Losing the plot

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-         We wanted the power to borrow money. 
-         The only way that we could get that was to promise to use all the money we borrow to build a new motorway. 
-         So we’re building a new motorway.

As a justification for building a six-lane highway across the Gwent levels, this doesn’t work for me.  I suspect that it won’t work for a lot of other people either.  And whilst I’ll admit that it’s paraphrased, it does seem to sum up the argument being put forward by the Welsh Government for the decision to press ahead with the M4 relief road. 

Adding in, for good measure, that "Business people are very content", doesn’t do it for me either (even if it were true; my understanding is that some business organisations would prefer to have a cheaper route finished sooner).

It makes it appear as though the power to borrow money became, at some point, an end in itself rather than a means to doing whatever it was they originally planned to do.  And it means that the decisions on the Welsh Government’s transport priorities – and indeed more generally capital spending priorities - are effectively being set by the UK Government, not the Welsh Government.

It’s not a good starting point for new financial powers.

Words, not action

Tweet Amongst the reaction to the Welsh government’s decision to blow £1 billion worth of capital expenditure on one road scheme in the south-east of Wales, questions have been raised about how the government would be able to progress other schemes, including the Greater Cardiff Metro scheme.  It’s a good question, although given the strings attached to the way in which the Conservative/Liberal Democrat coalition in London has “allowed” the Welsh government to borrow the money for the M4; I’m not convinced that they would ever have been permitted to borrow the money for any other scheme - perhaps not even for the 'blue route'.

The UK government has always been clear that they were only permitting borrowing because they wanted this particular scheme to proceed (which makes the Welsh Lib Dems’ apparent opposition more than a little curious, even if it isn’t exactly unusual for that party to be both for and against policies).

One option for funding the Metro scheme is the use of European funding.  Cardiff is not actually entitled to that money but it’s been suggested previously that schemes which happen to benefit a greater area might be able to tap into such funding, effectively diverting them to Cardiff.  It’s a little bit like robbing the poor to pay the rich but there’s nothing new or original about that.

On the matter of the M4 itself, Gareth Clubb has done a very effective deconstruction of the objective “evidence” (or rather total lack of) for the government’s proposed scheme.  Whilst both the government and the CBI refer incessantly to the damage which the limited capacity of the M4 does to the Welsh economy, they have no facts to back that claim.  We are all, apparently, supposed to take the claim on trust because they say it is so.

In principle, of course transport bottlenecks will negatively impact on those economic activities (and thus those companies) which depend on transport; but the leap of logic from stating that obvious truth to building a six lane highway around Newport is far from being an obvious – let alone the only – solution.  And the concentration of attention and resource on one (comparatively small) area of Wales betrays an obsession with the idea that the Welsh economy is wholly dependent on (a) what happens in one corner of the country, and (b) on the link between that corner and England.  It’s not a version of the future which offers much to those of us in the west or north of the country.  Nor does it suggest any serious intention to rebalance the Welsh economy and promote more sustainable local economic activity across Wales.

All in all it tends to confirm that “sustainability” is something to be talked about ad infinitum; something which politicians can declare themselves passionate about when seeking ‘green’ votes.  But it isn’t really anything which requires them to take any action.

The for-and-against party

Tweet A couple of weeks ago, Peter Black proudly announced that the Lib Dems were the first party to oppose the building of the M4 relief road.  I thought this a welcome step forward, and I think that he was right to say that the Lib Dems are the first party to reject the idea in principle.  It’s true, of course, as one of the comments on the piece suggested, that the One Wales Government decided not to proceed with the plan, but that was a decision taken purely on financial grounds at the time, leaving open the possibility of resurrecting the scheme at a later date - exactly as many of us feared at the time.

But hold on a moment – on Thursday of last week, the UK Government’s spending statement, produced by a government of which the Lib Dems are a part and announced by a Lib Dem minister, committed to working with the Welsh Government to build the self-same road.

In fairness, Peter Black did specifically refer to this being a policy of the ‘Welsh’ Lib Dems, so I suppose that leaves open the possibility that the UK Lib Dems will just ignore them (nothing new there) and carry on regardless, which is exactly what is happening here.  But if a policy of the Welsh party on a specifically Welsh issue, which is under the control of the Welsh Government can be over-ridden by the so-called ‘federal’ party, what is the point or status of such a policy?  A quick press release, I suppose, like so much of politics these days.

The idea that the use of borrowing powers to fund the M4 had anything to do with a response to the Silk Commission’s report is also rapidly evaporating.  The Treasury statement referred to an agreement that the Welsh government ‘can use’ – how nice of them to give permission – ‘their existing borrowing powers’ for the scheme.  And Eurfyl ap Gwilym (himself a member of the Silk Commission) referred to a short term “…agreement on limited borrowing powers to fund an M4 relief road”, with proper longer term borrowing powers a matter for the future.

