AUSTERITY OR AUSTERITY LITE?

It’s not much of a choice, especially when you consider that by polling day only 40% of the Con Dems cuts will have taken place. Before the Autumn Statement, Plaid warned that the Government’s spending plans for the next parliament would take us back to the 1930s if the proposed reductions in public spending were pushed through.

The Labour party understandably attacked the Tories for their plans to reduce spending on public services to levels not seen since the 1930s, at 35% as a share of GDP. Yet, what should alarm people is that the Labour parties’ economic plans are essentially the same. Labour’s plans would see spending on public services at roughly the same, 37% of GDP – reducing it to a level that we have not seen since the 1930s, a time before the creation of the NHS and when people left school at the age of 14.

If nothing else, this reveals that there is little or no difference between any of the larger Westminster parties, with Labour lumped to the Tories’ ideological plan to shrink the size of the state and intentionally hack at our public services. At the next Westminster general election, the real choice being offered the people of Wales is between the Westminster parties who all offer more austerity and more hardship, or Plaid Cymru - who, in the forthcoming hung parliament where every vote counts, will demand an end to austerity and fight for the need to invest.

Plaid Cymru has set out its plans to increase investment infrastructure by 1% of UK GDP annually. Institutions such as the International Monetary Fund and the Confederation of British Industry have noted that for every £1 invested it produces £2.50 - £3.00 in the real economy. This would be an investment of around £16 billion at a UK level, bringing £800 million to Wales to invest in schools, hospitals, and other works to improve the economy.

This investment would help us to tackle the deficit over a much longer period. Investment is the perfect antidote to the cosy Westminster Parties’ consensus, which seeks to inflict ever greater levels of austerity on our people. Austerity will ensure that places like Wales suffer as they seek to balance the books on the backs of the poor.

FIND(ING) THE MONEY

The UK's growing inequality and concentration of wealth and resources in the South East of England means that most people are not seeing any signs of economic recovery. The bad news that by election day we may be around 40% through the planned cuts something that is unlikely to bring much comfort as we (save for the happy sons of bankers) will all face the consequences of future cuts which will only lead to more suffering. 

The austerity experiment has failed failure to balance the books, yet there is still time for the Chancellor to change course so that the economy can recover. The recovery has not been helped by the Labour in Wales Welsh Government's decision to effectively blow the Welsh borrowing budget on a single infrastructure project – the few miles of the M4 – at a time when every corner of Wales is crying out for infrastructure investment.

Responding to the Chancellor’s Autumn Statement, Plaid Cymru Treasury spokesperson, Jonathan Edwards MP said:

"While we welcome the devolution of business rates which the Labour Welsh Government must now use to secure a far more business-friendly environment in Wales, there is little here on offer to our nation.

"Northern Ireland is set to be offered powers over corporation tax and, as the Smith Commission recommended last week, Scotland will get powers over income tax. Wales should have the same powers without delay and Westminster needs to stop treating Wales as a second class nation.

"The current Wales Bill is now no longer fit for purpose. If we are to tackle unemployment and generate economic growth, Wales must be handed the same job-creating powers as Scotland or risk being left behind.

"Plaid Cymru is committed to a genuine Wales-wide recovery driven by well-paid, high-skilled jobs. Our policy to pledge an extra 1% of UK GDP to infrastructure investment would have delivered £800m to fund Welsh roads, railways, schools and hospitals. Sadly this was a missed opportunity for the Chancellor.

"With Labour and the Tories fully signed up to further austerity after the Election, it is clear that Wales must return as many Plaid Cymru MPs as possible after May if our nation's best interests are to be protected from the Westminster elite."

A BUDGET FOR AN ASPRIN NATION

It was more like a budget for an aspirin nation, along the lines of an economic take two aspirin and it will be better in the morning, than a budget for an aspiration nation. The problem is that George Osborne’s Budget brings scant benefit to the Welsh economy and provides clear indication that Con Dem Treasury policies are failing Wales.

