Thursday, 29 March 2012
Assembly Members are packing up on Cardiff Bay to go back to their constituencies to take part in Easter egg hunts or whatever exciting other events they get up. So today has that end of term feel to it.
The last act of all was the First Minister’s monthly press briefing.
Today, he concentrated his remarks on the work of selling Wales apparently there’re a few firms out there that intend coming to Wales. He even announced an Indian company coming which caught everyone by surprise. Surely they're not outsourcing their call centres to Wales now. But that was the First Minister in First Minister mode doing his bit for Wales. It was almost above politics.
But perhaps the questions that the hacks ask bring the worse out of him. 'Cos politics certainly raised its ugly head. This time it was the tanker drivers dispute. The First Minister was scathing about the panic caused by the UK government by their injudicious remarks about stocking up on petrol. All so very irresponsible of them.
He even remembered where he had his last pasty. It was a corned beef one and purchased in Bridgend. He also bought one in Paddington too. So there you have it the eating habits of our First Minister.
Oh, in case you ask, he’s still waiting for a reply from Mr Cameron to last month’s press conference demand for a convention on the UK constitution. Carwyn Jones has written asking for one, but the PM hasn’t got back to him yet. Perhaps, the Prime Minister is to preoccupied with pasties, dinner parties and petrol shortages to get round to posting a reply.
The week also marks the end of the Spring conference season. Sorry I’ll rephrase that the conference and rally season, for of course, the Conservatives cancelled their Spring Conference much to the annoyance of Llandudno hoteliers in favour of a Sunday rally.
Did the conference season advance knowledge of the political scene in Wales? Well, if we didn’t know it before, we certainly rediscovered the truth that political parties are less obsessed with worthy policy and are more interested in the cruder political art of getting one over on the other lot.
The two largest parties thought Plaid Cymru offered fertile territory for their ambitious. Both the Labour and Conservative leaders appealing to the ordinary Plaid Cymru voter to come to them.
Labour’s Carwyn Jones latched onto the St David’s day poll conducted by ICM for BBC Wales. The poll showed that many Plaid voters did not believe in independence and more generally only 7% of those polled wanted an independent Wales, separate from the UK. The figure only edged up to 12% wanting Welsh independence in the event of Scottish independence.
So quick as a flash Carwyn Jones was on his feet making a direct appeal to Plaid voters. Labour in Jones’s opinion was a party for those that wanted primacy for all things Welsh, but not independence. Playing up the fact that it was the party that delivered devolution.
Leanne Wood’s election and her first conference as leader made it quite clear that she was placing her tanks very firmly on Labour’s lawn. She sees the labour vote as being up for grabs. In her opinion Plaid Cymru is already to the left of Labour and she aims to keep it that way.
So Plaid and Labour are involved in a tussle for the centre left vote.
Meanwhile, the Tories see an open goal on the centre right of Welsh politics. The will continue their strategy of targeting the centre right Plaid Cymru voter of which, despite many a Plaid members protest, there are many.
In his first speech to his party, all be it at a cut price rally, Andrew RT Davies made a direct appeal to Plaid voters. "If you're a patriot, if you're proud of your community, if you're proud of your heritage and your culture and your language, then your beliefs are our beliefs in the Welsh Conservative Party."
The successful strategy of targeting the Plaid voters which has served them well in successive Assembly elections will continue. This strategy has seen them wrestle control away from Plaid in Aberconwy and also seen them replace Plaid as the largest opposition party in the Assembly in both seats and votes.
Liberal Democrats concentrated their conference more on the local government elections in which of course they’ve got a lot at stake. They currently are in a ruling coalition in four of Wales's biggest councils.
They've been trying desperately hard to distance themselves from Westminster. They want voters to concentrate on the work of Assembly and the deal they did with Labour to get the budget passed.
Hope springs eternal and Liberal Democrats if they’re anything they’re life’s optimists. Their dearest wish is to buck the national trend and pray that voters vote on local issues. A forlorn hope if past elections are to go by. Voters tend to punish national government in local elections.
