He said: “The important thing that I know from my time in the Treasury is that the Barnett Formula applies to part of public spending. But you’ve also got in addition to that, the spending outside the Barnett Formula which comes on the basis of need... because of unemployment, because of child poverty, and also because of the need for regeneration.”
And he went on that Wales, “disproportionately benefited” from European aid, unemployment benefits and tax credit support “because there has been greater need and disadvantage in some parts of Wales because of the legacy of the Thatcher unemployment of the 1980s”.
It’s seems to be a bit like saying that a victim of mugging disproportionately benefited from A&E treatment and Police attention.
What Balls and the rest of the Westminster circus can not see is the reason why Wales has such a dependency on the public sector is because of the failure of successive governments and to realise that we need to rebuilt our manufacturing industry. Well Balls appears to understand this to some extent,but he cannot blame it all on Thatcher. His party has had 10 years of government and in reality did nothing to address the issue ,or used the wrong policy the which is why we became dependent on EU funding.
The idea that if you get money from the European Union means that national government can cut it’s own aid is contrary to the actual ethos of EU policy.
But successive government have pursued the wrong policy when it comes to encouraging manufacturing in Wales. To the extent of building large complexes for major manufactures who stat for a period but then decamp to area where wage costs are lower.
This cam be reflected in the saga of the LG factory in Newport which never realised anything like it's potential,
The LG site has had a troubled history, with up to 6,000 jobs promised in 1996 never materialising.
A £1.2 billion sister factory on the site, which was to make semi-conductors, never went into production and is still empty.
The LG Philips factory making colour tubes for monitors and televisions closed in 2003 with 870 job losses.
At its height, 2,000 people were employed at the site.
The LG factories on the site originally received more than £87m of grant money, and in 2005 some £34m was repaid to the then Welsh Development Agency.
To some extent LG failed because they were intending to build the wrong sort of TV sets but they could have changed their process.
Some would argue that this was the fault of the Welsh Assembly Government but they were highly under the control of Labour's Westminster Ideology at the time and the initiative came before the Assembly was created.
It would have been better if the £87m had gone to encouraging smaller indigenous companies to form or expand in areas of high unemployment perhaps on a small proportion of the 6,000 jobs would have been created but they would still be here. We need Welsh solution for Welsh problems not be led
It is clear to me that the current crisis will be used by the Parties at Westminster to “roll back the state”. Which they have been itching to do for decades. None of the leadership candidates seem to be willing to stand up for the eventual victims of this and Welsh Labour who may benefit from this policy. But Welsh voters are not stupid and they must distance themselves from the likes Balls because if they do not there is a centre left Party in Wales who will be only willing to do so.
Fortunately, Plaid Cymru is challenging both Balls and this short-sighted and ill-conceived economic policy by changing the way the Welsh Government provides economic assistance. Ieuan Wyn Jones's announcement that economic development would be targetted away from the LG-type inward investment and towards promoting local small-scale enterprises is a very welcome change of course. I hope those enterprises will include workers' cooperatives and community interest companies that lack start-up capital but are not motivated by greed.