The Chancellor’s not unsurprisingly failed to transfer key job-creating powers from Westminster to Wales something that means his Budget will fail to boost demand in the Welsh economy and prevent vital investment in major infrastructure projects.There was a basic failure to accept that Plan A, such as it was, has failed.

It’s time to try something different (Plan B perhaps) and to adopt a range of progressive policies including reversing the tax cut for those earning over £3,000 a week which is still due to be implemented in April 2013. Once again a Westminster Government has failed to cut its cloth to match reality as the pursuit of World Power Status continues with the Trident renewal which is set to cost £100 billion pounds over the lifetime of a new system carries on.

The Chancellor also failed to make progress on introducing a Financial Transaction (the Robin Hood) Tax that would raise £20 billion a year and help curb the speculative behaviour in the financial sector which caused the crash in the first place and the decision to scrap the stamp duty on shares trading is a regressive move as it’s the only thing in the UK currently resembling this tax.

There are some positives such as the announcement on childcare support which is a positive move but even this does not help people on tax credits or universal credit as those on the lowest incomes will still face the greatest barriers to finding work. The scrapping of the planned rise in fuel costs was also a positive, but the opportunity to sort out a longer-term solution with a fuel duty stabiliser to prevent soaring prices at the pump, was missed.

The announcement of the £10,000 tax threshold is also welcome as it will help people on lowers incomes, something that Plaid has long supported. Despite the few positives, ordinary families in Wales are still set to pay the price for the failings of the banks and the self-defeating policies of the Treasury.

Most importantly for Wales, what the Chancellor should have announced is the implementation of the recommendations made by the Silk Commission. This would have ensured that we in Wales have control over the levers that would allow investment in major infrastructure projects, creating jobs and boost demand in the economy.

PLAN B OR ABANDONING AUSTERITY?

The latest GDP figures don’t make pleasant reading, showing that GDP fell by 0.3% in the last quarter of 2012, this should give further confirmation to most people (including economists) that the Con Dem Coalition Government’s questionable austerity experiment (Plan A) is clearly failing. This has prompted a flurry of calls for a change of approach (Plan B) from all quarters, including the chief economist of the International Monetary Fund (IMF). It’s time for the Chancellor to change course and announce radical growth measures in the Budget which takes place on 20th March.

Austerity is not just not working, it’s actually smothering any prospects of sustained recovery and economic growth. It’s time for some balanced well thought out investment in infrastructure and green energy which will help to create  jobs and provide the key to getting the economy back on track. Plaid Cymru has long advocated a progressive alternative to drastic public sector cuts (and their consequences) in order to stop the UK sliding back into recession and to avoid a whole decade of economic decline.

Plaid Cymru's Treasury spokesperson, Jonathan Edwards MP, said:

"These latest GDP figures signal the latest disaster for a Chancellor whose ideologically-motivated policies make him deaf to all warnings and cautions.

"Tackling the Government deficit and debt should only be done when the economy is growing and confidence is high. Current austerity is strangling any sustained recovery. 

"It looks increasingly likely that the cherished AAA credit rating is in jeopardy making the pain of the Government debt pointless. There is now a real threat of a triple-dip recession and the Chancellor has no choice but to change course.

"We must invest in infrastructure and focus on creating meaningful jobs if we are to get the economy back on track - this is what Plaid Cymru outline in our plans for a Bank of Wales to support SMEs and what we achieved in our recent Budget deal with the Welsh Government.

"Wales is suffering disproportionately as a result of the Coalition's austerity experiment. The Bevan Foundation recently announced that welfare cuts would wipe £100m from the Welsh economy. Real terms cut to benefits will suck demand out of local economies as ordinary families are forced to tighten the purse-strings even more.

"As the Chancellor announces his Budget in March, we in Plaid Cymru will present our alternative economic vision that would generate growth, tackle unemployment, and equip Wales with the powers necessary to have meaningful control over its own economy."