Cut and Waste: Tory mixed messages on spending
- We can’t go on … together, with suspicious minds? How will Cameron help Wales?
THEY CALL it the luxury of opposition. Sat out of government, politicians can make all kinds of pledges (although not necessarily promises) and suggest – usually in the place where it will be heard most loudly – better ways that an administration can spend its budgets.
Often, it involves greater spending rather than smarter spending, and it is a practice that Welsh Tories have refined to an art in recent months. This largesse is particularly remarkable because it is so out of keeping with the Tories’ self-proclaimed financial probity, their opposition to wasteful, big, intrusive government and their championing of self-regulation and personal responsibility. Given the likelihood that the Tories will win the Westminster General Election with an agenda of immediate and drastic cuts, it is nothing short of extraordinarily inconsistent.
Most political parties agree that cuts must be made in order to balance debts that have accrued as a consequence of the risk-taking greed of bankers – although my party backs the findings of the Holtham Commission, which called for no further reductions to the Welsh budget.
What other parties fundamentally disagree on is the way in which those cuts should be made. Left-leaning parties don’t see why it is that the public sector should take the pain that still well-remunerated financiers have created. Right wingers will point to local authority officers who are paid more than the Prime Minister as evidence that the public sector needs to clean up its act. But whose jobs are most likely to go?
In my region, Neath Port Talbot County Borough Council has this week suggested that it could lose as many as 750 jobs – and that is before any administration has ordered cuts. Of course, the authority lost more in the collapse of the Icelandic banking system than any other in Wales, but it may well be that its officers, like many across the whole of the UK, are readying themselves now for the hard days ahead.
It is widely supposed that the Tories will hit the public sector harder than Labour, which has traditionally found strong support there. But what Conservative Central Office is not saying (which is almost everything, ahead of the manifesto) has assumed more significance than promises made so far.
Reuters reported on Tuesday: “Party strategists say there is room for a harsh budget tightening without endangering the economic recovery because the Bank of England could take up the slack by keeping monetary policy looser for longer. The party has said it would protect international development and health spending.”
Leaving aside Westminster’s inability to interfere in how Wales (or anywhere outside of England, for that matter) decides health spending, this assessment suggests two things: that the importance of the economic recovery precludes all other Government functions; and that outside of health and international development, anything else is fair game.
It is against this background that Tories in the Assembly have been making hay while the sun shines. They have been coming up with – or at least inferring – plenty of ways for the Welsh Government to spend its still as-yet-unreformed annual settlement, from health initiatives and clean railway stations to more road salt and even suggesting that someone other than farmers pay for the damage when their land is flooded. Just think – if those same farmers had been Tory MPs, they would have been able to claim it on expenses.
Top prize goes to the top Tory, Nick Bourne. We are certainly in different days from those of John Redwood, when the arch-Thatcherite contrived to cut Welsh Office spending and return the difference to his grateful London masters. Now the Welsh Tory leader has berated the coalition for failing to keep up the spending.
He discovered that the Welsh Government’s ProAct programme, designed to assist redundancy-threatened staff through giving retraining money to the businesses they work for, had awarded “just” some of its budget for training. “It doesn’t indicate they are being nearly as proactive as they are pretending to be,” punned Bourne.
His main bone of contention was that the application process made it difficult for companies to receive money. He didn’t suggest alternative structures for awarding funding. Wales TUC general secretary Martin Mansfield saw it differently: “Over 7,000 workers are still in work and hundreds of vital manufacturing firms still in business thanks to this important assistance which was delivered in record time from idea to action.” David Rosser, director of CBI Wales, added: “If it’s (ProAct) kept 7,000-8,000 in work that’s a good thing”.
Even though the Tories aren’t quite as good with numbers as they would have us believe, they have under David Cameron begun straying into areas previously unchartered. We’ve only just finished undoing Thatcher’s failed ‘internal market’. Now Shadow Health Minister Andrew RT Davies concentrates on patient care. “Welsh Conservatives believe the £8m over three years allocated to palliative care services following the review is nowhere near sufficient,” trumpeted a release on his site. “Charitable giving alone cannot be relied upon to provide this service – especially in a recession when everyone is tightening their belts,” said Davies, who doesn’t expect the same from the Welsh Government. “Palliative care is not a sector which should be short-changed.”
Neither should ambulances. “I am also pleased the minister has finally recognised the tight financial situation the ambulance trust was forced to work in. What is vital now is for the service to be given proper support to allow it to hit Welsh targets.”
