How can Welsh Labour govern, if it doesn't understand the basics.

A lifetime of being a very small part of the UK. A very small part of UK Labour. And for the trade unionists, a very small part of the UK trade union movement, has led Welsh Labour to the mindset of being very small.

The government of Wales, which has been exclusively Welsh Labour. No more than that of running a county council [ no offence to county councillors ].

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They are given a grant together with limited ability to raise finance. Just like a county council.

They set up little committees to divide it up. Just like a county council.

They share it between areas for which they have responsibility. Just like a county council.

And for their peace of mind they have someone above them to blame. Just like a county council.

 

They have persuaded themselves, or have been persuaded, that Wales cannot survive on its own

They argue that Wales is only safe if it is ‘ protected ‘ by belonging to the UK Union.

To justify this stance they have latched on to any theory offered that will support their case.

Mr Drakeford, as First Minister, didn't feel the need for theories. 

Continually rattling out concepts, such as ‘ shared culture ‘ ‘ shared history ‘ ‘ better together ‘ and ‘ insurance policy ‘ was all he felt the need to offer.

Others of Welsh Labour, without Mr Drakefords vision, or should it be visions, offer other, more earthly reasons.Although often just as fanciful.

One senior Welsh Labour Senedd member [ among others ] actually believes that Wales relies on financial transfers from the wealthy parts of the UK and, he argues, that it is an ‘historical fact ‘ and a paradigm that no one has the answer to.

Another believes that Wales cannot survive on its own due to its significant budget deficit.

Almost unanimously all believe that with a Labour government in Westminster, all will be well.

Well this guide is here to tell you that they are misguided on all counts and that there is an answer to the paradigm.

The Union.

It seems to be universally accepted that the constitutional status quo is unsustainable.

Welsh Labour recognises this as their forays into ‘ improving devolution ‘ would suggest.

It ranges from The Welsh Labour document ‘ Reforming our Union’ to Mike Antonawi ‘ We the People,Radical Federalism ‘

While both are beacons of Unionism for Welsh Labour, they are largely ignored elsewhere in the UK.

The problem is, that although they contain a wish list of what the Welsh government would like, they contain very little in the line of financial or material benefits.

Furthermore they provide little guidance on how those aims are to be achieved.

Mr Antonawi does suggest the Good Friday agreement as a model for federalism.

[ seriously ]

And as for Mr Drakeford’s, Reforming our Union, the SNP did suggest that it made a very good case for Independence.

So the Welsh Labour case for the Union seems to be that we must stick with it as there is no other option and Wales can't manage without it.

In order to ignore more radical solutions, they devise these arguments. 

So are their support arguments legitimate.

Well naive but not legitimate.

The reliance on financial transfers.

The story goes, historically, Wales has to rely on financial transfers from the wealthier parts of the UK, because it does not raise enough revenues itself.

A commonly held view by Welsh Labour and its cohorts.

However, a quote from Welsh Labour's favourite source. The Silk Commission on Devolution

Central Government taxes are collected by HMRC in Wales and pooled centrally in a UK Consolidated Fund. Money is then drawn down to finance public spending across the UK including Wales.

So there is currently no direct relationship between the amount of central government taxes raised in Wales and the amount of money spent in Wales.

[Silk ].

Further, as for the UK funding Wales. This is simply because it is the accepted system within the present constitutional arrangement.

The UK collects the revenues, Wales does not.

The UK government distributes all money according to decisions made by the Westminster parliament.

There are no transfers from the wealthier parts of the UK to the poorer parts.

Furthermore, the money the UK does distribute is borrowed money.

The UK has a perpetual budget deficit and it borrows to fund it.

The Wales economy mirrors the UK, but Wales is not allowed to borrow. To run a national debt. The UK does it on Wales behalf.

That's the constitutional arrangement.

Whether the constituent parts of the UK runs at a so-called deficit is due to policy decisions made by the Westminster government.

