Ducking the issue?

Tweet 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.