Kirsty Williams remains her parties biggest asset. Of all the opposition leaders, she’s much the most effective performer. She rarely misses her target and often bests Carwyn Jones The others often struggle for a hit. Granted Leanne Wood has only experienced two such events and may grow in confidence but she ain’t there yet.
In the next few weeks to focus of Welsh politics moves out of the Assembly and on to the doorstep. Yes, it’s council election time.
Whose going to be running a given patch may be important locally but for the parties it is a test of their popularity.
Labour will be hoping for gains so that young Ed can prove to his backbenchers that he’s a winner. And they should do well as they lost last time when the party was in government and deeply unpopular.
Although Helen Mary Jones, the chair of Plaid Cymru was trying to dampen expectations that six weeks is far to short a period for their new leader to make an impact on these elections. Nevertheless, many local activists are hoping that Wood's election will help the party retain control of Caerffili. Some would go so far as hope that her Rhondda pedigree will help the party win back control of RCT.
The Conservatives will be hoping to retain control in the Vale of Glamorgan and Monmouth and win seats elsewhere. The current polls suggest otherwise.
And the Liberal Democrats will hope that the elections show they’ve stopped the hemorrhage in their support.
So there we have it the political agenda for the Spring.
Tuesday, 27 March 2012
Who has the prime minister had round for dinner. Has become subject to political debate. And rightly so.
The worry is that those round the dinner table may have undue influence and public policy and on law making.
This blog raised concern about those that attempt to influence our law makers last October in the middle of the Liam Fox debacle.
At the time the absence of a Welsh register of lobbyist was raised. There is still no register of lobbying firms operating in Wales and there should be one. (see http://ogarethhughes.blogspot.co.uk/2011/10/whose-in-lobby.html)
In calling for a code of conduct on the lobbying industry there is another safeguard that needs to be put in place. An awareness of who our cabinet ministers meet and why.
A record of all meetings need to be kept and published.
We know not who have welsh cakes with our ministers.
It is all about accountability. Making a case to government is a very proper thing to do, indeed some very useful legislation stems from such meetings.
Many a public or charity body has also been helped with a cash grant by government. Welsh life would be the poorer if this didn’t happen.
But those that pay through their taxes need to be assured that money is handed out on merit and not because the body has had special access to a Minister.
Today the Liberal Democrats have belatedly taken up the cudgels. They’ve called for the Welsh Government to publish details of its meetings with lobbyists and external pressure groups.
They rightly point out that the “UK government now routinely publishes details of all meetings `ministers and Civil Servants have with lobbyist. The Welsh Liberal Democrats believe the Welsh Labour Government should do likewise.”
Of course, the usual reaction of government when an issue is raised by the opposition is a big no, no.
The government should on this issue ditch a habit of a lifetime and say ‘yes.’
Fortunately there has never been a scandal connected with any member of the Assembly and long may this be the case. But as many safeguards that can be built into the system to prevent a scandal happening, the better. This is one such measure that should be implemented, and soon.
The architect's brief for the Senedd building was to make it an open transparent building to represent the kind of political institution that it was to house. Let the government also take that as its brief.
Friday, 23 March 2012
She came and conquered the faithful. The first of many standing ovations that will be hers as she leads this most sentimental of parties.
For a new leader the first speech is always the most difficult and she succeeded. Her style is conversational, understated, discursive but effective. She held her audience.
The message, well, one of hope. She wants to do politics differently. To do “politics positively.”
“Let’s talk about ideas, not personalities. Let’s talk about our vision of what Wales can be instead of running others down.”
A noble aspiration, indeed the last politician that had a similar message of a new type of politics was dear old Lembit Opik and look where he’s now. Not that Leanne Wood is in the same mould, thank god.
There were clues in her speech of the direction she wants to take the party. “to get the job done.....doesn’t always mean sitting around the Cabinet table. That’s not the only way that co-operation works.”
She sees the aspiration for independence and the new Wales being built from “the ground up, piece be piece, ward by ward.”
