Do not ask, can Wales afford Independence?

Ask instead, can Wales afford the Union?

The perennial question asked, is whether Wales can afford to be Independent.

Less often is the question asked, can Wales afford the Union.

The Unionists in Wales, Welsh Labour and Tories extol the virtues of this relationship, but except for " better together " and " Wales can't manage without Westminster ", very little detail is offered in support.

The coming elections for the Senedd however, somewhat gives the game away.

Both these parties promise great changes.

Thousands of new nurses, doctors, teachers More affordable houses, roads and to increase the wages of low paid workers.

All this however,merely illustrates that they accept that Wales is suffering significant shortages.

Add to this the 10% lower than average earnings of Welsh workers. The 11% lower productivity of Wesh industry, through lower than UK average levels of investment. Twenty five percent lower in transport and infrastructure and research and development.

And then there's the lower than average levels of education standards of Welsh children against UK and international standards.

And let's not forget the 200000 Welsh children in poverty.

I nearly left out the stagnating Welsh economy.

Oh yes and the food banks.

This, as part of the sixth wealthiest economy in the world.

The opposition will lay charges of incompetent government against the Wales government, but that cannot explain such widespread impoverishment. 

The Tories in Wales also call for increases across the board and it will take miraculous redistribution to fulfil their aims from the present budget.

The Welsh Labour government has given a further clue as to the problems. They have taken up with the dreaded Public Private Finance 

Initiative.

The very system that they have derided the UK government over and 

boasted that it wasn't for Wales.

Well it is now.

They have tied a bow around it and given it a different name, but it's the same system where the private part gets rich and the public part carries the cost for years to come.

So why have they done this? Out of the mouths of babes. The First Minister admits that without this arrangement, Wales would not be able to invest in infrastructure projects. 

So, to get to the point.

Independence has played no part in this dire situation. It is a consequence of  the history of Wales only ever belonging to the Union.

How do the Unionist parties intend to resolve Wales' problems?

More of the same it would seem.

The Tories in Wales would continue to rely on friends in high places. Other than, they would work with the UK government, no other clue as to how they would achieve their huge transformation promises.

Welsh Labour aren't quite sure. Some are talking up an as yet, undefined federal system. Others an improved devolution.

Both lead back to the same problem, that control of the essential levers of government, economic and legislative, will lie outside their control.

Both the Tory and Labour solutions have the same problem. These solutions are beyond their influence. Both these approaches are in the gift of the Westminster government.

A Westminster government, not recognized for its generosity to Wales.

It's not as if Wales has not made its contribution to this Union.

It presently sends water and electricity, free of charge, to keep England going.

Revenues from the profits of businesses in Wales are paid to the UK exchequer.

In recent history Wales was an industrial powerhouse. Huge profits were made from mining, slate and iron and steel from Wales.

Where are the great seats of learning, the hospitals and care homes paid for from these profits.

The universities of Wales were as a result of the contributions of the workers, the public.

The hospitals and medical care are the result of the NHS, the contributions of the people and before that by religious and charitable organizations.

The care homes are run by private enterprises.

The benefits from these vast  profits don't seem to have found their way to the Welsh part of the Union. 

Although Wales is suffering the consequence, in long term health problems and a polluted environment.

This is not the result of Independence, but of being in the Union.

So. Those that enthusiastically bang the Unionist drum, would do well to remember that wrapping Wales in the Union Flag, only leads to getting smothered.

 

The Pros Cons and Cons of Wales and the Union.

Wales couldn't have managed the costs of covid without Westminster.

£5.9 billions given to Wales. The vaccines Westminster has supplied. All the military to help.

To this the Wales First Minister applauds and the leader of Plaid does his goldfish act.

And it's a con. It's misleading the Welsh public.

The £5.9 billion is a very small share of the very large amount that the UK Chancellor borrowed to deal with Covid. Wales wouldn't have received any help, only that England/UK needed it.

A self governing Wales could have borrowed in the same way.

Next con. The UK Chancellor has, according to the Office for Budget Responsibility, borrowed almost £400 billion to deal with covid.

This being so, Wales' population share should be £19 billion. 

So if Wales has received £5.9 billion. Where is the other £13 billion gone? Someone's had it and it's not Wales.

Think what help could be given to Welsh businesses, tourism, hospitality

health,social care and individuals with an extra £13 billion.

After all Wales pays a population share of servicing the debt.

As for vaccines. Yes the purchasing power of the UK secured a cheaper deal and Wales as a small country would have paid a higher price.

It would however have secured vaccines in the same way as other small countries. 

Had it been able to act individually in the beginning of the pandemic, it would not have  to rely on others for supplies.

