Tuesday, 7 October 2008

Ducking the issue?

One e-mail response to a previous post on the Welsh budget deficit raised the question 'but you still haven't said what you will do to reduce the deficit if Wales were to become independent'. Superficially, it appears to be a good question – but I think it's actually the wrong one.

Wales is clearly not going to become independent tomorrow. I've said before that I think independence is at least 15 years away, and the circumstances will be different then. But, for the purposes of debate, let us assume that the people of Wales have voted for independence in a referendum, that independence day has been set for 1st March 2024, and that the first independent government will be a Plaid majority government.

For the 15 years between now and then, most of the major economic decisions affecting Wales will be taken by either a Labour or a Conservative government in Westminster. So, if Labour or Tory opponents of Welsh independence want us in Plaid to set out in detail our figures for a four year period of government starting in 2024, perhaps they could start by telling us in the same detail what they will be doing in the interim, so that we know where they think their policies will have left Wales by then.

Telling us to simply assume that independence happens tomorrow is not only positing a completely unrealistic situation, it is also dodging the issue of what they are going to do in the interim, and why they have been so unable to change the situation - although given their lack of vision for Wales, it's probably not entirely unreasonable to assume that there will have been no significant change in Wales' position. (If there's been a significant period of Plaid government in the Assembly in the interim, then we will have used the Assembly's limited powers creatively to make some progress; but if we could turn the position around entirely within those powers, then we wouldn't have such a great need of independence.)

Assuming that most of the major decisions continue to be made by LabourTory politicians, it is therefore reasonable to also assume that, at the point of independence – whenever it comes – Wales will still be lagging behind the UK average in terms of GVA, still have a less healthy population overall, still have a higher proportion of people economically inactive, and still have lower wages than the UK average. And the Welsh budget is likely to be still running a significant deficit. That is the effect of LabourTory policies today and they have no discernible proposals to change that situation.

The challenge is surely how to change the situation in ways which both we and opponents of independence seem to be agreeing will not happen without that independence.

We will need to bring the budget deficit down; but it is not necessarily the case that that should be the top priority in the short term. Indeed, in order to bring the Welsh economy up to the level at which it should be, there could even be an argument for a deliberate increase in the deficit in the short term in order to make the necessary investments in infrastructure etc. – to deal with the neglect of the past.

Adam Price has previously made a cogent case for reducing business taxes, particularly where the untaxed profits are re-invested in growing the businesses (whereas any profits taken out of the businesses are taxed through personal taxation, such as income tax). That is likely to decrease the tax take in the short term, although increase it in the longer term as the economy develops and provides more and better jobs.

So, in answer to the question about how we will plug the funding gap on day 1 of independence:- in my view, it's the wrong question. The right question is how do we bring the Welsh economy up to the level at which it needs to be for the long term prosperity of the whole nation, because that is the best way to address the budget deficit.

Plaid has been offering manifestoes-full of solutions to that issue for decades, based on Wales taking control of her own future. Our opponents seem to be offering, and assuming, only more of the same. For them, getting the Welsh economy to the point where there is no need for a budget deficit is simply not a priority. It's far easier to simply throw the question at us.

6 comments:

Stonemason said...

I think I agree with your .....

"it appears to be a good question – but I think it's actually the wrong one".

..... except .....

Having no idea who your correspondent could be, I might understand the general concerns as expressed, if it were me I would be asking for clarification of your intentions, asking for easily understood models of where you might be taking me, bones with sufficient meat, not minutia.

Budget deficits are for the now, an impossible task for forecasting, a task for Delphi maybe.

Anonymous said...

whether i agree or not that was an excellent read - thank you John

alanindyfed said...

15 years away, you say?
But I hope, and expect, to see independence within my lifetime
(and I´m not getting any younger).
Gwynfor did not live to see it,
so will Dafydd (2), Ieuan or John live to see it?
Alex in Scotland will surely live to see it. So why shouldn´t we all live to see it? Steady unrelenting pressure will bring it about, and we do not have so long to wait IMO.

John Dixon said...

Stonemason,

Yes, I and Plaid need to do more to spell out the broad direction of the policies which we would follow. I could simply say that a lot of it is in our election manifestoes, but that's not enough.

There is a limit to how much I want to include in a single post - so I try and keep to a single topic at a time. But I will attempt to return to matters economic over a period in other posts, and hopefully add more meat to the bones in the process.

Alan,

Plaid have made it clear on a number of occasions that independence is something that the people of Wales must choose for themselves; it's not something that can be or should be forced upon them. We have also said that a step of that magnitude must be preceded by a referendum.

We know that we face one referendum in the near future - and that one won't even give Wales the powers which Scotland currently enjoys. I don't believe that a further referendum is on the cards for some time after that.

I try and be realistic in my assessment of the likely pace of progress. I'm sure that you will not be the only member of Plaid who may feel that my assessment is disappointing, and I'd be happy to be proved wrong.

But it is impossible to respond to some of the economic questions which we are being asked unless we put them into a context - a realistic context - of the probable pace of events. The timescales I use to set that context are just my honest personal opinion.

Un o Eryri said...

In answer to alan I hope we do see a self governing Wales in less than 15 years, but I accept your point entirely about attempting to put things in a realistic context. What is important for us in Plaid is to continue fighting for the cause no matter how long it takes, and even if it won’t happen in our lifetime we have to make sure that it happens for the next generation. There are many people that have unfortunately passed away that knew they wouldn’t see a self governing Wales but that didn’t stop them working tirelessly for the cause. The important thing that everybody in Wales has to realise is that it is only through voting for Plaid that we can succeed.

John Dixon said...

un o eryri,

I agree. I have always understood that some of the changes which I would like to see may not happen in my lifetime, but that doesn't mean they are not worth fighting for. We should be grateful to the generations of campaigners who went before and understood that point - they helped put us where we are today.

One of the key differences between a party like Plaid, which has a long term vision for the future, and other parties is that for us, political power is a means to an end; for the others it has become the end in itself. That means that we seek to lead and change public opinion - necessarily a long term project; the others seek only votes.

I actually don't know how long it will take, nor whether I will see the outcome of our efforts today - but that has never - and will never - stop me from campaigning for those things which I believe to be right. Being prepared to take the long view is one of our great strengths as a national movement, not an indication of defeatism.