Almost like Obama she wants to activate the young and other groups that have hitherto not been greatly concerned with politics. The leadership campaign showed that she understands and can reach the twitter generation. Her background as a social worker and community activist means that she’s playing to her strengths in pushing micro politics. After all she is a warm engaging person and has the enthusiasm.
The difficulty with trying to build politics from the ground up is that it takes an awfully long time. Political parties are not known for their patience. They want and demand instant gratification.
Under the new leader Plaid will worry less about the National Assembly and worry more about the big world outside the Cardiff Bay bubble. Indeed the fact that she’s not changed the jobs of any Assembly Members would indicate that this is not a priority.
Her economic policy has three strands. First is to build the green economy. Her ambition is to to see the “whole of Wales, retrofitting every home and every building until every last one is fit for the future - staring with those that need the help most, the homes of those on low incomes.” A noble aspiration but one at the moment without a price tag.
Secondly, she wants investment in the knowledge economy. “knowledge will be the economic frontier of the future.” She wants a 1% minimum investment across all companies for all workers. And a Welsh research council so Welsh universities “no longer lose out to the Oxbridge college cartel.”
The third strand is that old Plaid chestnut of Build for Wales. This will get much needed infrastructure work underway. But this is not currently a runner so meanwhile she hopes to get borrowing by piggy backing on the local councils right to borrow.
But much of these specifics were simply padding for a speech that’s aim was to rally the troops to her cause and ambition. Her optimism was infectious and not many in the hall would disagree with her. The challenge she faces is to get the 93 per cent of the population that don’t care a toss about independence to buy into the vision.
A big ask.
Thursday, 22 March 2012
It is often said that if a Chancellor’s budget is cheered on delivery the next day it will be given the thumbs down.
Many now see this budget as one for the fat cats.
A close look at the small print of the budget contained in the red book showed it barely changes the country’s public finances. The rule that the chancellor has adhered to is, what he gives in taxes will be balanced with taxes that he takes. Hence, the economist’s jargon of a fiscally neutral budget.
Just like any household with no change to their income what becomes interesting is what they prioritise. And just so, with young George Osborne’s effort.
His budget showed very clearly what his priorities are. Help to businesses and to the rich.
Business was helped with lower corporation tax. This was done in the hope that the action would make Britain an attractive place to do business. But will international businesses be rushing to our door with inward investment? Unlikely.
Business was helped with lower corporation tax. This was done in the hope that the action would make Britain an attractive place to do business. But will international businesses be rushing to our door with inward investment? Unlikely.
Evidence shows that inward investment decisions are not usually made on tax rates. What the international entrepreneur looks for is a work force that is educated and well trained and an infrastructure that is capable of getting their goods to market quickly, cheaply and efficiently.
Yesterday little was said about increase sums for education . Indeed the talk was of further public expenditure cuts and of course the big story on infrastructure is that the much criticised private finance initiative is back in vogue.
Despite PFI being costly to the public purse in the long term it provides a quick fix if the government does not want to immediately invest.
Cutting corporation tax is hardly likely to act as the stimulus to get the economy moving and reduce the 2.7 million that are unemployed. Neither, for that matter will cutting the the taxes of the rich stimulate economic activity.
A political budget is what we’ve had. But is it good politics. Well, certainly the budget will not have harmed George Osborne’s prospects within his own party. He will be seen as the authentic voice of Conservatism.
But you don’t win elections by playing to the prejudices of your own supporters. Even when those supporters donations pay such an important part in the running of your party.
Being seen to be the party of the rich won’t make you popular with the voter especially when it gives more cash to bankers that already get £5 million pay packets. And especially not, when it seen as being at the expense of the frugal pensioner.
Like a poor magician the Chancellor’s slight of hand on pensions has been seen by the audience. Nothing worse than a trick that's gone wrong.
To give taxes to the rich and make pensioners pay more to the Treasury this ain’t good politics in anyone's book. The rush to the airwaves today shows that they’ve realised what a major blunder they’ve made.
You can cut back on welfare payments and get away with it. But to take away from the grey voter whilst be seeing to give to your chums is bad politics indeed. It sends all the wrong signals.
