Discover more from Peter Hain
Welsh Grand Committee
For the last 13 years the people of Wales have had to put up with the ignominy of four Secretaries of State who were MPs from Wales – yes MPs from Wales – in the Wales Office – can you credit it? What a relief that Gwydyr House has now been restored to its former Tory glory, continuing the long line of Conservative MPs representing English constituencies which goes back to 1987.
Some might say not so much a new Secretary of State for Wales as new Secretary of State for Chesham and Amersham.
And this despite her Conservative Welsh back benchers who are bristling with talent. Never has the Welsh Grand Committee witnessed a more brilliant bunch of Tory boyos.
And why, in contrast to Scotland is there no Liberal Democrat Minister in the Wales Office? Despite such a talented a threesome: Cardiff Central’s young Mum to be, Ceredigion’s scourge of Plaid Cymru and Hon member for Brecon & Radnorshire who looks absolutely ecstatic at being coalition with Tories.
Even more so since on BBC Wales last Tuesday he proclaimed the VAT rise the best thing since sliced bread having denounced it on BBC Wales two days previously as “a very regressive tax that falls most heavily on the poorest in society” which he could not possibly support. A new Liberal Democrat dictum: two days is a very, very long time in politics. In fact after Brecon & Radnorshire has now done a double volte face because he popped up on Monday alongside Ceredigion with a motion condemning VAT again.
And then there was the excruciating sight of Welsh Liberal leader Kirsty Williams meeting her new coalition partner Rt Hon Lady on the steps of the Senedd. She was like a bride who suddenly discovers to her horror the wrong person waiting for her with the ring. But all guests there, photographers snapping away, presents stacked up, the Vicar expectant. So what does she do? Goes through with the wedding ceremony smiling rigidly like the bride of Frankenstein. Her performance is a vintage hit on You Tube – I recommend it as a cure for coalition insomnia.
As for the Queens Speech, it’s clear that they want to pack the Lords and fix the Commons. She has the dubious distinction of being the first Secretary of State ever – the first Secretary of State ever – to advocate a reduced voice for Wales in Parliament, so increasing the voice of her Buckinghamshire constituents relative to our Welsh constituents.
Drawing up new boundaries which take no account of Wales’ population sparsity, or the geographic remoteness of communities in rural and Valley communities. Slashing the number of elected Welsh MPs from 40 to 30 and riding roughshod over criteria by which Parliament first ensured in 1949 that Wales never had fewer than 35 MPs.
Subsequent independent Boundary Commissions gradually increased this to 40 seats. She is spearheading a deliberate, calculated attack on Wales’ influence in Parliament. Outrageous behaviour for a Secretary of State whose main job should be to stand up for Wales not to attack our citizens’ democratic rights.
In fact, yet again, the Tories are turning Wales into the great ignored nation because, as the First Minister Carwyn Jones has said, there is no longer a strong voice for Wales around the Cabinet table. Scotland has got a generous reform of the Barnett Formula through legislation on the Calman Commission reforms and on top of this the Fossil Fuel Levy. But nothing whatsoever from her Government for Wales: not a mention of the Holtham Commission reforms. She could not even persuade her new Tory Liberal Cabinet colleagues to honour the agreement I negotiated with the Treasury to protect Wales. Instead of taking forward the Holtham proposals, she has broken that pre-election promise and dumped them in the long grass. A weak Secretary of State doing what Tories always do best of all: weakening Wales.
And only yesterday she had to make a humiliating climb down on the Housing LCO. She and her Minister blocked it in the pre-election wash-up negotiations but Carwyn Jones has now forced her to take it through. And a good thing too for the homeless and thousands in Wales in desperate need of affordable housing.
On the budget, the government says the richest will bear the brunt. That is simply not true. Many on low and modest incomes will feel the pain much more.
The real scandal of the budget is that the poorest will be hit the worst. I expect nothing less from Tories. But Liberal Democrats should hang their heads in shame. The Party of Lloyd George, who first established the state pension in 1909, and William Beveridge who in 1942 paved the way for the welfare state, has abandoned all it stood for.
The Observer reported a study by leading economists that finds poorest families in Wales will lose 21.7 per cent of household income. That’s over a fifth of their income. Even worse, they are being hit fully six times harder than richest. This was the first such study to take account of impact, not just of tax and benefit changes, but of savage cuts in public spending.
Not only will pensioners pay more in VAT, they were shamefully excluded from the much vaunted £1000 rise in the basic tax threshold. A double tax attack on Welsh pensioners.
Increasing VAT to 20% will affect everyone, most of all pensioners and those in poverty. As the Financial Times has said, areas like Wales that rely most on the public sector will be hit hardest by the deep cuts announced to public spending.
Worse still, these big cuts are based upon a big lie: that the public finances are so terrible, the cuts must be faster and deeper than Labour’s very tough deficit reduction plan which would have halved borrowing within four years. The prime Minister and Chancellor have been deliberately scaring the public, with the Liberal Deputy PM and Business secretary joining in.
