WAITING FOR THE GLIMMER MAN...

Yesterday we were waiting with no particular degree of anticipation for Chancellor George Osborne to inform MPs (and the rest of us) that there was no "no miracle cure" to the UK's economic woes in his Autumn Statement. The Chancellor made his statement against a pretty grim economic background when compared with his budget forecast made last March in the Budget. Mr Osborne continued to state that the coalition was continuing to "confront the country's problems" and was hard at work reducing the deficit.

The cancellation of the proposed 3 pence a litre increase in fuel duty may help a little and the  extra £227 million pounds for capital projects is useful it does little to redress fair funding for Wales. When it comes to growth being predicted to be -0.1% in 2012, down from the 0.8% prediction in the Budget in March we are truly in the realm of old style Soviet economic statistics. I suspect that some of the Con Dems (the Cons rather than the Dems I suspect) actually believe that austerity is the answer to the economic disaster left behind by Gordon Brown (and New Labour).

The party formerly known as New Labour predictably called the government's economic policy "a terrible failure” not that they would have done anything different if Gordon had managed to pull the electoral fat out of the fire back in 2010. What’s pretty clear from all of this is that the Con Dems are out of ideas, there was not really a Plan A, so there is little likelihood of a Plan B and clearly no desire to sort out the ongoing UK’s problem with tax evasion. So much for being all in it together.

Almost unnoticed by the UK’s self Anglo centric media the Irish Government presented its sixth austerity budget since the banking and economic collapse. Tax rises and spending cuts were announced as the government aims to save another 3.5 billion euro (around £2.8 billion). All of the so called economic "low-hanging fruit" has been picked clean after four harsh years of austerity. A new property tax (set at 0.18% of the value of a home up to 1 million euros (£800,000 pounds or $1.3 million dollars) and cuts to the health and social welfare budgets are planned.

Since 2010, Ireland, following an international bailout, has been forced to follow strict spending limits set by the EU and International Monetary Fund. The Irish government stated that it would meet its deficit reduction target for 2012 and that it  projected a budget deficit of 8.2%, compared with a target of 8.6%. Therefore the deficit would continue to fall steadily to 2.9% by 2015, it added. Irish economic forecasts (unlike on this side of the Irish Sea) were based on economic growth of 1.5% in 2013, rising to 2.9% growth by 2015.

Ireland is no Greece and while it has been riot it has not been protest free. The evident anger (if not quiet rage) at the bankers and the elites abject criminality and sheer folly may have been sidelined at the prospect, after hard years, by some light at the end of Ireland's dark economic tunnel, but, I suspect that it won’t be forgotten. Despite some economic glimmers  there are still plenty of people across the Celtic Sea who are less than happy with the choices made by the Irish elite and the fact that they have largely got away without punishment for their crimes, misdemeanour's and bad decisions.

There have been calls for a new republic and a fresh start literally writing off the past (and the debt) in a simular manner to Iceland. in ‘Towards a Second Republic’, Peadar Kirby and Mary Murphy exposed the winners and losers from the current Irish model of development and related the distributional outcomes of the use of power by Irish elites. It’s analysis of Ireland's economics, politics and society, draws some important lessons from its cycles of boom and bust. They also look at the role of the EU and compare Ireland's crisis and responses to those of other states.

The book (which is well worth a read) also includes proposals to construct new and more effective institutions for the economy and society are also included. Considering (somewhat closer to home) that  there have been no real consequences (or punishments for that matter) for the banking crash for the inhabitants of the Westminster village or the bankers (save for the loss of the odd bonus), I suspect that it won't be on the Christmas reading list of any elite reasonably near here.

LABOUR INACTION

Despite all the budget day bluster from Labour, when it came down to the actual vote (on Monday evening) Labour politicians failed to oppose the cut to the 50p tax rate. The vote was forced by Plaid Cymru and the SNP, some 22 MPs voted against the cut, with only two Labour MPs voting to keep the top rate at 50p. The vote took place after both Labour Leader Ed Milliband and Carwyn Jones (Welsh First Minister) made much of their party’s opposition to the cut from 50p to 45p proposed in last Wednesday's Budget.

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

"Having heard Labour's alleged objection to this regressive taxation policy time and again last week, the inaction of its party members last night showed astonishing hypocrisy.

"Over the past few months, we have seen Labour abstaining or voting with the ConDems on important issues such as privatisation of the NHS and cutting Welsh farming subsidies. Labour of course introduced regional pay in the public sector and are now advocating a regional cap on benefits. What we saw last night was the Tory-Labour tag-team at work yet again.

"Plaid Cymru has always maintained that progressive taxation is a principle, not an option, and those who are most able to afford to pay must make a fair contribution.