A point that Ed Miliband was quick to latch onto. The message he's quite keen to get over is that we're now not all in it together. Incidentally, his performance certainly was his best to date. Who knows, his party might not dump him before the next election if this form continues.
It’s the rich that gets the pleasure and the poor? Well, this budget answers that.
Wednesday, 21 March 2012
“Public Sector Net Borrowing in February 2012 was a deficit of £15.2 billion, £6.3 billion higher than in February 2011 and a record net borrowing for February.” So said the Office of National Statistics(ONS) on the morning of Mr Osborne’s budget.
What does it mean? Well, It is the size of the country’s debt. But just like household debt when you’ve in the financial mire your options close. So this high PSNB means the Chancellor has very little wriggle room in this budget.
It is a bit of a shock to those economists who’d been pushing the line that the Chancellor’s policies had been working and that UK borrowing for this year would be lower than forecast. This morning’s figures show that there will be very little if any undershoot. Never trust optimistic economist’s, it’s not called the dismal science for nothing.
Predictably traders panic and suddenly the pound drops sharply. At the time of writing half a cent against the US dollar to $1.584.
So within the tight margins that he had available, how did the Chancellor do?
Well, he styled himself and his budget as championing business, and indeed with corporation tax heading for 22p over the next three years he certainly is entitled so to do.The rate was already due to decline to 25% this year; it will now fall to 24%, and there will be a further two 1p cuts in the years ahead.
That he needs to help business grow is clear with economic growth only 0.8% this year and only a projected 2% growth next year. This is down from, the 2.1% he said in November.
But the real political nub of the budget was the controversial decision to cut the 50p top rate of income tax for those earning more than £150,000 a year. Although he maintains that the money lost by lowering the top is clawed back rate by clobbering buyers of £2m homes with a new 7% band of stamp duty.
Now this gives Mr Miliband a very useful stick to beat with which to beat the government. He was quick off the mark to accuse it of being a "millionaires' budget.”
His performance was his most effective to date, mind you with the coalition government having leaked so much of the contents he was given plenty of material to prepare his attack.
So the usually opposition cliches came out. The budget was "unfair, out of touch, for the few not the many" and was based on the "wrong choices, wrong priorities, wrong values" from the "same old Tories".
But the cut in Corporation tax gave him the open goal to aim at. He was able to point out that most top earners would be "totally unaffected" by the rise in stamp duty because only around 4,000 homes worth more than £2m are sold each year.
As for Wales an enhanced capital allowance for the Deeside Enterprise Zone and ultra-fast broadband for Cardiff don’t amount to the kind of boost that the Welsh economy need. Hardly enough to compensate for the threat to pay in the public sector that the Chancellor is threatening with regional pay.
The UK Government also promise to work with the Welsh Government to consider the electrification of the Cardiff Valley rail lines now this would give a much needed boost to the economy if it was to be agreed and started up soon.
Meanwhile Plaid Cymru's new leader Leanne Wood AM has announced the formation of an Economic Commission which will develop the party’s vision for the Welsh Economy over the coming decades. And guess who’s to chair it?The former Plaid Cymru MP Adam Price and one of Leanne Wood's major backers.
Final thoughts on the budget. The chancellor will have become the darling of his party by delivering a tax cut. His chances of being the next leader should Mr Cameron leave the stage are greatly enhanced. Tory chancellor’s who deliver tax cuts always win the hearts of party members.
But he will not win the hearts of the country if Miliband’s attack sticks. For the country is hardly likely to reward him if he’s seen as only helping his chums the rich.
Monday, 19 March 2012
David Cameron has a cunning little plan to lease out the English road system. What he wants are countries such as China through sovereign wealth funds to lease bits of roads and motorways to improve and maintain the road system.
The idea is that these new road companies would be set a series of targets to reduce hold ups and improve the roads they’re responsible for. In return the companies would get a cut from the vehicle license revenue.
Indeed what was known as the road fund license would really become just that. It would be a form of hypothecation, meaning the revenue raised in the tax would go to a specific end, in this case roads.
