Wednesday 27 October 2010

Fantasy economics?

Some politicians get themselves quite worked up if they think another party has 'stolen' one of their policies; I prefer to see it as flattery and vindication.  Politics for me has always been more about making the right decisions than about who makes them.

So I'm not in the least unhappy to see that the Conservatives and Lib Dems have come round at last to a policy on state pensions which looks remarkably like the one which Plaid Cymru proposed in May's General Election.  The devil is in the detail, of course, and they are planning to pay for it in ways which were not the same as those which we suggested.  Nevertheless, the weekly figures which they are suggesting are stunningly close to those which Plaid advocated.

It is likely to cause a degree of indigestion, however, as some people have to eat their words

I particularly liked Vince Cable's claim that it was that it was a Liberal Democrat idea that had been developed by the party over several years in opposition.  Clearly the party hadn't told Kirsty Williams that they had spent several years developing this policy when she said "These half-baked plans will never see the light of day, because the sums just don’t add up. You simply cannot fund huge pension increases for millions of people, without endangering the front-line services upon which many older people depend".  Although it's possible, I suppose, that her caveat may tell us more than she intended about the way her party intends to fund the policy.

And presumably, Iain Duncan Smith hadn't talked to Cheryl Gillan either when she said "This is fantasy economics that Plaid cannot deliver and know gives false hopes to pensioners across Wales".

Still, thanks to the One Wales policy of free prescriptions, Kirsty at least will be able to get something to assist with her digestive problems.  Our Secretary of State will have to pay for her medicine though, I'm afraid.


Paul Williams said...


Plaid Wrecsam have also attempted to take me to task over basically the same grounds (see here: My thoughts are:

1. It is a tad silly to suggest that other parties have 'stolen' a Plaid Cymru proposal unless you can prove that no other party had ever thought of increasing the national pension before.

2. Plaid's policy, if I recall correctly, was to pay for a 30% increase by scrapping ID cards and trident. The problem of course is that you can only scrap capital projects like ID cards and Trident once, whereas you have to continue funding increased pensions indefinitely. IDS's proposal is fiscally neutral and sustainable insomuch that it could be financed by a permanent reduction in govt bureaucracy.

3. I still think it was daft of Plaid to make their key election pledge in the last election something which they would never, ever be in a position to implement. Its fine to have a position on pensions, but to make it your key pledge was cynical and misleading.

John Dixon said...


I didn't really suggest that the policy was 'stolen'; my point was that I really don't care how people arrive at a position as long as I agree with the position.

"Plaid's policy, if I recall correctly, was to pay for a 30% increase by scrapping ID cards and trident."

It wasn't, in fariness, quite as simple as that. I agree entirely with your view that you cannot pay for an ongoing revenue commitment by scrapping a one-off capital scheme; however, the costs of Trident aren't just capital. There is an ongoing revenue cost as well - in the region of £2.8bn per annum, if I recall correctly. It is entirely legitimate to seek to reallocate that cash on an ongoing basis.

Plaid also said that it would raise revenue funds to pay for pensions by reducing the level at which 50% tax kicks in from Labour's £150,000 to £100,000, would scrap the upper limit on NI contributions, and would scrap higher rate tax relief on pension contributions. It also said that the higher level of pensions would start from 80 year olds and reduce over time.

Taking all these points together, it was and is my view that the proposal was affordable within an overall UK budget. Whilst the Tory / Lib Dem coalition aren't proposing to fund it in the same way, the fact that they are proposing it at all is surely some vindication for the view that the proposal is indeed affordable if given an appropriate level of priority in spending terms.

"I still think it was daft of Plaid to make their key election pledge in the last election something which they would never, ever be in a position to implement."

Understood. But the point is that Plaid will never ever be in a position to implement any of its policies at UK level, and anything said in a UK General Election has to be interpreted in that context. What Plaid can do is display a set of values and principles, and use headline policies to draw attention to the way in which those values and principles differ from other parties. Whether this was the right one to choose is a matter of opinion, of course, and on that, I think we'll have to agree to differ.

Unknown said...

Druid- Plaid also proposed to raise capital gains tax, it wasn't *just* ID cards and Trident. Plaid suggested a number of tax rises as well as cuts at the last Westminster election. It is a slight to say that Plaid *only* wanted to scrap ID cards and Trident.

Paul Williams said...

John & Ramblings,

Thanks for your replies. If you tell me that it wasn't just ID cards & trident then I of course believe you -- and that makes a lot more sense policy-wise (though I may not agree with your individual cuts/tax-rises).

I stand by my opinion on making such a pledge the centrepiece of Plaid's election campaign however. Not all voters may understand that it was just to " display a set of values and principles".

John Dixon said...


"Not all voters may understand that it was just to 'display a set of values and principles'."

I think you've inserted the word 'just' there in a way which makes it look rather more cynical than I think is fair. Perhaps my wording invited that though; what I'm saying is that we can spell out the sort of society we'd like to see, the sort of priorities we think are right, and use headline policies to achieve that.

I believe that voters are clever enough to realise that Plaid was never going to form the UK government, and could never implement any policies at that level; I really don't believe that anyone would have voted for Plaid in the belief that pensions would increase as a result. They may well have done so in the certain knowledge that Plaid would support an increase in pensions though, and with an idea of the sort of level to which we would like to see them increased.