Not to be outdone, Angela Burns suggests ‘warmth checks’ introduced for vulnerable people – “Fire Safety checks are an excellent system and could be used as a role model for the warmth checks. Inspectors could look at insulation levels, problems with drafts, energy saving advice, how to conserve energy and much more.” Presumably more overpaid council officials will carry out the work.
Mark Isherwood thinks more money should be spent on the third sector, but he has his cake and eats it. A 1.1% increase in funding for the Wales Council for Voluntary Action and the bodies it supports represents “a fair increase given the financial circumstances … at the moment”. However, “the combined budget of social enterprise and the third sector has flatlined, which is a cut in real terms.” Questioning the First Minister on the consequences of this payout, he is told by Carwyn Jones: “Financial circumstances will be challenging in the years to come”, somewhat similar to what he has already conceded. Instead, Isherwood concludes: “These organisations are key to recovery from recession … they deserve better.”
Alun Cairns is angry because the boiler scrappage scheme isn’t in force in Wales. “The Assembly Government needs to make an urgent statement about how it intends to help Welsh householders who wrongly thought they would qualify for this scheme.” Perhaps Cairns will be placated by such a statement – but only if it is accompanied by funding, we suspect (funding that is on its way, too).
Brynle Williams laid into both the Welsh Government and local authorities for failing to foresee a particularly bad winter and stock up with plenty of salt. He too is “aware that many local authorities are under considerable financial pressure”, but “The Labour-Plaid administration must work with councils … and keep disruption to a minimum”. Again, no suggestion of how this will be paid for.
The Shadow Minister for Rural Affairs also wants to know who will foot the bill for any clean-up of flooded agricultural land. “The sacrificial flooding of productive agricultural land, to protect homes and businesses, will undoubtedly play a more important role in the future.” Oh, so not now? “If these agreements are to be rolled out across Wales, then there must be a clear understanding where responsibility lies for footing the clean-up bill.” Perhaps the farmer, you may wonder?
Bourne has pledged that under a Welsh Conservative administration, firms with a rateable value of up to £10,000 would be exempt from business rates, while companies with a rateable value of between £10,001 and £15,000 would have a 20% business rate cut, benefiting up to 90,000 small and medium-sized businesses – well over half the total SMEs in Wales. We can only assume that such spending fantasy comes from a confidence that there will never be a Tory Welsh Government.
Other promises include increasing the social housing grant, business rate relief (again) for small tourist operators, a safe railway with cleaner stations with CCTV and secure, well-lit waiting areas with a 24 hour staff presence.
What they spend with one hand, they take away with tax cuts in the other. Pensioners will be given a 30% discount on their bills. The Tories also would allow local referendums to be triggered if council tax payers felt their rate was unfair (and who wouldn’t take them up on that?).
So if the Welsh Tories are so flush with money, where are they going to get it from? Hardly likely to be from London, where the party is split along the lines of a minority that wants to reform Barnett, and a majority that ropes Wales in with the ‘Tartan Tax’ and advocates slicing spending in devolved areas. But George Osborne, the man who will have the final say, appears to be a fan of the status quo, and while the Tories have publicly calling for a reform of Barnett and the introduction of a needs based formula, they have yet to commit to anything.
In fact, when it comes to making spending commitments of their own, the Tories prefer a ‘we haven’t said we won’t do it’ approach. This means no decision to proceed or halt electrification of rail, nothing on St Athan, zip on the Severn Barrage, and zilch on the North Wales Prison. With any major spending projects proposed by Labour, usually backed by the Tories but yet undelivered, comes a deafening silence.
So what is Cameron pledged to? Well, there’s tourism (no talk of money), a “beefed up” Welsh office to handle the LCO system (just what we all want) and this commitment not to cut the NHS, which is none of London’s business. They do want Trident, an enormous white elephant, a £16bn high-speed rail line between the north and Heathrow that will be paid for after 2015 (something similar promised to Swansea has mysteriously disappeared from recent pledged), a National Loan Guarantee Scheme for businesses – to underwrite lending and stimulate credit flow, a six-month VAT holiday for small businesses, and tax cuts for employers that take on the unemployed by giving a £2,500 national insurance holiday for each worker. All somewhat nebulous, all easily put off until tomorrow.
So what about just one joined-up concrete pledge between London and Cardiff Tories? Something that won’t cost the earth but would engender a great deal of good will, certainly here in Wales? I’m not in the habit of giving policies away, but here goes:
Around 3,500 former car workers – including 700 from Swansea – stand to lose up to 50% of their entitlements because Visteon, their former employer, applied to enter the Pension Protection Fund when the company went to the wall last year. The company had been a part of Ford and most of the pensioners spent the majority of their working lives with Ford. It now refuses to pay up.