It could have acted sooner, vaccinated quicker.

As for cost. Israel, for example, had to pay top price for it's vaccine supply, but as its government said, in total, the equivalent to two days of lockdown costs.

So Better Together. But better for who?

The beneficiary of retaining the Union is England.

If the Union were to split, England, which is in essence the UK and vice versa, would lose considerable status in the eyes of the world. Indeed would stand to lose its special position at the UN Security Council. 

England/UK would be diminished.

England is a net consumer of resources.

It presently benefits from supplies of resources, electricity and water from Wales and Scotland.

If the Union should split England would no longer have control of those supplies.

It is argued that England/UK provides the finance for Wales to pay its way, 

England/UK has no money. They have a £2 trillion debt. They borrow money to pay their way and on the expensive projects they undertake.

They then give Wales a very small portion of that money through an outdated and unfair formula.

The money allocated does not relate to any specific spending requirement, nor whether it is sufficient, nor under any timescale decided by the Welsh government. It is entirely dependent on England's requirements.

England/UK treasury receives Wales population share contribution to servicing the debt. it's not Wales debt, they are not allowed to have debt. Wales does not get it's population share of money raised from the " National " debt.

Prior to covid. In the years 2015 to 2020, the UK debt increased by £500 billions. Money borrowed for expensive projects ( all in England ) and to fund overspend.

Wales population share should have been approximately £25 billion.

The 2015 devolution settlement allocated less than £1 billion capital spending to Wales spread over five years. 

England has the advantage of that.

Wales revenues are collected on a UK wide basis. They are disaggregated between the UK nations, as HMRC states, using estimates, assumptions and adjustments, therefore revenues allocated to Wales and Wales' so called financial deficit must be treated with caution.

HMRC conceded that corporate revenues from businesses operating in Wales are often allocated to company headquarters located in England.

Wales public services don't benefit from these revenues. That revenue goes to England.

Wales, together with Scotland and N Ireland, contribute to HS2 railway link.

Although no part of it is in Wales, it is regarded as an England and Wales project and therefore Wales gets no Barnett tradeoff, although Scotland and N Ireland will receive hundreds of millions of pounds through Barnett.

It has been estimated that Wales will be robbed of approximately £500 millions. 

It has also been estimated that rather than benefiting Wales, HS2 will be detrimental to the Welsh economy to £150 millions per year.

So what does Wales get out of the Union.

It gets a budget deficit. Wales deficit is a consequence of being part of the UK. The deficit wouldn't exist as an Independent country.

Wales budget spending, contains items not spent in Wales. They are amounts that the Westminster governments say Wales must pay to UK spending.

This arrangement leads Wales to have the largest military expenditure, per capita, of any nation in Europe.

The total Wales spending outside Wales is £7.2 billions pa. Amounts totally unrealistic for a country the size of Wales.

This money does not benefit the Welsh economy, nor does Wales get revenues associated with it.

Wales pays the state pension in Wales from its government expenditure.

State pensions throughout the UK is legally the responsibility of the UK government.

This costs Wales £5.9 billions pa.

Wales loses £1.6 billions through the UK's " revenue gap ".  That is Wales' population share of the money HMRC loses through tax evasion, tax avoidance, inefficiencies etc.

Wales has no control over that,

Wales can't borrow as other nations do. To invest in the economy or infrastructure.

Wales can't set up its own tax and benefit system. One that's more efficient, equitable and better suited to Wales economy, taking the best practices of other countries.

Wales can't grow its economy. The Silk Commission on Devolution states this specifically " Under the present constitutional arrangements, the Wales government cannot grow the Welsh economy. They can only manage a given allocation ".

Wales can't make trade deals with other countries, independently of the UK. Only the UK government can make such deals on behalf of Wales.

Wales can't authorise or invest in large infrastructure projects. Wales must gain the consent of the Westminster government.

Wales can't authorise or invest in large energy projects. Wales must gain the consent of the Westminster government.

Wales does not have income over that felt necessary to run it's public services and maintain its infrastructure.

Wales doesn't have the money to deal with emergencies such as covid, flooding and the removal of dangerous coal waste tips. 

Wales has to ask for such finance from Westminster and it is entirely at the discretion of the Westminster government.

So what are the pros.

Still looking.

 

Scotland will be £11 billions poorer with Independence.

Should it be a worry for Wales Independence?

Unionists have failed in presenting any credible reasons for maintaining the Union.

They have not persuaded that Better Together has benefited the constituent parts of the UK.

Having failed in this, they fall back on the Brexit tactic, of not letting the truth get in the way of a persuasive story.