“Cutting the 50p income tax rate for the mega rich who earn more than £3,000 per week whilst continuing to slash support for the needy and vulnerable shows once again that the Coalition only cares about the rich and wealthy.

"Labour's failure to vote last night clearly shows that their priorities are much the same.

"First Minister Carwyn Jones's inability to influence his MPs in Westminster reveals a crisis of leadership for the party in Wales.

"His Treasury spokesperson, Owen Smith MP, was quoted last week as saying that cutting the top rate of tax for the rich would show how out of touch this Government is, yet when it came to the crunch last night, Labour failed to deliver.

"The Labour Welsh Government as always is more interested in serving its masters in London Labour HQ than serving the people of Wales."

OOPS...AN UPDATE

An advisor to Ed Balls, the Shadow Chancellor, has admitted that Labour had made a “screw-up” on Monday night by not voting with Plaid Cymru and the SNP to oppose Con Dem plans to cut the top rate of tax for the highest earners. The admission reveals embarrassing efforts by Labour staff to claim their abstention had been planned, and also reveal that Carwyn Jones was only belatedly told what was going on in Westminster rather than being part of Labour Party discussions. The Labour no-show followed some pretty vocal opposition and several pledges from shadow chancellor Ed Balls to vote against the Budget measure. The Con Dem Government won the vote on the 45p rate by 319 to 22, a majority of 297.

TIME FOR A FUEL DUTY REGULATOR

Rapidly rising fuel prices have prompted calls for the introduction of a fuel regulator. While we are all getting hammered by high fuel prices, the situation is worse in the more rural areas of Wales. The introduction of a fuel regulator who would cut fuel duty when prices spike unexpectedly, freezing the price at the pump. George Osborne, in the Budget later this month should introduce a genuine fuel duty stabiliser, something that is supported by motoring organisations and the Federation for Small Business, this would cap the price of petrol at the pump if it increases beyond expectation.

The Chancellor should also look at extending the rural fuel duty derogation which is currently being trialled in parts of Scotland where 5p per litre is cut from the bill. Plaid (and the SNP) have long recognised this problem and have been pushing for it in Budgets in 2005 and 2008 with widespread support from real people outside parliament. New Labour ignored the problems of rising fuel prices, the Conservatives simply lifted the idea, watered it down and re-branded it as their own.

We are all suffering from the consequences of the massive hike in the cost of fuel recently, not all of it down to the rising cost of oil. The Tory-led Government's VAT increase and fuel duty hike last year merely pushed the price of a litre up. Businesses and especially families in rural areas, where a car is a necessity not a luxury are facing the pain because of these choices. For the short-term we need to have a fuel duty stabiliser and a special price for fuel in rural areas, but we also need to diversify and invest in renewable energy alternatives to reduce our reliance upon oil and other fossil fuels.

THE BUDGET

No matter how they would like to spin it the Con Dem's have made a very basic and bad decision budget wise, they should have concentrated on growth rather than cuts in their first Budget last year. This publicly announced (in not trumpeted) “austerity” budget rather than a “growth” budget is simply bad economics.

The UK coalition has got it's financial policy fundamentally back to front and cuts in capital investment, not to mention the snatching £385 million away from the Welsh Government's funds, has left Wales in a weak position especially when it comes to securing economic recovery.

Here in Wales, things could be quite different, Plaid have already launched their proposal for a “Build for Wales” investment vehicle which would ensure capital investment in new schools, new hospitals and new roads while creating up to 50,000 jobs here in Wales.

Jonathan Edwards MP

Plaid Cymru’s Treasury spokesman, Jonathan Edwards MP, said:

“The Office for Budget Responsibility is set to lower growth expectations in the UK in this Budget, while figures from the Office of National Statistics show higher than expected UK government borrowing.


“This is the scenario we set out a year ago - that cutting too much and too early would lead to the situation where the tax-take falls, and more people are out of work and claiming benefits after losing their jobs.


“The UK Government should have pushed for growth in the economy first and secured the recovery, before making massive cuts to public sector jobs and investment.


“Quite simply, they got it the wrong way around.


“Capital investment, in new schools, new hospitals and new roads, is key to making our economy work in Wales, by creating jobs for our construction industry and developing vital infrastructure.


“On top of that, the Treasury has mugged Wales by taking back £385m End Year Flexibility that we were keeping to use for just this purpose.


“Clearly Plaid is the only party interested in a better future and a credible economic plan for Wales. Plaid’s Build for Wales investment vehicle, for example would allow us to raise money to counter the cuts and to create up to 50,000 jobs.”

PLAID BUDGET RESPONSE 2010 (from Elfyn Llwyd MP)

"Last year I warned that the Welsh budget – the money that pays for our public services, our health, our education – was under threat because of cuts made at Westminster. The London parties said we were scare-mongering, but Wednesday’s UK Budget confirmed our worst fears.