A Tory Government could do one thing: it could make good on Cairns’ quote last week that if the UK Government had taken up his party’s recommendations to use cash from dormant accounts to make up pension shortfalls that these men and women will experience because the PPF can only pay out up to a certain amount. This isn’t a 2015 policy, nor 2012. It isn’t even next year. It’s here and now, and it’s a policy that the Tories can introduce on day one, as a matter of urgency and bring a bit of real policy to these workers’ very real world.
Facebook
Twitter
LinkedIn
Flickr
“THEY CALL it the luxury of opposition. Sat out of government, politicians can make all kinds of pledges (although not necessarily promises) and suggest – usually in the place where it will be heard most loudly – better ways that an administration can spend its budgets.”
£20bn on pensions, anyone?
Interesting response to this over on Cynical Dragon: http://www.cynicaldragon.com/2010/01/luxury-of-opposition.html
To clarify:
- The piece is about the contradiction in Tory attitudes and inconsistency in spending intent. The criticism would stand if the Plaid Assembly group announced the pension plan and its Westminster MPs disagreed – publicly – with it;
- Plaid aren’t in opposition;
- The pensions policy will be tested at the ballot box.
And finally, as an observation:
- Nice to see we’re all fiscal prudes these days. Shame the same wasn’t true when we shelled out far more to undeserving bankers, who have taken the money and laughed in our faces. Pick your sides, people.
It is disappointing that the author chose to write a party political piece criticising potential Conservative policy, rather than expounding Plaid 2010 policies on how to deal with the economic crisis and improve the economic health of Wales – but perhaps the Plaid well of ideas is emply!
Following Alastair Darling’s interview on Newsnight this week, it is apparent that neither he nor the Treasury has or is willing to give the figures for the true state of the UK’s economic deficit. Thus it is very difficult to pre-determine an economic policy without that vital information. The continuing prevarication by Gordon Brown on deciding the date of the election has certainly put the economy in holding pattern, but without urgent reform.
It is certain that both National & Local Government in Wales is going to have to use its scarce financial resources more efficiently and only employ people who vital to the delivery of required services.
Perhaps then, there will be finance left to start to improve the infrastucture of Wales to a level that will attract new business to be based here.
It’s about time an alternative view has gone up. The convergence of the three British parties on the public cuts agenda is a disgrace and the media has given them an easy ride.
This is not a ‘normal’ recession. It has been caused by a specific failure of the banking system. The banking system needed the state to step in and rescue it, pretty much in order to avoid social chaos. I reluctantly support the idea that the bailout was necessary, as we would have had an Argentina-style crisis on our hands otherwise.
But now that the rescue has taken place, the British parties are not asking the banking system to make a reasonable contribution to the recovery. Darling’s “tax on bankers bonuses” was a sham that has been torn apart to the extent that Labour are no longer promoting it, and the Tories want a return to business as usual.
I do not see why Plaid Cymru as a social-democratic or socialist party should have to join the queue to advocate public spending cuts, when the public sector did nothing to cause the financial crisis. The reality of cuts having to be made is a bit different, but as a progressive I refuse to condone any public spending cuts UNLESS the culpability of the banking sector is clearly explained to the electorate and addressed with regulation and taxation.
Financier’s points are ironically correct insofar as the future of the Welsh economy will be decided outside of Wales. The best we can hope for is for MPs that will defend Wales’ interests and ensure that the other side of the story gets heard.
A better commenter than myself might ask Financier why Wales’ infrastructure needs should come second to paying for a crisis that Wales did not cause?
There is alot of job losses predicted. I think these job losses can be avoided by sharing the resources more.
Instead of the Assembly championing Pro-act, the Assembly should get council bosses by the scruff of their greedy necks and make them take large wage cuts to them and all mid-higher earners.
This will assuage job losses and unemployment. Those civil servants who don’t like it could leave and try their luck in the real world way from holiday pay and sick pay and so on. It could bring new life into councils with new talent. The high labour turnover of some councils sems to be only in the lower end of wage scales.
The Assembly cross party group should sit down around a grubby table away from the videocam’s and think of how they can avert job losses in civil service and make the bosses take home 25% less.
Fair enough senn, but its a bit absurd to see why they should do that “instead of Pro-Act”.
Personally I’d like Welsh Ministers to follow the lead of their SNP counterparts by volunteering for pay cuts. I think a handful of Welsh Ministers have not taken pay rises but a clearer position would be more welcome, to show some solidarity. You don’t have to be on the left to back that as the centre-right Irish government slashed their own pay at some of the highest levels.
