Tuesday, 7 September 2010

Reasons to be cheerful

Tomos Livingstone of the Western Mail has this interesting article about Plaid's prospects over the coming year:

Shouldn't Plaid Cymru lighten up?
Interesting piece this morning from Vaughan Roderick on why Plaid Cymru have plenty of reasons to be cheerful. A bit like the world economy, Plaid are at risk of talking themselves into a depression; lots of senior figures seem very gloomy, and Vaughan is right to point out that things aren't as bad as they seem.

Essentially his argument is this - come the 2011 Assembly elections the Conservatives will, surely, be less popular than they are today as spending cuts start to bite. Plaid, therefore, have a good chance of leap-frogging the Tories and finishing second to Labour in the popular vote. Opinion polls are already pointing in this direction.

Careful targeting of constituency seats (rather than hoping for goodies on the regional list), could, says Vaughan, reap big rewards for Plaid - subject to the usual caveats about picking decent candidates, etc.

He's right, of course. Plaid do have problems, and the party's poor performance in the General Election - still stuck on three seats, no closer to winning Ceredigion or Ynys Mon and not mounting much of a challenge in the valleys - has only darkened the mood.

And the medium-term issue of what to do once Ieuan Wyn Jones decides to step aside as leader remains unresolved, with Adam Price deciding not to stand in next year's Assembly elections.

But the paradox is that, despite underwhelming electoral performances, Plaid remain amongst the most successful parties around in achieving their strategic aims.

If there is a 'yes' vote in next year's referendum on the Assembly's powers, Plaid can realistically claim to have played their political hand to maximum possible advantage, presiding over the creation of a Welsh parliament without making a sustained electoral breakthrough themselves.

Maybe the seaside air in Aberystwyth will help lift Plaid's spirits.


The sea air will certainly dispel the silly season stories about Plaid. The biggest problem Plaid members face at the minute is choosing the most able candidates for the regional list - in the North, and elsewhere, that's a genuine dilemma as there are some very capable candidates.

Plaid is also making the running in challenging the Lab/Con consensus on wealth creation and the need to move the focus away from the City of London to places like Wales. Jonathan Edwards doesn't mince his words here:

“Successive UK Governments have been guilty of basing their economic policy on the financial sector in London.

Consequently, under Tory and Labour administrations, there has been increasing regional and individual wealth polarisation. Inner London, despite the recession, continues to be the richest part of the EU, while West Wales and the Valleys, just a few hours down the M4, is among the poorest.”


He makes an excellent case for the devolving of economic powers, which the Con-Dem coalition is proposing for the North of Ireland.

13 comments:

The Druid of Anglesey said...

“Successive UK Governments have been guilty of basing their economic policy on the financial sector in London.

Consequently, under Tory and Labour administrations, there has been increasing regional and individual wealth polarisation. Inner London, despite the recession, continues to be the richest part of the EU, while West Wales and the Valleys, just a few hours down the M4, is among the poorest.”

Piffle. Without incentive to set up businesses elsewhere, companies will always *of their own free will* cluster around the economic centre where there is a larger pool of skilled workers, better domestic and international transport links, and complementary companies providing needed services. This leads to virtuous circle for the South East - it has nothing to do with "Successive UK Governments have been guilty of basing their economic policy on the financial sector in London."

"He makes an excellent case for the devolving of economic powers, which the Con-Dem coalition is proposing for the North of Ireland."

Only if devolving economic powers to Wales resulted in the creation of an environment conducive to nurturing private businesses. As it is currently run under Labour and Plaid I have no confidence that sufficient savings in public expenditure could be found to reduce headline rates of corporation tax in Wales. Business Rates are already higher in Wales than in England, and IWJ's Economic Renewal Programme is already being hailed as a disaster for Welsh small businesses. As per your post on the Tobin Tax earlier this week, Plaid's instinct (like Labour) is always to tax more to spend on more public services, creating an overlarge public sector which then crowds out the wealth creating private sector.

Plaid Whitegate said...