Hypothecation is normally resisted by the Treasury, they like to get their grubby little paws on all taxes, to do with, as they will.
Clearly such is the desperation of government with the state of the infrastructure that both the Prime Minister and his Chancellor have lent on Treasury officials to get them to drop their objections to such a tax.
So if Cameron gets his way the good workers of Swansea’s DVLA will be raising money that ultimately goes into the coffers of the Chinese state.
Why? Well, it was only but recently that the Chancellor took his bags to China to persuade them to invest their cash surpluses in infrastructure schemes in the UK. This latest wheeze by the Prime Minister is just an added project to the ever growing list of infrastructure projects that government want outsiders to fund.
The government has to go down the humiliating route of asking a foreign government to bail it out because the country’s infrastructure is crumbling.
The chronic under investment in the past means that the UK just can’t compete. It is now dawning on the government that a great deal of investment is needed. It is ideologically opposed to public investment which leaves it no choice but to go cap in hand to the Chinese for their cash. Nothing is for nothing, so in return they get a stake in our roads.
And if, as is likely, these companies start adding new lanes and even new roads to reduce congestion then tolling will enevitably follow.
But roads and transport are devolved so this will only apply to England. True but Wales and the Welsh will be greatly affected.
Quite apart from the fact that many journey to England on a regular basis and our trade links are cross border. There is the little matter of our old friend Barnet and his consequentials.
The more the private sector takes over the burden of investing in the transport system in England the less the UK government has to put of its own cash. Consequently, the Department of Transport gets less cash from Treasury and the old Barnet formula kicks in with Wales’s bit of the cake going down too.
So less cash for Carwyn Jones to spend. Either on roads or any other pet scheme of his.
God knows, if England’s infrastructure is not fit for purpose what can be said about Wales’s.
No track of rail electrified. Very few miles of road with dual carriage ways. A third world airport that the First Minister describes as a disgrace.
Wales needs projects galore to just get it to twentieth century standards let alone equipping it for the current century.
To do so, our politicians may also have to think sovereign funds, and take not the long boat to China but a plane ride there. But not from Cardiff.
Socialist ideology goes out, to get communist money in. There’s irony there, somewhere.
Friday, 16 March 2012
It’s the real deal. Leanne Wood is a lefty through and through. A republican that got thrown out of the Assembly for calling the Queen “Mrs Windsor.” She’s protested against Trident and been arrested, she’s been seen on many a picket line and has shared platforms outside her party with many a far left organisation. And of course she firmly believes in an independent Wales. Strong and genuine credentials to lead a left wing nationalist party.
In electing this left wing young republican Plaid Cymru has made a statement “forget the central ground of Welsh politics we’re firmly staking our claim as a party of the left.”
Her election isn’t an emotional spasm or the romanticism of the large young following that has being the bedrock of her leadership campaign. It is the settled view of the way Plaid Cymru sees itself.
The election of Leanne Wood is not one of an isolated left winger somehow bucking the trend within the party, but more an election of “one of us” to lead.
For in the last few years we have seen the election of the following from the left of the party, Jill Evans, MEP as President of the party and Helen Mary Jones the former Assembly Member as Chair of the party. The top positions in the party are firmly in the grip of the left.
And who can deny that is exactly what the rank and file of Plaid members want. In recent years the party conferences have consistently voted anti nuclear power generation, they have a pro green agenda and again and again have declare for independence, despite the best efforts of Dafydd Elis-Thomas.
All these are Leanne Wood’s agenda writ large. There is little doubt the party is positioning itself to challenge Labour from the left.
It’s a brave and massive gamble for the party to take. But one that it’s prepared to take seemingly with it’s eyes very much wide open.
For the strategy to work it has to persuade Labour voters to jump ship and to do so in droves. Indeed it has to win the valleys for Plaid, a mammoth task and one that has been beyond them to date. This strategy also carries with it the danger of alienating the more conservative Plaid voter in rural north and West Wales.
What will the other parties make of this extraordinary development?
Initially Labour will be pleased with the result. Leanne Wood’s election will rule out the prospect of a rainbow coalition. Indeed she was one of four refuseniks AMs when this was live following the 2007 election.