They seek to undermine the case for Independence.

The EU stealing our money, has now become the dire fate awaiting nations who dare to break from the Union.

As the move to Independence has grown in strength, then the attacks on it, using dubious, but effective tactics, intensify. 

Scotland, more advanced on Independence, is experiencing this currently.

Wales will increasingly come under the same pressures, as Independence here grows and it is therefore worth putting these attacks themselves, under scrutiny.

The Unionist camp seek to present their assertions under a cloak of apparent credibility. They will cite their data as , government sources, or official figures, or increasingly academic reports.

It was one of these that caused the excitement recently among Unionist supporting media.

Scotland Independence will make it £11 billions poorer.

Headlines in the Anti Independence Scottish newspapers and in the English based, Unionist supporting media. The Mail, Guardian and Independent, among them.

They had latched on, without question, to an academic paper presented by the Centre for Economic Performance, part of the London School of Economics.

The Reality.

The study asserted that an Independent Scotland would be £11 billions, poorer irrespective of whether it rejoined the EU. The media loved it. Scots worse off by £2800 per head if they left the UK.  This by a "non partisan"  report.

The report. Disunited Kingdom, Brexit, trade and Scottish Independence.

It argues that the Scottish people have a right to know the costs and benefits of Independence, in making their decisions.

And yet we find that this " neutral " report has examined and presented only the costs, while ignoring the benefits.

The £11 billions of the report is exclusively assuming the costs of trade, the cross border costs, of Scotland leaving the UK.

It argues, for example, that Scotland will suffer more expensive imports of between 15% and 30%. Such a wide variation, suggesting a high degree of uncertainty in the research calculations.

The dodgy methodology continues ( I almost called it a dodgy dossier ), by advancing a calculation of a Scotland deficit based only on trade and ignoring the effects of currency, changes in investment flows, taxation policy, new export policy decisions and the ability of Independent countries to boost growth.

In order to reach their conclusions, the authors make some unusual assumptions.

They state that this deficit remained, whether or not Scotland, rejoins the EU.

There is no advantage with regard to trade tariffs.

Scotland would therefore be the only country trading within the EU not to have a tariff free advantage.

 

The report then uses the fact that Scotland would face border trade costs with the UK, it's largest trading partner, to justify its findings.

In doing so it places Scotland in a category on it's own, for it's the UK's publicly stated policy to encourage free free trade.

Tariff free trade for New Zealand to which it exports £1.7 billions. Singapore to which it exports £5 billions. Canada to which it exports £11 billions and Japan to which it exports £15 billions.

It is not credible that it would not seek free trade with Scotland, to which England exports £67 billions or with Wales to which England exports almost £40 billions.

That this report fails to acknowledge these points, further diminishes its credibility.

The authors are also measuring long term effects in a long term forecast. So long term, as to become not valid and credible.  As Keynes famously said to those economic forecasters careless enough to undertake such self indulgent penchants in a fast changing world that " in the long run we are all dead ".

Then for some strange reason, the authors seek to undermine their own research.

The authors state. As with all economic forecasts, our estimates are subject to uncertainty and should be treated with caution. We do not know exactly how large an effect Scottish Independence and Brexit will have on trade costs and although we use the best available data and modelling techniques, our model is an imperfect representation of the global economy.

But all the media wants are the headlines.

So what of the motives behind this report.

The authors say it is to make the voters aware of the costs and benefits of Independence.

This clearly is not the case with such an unbalanced presentation.

But the Centre for Economic Performance  has a history with Scottish Independence and is far from impartial.

The CEP is a pro business global research body funded by a mixture of UK government and private finance.

This particular report acknowledged and thanked Jim Gallagher for his input. 

Jim Gallagher was the main economic adviser to the Better Together Campaign 2014 and an opponent of Scottish Independence.

The work of CEP is overseen by a policy committee headed by Sir Nicholas MacPherson, former boss of the UK Treasury during the 2014 referendum.

He broke with tradition by using civil servants to produce a stream of, so called, reports attacking the case for Independence.

He used the excuse that the SNP was " seeking to destroy the fabric of the state ".

He publicly urged Tory and Labour opposition to block Independent Scotland from using the pound as currency.

The CEP was active during the 2014 referendum, producing a series of reports, seeking to undermine the case for Independence.

The then director, Professor John Van Reeson, published his own Independence paper and likened Scotland to become a depressed Spain  "without the sunshine ".

This response is to what can be seen to be a Scottish issue, but it relates similarly to Wales. Similar attacks are coming to Wales.

As Wales Independence becomes stronger, these tactics become more frequent.

It is to show that such documents can be shown to be flawed and as in this case not at all impartial.