The proposal for the M4 relief road seems to be developing an increasing cross-party momentum in favour of mortgaging the future of the whole of Wales to fund one short stretch of road in the bottom right hand corner, and it seems unlikely that any of our politicians are going to oppose it.  Once again, when push comes to shove, all the politicians' talk of sustainability is put to one side; the economy always trumps the environment.

There are two rays of light, however.  The first is the work done by Professor Stuart Cole to try and resurrect an alternative proposal which is much cheaper and less environmentally damaging.  The the second is the proposed court action by environmental groups challenging the validity of a consultation process which does not even allow the consideration of any alternatives.  All power to their elbow.

Splurging the family silver

Tweet One of the sins which I thought True Wales committed during the 2011 referendum campaign was to confuse – and I suspect sometimes deliberately – structure and process with policy and performance.  There were elements of their critique of the policy and performance of successive Welsh governments with which it was hard to disagree; but wrong policies and general incompetence do not, of themselves, justify criticism of structure and processes.  (That doesn’t mean that there’s no scope for criticising the structures and processes as well of course – merely that that scope isn’t based on policy or performance).

The issue of borrowing powers for the Welsh government is in danger of provoking a similar response, even amongst the friends of devolution.  I am deeply concerned - reading reports like this one – that the government would use those powers to splurge several years’ worth of available capital expenditure on a very short stretch of road in what is already the wealthiest corner in Wales.  Indeed for some it seems that the ability to build that one short stretch of road is sufficient argument for the borrowing powers in itself. 

The issue is, I fear, another manifestation of the way in which Welsh policy favours the south-east corner of Wales just as UK policy favours the south-east corner of the UK.

It’s a depressing prospect, but it isn’t really an argument against the Welsh government having borrowing powers.  It’s an argument, rather, for electing a government which looks at how it can spread economic wealth across Wales.  That is easier said than done.

How to spend it

Tweet There’s a sort of a rule in politics which says that the publicity given by Ministers to their decisions is in inverse proportion to the importance of those decisions.  It’s probably the influence of all the Sir Humphreys in the background somewhere. 

Anyway, the announcement this week that the National Assembly will be allowed borrowing powers seems to fit the pattern, in terms of timing if not of principle.  Three busy minsters from three different parties and two governments assembled to tell the world that the Welsh Government will be allowed to borrow some money at some point in the future if and when they can find a way of supplementing the block grant with monies raised locally.  In the short term, it’s not much of a deal at all.

It may just be a bit of clever politics; tying three parties into the deal may make it harder for any of them to reject any tax-varying powers proposed by the Silk Commission.  Clever politics by whom is another question, with at least two of the parties involved lukewarm at best over the idea of transferring any real revenue powers to Wales.  A sort of mutual assured torture, perhaps.

It could also turn out to be a double-edged sword for most of Wales as well.  Many of the schemes being touted for funding through borrowing are highly Cardiff-centric.  We’ve already seen a pretty naked attempt by Cardiff-centric commentators to grab Convergence funding from the poorest areas of Wales and spend them in the richest, and I wouldn’t be at all surprised to see any available borrowed funds being appropriated in similar fashion.

It’s part of what I’ve noted before – whilst Welsh politicians are quite happy to criticise the London-centric economic policies of the UK, they seem equally happy to replicate the same phenomenon on a smaller scale here in Wales.  As we saw in another report today, it’s probable that when the statisticians say that the UK is coming out of recession, what they really mean is that London is starting to boom whilst the rest of the UK continues to be in recession.  It’s not a good outcome, and I can’t for the life of me understand why anyone would want to replicate that in Wales.

It underlines the fact that winning borrowing powers, even if the Government were in a position to use them, is only part of the picture.  Making sure that we use them for the benefit of the whole of Wales is another matter entirely.

PS – Much of the reaction to the announcement was predictable, but I have to admit to being surprised to read an article by the former leader of Plaid in today’s Western Mail in which he described Scotland as a “white elephant”.  I can’t imagine that going down too well in SNP HQ!

Expensive roads

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I was concerned at the time the previous Welsh Government ditched the M4 relief road plans that, by taking the decision solely on cost grounds, there was a danger that the beast would be resurrected.  And that has duly come to pass, according to this report from the BBC last week. 

Strangely, the cost seems to have more or less halved from the £1 billion it was going to cost in 2009 to a ‘mere’ £550 million now.  It’s far from clear why the alternative scheme now proposed wasn’t part of the consideration in 2009; but either way, it’s still an enormous cost for a fairly short section of road.

Last week, Carwyn Jones seemed to be using the scheme as some sort of a stick with which to demand borrowing powers for the Assembly.  It could only go ahead, he said, if the Government was granted such powers.  In short, the government isn’t against the scheme as such; it merely cannot afford to build it.  That is not, as the Tory spokesperson claimed, a U-turn from the decision taken in 2009, merely a re-affirmation of the thinking behind that decision by the One Wales minister, who never actually claimed to be against increasing the M4 capacity as such.