It is argued, by the less enlightened, that only two regions of the UK have budget surpluses. London and the S E England.

They do so due to being the financial centre of the UK and therefore benefit most from government policies.

Indeed they are the focus of government policy. The City, Finance, is what the UK economy is based on.

But that's the policy of the Westminster government.

London and the S E England are the recipients.

An example is the many billions of pounds of government money used to support the financial sector during the 2008 financial crisis.

A crisis brought about by the greed and mismanagement of that same financial sector. Decisions made, not for the benefit of the nation, but for corporate gain.

Central government gave over £300 billion and made £1 trillion in guarantees available to prop up this sector.

This, not without cost to the rest of the UK. That money was no longer available for investment in the nations and regions of the UK.

The attempt to claw back that money by subsequent governments has also been argued to be a major contribution the austerity suffered throughout.

It is not like these regions. London and S E England, are wealthier, it is that the UK government has transferred the UK wealth, through policy decisions, from the ‘ poorer ‘ parts of the UK to this financial centre.

That however, is the nature of the constitutional arrangement that Welsh Labour supports.

Wales Budget Deficit.

Lies, damn lies and statistics. So a very perceptive person once wrote.

Wales has a budget deficit, a significant budget deficit, so it is said..

This deficit will be a major impediment in any consideration of Wales becoming Independent.

This has been pounced on by Welsh Labour to argue that an Independent Wales government would be faced immediately with raising taxes and cutting services in order to balance the books.

However difficult things are in the Union, they argue, it is better than being faced by that.

The arguments conveniently ignore the tax rises and service cuts experienced by the people of Wales through being part of the UK.

The deficit.

Is there really a budget deficit and if so how much?

Well the truth is, no one really knows.

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In the 2019 financial year, a report was carried out by the Wales Governance Centre, part of Cardiff University.

This report, based on a financial analysis of Wales income and expenditure, came up with a budget deficit of £13.7 billion.

It is a figure that has since been widely quoted.

It has formed the basis of other studies and of course has been utilised by Welsh Labour in its objections to any discussion on Independence.

This in spite of the authors of the report clearly stating that it is an analysis that only applies to Wales in the present constitutional arrangement.

So £13.7 billion deficit, a significant sum to deter any move to Independence.

Except that its existence is based on dodgy data.

Professor Williams of the same university has questioned the methodology used.

The authors of the report have been forced to issue provisos over concerns at ‘ difficulties regarding Wales data not being collected on a national basis, but on an England and Wales, or UK basis ‘ and which has led to estimates being used,

They also stress that the financial situation only applies to Wales current constitutional arrangement and not relative to Wales finances in Independence.

HMRC conceded that the tax revenues allocated to Wales were subject to ‘ assumptions and adjustments ‘ and that some of  revenues of businesses in Wales, were allocated to the HQs  located outside Wales, rather than Wales revenue streams.

The published revenues have therefore underestimated Wales real revenues.

There is a similar story with spending.

Wales spending is dictated by UK policy

Public spending is a reflection of Wales population share of the UK, 

Other spending is what Westminster tells Wales it must contribute to UK wide spending..

The anomaly of this, is that Wales has the highest defence budget of any country in the EU , per capita and as a share of GDP. This in spite of Wales having no military and no taxes or spending from the military in Wales.

Yet despite the so-called deficit being arrived at through estimates, or underestimates, assumptions, adjustments and allocating Wales revenue income elsewhere.

In spite of Wales spending being decided by the Westminster government.

In spite of that, it is still argued that Wales has a deficit and a precise figure is quoted as fact.

However, as an increasing number of economists and economic commentators, who are not seduced by the easy option of’ following the leader ‘ question the validity of Wales ‘ budget deficit ‘,

Welsh Labour will be unable to continue to scare the Welsh people with that one.

And so to Welsh Labours final throw.

All will be well with a Labour government in Westminster.