Illtyd Luke says:
“I do not see why Plaid Cymru as a social-democratic or socialist party should have to join the queue to advocate public spending cuts, when the public sector did nothing to cause the financial crisis”.
The state of UK’s public finances need to be restored, either by reductions in public expenditure, increases in revenues or both. We can all roundly criticise the bankers and their regulatory regime, the government and its previous programme of expenditure, and a few other things besides. But, aside from learning important lessons for the future, it really doesn’t matter why we got to this position. What matters is that we are in this position, and that our elected representatives either do something about it, or we all suffer because of their inaction.
You are quite right that Plaid Cymru has no obligation to advance a detailed programme of public spending cuts. This is not because of its political ideology; other social-democratic and/or socialist parties must do so if they wish to be taken seriously and to formulate a programme that will avoid doing more harm than is absolutely essential to public services and people on low incomes. Instead, I’d suggest that Plaid’s Cymru’s lack of obligation stems from the fact that it is most unlikely to form any part of any future UK government. But I think you should be aware that not doing so will rightly be taken as a message by the voters that Plaid is not a serious party with a rounded outlook.
Senn, Illtyd Luke – laudable as it may be, cutting the pay of Welsh Government ministers and council chief executives would represent a drop-in-the-ocean solution to the black hole in our finances.
Adam – as far as I’m aware, what Plaid has advocated is no cut to the Welsh settlement, in line with the recommendations of the Holtham Commission. Of course, it sort of follows on that if there is no cut to the Welsh settlement then there is no cut to services in Wales, except Plaid are arguing – in line with the commission’s findings – that we already have a budget that behoves reductions in public spending.
However, it is also worth pointing out that while other parties can attack Plaid for not putting forward any proposals for cuts, what have they themselves put forward? We still don’t know how either Labour or the Tories will address the national debt. We await their manifestos.
“The state of UK’s public finances need to be restored, either by reductions in public expenditure, increases in revenues or both. We can all roundly criticise the bankers and their regulatory regime, the government and its previous programme of expenditure, and a few other things besides. But, aside from learning important lessons for the future, it really doesn’t matter why we go to this position. What matters is that we are in this position, and that our elected representatives either do something about it, or we all suffer because of their inaction.”
Adam, are you really suggesting it doesn’t matter WHY we are in the position we are in? That is an extremely short-termist view to take and completely lets reckless economics off the hook. It matters alot! If peoples’ jobs are disappearing they deserve to know why. If people are losing local services they deserve to know why.
I accepted the reality of public spending cuts in my comment, but said that progressives should refuse to condone them “UNLESS the culpability of the banking sector is clearly explained to the electorate and addressed with regulation and taxation.” After that just step had been taken, then I would support sensible cuts being made. But at present, that step has quite clearly not been taken, and by saying all parties should focus on “restoring the UK’s public finances” without looking at regulation is completely letting Labour off the hook.
You’re essentially arguing that Plaid should converge on a consensus around cuts to be “taken seriously”. That same convergence of all parties being the same is what has led to electoral turnout plummeting in Britain. Plaid should refuse to put forward proposals for cuts until such a time as the cause of the financial crisis has been addressed.
Illtyd Luke, I will stick to my opinion. Assembly members need to do more themselves. Local government is devolved. Why leave so much to quangos?
Just got to summon all 23 chief exec’s to the Assembly and say ‘This is all your getting kid, like it or lump it!’. Assembly members and ministers are not too overpaid as they of course are publicly elected, unlike civil service .
Illtyd Luke said:
“Adam, are you really suggesting it doesn’t matter WHY we are in the position we are in?”
No, I’m not suggesting that. I am suggesting that we now need to act to sort it out, and that means one of the three options I set out above.
I don’t say Plaid should join any consensus. I don’t even say it should advance cuts. I do say that a failure to do so will likely be interpreted by the electorate as a signal that the party is not especially responsible.
Dunc – I’m aware that Plaid thinks that the block should be maintained. Sadly, Holtham’s was a ceteris paribus recommendation – and we are not in that territory any more. I suspect the magnitude of public spending cuts will be such that the block will be adversely affected. Whether it should be reduced by less than the Barnett formula automatically implies, to make up some or all of the shortfall identified by Holtham is another matter. But if we are talking about 17% cuts in most major departmental spending limits (which, as you rightly note, has not yet been made clear by either Labour or the Conservatives) it is not realistic to expect these to be absorbed by England, Scotland and Northern Ireland but not Wales. That really is the luxury of opposition.