The figures published yesterday showed a 5% real terms cut in the Welsh budget, hundreds of millions of pounds, not from some fantasy point in the future but in the 2010-11 financial year which starts in two weeks time. We will have £800m less to spend on Welsh public services in the next year than we should, and between now and 2014 we are likely to be much more than the £3bn worse off that we first thought a year ago.

This is neither fair funding nor a fair deal for Wales. Plaid Cymru were the only party to see this. We were the only ones who cared about our Welsh public services, about our council jobs, health and education, and the only ones facing up to the reality of the situation.

But we in Wales have no have say in these cuts. These are cuts imposed upon us by Labour and Tory masters in London, at Westminster. What’s worse is that Wales has been under-funded for many years and will continue to lose out in the future, as shown by the independent Holtham Commission, which estimates that Wales is losing at least £300m per year under the current system.

Under Labour, public spending in England and Scotland grew faster than in Wales. We in Wales have been taken for granted, and it is still only Plaid Cymru who are fighting for fairer funding, based around the needs of the people of Wales, the outcome recommended by the Holtham Commission.

Despite the successes of the One Wales Government such as ReAct and ProAct, hard working families and businesses all across Wales will still be feeling the pinch when new fuel duty rises kick in next week on what will inevitably go down as ‘April Fuels Day’.

By next January Labour will have increased fuel duty by a massive 17% since December 2008. This means that fuel duty will make up 59p in every litre when people go to the pump. It is a regressive tax that will hit families, businesses and public services budgets hard, and especially those in more rural areas who have less choice in how they travel or how far they have to go for the services they use.

When the time comes we will be fighting these tax rises and repeating our call for a fuel duty regulator which would cap prices at the pump. Labour introduced an even stealthier tax when they froze the income tax threshold. This will increase the amount of tax being paid by hard-working people and impact strongly upon low-paid families here in Wales. In contrast, Plaid would have increased this threshold by £1,000, taking thousands of people in Wales out of paying income tax altogether and putting more money in people’s pockets.

That’s why, in Plaid Cymru, we’re different. We put people first

We would also have increased the basic state pension for over-80s to the level of pension state guarantee to fight pensioner and fuel poverty, whilst increasing taxes on those who are very well off through bringing down the threshold for paying the 50% tax rate and levelling capital gains tax with income tax for example.

This can be afforded – by taking away tax breaks from the already well-off. They don’t need it… our pensioners and those on low incomes, do.

When times are tough it is a question of priorities – and only Plaid Cymru would put the people of Wales first, while Labour and the Tories are more worried by fat cat pin-striped City bankers who are back to their old tricks now after we risked billions of pounds of our money to bail them out.

Our economic future in Wales depends on there being a hung parliament, with neither Labour nor the Tories in overall control. It’s only when your votes matter that they start to pay attention to ordinary people. Plaid Cymru doesn’t owe anything to the City of London, only to the people of Wales – that’s why we’re different. Our policies reflect that and we go to Westminster to get the best deal for Wales, not to listen to anybody else."

THE BUDGET

Now that the dust has settled, it's pretty clear that once again that the New Labour Government failed to announce a fair funding system in this year’s Budget, which means that we in Wales will be hit hard by a 5% real terms cut when the new financial year starts. The failure to ensure fair funding for Wales, with either a fair system or a fair deal has sadly become a signature failure of what's now nearly 13 years of New Labour Government.

The Budget Red Book, suggests that there will be a real terms cut of around 5% once inflation is taken into account –which will start not next year but in little less than two weeks time.There can be little doubt that there are deep cuts coming, which we can be sure will hit Wales hard before we begin to leave this recession behind. initially it was estimated that the Welsh budget would be hit by £2.8bn over three years, but recent revisions by independent bodies such as the Auditor General for Wales estimate £3bn or more over three years - however you spin it that's a big ouch"!

The failure to hold a Comprehensive Spending Review before the General Election and the failure to make it clear exactly where proposed cuts are going to being made, once again leaves the people of Wales well and truly in the dark – and unable to see what the effect will be upon Welsh public services. It is ironic that both New Labour and David ('Call me Dave') Cameron's Conservatives are very happy to tell us what they will keep in the UK Budget, but much more reticent when it comes to telling us what they will cut and where, which is the real issue.

The current funding formula for Wales, where the money for our public services comes from is decided by spending priorities of London, we in Wales will not know the effect upon Welsh public services over the next three years until they have been announced in detail in England. The Holtham Commission recommended that the Treasury in London produce an annual publication
which provides details of changes to the Assembly budget arising from decisions made in London - this has not happened.