It's an interesting philosophical concept but I don't accept that companies can have their "own free will". The owners of companies will locate in a specific area for various reasons - some economic, some cultural, some subjective.
The UK's central economic policy has not worked for Wales for decades. It has not been central to any economic strategy or policy. It has barely been peripheral to economic strategy. What is and remains central is the well-being of the City of London, on whom both Tories and Labour depend for much of their party finances and who lobby aggressively for their own narrow economic interests.
If you think that a UK government - which ultimately is responsible for the appalling state of the Ynys Mon economy - gives a damn about us, please enlighten us how it has demonstrated so.
In what way does the public sector "crowd out" the wealth-creating private sector? By awarding contracts to builders to design and build new hospitals, schools, housing, etc?
Druid's simplistic mantra of public = bad, private = good begs several questions. Would he, for example, like to see the private sector taking over the running of our NHS? Does he see a strategic role for either UK or Welsh governments in economic development (beyond reducing taxes for corporations)?
Plaid's instincts, because we are a community- based party that understands the importance of small enterprises and local business, is to nurture those and to avoid the pitfalls of Lab and Tory administrations in spending millions on luring big corporations (LG anyone?) to Wales.

The Druid of Anglesey said...

I will break my reply into two parts as your comments system does not accept over long replies:

"It's an interesting philosophical concept but I don't accept that companies can have their "own free will"."

A very telling quote.

"The UK's central economic policy has not worked for Wales for decades. It has not been central to any economic strategy or policy. It has barely been peripheral to economic strategy."

Successive governments have tried to even out the regional differences in the UK by (a) improving transport links; and (b) funnelling public money to economically depressed regions. These monies have been spent on regional development agencies, relocation of public agencies creating more public sector jobs, social security and so on. All this has been done on the premise that redistributing money around the country through the public sector apparatus could help somehow kickstart local economies. It hasn't worked - and over time becomes more and more unsustainable as regional economies become more and more dependant on public monies. Its time for a new, more sustainable approach centred on helping regional private businesses by introducing regional variable rates of corporation tax. You can see my blog on the subject here: http://druidsrevenge.blogspot.com/2010/09/towards-regional-rates-of-corporation.html

"What is and remains central is the well-being of the City of London, on whom both Tories and Labour depend for much of their party finances and who lobby aggressively for their own narrow economic interests. "

Having uniform rates of corporation tax throughout the UK (like most countries) is not proof of favouring the well-being of the City of London. Besides the UK financial services is not just centred around the City - for example the two most effected banks in the recent credit crunch (RBS and HBOS) are both primarily domiciled in Edinburgh.

The Druid of Anglesey said...

Part 2 of 2:


"In what way does the public sector "crowd out" the wealth-creating private sector? By awarding contracts to builders to design and build new hospitals, schools, housing, etc? "

This is very elementary and I'm surprised you have to ask: firstly an over large public sector employs too many people (offering secure jobs with better salaries and pensions) thus depriving the private sector of needed manpower. Secondly it borrows money from the markets (currently huge amounts) thus reducing the amount of capital available to private businesses to loan (I'm sure you've heard about this phenomenon lately). Thirdly it does too much, thus depriving private firms from being able to operate profitable businesses in those areas. I could go on. Your point about "awarding contracts to builders to design and build new hospitals, schools, housing, etc" is moot as the public sector has to first tax those very same businesses (plus borrow money from the banks) to provide the money to carry out those projects.

"Druid's simplistic mantra of public = bad, private = good begs several questions."

You are too quick to smear. I have not said the public = bad, I've said that having an overlarge public sector is not optimum. And it is undeniable that the current welsh Public Sector is too large insomuch that it cannot be sustained by tax revenues from Wales alone. Is there a strategic role for either UK or

"Does he see a strategic role for either UK or Welsh governments in economic development (beyond reducing taxes for corporations)? "

Of course there is a role for government in the economic development. But it has to be based on creating an environment conducive to private sector growth - not in trying to pick winners (as IWJ's ERP attempts to do) or bribing international companies.

"Plaid's instincts, because we are a community- based party that understands the importance of small enterprises and local business, is to nurture those and to avoid the pitfalls of Lab and Tory administrations in spending millions on luring big corporations (LG anyone?) to Wales."

Why then did Plaid Cymru renege on their key pledge at the 2008 Assembly elections to remove Business Rate for 50,000 small welsh businesses? Why then does IWJ's Economic Renewal Programme cut the fund for small business support by half and then restrict eligibility for support to businesses in six particular sectors - none of which are known for having many small businesses anyway? As always your rosy view of Plaid Cymru being "local champions" does not reflect the reality.

Plaid Whitegate said...

I too will answer in bite-sized chunks....

Living things have "free will". Companies are not living entities. The people running a company decide where a company is located not the "hidden hand" of economic law. They may choose to locate in London, Liberia or Liverpool depending on their own subjective criteria as much as the availability of cheap labour, skilled labour, favourable tax regimes, a ready market and/or grants.

