if we just get the jobs here no matter what the wage levels is the realm of dullards and doing untold damage.

And the Barnett formula? That will be sunk without trace within a decade. Everyone will get the same.

Prometheuswrites said...

http://www.bbc.co.uk/news/uk-wales-11505718

"Welsh exports fell in value by £1.6bn in the 12 months to June this year, figures show".

"Energy, including coal, fuels, petroleum products and the machinery for energy generation, was Wales' top export in 2009, accounting for half of sales to the USA, and 30% of total Welsh exports in the 12 months to June this year.".

Interesting to see that coal (the only raw material resource that the the UK has ever successfully exported in bulk) is still in vogue.

Now would be a good time for international export support from the WAG to be provided.

Nations, just like business start-up's, find it harder to generate income flows when capital is scarce.

Anonymous said...

Prometheus

My business is 80% Export 20% Uk sales. Are you not aware that IWJ (obviously feeling exports are unimportant) has withdrawn WAG support for most areas of business save for six which probably represent the minimum of trade share anyway.


If the UK as a whole and Wales in particular do not attract foreign income we are lost. He probably thinks inward investment is the answer but by thetime the associated grant money has been paid and the companies have left for pastures green, as they do, are we any better off?

Disillusioned.

The Druid of Anglesey said...

Prometheus - further to 'Disillusioned's comments, IWJ has recently abolished International Business Wales (IBW) -- the Wales export support body -- as part of his Economic Renewal Programme. See here:

http://dylanje.blogspot.com/2010/07/myopia-and-entropy.html

Prometheuswrites said...

D & D:

Yes I did read Dylan's excellent article.

I was trying to be being ironic. Guess I missed the mark.

I'm firmly of the opinion that we have to have a manufacturing export surplus - otherwise there's no way to reduce the balance of trade deficit.

I'm not convinced that financial 'vehicles' that aren't directly linked into manufacturing support (ie software products and services) actually produce any 'goods' worthy of the name, (and I suspect they fuel inflation - no-one gets something for nothing, free lunch, etc...).

I was pleased to see that Wales is exporting energy tech goods, although as the article I read says you have to have customers who are wealthy enough to be buying said products, ... so we'll still need a basic commodity producing base as well ... like farming, for instance.

Anonymous said...

Druid & Prometheus

I can only think IWJ feels Imports are more important....import inward investment by giving them lots of our cash....then (probably) by the time they up-sticks for greener pastures the said politician will be out of office anyway. What a shambles. men with absolutely no business experience trying to run our country.

Disillusioned