‘Budget must bring austerity to an end’
FINANCE Secretary Mark Drakeford has urged the UK Government to take action now to back up Theresa May’s assertion that austerity must end by increasing public spending to meet the growing demands for public services.
In a letter to Liz Truss, the Chief Secretary to the Treasury, Mr Drakeford set out Wales’ priorities ahead of today’s Budget announcements by Chancellor Philip Hammond.
The Finance Secretary is urging the UK Government to make a series of commitments to Wales, including:
■ Delivering on its promise that Wales will not lose a penny of funding from the decision to leave the EU;
■ Increasing our borrowing capacity to support ongoing investment priorities;
■ Assurances that the costs arising from the recently announced pay deals and pension changes will be fully funded;
■ Continuing constructive joint working on the Welsh Government’s four new tax ideas: a vacant land tax, a disposable plastic tax, a tourism tax and a levy to support social care;
■ Recognise expert reports and reverse the decision not to devolve Air Passenger Duty to Wales; and,
■ Address the significant underinvestment in Wales’ rail infrastructure and commit to an equitable share of rail funding for Wales.
Mr Drakeford said: “We have repeatedly called for an end to the UK Government’s failed austerity policy.
“While I cautiously welcome the Prime Minister’s recent indication that austerity is coming to an end, I look forward to hearing what this means in practice.
“It’s time for the UK Government to increase public spending to meet the growing demands for public services and repair the damage inflicted by a decade of cuts.
“There remains significant pressure on the resources available to the Welsh Government to invest in infrastructure.
“We already make full use of our borrowing capacity, but in order to continue to deliver our ongoing investment priorities we need to see an increase.
“We have consistently called for an end to the cap on public sector pay, so we welcome announcements of pay deals in excess of 1%.
“We now expect the UK Government to provide the requisite funding – for all workforce groups – to avoid increases in pay impacting on the delivery of vital public services.”
The Finance Secretary also urged the UK Government to ensure that Wales receives the same level of funding from current EU programmes after Brexit – without any top slicing or conditions attached.
He added: “Brexit-related uncertainties continue to depress the growth prospects for Wales and the UK as a whole.
“The Chief Economist’s Report published earlier this month notes, in line with a range of independent experts, that our economy may already be around 2% smaller as a result of the referendum result. A nodeal Brexit is likely to be catastrophic for the Welsh economy.
“I expect the UK Government to deliver the referendum promise that Wales would not lose out on a penny from the decision to leave the EU. Withdrawal from the EU must not take money from our communities or restrict our ability to continue investing in the economy and people of Wales.”
Leaders of the eight Welsh councils run by Labour have issued a joint statement expressing serious concern about the impact of funding cuts on core council services like education and social services.
They said: “Monday’s Budget announcement is very much a case of make or break for public services and for the future of many Welsh local authorities. It will very much be for the Tory UK Government to make good on their word and truly bring an end to the failed policy of austerity.
“We cannot understate the effects that eight consecutive years of real terms cuts to funding have had on local public services in Wales, which have amounted to a staggering £1bn. While we appreciate that the Welsh Labour Government has tried to mitigate the worst effects of austerity, the continuation into a ninth consecutive year will simply mean that some services become unsustainable and we may see situations developing in Wales that are similar to those in England where councils are struggling to maintain the very basic services that residents depend on.”
The leaders claim the pressures facing major services are unrelenting: “Local authorities are sailing directly into a social care crisis, and we cannot change our course unless we are given the resources necessary to effectively combat the challenges posed by an increasingly aging population with ever more complex needs,” they said.
“Education is presenting similar challenges, with many schools running budget deficits as reserves have been depleted as councils are finding it increasingly difficult to pass on adequate funding settlements, while ensuring that other statutory functions are delivered appropriately.
“It is clear that we have reached the end of the road and things must change.
“The philosophy of austerity fails to register that the very efficiencies that it seeks to make are the root cause of further pressures and lead to the consequent need for increased funding to alleviate the strain.”
CHANCELLOR Philip Hammond will stand before the House of Commons today and reveal the latest forecasts for borrowing and growth as he attempts to instil confidence in the economy and point to a future beyond austerity.
But the Chancellor is not like the writer of a television series who can plot out how a drama will unfold and determine the way characters will react to sensational events. He finds himself in one of the great offices of state right at the moment when the country is defined by uncertainty.
Neither Mr Hammond, nor the Prime Minister, nor anyone else alive today knows how the next stage in the Brexit negotiations will develop. Radically different futures could await the UK depending on whether or not an exit deal is struck with the EU.
Even if such an agreement is reached, it is fundamentally unclear as to whether it could get through the Commons. And if it fails, nobody knows whether that would lead to the fall of Theresa May, a general election that could result in Jeremy Corbyn becoming PM, or a new referendum.
The events that determine the stability of the country and have the biggest influence on your personal prosperity may have little to do with the decisions that the Chancellor has taken in preparing this Budget. He will dearly hope that the wider Brexit machinations do not tempt the DUP to vote against it in a move which would endanger the future of the Government and could pave the way for a seismic shift to the left in UK politics.
Communities in north and mid Wales will watch for signs that long-discussed growth deals will become a reality, and people whose livelihoods are linked to continued investment in Wales by the likes of Airbus, Ford and Toyota will want to see measures to ensure that these critical employers have good reason to plan for a longterm future in this nation.
There will be relief in many quarters if extra funding is provided for the roll-out of Universal Credit so it is clear that Britain’s social safety net is not weakening at a moment of epic national change.
And the Welsh Government will look closely to see how its funding will be affected by UK spending decisions, but in the not-too-distant future AMs will debate whether to have higher or lower income tax rates than England.
As the Chancellor knows, Britain’s old certainties are vanishing.