The only coalition game Plaid will now play, is with Labour. And if such a marriage is ever contemplated it is unlikely to be consummated this side of the next Assembly elections.
The chances of the opposition parties under a lefty Leanne Wood and a rightist Andrew RT Davies getting their ducks in a row to mount a creditable challenge to Carwyn Jones’s government is highly unlikely. So our First Minister will be quietly pleased with the outcome of Plaid’s leadership contest in the short term.
But what of the longer term.
The prospect of Plaid Cymru placing their tanks on Labour’s lawn may not cause Carwyn Jones much loss of sleep even over a longer time period.
The valleys are not the hot bed of radicalism that many a left wing romantic would like to hope, think and make out. No, the typical valley voter is quite conservative, with a small ‘c’ of course. And a Stanley Baldwin type figure like Carwyn Jones suits them just fine.
Ms Wood may attract some new idealistic young recruits to the ranks of her party, her enthusiasm and relative youth should do that. And as her campaign showed, she can energise her own party.
Getting the voter to desert Labour for a more radical party of the left... others have tried and failed. Looking into the entrails of history the omens are not very promising.
The Tories are full of glee at the result. They’ve most to gain from the lurch to the left. The party has, over the last few years, being quietly turning itself into the “Welsh” Conservative party.
Prominent members of the party like Glyn Davies, David Melding, Jonathan Morgan, Guto Bebb, Paul Davies and former leader Nick Bourne have being pushing for more devolution, more sympathy for the language.
Forget their initial opposition to devolution, they have the zeal of the newly converted. These right wing welshy Tories aim to hoover up the Plaid Cymru vote.
There are many voters with a sympathy for all things Welsh. These in the past have looked to Plaid to represent their interests. Could they now be seduced by this newly invented Conservative party with its strong “welsh” agenda?
The gradual but steady growth in the Conservative vote in Assembly elections is testimony indeed that their strategy is working. It is not mere chance that this most pragmatic of parties has overtaken Plaid to become the Official Opposition in the Assembly
All in all, Leanne Wood has a daunting task to lead a left wing crusade in a country that for some few years now has talked radicalism but has hardly embraced it. The backdrop to yesterday’s count was a dragon climbing a very steep hill, how very prescient of the party to display such a motif.
But yesterday's result has made Welsh politics suddenly very interesting.
Thursday, 8 March 2012
After the hacks the cops are under scrutiny in the Leveson Inquiry. Yesterday was the turn of Robert Quick, formerly Britain's top counter-terrorism officer.
What he had to say gives an interesting insight into the way our politicians operate. In his evidence he says that his bosses in Scotland Yard caved in and withdrew their support for the investigation of a Tory front-bench spokesman who had received leaks which endangered national security.
It all stemmed from a leak inquiry in 2008. It centered around Damian Green a Tory shadow minister. The allegation was that the MP had not just a passive recipient of leaks but according to the civil servant at the centre of the case ‘Mr Green was seeking dirt or damage on the Labour government, and other material that would be useful to him.’
Information that the authorities thought posed a problem to national security.
Green was arrested. This caused outrage amongst the Conservative party and their mates in the Conservative press at the time.
The arrest was condemned by David Cameron, the then Leader of the Opposition and Boris Johnson the mayor of London. This resulted, according to Quick's evidence, in the acting commissioner withdrawing his support of the investigation. The Crown Prosecution Service eventually decided not to prosecute.
Now there have been many Police Inquiries into many sensitive political issues in the past and also into politicians. Some in Wales.
There was an inquiry into Peter Hain’s late declaration of donations in his failed bid to become Deputy Leader of the Labour Party. There was no charge.
When Mike German was Deputy Minister in the Welsh Assembly there was a police fraud investigation into the WJEC’s European Unit which in the period under investigation was headed by Mike German. After an investigation there were no charges forthcoming. Mike German was restored as minister in the then coalition government.
After critical reports into the running of AWEMA, the police have now embarked on an investigation into the now defunct organisation.
