Why We Need a Wealth Fairness Bill (The article first appeared in the Morning Star 7/6/13)

When the British coalition government came to power amid the aftershocks of the 2008 financial crash, it pledged to rebalance the economy.

Diversifying away from over-reliance on financial services and a shift away from London’s economic domination of the whole country were promoted as part of Britain’s recovery.

After decades of increasing wealth inequality under successive Tory and Labour administrations, which saw Britain become the most unequal state in the whole European Union, finally there was to be a change of direction.

It hasn’t happened.

Vast areas of Britain are economically depressed, with most political efforts concentrated on south-east England.

GDP per capita in inner London is almost 10 times that of many areas of Wales.

Many parts of northern England are in the same boat as the latter.

Great inequalities exist within London itself, but there is still an overwhelming concentration of wealth in that region.

Its GDP per head is 70 per cent higher than the British average.

It’s the current political structure and policy priorities of the Labour-Tory tag-team that have allowed this to happen.

West Wales and the Valleys now incredibly finds itself below parts of Bulgaria and Romania in the EU wealth league.

The Party of Wales (Plaid Cymru) believes that Wales is best served when we are free to decide our future and set our own course.

That’s why it’s so important that the job-creation and economy-boosting financial powers recommended by the UK Commission on Devolution are implemented as soon as possible.

But on their own they’re still unlikely to reverse decades of inverted wealth distribution.

An Economic Fairness Act, as proposed by the Party of Wales in the lead-up to the Queen’s speech, would force British governments of whatever colour to implement measures to ensure more economic and job opportunities are created outside south-east England.

It would concentrate minds on a genuine rebalancing of the economy away from banking and towards manufacturing and engineering.

It would allow poorer areas to be prioritised for infrastructure spending and investment, bringing jobs and growth.

Legislation based on the US Communities Reinvestment Act could ensure that the private banking sector operates fairly in terms of prioritising lending in certain areas.

In Wales a national public development bank could be set up to ensure businesses in our country are able to access finance to grow and develop.

The devolved governments would be empowered with the job creation levers to incentivise economic development.

Instead the Westminster government is driving in the opposite direction – promoting regional pay in the public sector, introduced by Labour and now pursued by the Con-Dems, which ensures low-wage economies outside London.

Labour’s now gone further with a pledge to cap benefits on a geographical basis if it forms the next government.

That means the unemployed and disabled in Wales would receive less in payments than those who happen to live in London.

Wales is already set to lose over £1 billion in the coming year due to cuts to benefits, including payments that people in work receive to top up low wages.

In the aftermath of the latest Budget it is also increasingly clear that the Treasury has been reinfected with the “British disease” – basing growth on inflating house prices backed up with taxpayers’ cash, the “help to buy” policy.

Far from rebalancing the economy, the Treasury is reintroducing boom and bust.

Instead of delivering an equitable share of infrastructure investment across Britain the Exchequer lavishes its grand design projects on London – such as Crossrail or the Olympics. Even HS2 will benefit London more than other regions.

Foreign direct investment could be deliberately channelled into the poorest parts of the country – Germany does this, but UK Trade and Investment doesn’t.

Germany is a federal republic. Its constitution requires fiscal equalisation between regions.

This is a timeless requirement on all governments there.

After reunification a huge effort was put into financial transfers to poorer regions and industrial development policies.

The same could be done within Britain.

The alternative is the current “let it be” approach favoured by Westminster Governments of whatever colour – whereby investment is concentrated in London and south-east England and wealth inequality continues its inexorable rise.

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