Tuesday 28 October 2008

How the other half live

The Independent on Sunday carried a very good and lengthy analysis of who did what, where and when on certain yachts off Corfu in the summer. For what it's worth, I tend to accept that Mandelson probably didn't do any favours for the Russian oligarch, and Osborne probably didn't actively solicit donations - although he might well have been more than willing to pursue the point once the subject got raised.

Notwithstanding the truth of the matter, Labour and Tory alike seem determined to demand ever more detailed explanations of each other, keeping the story alive a little longer.

What seems not to be in dispute at all however, is that Mandelson for Labour, and Osborne, Feldman, and Cameron himself for the Tories all accepted what can only be described as lavish hospitality from a range of very rich and powerful people, all of whom could stand to gain significant sums of money from changes in government and EU policy. I remember when I was doing business with other companies on behalf of my then employer, that the rule was never to accept any gifts or hospitality which I would not be able to reciprocate. It was a simple and clear rule, which led to a nice collection of cheap diaries each year.

These politicians all claim to have done nothing wrong, and in the sense of keeping within the limits set down by the letter of the law, I'd be prepared to accept that they're probably right. What continues to stagger me, however, is that any of them could consider this sort of hospitality to be normal and acceptable, just because it isn't actually illegal. They really do not seem to understand that being flown in private jets to stay in billionaires' yachts and villas – the sort of one-sided hospitality which they could never reciprocate – is always going to look like a conflict of interest, no matter what the detail of the law says.

They may not have done anything which is actually illegal, but they seem to be completely detached from the real world in which the rest of us live; and the whole story raises serious questions about the judgement both of the individuals concerned and of those who are trying so hard to defend them.

Friday 24 October 2008

No mere bagatelle

Betsan Powys has kindly provided some of the figures that I didn't have when I posted this a fortnight ago. Our local councils have a combined total of £581million in reserves – that is a very large sum of money. It's not the total of public sector reserves in Wales, of course. On my reading of the numbers, this is just the 22 county councils – other public bodies such as health boards and trusts and police authorities also hold significant reserves. The total is probably a couple of hundred million more.

The councils and other bodies who hold the reserves are entirely correct to point out, of course, that much of these funds are earmarked, and only held for a comparatively short period as reserves. I accept that argument, and to try and commit the whole of these funds to long term investments would be foolish. But that is no excuse for investing them, even in the short term, outside of the economy that these bodies are supposed to be serving. Even short term investments of £700 - £800million could be making a difference to Wales.

I'm most interested in the core figure – the unallocated total of around £144million. (This too would be higher with other public bodies added in). Divided between 22 councils it comes to an average £7million each, as Betsan says. From each individual council's point of view, investing it to earn maximum interest looks like a sensible financial decision. From the point of view of each individual council, this is money which they might need to call on at any time. But, when added up, it simply doesn't look so sensible for Wales as a whole.

Even assuming that the whole of the earmarked funds are spent in the year (a major assumption in itself), what these figures are telling us is that, on every single day of the year, there is at the very least somewhere between £150 and £200million of Welsh public finance invested in short term high interest accounts when it could be used for investing in the Welsh economy.

Whether through the creation of a People's Bank, as Adam Price and others have suggested, or through some other mechanism, we need to be pooling those resources and using them to boost the Welsh economy. A reduced rate of return to individual public bodies is a small price to pay.

Carmarthenshire Cllrs start blogging

The thirty-strong group of Plaid Councillors in Carmarthenshire have established their own blogs recently – one in English and the other in Welsh. The group is developing an increasingly high profile locally, building on the experience of the longer serving members, and the strength in depth of a large group of members. It's a powerful and effective team. Roll on 2012 and the next council elections.

Thursday 23 October 2008

Distancing herself from the ill-gotten gains

My attention has been drawn to this little spat (full record available here) in the Assembly on Tuesday, when one of Labour's Regional AM's attempted to rattle the cage of our local AM. I think he failed, largely because of an inaccurate choice of words. Instead of a wholly justifiable criticism of the Tory party's source of funds, he ended up making an inaccurate and unjustified attack on Angela Burns herself, over a donation which was clearly given to the constituency rather than to an individual. He was, quite correctly, forced to withdraw his remarks.

The exchange does suggest, however, that Ms Burns (and perhaps Nick Bourne as well?) is trying to distance herself from the donation made by the hedge fund to her local association. I found it particularly interesting that she sees any suggestion that she might have any sort of relationship with a hedge fund as being a 'slur on her integrity'. I entirely agree with her on that point – her integrity would indeed be damaged by such a relationship.