The entirety of the Welsh government's future policy seems to rely on this. They offer no alternative plan.

Jeremy Miles, a contender for the First Minister of Wales, has recently put forward that things will improve with a working partnership with a Labour government in Westminster.

Vaughan Gething also relies on this partnership relationship.

Previously Mark Drakeford was the believer in chief.

This approach says much about the lack of forward policy thinking, when a Government of Wales rests its and the wellbeing of the Welsh people, future, almost entirely on which political party governs in Westminster.

What if Labour doesn't get a working majority? What then? 

What if this, wished for, Labour government only lasted for one term? What then?

What if, as is highly likely,  this Westminster Labour government doesn't deliver for Wales? 

What then?

Because it is highly unlikely that this craved for partnership will deliver.

Kier Starmer, the UK Labour leader, is on record as stating there will be no more powers for the UK nations [ he didn't mean England of course, as they are indistinguishable from the UK ]

He has made his priority, reinforced by Labour's Constitutional recommendation of Gordon Brown, the elevation of the English regions.

History also offers no support.

However ‘ pleasant ‘ the working relationship, Wales remained bottom of the pile on all measures of social welfare , the health service, education,  earnings and poverty levels, under the Labour Westminster governments of Tony Blair and Gordon Brown.

They should also be careful what they wish for.

As pointed out by Professor Scully, Welsh Labour's popularity was at its lowest when associated with an unpopular Labour government in Westminster in 2010 and only revived when the Tory/ Lib Dem coalition came to power.

With regard to extra money. There is no money. The UK runs a perpetual budget deficit and has a huge national debt to service and repay.

This is the nature of the UK. The last surplus was 25 years ago and that only briefly.

A UK national debt of £2.6 trillion.

The Office for Budget Responsibility forecasts a UK budget deficit for the current year of £131 billion.

They forecast that if all goes well the deficit for 2027/28 will be around £50 billion, but the national debt will have risen to £3 trillion.

There is no future economic forecast of the UK actually paying its way

And that's the economy that Welsh Labour want closer ties with.

What's the alternative?

Just a suggestion.

Surveys by The Carbon Trust, Marine Energy Wales and The Crown Estates have discovered the potential for renewable energy through offshore wind, marine and tidal energy and floating turbines, off the Welsh Coast, worth at the current wholesale electricity price, £16.4 billions. In the longer term over double that.

This is reinforced by a quote from one of the UKs leading engineering publications.

The Celtic Sea and the coastal waters around Wales have the highest concentration of renewable resources than perhaps anywhere else on the planet.

Wales geography, particularly tidal resources, means that every form of marine energy is abundant [ The Engineer ]

In the report on Wales Finances, the Wales Governance Centre stated that Wales wage levels were significantly lower than the UK average. This is due to lack of investment in skills and technology.

They state that if Wales earnings were brought to the UK average, it would add to Wales revenue by  £5.4 billion per year in income tax and NI. 

This would require a reversal of past investment policy.

Studies by National Westminster Bank and Price Waterhouse argued that if Wales productivity levels were raised to the UK average it would add £1.7 billion pa to the Welsh economy.

If it was raised to the best in Europe it would add £7.4 billion pa to the Welsh economy

Welsh productivity will be raised by reversing the historic low levels of investment in innovation, research and development.

Just a few examples that by concentrating on Wales potential and the means of investing in that potential. £16 billion to start and you can see Wales in a new light.

Wealthy and productive.

So different to the small, poor and dependent nation so readily portrayed.

It would however, mean joining the 197 other countries who have taken the step of governing their own affairs.

Not one of them has asked to be taken back.

This could be the future for Wales, an option to be seriously considered.

It is also the answer to the paradigm that Welsh Labour fail to see.

It has for now been a step too far for Welsh Labour.

Perhaps they lack imagination.

Perhaps they are just afraid of the responsibility such a step will bring.

Perhaps they should consider which best benefits Wales, rather than what's best for Welsh Labour.