They will be used by opponents of Independence and we in Wales must be prepared to show them for what they are.

Dodgy document propaganda.

 

 How to turn Wales' budget deficit into a surplus?

answer.

Make Wales Independent.

How to turn a £13.7 billion budget deficit into a £2 billion budget surplus., without raising taxes.

Mark Drakeford, Wales First Minister has said that Wales future is better with the " Union "

This is an article that shows the opposite to be true.

That the inability to make important decisions is costing Wales and conversely the ability of an Independent Wales to freely make them, improves Wales economic position.

It is this that sets the conditions to turn the deficit to surplus.

This article does not attempt to go beyond Wales budget. It is not an economic plan, that's for another day, but shows that on day one of Independence, Wales has a budget surplus, not the deficit, Independence detractors trumpet.

It is important, essential even, that Wales starts it's Independent journey, with an economy that can pay its way. That the concentration is on the country's growth and development, not finding the means to pay for it's essential services.

So exchanging the deficit into a surplus. A little bit of magic? Or just claiming what's fair.

Firstly, To understand that the deficit is the product of Wales present constitutional arrangements. Not the product of an independent Wales.

Next. No widespread changes to the present budget are necessary in order to make this transformation..

The deficit is arrived at in a report on Wales financial position, by the Wales Governance Centre.

The authors conceded that Wales financial data is difficult to find as the data is collected on a UK wide basis by HMRC and ONS. There is no collection by Wales, for Wales.  It is then allocated to Wales using various methodologies.

It is presented,  subject to " estimates ", " assumptions " and " adjustments".

The report estimates that Wales revenues are £27.1 billions.

Wales spending is £40.8 billions.

Wales' budget deficit is therefore £13.7 billions.

This is not the budget of an Independent Wales however.

Revenues.

Corporation tax is apportioned to Wales in the sum of £1.3 billions.

However HMRC allocates much of corporate tax to the location of the business headquarters. This disadvantages Wales, as many of its businesses have headquarters elsewhere.

As the report found, accurate data is difficult to find, however as a guide. If corporate taxes were apportioned on a population share, as with most other taxes, Wales should have received £2.7 billions.

An increase of £1.4 billions.

Wales tax system would ensure that taxes are paid where profit is made.

HMRC has conceded that £35 billions of revenue is " lost ", avoidance, evasion, inefficiencies, etc.

Wales' population share of these losses is £1.6 billions.

A Wales tax system preventing these losses would add £1.6 billions to Wales revenues.

The financial report found that Wales raised less than the UK average in Income Tax and NI. £5.4 billions less.

The reason is the lower level of earnings in Wales. £1690 per person less than the UK average.

This was brought about by lower investment in the Wales economy. Also by the higher than UK average number of public sector workers in Wales. Any Westminster policies in capping public sector earnings, impacts, disproportionately on Wales.

Wales free of Westminster policies and investing, to regain the previous lack of investment in skills and technology, would raise Wales worker earnings to UK levels, thereby adding £5.4 billions to Wales revenues.

Expenditure.

The report estimated Wales expenditure as £40.8 billions.

However only £33.6 billions is spent in Wales. The remainder, called " unidentified items ", is what Westminster says Wales must pay to UK wide spending. Defence, International affairs, border control and debt repayment etc.

This amounts to £7.2 billions. An independent Wales wouldn't be responsible for these payments and would make its own arrangements in these areas.

Wales budget deficit contains a payment for state pensions. This amounts to £5.8 billions. Although Wales revenues are debited to this amount, Wales has not received the lifetime contributions of tax and NI paid by these pensioners. That has gone to the UK government.

However on Independence, Wales won't be responsible for this payment, that will be the responsibility of the UK government. 

The UK government is legally responsible to pay the pensions of all pensioners who have paid their NI contributions, wherever they choose to live.

Although Wales will be responsible for new pensioners as they become eligible to claim in the new nation, that has been estimated at. 5% per year. £290 million in the first year.

An expenditure saving of £5.5 billions.

With Just five changes to the budget, claiming what rightfully belongs to Wales.

Revenue becomes.

£27.1 billions + £1.4 billions + £1.6 billions = £30.1 billions and £5.4 billions to come.

Expenditure becomes

£40.8 billions - £7.2 billions - £5.5 billions = £28.1 billions.

So. Not a Wales budget deficit of £13.7 billions, but.

A Wales budget surplus of £2 billions rising to £7.4 billions.

There are costs to Wales Independence. They will need to be addressed in an economic plan and in the context of a growing economy.

This article merely emphasises that an Independent Wales goes into that plan, not with a budget deficit, but a surplus.