Quick as a flash Assembly opposition politicians tried to make political capital and embarrass the Welsh Government by alleging a close link between some key members of AWEMA and the Labour Party.
Politicians, when there are allegations of wrong doing need, to be investigated fairly but thoroughly. Undue influence must not be bought on to the police and the prosecution authorities to go easy on certain investigations because there is a political dimension. Yesterday’s evidence to Leveson hints that policemen can be brow beaten by politicians.
But that was the past, what of the future. As we've seen police have done their duty and have looked into matters that need looking into. There is no certainty that in future that this will be the case. Why? Because each Police Authority will be headed by an elected Police Commissioner.
And who will stand for these posts, party politicians. Will such people take a neutral stand on matters that are potentially embarrassing to their own parties. The history of politics in Wales would suggest not.
Wednesday, 7 March 2012
It’s a fact the Welsh Government can’t borrow. The Scottish government and the Northern Irish government can.
The history of devolution in Wales has been that of catch up. Wales trying to catch up with the powers given to Scotland and Ulster. The needs of Wales were never taken seriously by the then Blair Labour government.
Indeed the initial devolution settlement was an off the shelf bill that had been put on the shelf in 1979 when the first referendum on devolved government was rejected by Welsh voters.
What was on offer in 1979 was limited, what was passed in 1997 was also limited. It took until last year to get law making powers and the Assembly is still without any fiscal powers. The Silk Commission is looking at this area, but the Welsh government is now pushing the Treasury for borrowing powers.
It has dawned on Carwyn Jones and his team that in these tight financial times that the only way to get essential capital schemes off the ground is to borrow money. Unless they get these powers, Wales is disadvantaged. The other nations of these isles are pushing ahead modernising their infrastructure whilst Wales looks enviously on.
But the recession and the cuts have caused government and opposition to look for ways to get round Treasury’s rules. Both government and Plaid Cymru are trying to get round the borrowing ban by piggybacking on organisations that can raise the cash. And who do they have in their sights? Well, local councils and housing associations.
The latest example of this kind of thinking comes from Plaid Cymru. In an Assembly debate they offer up the idea of a £1bn short term fiscal stimulus.
Alun Ffred Jones Plaid Cymru’s economic spokesperson reckons the money for this is going to come from “a Build4Wales style investment vehicle as proposed by Plaid Cymru which could carry about £500m worth of projects and an urgent commitment to revise and expand the local authority borrowing scheme to £350m. A similar programme for tapping into Housing Association borrowing powers must be drawn up, which should aim to generate around £150m.”
Well, if only money followed debates and the issue of press notices Wales would be fine. Unfortunately in the real world there is no magic wand.
There are merits to Plaid Cymru’s Build4Wales idea but it ain’t up and running and would require Treasury to give its blessing. Treasury is not known for its sense of urgency.
Local authorities can and do raise money. But this year their borrowing has already seen an 80% increase. It is debatable whether they’ll want to raise more loans.
Now housing associations have not only been fingered by Plaid but also the government as a means of raising cash. Civil Servants have been targeting them as a potential means of raising money not for housing but for other projects, such as school.
Forget whether these charitable bodies should be raising money for ends other than housing. Those making the approach show a worrying degree of naivete in their understanding of accounts.
Most housing associations in Wales are already in debt. Debts they’ve occurred in raising private finance to build houses for those in need. They pay off these loans from the rent they collect. But with the cuts in housing benefit there are serious concerns within many associations about the future state of their balance sheets.
The technical term is gearing. At the moment most associations are near their maximum gearing ratios. In other words, they can’t raise the cash that the government and Plaid would want to get their sticky hands on.
Of course, government could step in and guarantee new loans, but why should associations borrow money for schemes that are non-housing when there is a large housing need out there.
If government or Plaid Cymru, for that matter, want to give the economy a boost, let it be by allowing housing bodies to build what they’ve been set up to do - houses. If Welsh politicians want money for roads, rail and schools, let them redouble their efforts to get Westminster to give Wales the powers. Wales mustn’t always be disadvantaged because of the way politicians sold the country short in the original devolution settlement.