So what does this say about the integrity of her local party – and the parliamentary candidate locally – both of whom most certainly do have such a relationship? To say nothing of Conservative Central Office, who have not only accepted large donations from the same company, but also a range of sizable donations ("Short-sellers bankroll Conservatives") from managers of other such funds?

Alun Davies: In speaking this afternoon, I will resist the temptation to roam across the range of this Government’s successes, although I would particularly enjoy a long discussion on the role of opposition here because, when I read the Tories’ amendment 2 this afternoon, I got the sense that they had given up not only on trying to be a Government, but also on being an opposition. I get the sense that the Tory Party has done a deal and has sub-contracted out to some Russian oligarch or other sort of undesirable that it has in mind. Perhaps you have done the same deal with the hedge fund in New York as Angela Burns did for her constituency.

I will focus my remarks this afternoon on the area in which I have a special brief.

Nick Bourne: Point of order. I think that the Member might like to reconsider his last comment unless there is some substance to the allegation that he made about a Member in this place.

Alun Davies: I was simply referring to the funding of a constituency association by a hedge fund based in New York.

Nick Bourne: You named an Assembly Member and you should withdraw your remarks unless you have any evidence to back them up.

The Deputy Presiding Officer: Can you rephrase that last sentence please, Alun?

Alun Davies: If the Conservative Party has not received any funding from that hedge fund, then I am happy to withdraw my remarks.

Nick Bourne: I am sorry Deputy Presiding Officer, but there was a specific allegation about an Assembly Member’s involvement with a hedge fund. Unless you have evidence to back that statement up, you should withdraw it.

Alun Davies: I think that there was such a relationship, and I am happy to sustain that—[Interruption.] I am not going to take another intervention.

The Deputy Presiding Officer: Order. Angela Burns wishes to speak.

Angela Burns: As far as I understand it, Alun Davies has just accused me personally of having a relationship with a hedge fund. I state categorically that I have never had a relationship with a hedge fund or with a hedge fund provider, and I would like him to withdraw that statement because it is a slur on my integrity; I do not play that kind of game.

Wednesday 22 October 2008

Playing the game

I suppose that it is inevitable that the Government always tries to take the credit when the economy is going well, and blames world conditions when things are not going so well. I can't remember a government of either complexion in London which didn't try the same tactic, and Gordon Brown is no exception.

Equally inevitably, the Opposition always tries to paint the good news as something which would have happened in spite of the government's action (or even better as the result of their work when they last had a turn in government), and the bad news as the direct result of government action - or inaction.

It's all a bit of a game really. The players seem to enjoy it, but I'm not sure that it is terribly helpful in terms of addressing the real issues. The truth, as ever, gets lost somewhere in between.

Certainly there are some things which affect the economic cycle which are completely out of the hands of government. Given that simple fact, it is a complete nonsense for any government (or opposition) to claim that it can exercise complete control over the economy. It is entirely fair to point out, however, particularly in relation to the recent events in the financial markets, that governments of both parties have made deliberate choices to reduce the amount of control and regulation which they can actually exercise.

On the specific question of the financial crisis, Cameron is right to point out that Brown has not done enough to re-regulate the markets; but that is more than a little disingenuous when what it really amounts to is a criticism that Brown and Labour have not done enough to reverse the silly policies of the Tory years. (And it would sound a great deal less dishonest if his party wasn't financed to a significant extent from the profits of irresponsible and unregulated markets).

There are things that governments can do, however. And on this score, both Labour and the Tories have shown a serious lack of imagination. Adam Price has set out a number of interesting suggestions for actions which can be taken. I'm biased – of course. But this is the sort of imaginative thinking which we need if we are not only to get through the current crisis, but also tackle the essential job of growing the Welsh economy for the longer term. And, as I've noted before, we should all want that, whether or not we believe that Wales should be taking more responsibility for her own future.

Friday 17 October 2008

The man is not for turning

I'll admit to never having been a fan of globalisation, whether economic or cultural. Reading Marcuse (One Dimensional Man) in the 1970's was a significant influence on the development of my own political philosophy, and as I recall, Sartre said something along the lines of "merely insisting on being Basque is itself a revolutionary act".

At a cultural level, Welsh nationalism is at least partly about maintaining human cultural identity and diversity, and at an economic level, it combines with environmental concerns in supporting a more localised economy. Localised is not necessarily the same thing as protectionist or isolationist, nor does it exclude the promotion of trade with developing countries in ways that assist them. But when I read that shrimps are caught off the British Isles, landed in Scotland, and then shipped to the Far East to be shelled before being shipped back to Scotland for packing – then I know that globalisation has gone too far.

