The UK economy continues to bump along the bottom with little or no growth in GDP and the revised OBR figures of only 0.6% growth for this year was a dark cloud over the whole Budget. In Wales, the situation is bleak, with the Office for National Statistics reporting 8,000 fewer jobs in the Welsh economy in the three months up to January. The austerity strategy set out in the 2010 comprehensive spending review aimed at the elimination of the deficit by the end of the Parliament has failed. The fiscal position is considerably worse than that forecast three years ago and worse even than that forecast this time last year—and that is with nearly 80% of the cuts yet to be delivered. We estimate that up to another 50,000 public sector jobs will lost in Wales in the coming years, following the 24,000 already lost. The Budget noted that Wales will get £161 million towards capital spending, but that conveniently masks the fact that there has already been a 40% cut to the capital spend budget from the CSR and that the re-allocation announced last week would come from strained revenue budgets.
Plaid Cymru welcomes some of the measures announced in the Budget. We welcome the freeze in fuel duty, but argue that it would be much better to have a long- term solution based on a stabilising mechanism. The announcement on when the £10,000 income tax personal allowance will be reached is welcome, as that is a long-standing Plaid Cymru policy. The £3 billion in infrastructure spending is also to be welcomed although, admittedly, it is a fraction of what is needed and was more of a political gesture than a serious economic intervention. We support the announcement of the introduction of an allowance of £2,000 a year from April 2014 for all businesses and charities to be offset against their employers’ national insurance contributions, as it will give businesses incentives to take on extra workers. We also support the move to change the terms of reference of the Monetary Policy Committee of the Bank of England to include a growth target. That is potentially the most significant announcement of the Budget and, again, is something that we have long called for.
I have some concerns about the second-home subsidy, not least because it would fuel another house price boom and after the inevitable crash, there will be serious consequences for the public finances.
There are several measures that Plaid Cymru would have liked to have seen included in the Budget. We wanted the Government to use the Budget and subsequent Finance Bill to implement the recommendations of the UK Government’s Commission on Devolution in Wales. We would have wanted the Government immediately to set about devolving minor taxes as well the income tax-sharing arrangements. We want the Treasury to implement the findings of the Welsh Government-commissioned Morgan report on devolved business rates, to incentivise Welsh local authorities to develop their local economy and expand their tax base. I will be tabling amendments to that effect to the Finance Bill, to test the will of the House.
The precedent for devolving taxes via the Budget was set with the devolution of air passenger duty to Northern Ireland in last year’s Finance Bill. On Thursday evening, I was amazed to see a senior Labour Assembly Member on the ITV political programme “Sharp End” dismiss the Finance Bill as an appropriate legislative vehicle to implement Silk. It just shows how visionless Labour has become in my country.
The measures I have just outlined would immediately trigger the borrowing powers—[Interruption.] That is the policy of the Labour party; they want borrowing powers in Wales. How will we get them without devolving fiscal levers? That just shows that Labour Members have no ideas.
The measures I outlined would immediately trigger the borrowing powers agreed during the bilateral negotiations between the Welsh and UK Governments, and are essential if Wales is to invest in infrastructure and create the economic boost that is so badly needed. We also want Wales to receive powers over corporation tax, as advocated by Silk, if they are devolved to Northern Ireland. Today, I read with interest in the Financial Times about the unanimous lobby for those powers in Northern Ireland, and the strong letter sent to the Prime Minister by the Northern Ireland CBI.
The tax cut for those earning more than £3,000, due to come into force next week, should have been overturned in the Budget. The renewal of Trident should be scrapped, thus saving £100 billion over its lifetime. A financial transaction tax, which would raise up to £20 billion per annum according to the Institute for Public Policy Research, should have been introduced. Plaid Cymru would have liked to see a mansion tax on domestic properties.
The Chancellor is boxed in by his own rhetoric and has run out of ideas. It is clear that the Treasury’s only economic strategy is to build up the barricades and hope that the rock star central banker can use monetary policy to turn things around.