After ten years as my party’s Treasury spokesperson it was a new experience for me this year to watch the Budget as a normal back bencher having passed on the baton to my great friend and colleague Ben Lake MP.
Being an opposition Treasury spokesperson is one of the most difficult tasks in politics, spending months in advance of any fiscal event trying to second guess the intentions of the Chancellor and then having to consume huge amounts of data on the big day to respond to what has been announced - when the Treasury has full command of the political narrative. That is why it normally takes a few days before holes start appearing in Budgets, after the economic experts have had a chance to dissect the Budget Red Book and the accompanying Office for Budgetary Responsibility (OBR) analysis of the public finances.
I wasn’t however excused from media duties in advance of the Budget, and during a debate on the ‘All Out Politics’ programme on Sky News on the eve of the Budget, I made the case that it was politically and economically inevitable that the Chancellor would make his first Statement a Coronavirus Budget. I challenged the Treasury to base its policy on three main areas of work. Firstly, the allocation of funding for health and care services to deal with the impending outbreak. Whilst these services are devolved to all four constituent parts of the British State, the reality is that years of underfunding of our care services are about to come back and bite policymakers in the coming weeks and months. Secondly, I called for a comprehensive package of support for the self-employed and those not able to access occupational sickness plans and the Statutory Sick Pay. And lastly a package of support to put a floor under the economy, and particularly small to medium size businesses.
This was broadly the strategy pursued by the Chancellor, however he did not specify a set amount of funding for Health and Care. The failure to allocate a specific sum for the NHS in England means that money available to Wales will depend entirely on what the British Government allocates to England as the outbreak escalates. If the situation is more serious in Wales than in England (and we have a more aging demographic) the Welsh Government will face a shortfall in resources. In terms of the second element, the move to bring forward SSP to the first day of illness is welcome. However, over 15 thousand self-employed people in Carmarthenshire are not eligible for sick pay. The move to relax access to benefits won’t comfort many. On the third element, the British Government decided to offer business tax exemptions for the most at risk sectors for England. With the whole weight of the British States borrowing and fiscal power this was an easy give away, however it will be far more challenging for Wales to replicate (business rates are devolved) due to the limited fiscal and borrowing tools at our disposal.
Of great concern for Wales was the admission in the Budget Red Book that capital spending in Wales would only receive an additional allocation of £100m. this compares to £1bn for Scotland (around twice our population) and £300m for Northern Ireland (around half our population). Our lack of funding again resulting from our weaker constitutional settlement in Wales compared to the other constituent parts of the UK. Our economic performance as a nation is directly hindered by the lack of powers available to our country.
The OBR once again reduced its growth forecasts for the UK economy, blaming in particular the British Government Brexit policy to reduce trade with Europe and its immigration policy which will reduce the number of young people in the workforce coupled with a fall in skills. These forecasts didn’t include the likely economic impact of Coronavirus. Ignore the fanfare around the spending splurge, we are about to enter some very choppy economic waters.