The Welsh Department Expenditure Limit for 2009-10 was £16bn and will be £15.7bn in 2010-11 which begins on 6th April, 2010. Taking inflation into consideration this will be a cut of 5% year on year to the Welsh block grant.When it comes down to brass tacks, while this is an unacceptable state of affairs is acceptable to new Labour and Conservative MP's in Wales it is no and never wil be acceptable to Plaid and many people within Wales.

The only way this unacceptable state of affairs will be rectified is by ensuring that Wales has a strong voice in Westminster and the only way that is going to happen is by sending more Plaid Cymru MP's to Westminster. The old two parties have failed us, failed our communities and failed Wales. We need to think differently, we need more Plaid MP's something that will ensure
that people in Wales will be electing MP's who will actually stand up against these cuts wherever they will have a negative impact upon our communities and our public services. It's time to think different, its time to think Plaid.

Ouch!

There we are then! The New Labour's Chancellor has not recognised the real need to support businesses - these cuts should not be implemented now, particularly as we in Wales are facing difficult economic times.

What we needed was the necessary financial stimulus to protect Wales from the impact of this recession - we did not get it. With our economy facing an extremely difficult period, the Welsh Assembly Government will face a significant challenge merely to manage these funding cuts in revenue which will amount to £216 million next year not to mention further cuts to capital expenditure.

We need to support our businesses and the training needs of our companies this year and into next year, it would have been prudent for any efficiency savings to have been delayed until the recession is over, and for them to be implemented when the economy starts to grow again.

The hard working people of Wales did not land us in this economic mess, it was the failure of the UK Government to deal with unregulated and irresponsible lending over the last 10 year that has landed us where we are now.

Sadly this budget only underlines the fact that the UK Chancellor does not understand that it was New Labour's failure to regulate the financial sector that was so disastrous - the end result being that financially viable prosperous businesses are not able to access the necessary cash to survive.

Welsh Public services will now face intense pressure after the cuts announced in this Budget filter through. The UK Government has admitted in the Budget that Welsh public services will be facing huge cuts as a result of a £15bn reduction in public service spending that was confirmed today.

When taking these and other already announced cuts into account, public services in Wales will be around one billion pounds per year worse off by 2013-14. The consequences of this upon the Welsh economy are frightening and are directly attributable to Labour’s mis-management of the UK economy.

Ouch indeed!

Budget Day

As we await the budget there is one thing we really need to avoid and that is cuts in the Welsh budget which would have a significant knock-on effect for small and medium sized businesses, customers and consumers alike, it will impact on government decision making and the Arts. Simply savaging public spending to help to cover the costs of bailing out the banks and to pay for the London Olympics is not acceptable.

If New Labour wants to make a difference on Budget Day, then it’s time to:

• Raise the tax threshold by £2,000 – this would put money in people’s pockets and take lower paid workers out of tax altogether.
• Tax should be genuinely progressive –with those earning over £100,000 being subject to a 50% rate
• Raise capital gains tax to match income tax levels.
• Cap increase in energy prices, it should not be choice of heat or eat.
• Bring in a Windfall tax on excessive energy profits.

When it comes to the banking and financial crisis, it’s time to:

• Support and develop the Financial Services Authority banking code.
• Deal with the banking bonus culture.
• Democratise corporate governance by empowering shareholders.
• Ensure that lenders are held culpable if they lend money to individuals who are clearly not in a position to service incurred debt.
• Work to bring in an international regulatory financial framework.
• Work to create a global register of hedge funds, and
• Curb the ability to asset strip solvent financial organisations.

In Wales, we already receive a less than fair financial settlement, we simply cannot cope with further cuts and the UK Treasury needs to understand this, even Gordon Brown has admitted that public spending should not be cut in a time of recession. Yet, in Wales we have already received a damaging financial settlement from the New London Labour government that has already been condemned by our local authorities and other sectors.

If New Labour are serious about dealing with the financial crisis, rather than awaiting electoral oblivion, then it's time to:

• Reverse the banking trend of the last 50 years which has centralised our financial institutions.
• It's time to encourage regionally based banks and lending institutions.
• We need to support the mutual model for personal finance.
• It's time to further develop micro-finance with more support for credit unions.
• We need to develop low interest banking networks, and
• Work to bring an end to tax havens.

In Wales, Plaid Ministers of the Plaid driven One Wales government have been and are working to shelter the people of Wales from the developing economic storm, but if proposed budget cuts go ahead then our Ministers hands will be tied and their ability to act in the interests of the Welsh people will be significantly reduced.

Any proposed Treasury cuts could have a devastating impact on our communities and the Welsh people would rightly never forgive the New Labour London government if it slashes Wales’ budget even further at this time.