Emergency Budget Response Speech

In my speech today I will examine several different issues of Welsh, UK and international significance, noting the impact of this new Budget upon the Welsh economy and Welsh families and communities.

I would like to begin, though, by asking whether or not this Budget was even necessary, never mind whether it deserves the billing of an ‘emergency’ budget.

This was clearly a political and ideological budget designed to shrink the state and not one that was economically needed.

Indeed, even the Financial Times columnist Sam Brittan called this a ‘totally un-necessary budget’ in his column of 18th June.

This was because we already had figures from the March Budget, from the new Office of Budget Responsibility and we all knew that the major announcements, the real announcement, are actually the cuts that will be announced in October in the Comprehensive Spending Review.

On Tuesday, though, the UK Government confirmed that, except for health and overseas aid, departmental budgets are to be cut by 25% during this Parliament.

If we map that level of cuts on to the situation in Wales then there are around 60,000 public sector jobs at risk – 15,000 more than the 45,000 job cuts planned by Labour back in March. If the FT is correct today, 65,000 public sector jobs could be at risk.

This is a very worrying situation for many families in Wales and we believe that this is one that is in many ways un-necessary, and avoidable.

It is clear that the national debt and deficit must be dealt with but this is a question of timing and I cannot believe that increasing the cuts in this way and at this time is in any way beneficial to the people of Wales.

What would be beneficial, of course, is the implementation of the recommendations of the Holtham Commission on Funding and Finance in Wales.

A major plank of that was the recommendation that a floor of 114% of English spend be implemented immediately to ensure that Wales does not further lose out under the Barnett Formula.

Plaid Cymru are not alone in calling for this.

Members opposite may recall that the Liberal Democrats leader in Wales said on 7th June 2009 said that “the Westminster Government should act immediately” in introducing a floor.

That £300m per year would save around 9,000 public sector jobs in Wales.

It would only be the first step on the way to a fairer, needs-based formula that we need.

It is therefore disappointing that all of this has been put on the back-burner.

With so much work on the issue contributed by Gerry Holtham and his team and three other reports, I cannot see the need for an additional commission coming after a successful referendum on further powers for the National Assembly.

There were other areas where the new Budget is both tough and unfair.

The most important of these are in terms of cuts in the welfare budget to the tune of £11bn in coming years.

As figures in the Financial Times showed, any cuts in welfare or the public sector hurt more those areas which are already in need.

The change from upgrading benefits according to RPI inflation to upgrading according to CPI will mean lower rate of benefits growth than before and a ‘stealth saving’.

Having worked for Citizens Advice Cymru I can tell you people who rely on benefits will struggle because of these changes, and we are talking about real people and families on low incomes, not the welfare scrounger that the political right like to caricature will be worse off than before.

Specifically the proposals to lower the number of people on Disability Living Allowance are a cause for concern.

In Wales there are more than 240,000 people on DLA

Having seen the impact of tribunals and stricter qualification criterion in other benefits, we have concern as to how new changes on eligibility will be implemented and who will make the final decision? What appeals system will be in place?

Disability groups and ourselves support getting people into work. That is a good thing. But when these schemes are suggested, especially in such a manner and in such a budget, then there is the wider concern that this just a means for getting people off benefits rather than supporting them back into work.

I must also say that in many parts of the UK, even if people are able to work, they cannot.

Some parts of Wales have very few jobs available and between 10 and 15 registered JSA claimants for each advertised job, even before adding people switched off from any disability benefit.

It is the same issue regarding parents of young children going back to work. If the work is not available, and if we are also forced into making savage cuts into the private sector, then how are these people to find work?

We welcome some steps in the Budget.

There was the recognition that Wales and other parts of the UK have not shared in economic growth in the past and that a level playing field is required.

Quite how Labour managed to create or accept a situation in which there was only 1 private sector job created in the North or Midlands of England but 10 created in London is beyond me, and it shows their failure of imagination in growing or developing the Welsh economy.

However, the proposals put forward by the Conservatives to allow a National Insurance holiday is hardly likely to correct years of economic centralisation in London and the south-east of England and re-balance the economy.

A further reaching idea might be the regionalisation of corporation tax according to GVA. This would give the poorest nations and regions a competitive advantage.

In West Wales and the Valleys GVA only 64% of the UK average and so additional assistance to equalise this across the UK would be warmly welcomed and eminently sensible, within EU regulations.

Another avenue would be the devolution of this tax so that the Welsh Government can make their own decisions, again within EU regulations.

As I say, bolder moves to develop the Welsh economy are needed compared with those given in the budget, and the route-map for economic renewal to be launched by Welsh Deputy First Minister Ieuan Wyn Jones will provide more nuanced, Welsh solutions when it is launched in a few weeks time.

But changes that bring about real terms cuts in benefits, and public sector pay freezes, punishes those who had nothing to do with the economic mess created by the banks and the recession.

The general public contributes £13bn extra towards the deficit through a VAT hike (one which we need no reminding that the Lib Dems campaigned against in the election), the bankers will pay a measly £2bn per year through a levy and still see huge benefits in ‘shifting’ their profits from income tax to capital gains tax.

The levy, it is not only small, it is only being introduced gradually: The banks won’t be squealing as a result of this Budget, in fact their balance sheets will be better off as the cuts in corporation tax will more than compensate for the levy.

Considering that the PCS estimate that there is 123 billion pounds of uncollected tax I was amazed that yesterday’s Budget didn’t include any detail of how the tax gap would be reduced. Far from demonizing vulnerable people struggling to get by, wouldn’t it be better if the Government targeted the super rich for their tax avoidance and evasion. Instead cuts to HMRC staff will reduce capacity to collect due tax from those intent on not paying their fair share.

There were elements of the Budget which must be welcomed – not least the increase of £1,000 of the level at which income tax is paid by basic rate taxpayers, a Plaid Cymru policy at the general election.

As we argued before the election, this was a realistic position and an affordable pledge even in difficult circumstances, and therefore we welcome its inclusion.

If I might turn to a further disappointment for Wales at this Budget then it must be that while confirmation was given of other transport schemes in England, the electrification of the Great Western line was noticeable by its absence.

Again more proof that this government is not attuned to the needs of Wales.

I do not need to remind you that Wales ranks alongside Albania and Moldova at the bottom of the electrified railtrack league table, and without a concrete timetable for either electrification of the Great Western Line or the creation of a High Speed Rail link we will languish there much longer.

Far from all of us being in this together – this Emergency Budget aimed its axe at the poorest and the most disadvantaged, whilst it is more or less business as usual for the economic elite.

One Response to “Emergency Budget Response Speech” [latest first]

  1. Excellent.

    And was impressed also by Glenda Jackson last night, she really let rip into those spineless condems. Fair play to her
    : )

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