That's an absurd example, obviously – although there are plenty more like it – but one of the consequences of globalisation has been the creation of long thin supply chains; and I think even supporters of globalisation ought to be more worried about that than they appear to be. The complexity built into the supply of goods and services, coupled with rigorous attempts to ensure 'just in time' delivery and reduce the amount of 'working capital' employed by businesses, makes the whole economic system extremely vulnerable to a failure at a single point.

The failure of financial markets has hinted at that; but there are a range of potential events in the real world which could be even more devastating. As a simplistic example, I'm not convinced that people really understand the potential economic impact of a major flu epidemic in the Far East, even if no-one in the UK even caught a cold.

What sparked this train of thought today was reading about David Miliband's speech in Cardiff last night, where he seems to have said that the financial turmoil won't deter Britain from continuing globalisation. I struggled to find any trace of a logical basis for that statement. It reminded me of the remark attributed to Keynes, "When the facts change, I change my opinion. What do you do, sir?".

It worries me that, in the face of a clear warning about the way in which globalisation has led to an essentially US problem being exported to the rest of the world, the response seems to be to accelerate the process of locking us into an approach which has an increasing potential for systemic failure. The facts have changed – shouldn't policy also change to reflect that?

Thursday 16 October 2008

More runes to read

I'm always sceptical about placing too much faith in opinion polls, even if they contain what looks like good news. Today's poll, even though it suggests that the result in Carmarthen West and South Pembrokeshire might now be different – in my favour – is no exception.

The first problem we have in Wales is that there are so few Wales-only polls – or even UK polls with a sufficiently large Welsh sample to draw any sensible conclusions. The second, as Richard Wyn Jones points out, is that Welsh polls seem to have an inbuilt bias, for some reason which is not properly understood. And the third is that we have clearly seen that voting patterns for the Assembly elections and Westminster elections can be significantly different.

Given all of that, what, if anything, does the latest poll tell us? I think it suggests fundamentally that there has been very little movement overall since last May, but that what movement has occurred has been away from the opposition parties in the Assembly towards the governing parties. Given the extent to which Labour has plummeted in the polls for a Westminster election over the same period, that is quite an interesting finding in itself. And it's worth noting that the poll was conducted in September, before the latest Brown come-back.

It also suggests, even if in an exaggerated fashion, that the appeal of David Cameron's Tories is considerably weaker in Wales than elsewhere in the UK. That probably comes as a surprise to few Welsh politicians, but may mean that the General Election results will come as something of a shock to some members of the English Conservative Party in Wales.

For me, I suppose my biggest immediate challenge is how to persuade people to vote in the Westminster election in the same way that they plan to vote in the Assembly election…

Wednesday 15 October 2008

Is small still so beautiful?

For years, opponents of self-determination for Wales and Scotland have pointed to the size of the two countries and argued that we were too small to be independent. The almost inevitable response of both Plaid and the SNP has been to point out how successful a number of small countries have been in recent decades. It was a sensible and logical counter argument – with the added bonus of being entirely true.

Does the collapse of Iceland's banking system, and the near bankruptcy of Iceland change the argument? I don't see that it does, although perhaps Iceland is less likely to feature as a specific comparator for a while!

The problems with Iceland's banks are not in any way the result of the small size of the country. Banks have failed in large countries; banks have failed in small countries – size per se hasn't really been a factor one way or the other. What has been more important in determining whether and to what extent any country has been affected has been the nature and extent of regulation and control of the banking industry.

Would a larger country have been better able to sustain the collapse, or rather the cost of the bailout? It seems to me that the real determinant of how well any country, regardless of size, could cope with the sort of bail-outs which are happening at present is more to do with the size of the banking sector as a proportion of GDP than with the absolute size of the country or its population.

For all the glee with which some seem to have seized on the problems in Iceland, claiming that they have 'proved' that small countries are worse off, I really don't see that anything has been 'proved' beyond the need for all countries to ensure that their banks behave in a prudent fashion. The real danger is that people who concentrate on the size argument fail to learn that simple lesson.