Plaid Whitegate said...

My argument goes much deeper than corporation tax. Many of the largest companies in the UK don't pay tax because successive UK Govts have a lax approach to taxing multinational corporations, permitting off-shore tax havens. HMRC has virtually thrown in the towel with many large corporations and there remain billions in uncollected taxes.

Plaid Whitegate said...

"An over large public sector employs too many people (offering secure jobs with better salaries and pensions)"

This Daily Mail fantasy really has to be challenged. Most public sector workers are low-paid and the average pension of a civil service workers (UK not Wales) is £4,200 a year. Any security went long ago as most councils employ on an agency/temporary contract basis.

Yes, there are outrageous salaries paid in the public sector (the NHS and University sectors were recently exposed by Plaid) that need to be dealt with but don't smear everyone with that.

If wages are worse in the private sector, perhaps that's because so many firms are non-unionised.

The Druid of Anglesey said...

"Living things have "free will". Companies are not living entities. The people running a company decide where a company is located not the "hidden hand" of economic law. They may choose to locate in London, Liberia or Liverpool depending on their own subjective criteria as much as the availability of cheap labour, skilled labour, favourable tax regimes, a ready market and/or grants."

I don't see what point you are trying to make - you started off by saying that successive UK governments based their economic policy on the financial sector in London; now you are basically just repeating what I said about companies choosing to set up in the S.E. to take advantage of a large market, large pool of skilled workers, large numbers of complementary companies, etc. My point was that companies have many reasons to set up in the S.E. without any perceived government favouring of the City and you seem to be agreeing.

The Druid of Anglesey said...

"My argument goes much deeper than corporation tax. Many of the largest companies in the UK don't pay tax because successive UK Govts have a lax approach to taxing multinational corporations, permitting off-shore tax havens. HMRC has virtually thrown in the towel with many large corporations and there remain billions in uncollected taxes."

You didn't make any argument regarding multinationals avoiding tax. I don't see how this fits in with your original argument that successive governments have favoured the well being of the City of London.

The Druid of Anglesey said...

I note you have studiously avoided addressing my comments regarding IWJ's Economic Renewal Programme. And why Plaid reneged on its election pledge to lift 50,000 small welsh companies out of paying business rates.

Plaid Whitegate said...

Plaid went into government on the One Wales agreement not its own manifesto. You know that.

The Economic renewal programme will be judged on its outcomes not on the moans from politically motivated commentators like yourself and Dylan JE.

I note you have not responded to the suggestion that you think the NHS is "too big" and therefore needs the private sector to help run it. Isn't that the logical conclusion of your argument?

My original argument that UK govts favoured the City of London and didn't ensure they paid taxes is perfectly compatible.



PS Druid - Please re-send your comment about civil servants.

The Druid of Anglesey said...

"Plaid went into government on the One Wales agreement not its own manifesto. You know that."

If you want to hold the mantle of a "community- based party that understands the importance of small enterprises and local business", then Plaid should have fought harder with Labour to retain the Business Rates policy.

"The Economic renewal programme will be judged on its outcomes not on the moans from politically motivated commentators like yourself and Dylan JE. "

Is any criticism of the ERP to be treated as 'politically motivated'? You stress that Plaid is community-based and understand the needs of small businesses - how does that square with entirely valid criticism of the ERP that it does reduce support available to small businesses by half, and then limit support to just six sectors (themselves chosen for opaque reasons).

The Druid of Anglesey said...

"This Daily Mail fantasy really has to be challenged. Most public sector workers are low-paid and the average pension of a civil service workers (UK not Wales) is £4,200 a year. Any security went long ago as most councils employ on an agency/temporary contract basis."

In deriving the average public sector pension figure of £4,200 how many persons included had worked for the public sector for the majority of their working life, and how many worked for few years and therefore receive a smaller pension?

The fact is that the Public Sector is now the only employer left paying final salary pensions - a practice long stopped by the private sector. Furthermore, because these pensions are not 'defined contribution', i.e. fully funded by the employee and employer, they have to be topped up from general taxation. This means that private sector workers therefore pay extra tax in order to fund the superior pensions of public sector workers. This is neither a Daily Mail fantasy or sustainable. Obviously given a choice, people will prefer to work in stable public sector jobs with better pension provisions - thus reducing the talent pool available to private businesses, which was my original point.