Bethan Jenkins AC/AM Blog

IT’S taken some time for me to comment on the ConDem government’s budget as I’ve been busy this week, and I was ill on Wednesday. Better now – thanks for asking!

My first thought was that the recession gave us a year-zero opportunity to look at the future of the Welsh economy, and to ask what we can do to prevent us from ever having to suffer the effects of financial mismanagement in the markets in the future. Instead, the Budget reads like a short term response – a five-year plan at the very most. But we need to put in place medium and long-term solutions to very fundamental problems at the heart of our economy.

It will be interesting to see the VAT increase play itself out. After all, you need consumers spending to stimulate the economy back to growth, and this rise is bound to dissuade buying. We are carrying out an inquiry in to financial inclusion on the Assembly’s Communities and Culture committee at the moment, and Fran Targett from Citizens Advice Cymru yesterday told the committee that the VAT rise and the decrease in housing benefit “don’t pull together”, and are “dangerous” for those on lower incomes. I cannot but agree.

Similarly, with the balance of spending cuts being 77% to 23% in tax rises, we will see more job losses, without a doubt. Unison estimates that every job lost costs the British taxpayer £16,000. That will have to be met, but where exactly is that costed?

The new rules on housing benefits are a misnomer. It betrays a Tory government as in thrall to Daily Mail headlines – of non-contributors living high on the benefits hog – as the last Labour government. If these stories are true, then they are not the common experience.

The banking levy is little more than a headline. Barclays made record £11bn in profits last year, so there is a strong possibility that it could have met the levy’s target itself in Corporation Tax. This is just a drop in the ocean. Where was the reform of inheritance tax, and the creation of a ‘wealth tax’?

The public sector pay freeze will affect Wales without a doubt. Apart from non-devolved departments like the police, the DVLA in Swansea, the Office for National Statistics in Newport and Companies House in Cardiff, the rest of the public sector won’t know what’s available until the CSR in October. So Welsh workers have been left in limbo for the summer.

And while we’re on the public sector, we shouldn’t let the Labour party off the hook here. At the moment, you could swear that they have been in opposition for 13 years. Let’s get real – they did little to redress the balance between rich and poor when they were in Government on a UK level. Its true to say that Wales has lost its coal industry, and it’s lost most of its steel industry. Manufacturing as a proportion of Welsh GDP fell 10% during Labour’s tenure, and it was Labour that grew the public sector. So it is grossly unfair of the Tories to depict men and women whose only crime is to go to work as part of an industry that is ‘bloated’ and therefore unnecessary.

If there’s anything good about the budget it’s that it has restored the link between earnings and pensions and that there is still a universal right to child benefit, although it has been frozen. But I still don’t see why the public sector should face all the worst cuts alone. The banking system must be laughing at how well it has done from this budget.

There are other alternatives that were not looked in to by the UK government. Tax evasion accounts for £70 billion, while tax avoidance stands at £25bn. Some £28bn of this isn’t collected as HM revenue doesn’t have the resources so it seems, and of this £11bn has been written off. Yes, there was a one-year freeze on the civil list, but Osborne is looking at providing a grant later on in the year. Hardly making the royals suffer the squeeze.

I worry what will happen in Wales, and the cuts that the Welsh Government must make. I worry how these measures will affect Welsh families – those families who are already in poverty, and people that will be pushed in to poverty by no fault of their own. I don’t want to scaremonger, I know Wales must play it’s part in this agenda, but this short term thinking by the ConDem government hasn’t inspired me one bit.