Friday 10 October 2008

Investment begins at home

The collapse and nationalisation of an Icelandic bank has obviously caused problems for a number of local authorities in Wales. Some people have suggested that the councils concerned have made unwise decisions about where they placed their funds. The leader of the WLGA, John Davies from Pembrokeshire has said that "It would be wrong to apportion blame. These investments are done with sound advice behind them.", and on this occasion, I agree with him. The bank appears to have met all the relevant lending criteria which councils are advised to follow, and councils have merely been attempting to obtain the best return that they could get.

What I do question, however, is whether it is right that we allow – let alone encourage - councils to place their deposits overseas at all.

I understand the councils' problems; they receive part of their money in large blocks, and they also have to keep prudent levels of reserves for emergencies. As tax-payers, I'm sure we would all prefer that that money was earning interest rather than sitting idle, and we'd want them to be getting the best return. The nature of such investment by councils is also relatively short term – individual councils need to be able to get their hands on the money fairly quickly.

Nevertheless, I still wonder. As I've argued before, I think the biggest economic problem we face in Wales is how to get our GDP per head up to at least the UK average level. I don't see how depositing Welsh assets in foreign banks, even in the short term, is making much of a contribution to that end.

Clearly, given the constraints upon them, councils cannot directly use these funds for long-term investments which would lock up the cash, but perhaps if the councils and other authorities involved were able to act in a more collective fashion, they would have more flexibility overall. The sums invested in Iceland are large, but they're still just a fraction of the total which has been deposited in banks by Welsh authorities. The overall total fluctuates throughout the year, reflecting cash flows, but on any day of the year, there is still a sizeable amount of our money invested in banks and building societies, some of them foreign.

Retaining the money within Wales might well lead to a marginally lower return on investment for the authorities; but if the result was an improvement in the Welsh economy, the overall result for taxpayers would be beneficial. Put another way, 'best rate of interest for authority X' may not be the same as best value for the Welsh economy.

Instead of individual councils stashing away their own cash, why not pool the temporary surpluses of all Welsh public authorities and use at least the core minimum which will always be present to invest in the Welsh economy?

Thursday 9 October 2008

Counting the billions

I have to admit that I'm struggling to keep up with precisely how many billions it is costing us as taxpayers to bail out the banking system. There's the cost of nationalising both Northern Rock and Bradford and Bingley, and there's the £50bn announced yesterday to buy a share of most of the UK's banks.

Then there's the injection of an extra £250bn of liquidity into the banking system, and the promise to guarantee another £250bn of debts if necessary. The 'guarantee' might not be called on, of course – but then again it might. Much of the money will be repayable at some point - provided that it has the desired effect, and succeeds in restoring stability – but that doesn't mean it doesn't have to be paid out first.

The total looks like being somewhere between £400bn and £650bn of our money, which has to be found in the short term. I don't believe that the government has any real choice (although being able to find those sorts of sums at the drop of a hat really makes something of a nonsense of the recent suggestions that Wales couldn't afford independence because of a deficit of a mere £9bn!).

The government may have no choice about finding the money and propping up the system; but they do have a choice about what strings they attach to these vast sums of money. We, as taxpayers, are facing this huge financial commitment because individual and corporate greed has led people to gamble recklessly and make foolish loans. At the very least, we should be imposing a framework of regulation which ensures that this situation can never arise again. And we clearly have a right to insist that the culture of excessive pay and massive bonuses which have been paid to those responsible for this mess comes to an immediate end.

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.

Monday 6 October 2008

Can't or Won't?

According to Tomos Livingstone today, Peter Hain's remarks about the timing of a referendum on further powers are "likely to infuriate Plaid Cymru". I somehow doubt that Mr Hain will be overly worried one way or the other about this, but for what it's worth, I'm not feeling particularly infuriated - yet. After all, his remarks are not out of line with what he's said several times before, so they hardly came as a great surprise.

I have said before that the decision to call a referendum is, ultimately, a matter of political judgement – it is not a precise science. Peter Hain is obviously in the cautious camp, whereas I think Wales both needs, and is ready for, bolder leadership than that.

The key question for me in this issue is whether we allow ourselves to be driven by events, or whether we try to ensure that events are driven by us. Do we merely reflect public opinion at a point in time; or do we seek to influence public opinion in a particular direction? I'm in no doubt at all where I stand on that question – I haven't been a member of Plaid for nearly 40 years in an attempt to reflect opinion; I've spent that time campaigning to change opinions.

Last year, Plaid Cymru and the Labour Party signed the One Wales agreement. We should remember that it wasn't just the AMs who signed up to this; it was the respective parties as a whole which agreed to "campaign for a successful outcome" in a referendum on further powers. There is a 'get-out' clause in the agreement, of course, but I remain unconvinced that it will be necessary to use that clause – I think that the leaders of both parties understood what they were agreeing to, and are committed to delivering.