Those who thought they had won the battle will now have to engage in the debate afresh when the scheme really could and should have been ruled out more comprehensively at the time.  There really are better ways of using these amounts of capital, if it were to become available, which will have more economic impact and less environmental impact.

£170 million of lost opportunity

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The Welsh Government announced this week that it is working with the 22 local authorities in Wales on a scheme to use local authority borrowing powers to boost infrastructure investment in Wales.  This looks, in principle, very similar to the proposal floated by Gerry Holtham some time ago, and effectively circumvents the restrictions which prevent the Welsh Government from borrowing.

To that extent, it’s a welcome departure from the usual approach of simply blaming the Tories for everything.  I do have three reservations though.

The first is the scale of the plan – or rather the lack of scale.  Gerry Holtham suggested that it would be possible to use this approach to borrow around £2billion for spending over the five year life of a government.  In comparison to that, £170million looks remarkably unambitious.  It’s significantly less even than Plaid’s rather more modest Build4Wales, which suggested borrowing a mere £500 million from the private sector.

The second reservation is that it seems to be restricted to spending on highways projects.  Whilst I’m sure that at least some of those schemes will be worthwhile, investment in road schemes wouldn’t be my top priority.  And it appears as though the schemes haven’t even been selected yet – local authorities are being invited to come forward with proposals.

And that brings me to my third reservation – the lack of an obvious strategic driver behind the scheme.  Obtaining a large capital sum for infrastructure investment should be a real opportunity to take a strategic view and decide on the most important projects to boost GVA.  Instead of that, we have a bid-driven allocation of resources to local authorities – the availability of the money is driving the spending, rather than the infrastructure needs.

It’s what we’ve seen far too often from successive Welsh Governments.  It’s the same curse which afflicted Objective One funding and Convergence Funding – an attempt to please as many people as possible and share the cash around rather than use it to drive a step change.

Sadly, it isn’t that the Welsh Government doesn’t have strategies – those they have aplenty.  They’re all carefully written, consulted on, amended, approved, and filed somewhere, with all the right boxes duly ticked.  What they are not, however, are drivers of government action.

In going down this route, the Welsh Government was in serious danger of getting something right – it’s a pity that the implementation is another missed opportunity.

Back-door borrowing

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Gerry Holtham’s article in today’s Western Mail returns to the subject of a contribution he made to the last issue of the IWA’s Agenda.  In essence, he has set out a way in which the Welsh Government can use the existing borrowing powers of local government to significantly expand its capital programme, and suggests a borrowing capability of around £2.6 billion over five years.

It’s not only more ambitious than proposals put forward so far by political parties in Wales, but unlike those proposals, it needs no legislative changes or decisions by the UK Government to implement.  So why isn’t the idea being seized on?

There are some practical difficulties of course.  Getting co-operation between local authorities to pool their borrowing, let alone persuading them to share that borrowing with a government which seems to spend a lot of time castigating them, will take a great deal of determination and political will.  And, even if that will exists (and I’m not convinced), a cynic might suggest that it’s a great deal easier to complain about the UK Government not doing something than to actually go out and get to grips with the alternative.

I don’t agree with all the suggestions put forward for a funding programme – I have a particular concern about the resurrection of the M4 relief road – but deciding which schemes should be funded is a question of determining priorities.  And that’s a far better pastime for a government than whingeing about what London isn’t doing.  The suggested approach offers an enormous opportunity which any imaginative government would be grasping.

As Holtham points out, an expenditure of £2.6 billion over five years would be like adding around 1% to the total GDP of Wales.  With a workforce of around 1.5 million, that could equate to perhaps 15,000 extra jobs, quite apart from the infrastructure benefits which would accrue.

I wouldn’t suggest that the Welsh Government should desist in its efforts to obtain direct borrowing powers, but there seems to be no reason, other than politics, for not trying to move this idea forward in parallel.

Parity is about more than borrowing

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Betsan Powys notes some extracts from a statement made by Carwyn Jones in response to the announcement of new financial powers for Scotland.  The sentence which caught my eye particularly was this one:

“I say to him what is good for Scotland is good for Wales and the same responsibilities must now be transferred from Westminster to Cardiff.”

I wonder if he’ll live to regret those words – because they can be applied much more widely than simply to borrowing powers.  There are many more aspects of the Scottish settlement where one could – and I would – say exactly the same thing.  No doubt Carwyn wouldn’t want to see his statement interpreted as having such wide-ranging implications, but there is a problem with trying to cherry-pick.

There is no way that the UK Coalition is going to want to give Wales the ‘goodies’ (as defined by C. Jones Esq.) other than as part of a package.  And that package will also include some things which he’s already said he doesn’t want, such as powers over taxation.

‘Parity with Scotland’ would be a good rallying cry for the next five years if he wanted to go for it – and it would probably be a more devolutionist position than that being put forward by other parties.  He might even find himself pushing at an open door in London.  I doubt that he'll push very hard though, just in case.