What probably would infuriate me, and many other members of Plaid, would be for the Labour Party to take no action to promote the case for further powers (whether internally within the party or externally with the public at large), and then seek to use the get-out clause purely in order to avoid a split in the Labour Party. That would be neither behaving "in good faith" (as the agreement requires) nor displaying the kind of leadership which I think Wales expects from her politicians. Nor would it be likely to encourage further co-operation in the future.

There is a huge difference between a Labour Party which is unable to deliver a yes vote, and a Labour Party which is unwilling to try. "Won't" is not the same as "Can't". Peter Hain seems to be dangerously close to saying "Won't", but I don't believe that he's speaking for his party.

Friday 3 October 2008

Frameworks and Blueprints

A few years ago, Carmarthenshire County Council first produced its 'Modernising Education Programme'. The plan was produced in order to deal with an increase in the number of spare places in schools, and the need to modernise and improve the facilities available for education in the county. As aims, who could disagree? It's almost what the Americans would call 'motherhood and apple pie'.

But there was a sting in the tail. It was always obvious that one way of delivering those objectives would be to close a number of rural schools, and Plaid called very clearly for the whole policy document to be subject to a proper public consultation. The council's response was that there was no need for that, because each and every individual proposal would be subject to full and proper consultation.

That's a promise which has come to sound increasingly hollow. When they do consult on the individual proposals, the consultations have come to look like a formality, and alternative suggestions are rapidly discounted. Indeed, in a letter to the local press last week, the cabinet member for education actually stated that the MEP 'is a complete project', and made it clear that there is, in his mind, no place for arguing against individual elements. What was a framework seems to have become a blueprint, which must be slavishly followed. And they wonder why so many think that the consultation processes are a sham.

The news that the One Wales government has produced some new guidelines for governors on creating federations is encouraging. This creates a real opportunity for school governing bodies in rural areas to take the initiative themselves and look at different ways of forming federations which could enable more rural schools to remain open.

I certainly hope that governors will look at this carefully as an alternative to allowing the county council to close their schools. And I hope that the Labour/ Independent Party coalition running the county council will set aside its blinkers long enough to give serious consideration to the wishes of the governors and their communities.

Thursday 2 October 2008

Who's really being decisive?

Whilst Gordon Brown endlessly reiterates the mantra that he is acting decisively, the Irish government has actually taken action, rather than just talking about it. And Brown's response is to raise doubts about what they've done - when he should be following suit.

The Irish have, effectively, guaranteed the whole of the deposits made in their banks, whilst the UK government proposes only to raise the level of guarantee from £35,000 to £50,000. It's a meaningless distinction. In reality, as one Labour peer has already pointed out, the UK government, whatever it says about imposing a limit, is for all practical purposes committed to a full guarantee - so why not just be honest about it?

A few days ago, I raised the question of how 'global' the crisis really is, drawing attention to places like Spain which have been relatively unaffected. The Economist carried an interesting article about how Spain managed to avoid the crisis so well. This could have been us – but for the obsession with allowing the 'markets' to do whatever they wish.

And, if any more confirmation was needed that the time has come to clamp down on the speculators and gamblers who have already done so much damage, the headline in yesterday's Daily Express certainly provided it. Not content with forcing a bank onto the rocks, it seems that the speculators were actually trying to wreck the rescue deal for HBOS. Not because it was a bad deal, not because the deal isn't necessary, but purely because they could make a bit more money by doing so. It neatly sums up the (lack of) values which drive them.

Black's Gauntlet

Peter Black accuses Plaid of being unwilling to pick up the gauntlet in the light of yesterday's story that Wales allegedly receives up to £9.1 billion more than is raised here in taxes.

His accusation is not entirely fair to say the least - after all, this is not a new story, and there was some discussion on the same news on this blog here and here some months ago. In fact the whole story is an old one – the figures being quoted were in a report published in July – and I'm fairly certain that it was covered by the Western Mail at the time. But I don't mind picking up a tossed gauntlet!

It is very easy for those who oppose independence to look at the report and simply say "£9bn black hole - how will you plug it". Responding to that involves considering the figures and the factors involved a great deal more carefully, and doesn't make such an easy headline, but I'll try again.

I start by accepting that, if Wales were to become independent tomorrow, the national budget would be in deficit. I don't know by how much – the figure of £9.1bn is open to significant questioning for a number of reasons, but the basic fact is that there would be a deficit. In reality, Wales is not going to be independent tomorrow, and the figures that count are those that pertain when independence becomes a realistic prospect. That means that discussion of precise figures at this stage is a somewhat hypothetical pursuit, but we don't have a better starting point. My response to the budget deficit is in three parts.

My first answer is – so what?

Lots of countries run a deficit budget for some or all of the time. The UK is budgeted to be in deficit by around £43bn for the current financial year, and that figure (according to the same report) is expected to rise to around £55bn in 2009/10. As a result of the recent financial crisis, some are suggesting that that figure may well reach £100bn. Does that mean that the UK is bust, and cannot survive as an independent state? No, of course not, and the mere fact that Wales is running a deficit doesn't make Wales unviable either.

In one of the comments on his thread, Peter suggests that this is not the same thing, because the UK is able to sustain this level of debt, but Wales isn't. And the basis for saying that is what exactly? It certainly is true that, for any country, there are likely to be constraints around the amount and duration of debt, but they're not black and white enough for anyone to be able to make this over-simplistic assertion.

Peter makes the point that "An independent Wales would need to spend additional money on social security and a whole range of other presently-non-devolved functions". Almost right, Peter – except for the word 'additional'. Wales would certainly need to provide such functions, but my reading of the Oxford Economics Report (available from this page) is that estimates for these costs (along with a host of others, including Defence expenditure) have already been included in arriving at the figure of £9.1bn.

The Oxford Economics report makes a valiant attempt to estimate total spend and total revenue raising in each nation/ region, and I think that the figures that it came up with are as good as any that we have. Some of them are inevitably estimates rather than actuals; but I don't have better estimates, and I cannot find anyone who does, so I'm prepared to accept them as a starting point for discussion.

But the report was never intended to answer the 'Is Wales viable?' question, and is therefore based on a big underlying assumption that things stay broadly as they are. Independence challenges that assumption, and means that there are a number of questions on the £9.1bn to which nobody really knows the answer, but which would certainly make a difference to the size of the deficit.

So, as the second part of my response, here's a couple of those questions for starters:

Would Wales spend as much on armaments and wars as the UK does? Under a Plaid administration, the answer would be no, and such a reduction would obviously narrow the gap between income and expenditure.

There are some civil service jobs in Wales which serve the whole UK (agencies such as the DVLA). But there are many more such jobs in England. Undoing the centralisation of administration in London would itself make a dent in the scale of the deficit.

The third part of my response is this:

Opponents of Independence always seize on studies of this nature to 'prove' that Wales is unviable, and 'depends' on England. But, even if we accept the raw numbers as being completely accurate and unchallengeable, one has to ask just how such a situation has come about in the first place. Surely any objective consideration has to at least entertain the possibility that a lack of independence just might be the cause rather than the solution?

Wednesday 1 October 2008

Free Wales, or Free Booze?

I spent a few hours earlier today at the Freshers' Fair in Trinity College. I wasn't exactly the youngest person there, but I was part of a team from Plaid, and the others, including Nerys Evans AM, were sufficiently younger than I. We had a good amount of interest in our special offer for students - a Free Wales, if you only come and help us work for it.

The other parties also had their stands there, of course - and why not? But I know that the Tories, in particular, would be extremely disappointed not to have a special mention for their efforts. So disappointed that I was even tempted to ignore their latest gaffe. (I'm beginning to think that they might actually be making gaffes with the specific objective of getting them mentioned here.)

First, some background. William Graham, the Tory AM for Wales South East tabled a motion in the National Assembly on 2nd July, which included the following words:
"To propose that the National Assembly for Wales:
"1. Recognises the importance of educating young people about the devastating health and social implications of alcohol abuse."

I and many others agree with him, and when the motion was discussed, it was agreed by all Assembly Members who were present. I'm sure that readers will have worked out what is inevitably coming after that – because the Tories' special offer to the young people starting college in Carmarthen was a chance to "Win Free Booze". What a stereotyped image they have of our young people, to say nothing of the inconsistency which this displays.

But inconsistency seems to be an inherent characteristic of the English Conservative Party in Wales; they seem able to contradict each other on an almost daily basis on any and every topic. Indeed, last week, one of them even managed to contradict herself with no help whatsoever from any other members, by retracting much of what she had said in an interview.

On a completely serious note, today's fair effectively underlined two very different approaches to the young people of Wales. Free Wales if you join us and help work for it; or a chance of free booze if you tell us your name and address.