But, as their own Office for Budget Responsibility said two weeks ago, the situation they inherited is actually better than was forecast as recently as Labour’s Budget in March!
Borrowing is £9 billion lower this year and £22 billion lower over the coming four years. Growth is higher and unemployment is lower. Business bankruptcies and home repossessions are half the rate of the 1980s and 1990s Tory recessions. All because of Labour’s government action and investment to support jobs, businesses and struggling home owners which has left Britain much better placed than America or the rest of Europe to recover from the worst global recession for eighty years.
These brutal cuts are ideological, not economic. The new ConDem Government is not cutting savagely because it needs to, it is cutting savagely because it wants to.
One thing has certainly changed since Labour left office: the Eurozone countries – especially Greece, and now Spain and Portugal – are today in real difficulty. Without Labour’s progressive influence, fiscal conservatism is now dominant in Europe, with huge cuts in public investment and jobs on the way. As President Obama has warned, this endangers the world recovery. It also means a downturn in the very European market where the vast majority of our trade takes place.
So this is precisely the moment not to cut public spending savagely, because it will put at risk the still fragile British recovery. Cutting deeper and faster repeats the mistakes of the 1930s, 1980s and 1990s Tory Governments.
We are coming out of the recession but our economy and the economies of many countries around the world have not fully recovered. The recovery is fragile and could easily be derailed.
Only governments can step into the breach during such difficult times.
Cut off that support and the risk is palpable.
The private sector isn’t yet robust enough to replace government investment. Nor is it getting anything like the support delivered by Labour.
John Maynard Keynes – a signed up Liberal – will be turning in his grave, not just at this damaging folly, but at the manner in which the Liberal Democrats have breathtakingly somersaulted, trading tens of thousands of jobs that will be lost in Wales (hundreds of thousands across Britain) for their own jobs in Government.
The Deputy Prime Minister, Welsh Liberal Democrat leader Kirsty Williams, and even the once-saintly Business Secretary, are now arguing the precise opposite of what they did in the election campaign just a few weeks ago. Big cuts based upon a big lie – a real tragedy for Wales.
Because there are two big challenges facing Wales: first how to secure jobs and growth. Second how to get borrowing down in a way that is fair to everyone.
The first budget from the new government has failed the fairness test, going back to the same old right wing Tory agenda:
hitting people on low incomes;
causing unemployment to rocket;
making our hardest working families pay the price.
The only difference is this time it’s defended to the hilt by the Liberal Democrats.
What we have from the Con Dem government is a strategy for cuts.
But where was the strategy for jobs and growth, the lifeblood of this country?
Growth is essential to secure a future for ourselves and for our children.
Without growth Wales will be condemned to years of decline.
After record levels of employment and prosperity, falling unemployment and falling numbers of incapacity benefit claimants under Labour, Wales will be returned to its traditional Tory place: bumping along the bottom, with higher unemployment, lower incomes, poorer prospects.
That is not where Wales needs to be. That’s no future for my three Welsh born grandchildren. Nor is it any future for the 240,000 Welsh men and women on Disability living allowance now facing brutal cuts.
And now the Tories with the help of the Liberals plan to punish hundreds of thousands on incapacity and other benefits. We had a benefits regime that was tough but fair. They are pledged to one that is punitive and unfair.
Wales has been through a difficult time as has every other country in the world.
But the Government is repeating the mistakes of the past when cuts were made without any regard to the consequences.
We have no argument with over the need to reduce our borrowing.
That is why Labour set out a plan to halve the deficit over four years, cutting borrowing by £70 billion – a huge reduction involving very difficult decisions and cuts.
What we were not prepared to do – and they obviously are – was top this up with a further £32 billion of spending cuts and a further £8 billion of tax rises over and above Labour’s plans.
The Tories, using the LibDems for cover, have made the wrong choice. They are gambling with the recovery and it won’t be bankers, or the many millionaires in this Cabinet, who suffer. It will be the people of Wales who pay the price.
The Tories, using the LibDems for cover, accept that unemployment is a price worth paying.
Listen to their new independent Office for Budget Responsibility. It predicts that as a result of the budget employment will be down by 100,000 with lower growth this year and next. The scandalous abolition of the Future Jobs Fund means the 11000 unemployed Welsh young people who have already benefited, and a further 6,000 who were due to benefit, will be back on the dole.
The former Monetary Policy Committee member David Blanchflower predicts 250k extra young on dole next year following FJF cuts and other Budget measures. That suggests up to 20,000 Welsh 18 to 24 year olds condemned as young people in Wales were in the Tory 1980s and 1990s to generational joblessness.
Many tens of thousands of Welsh jobs will be lost in both the public and private sectors, 50,000 being one estimate. That could well prove an underestimate according to a treasury assessment that 1.3 million jobs will be lost across Britain as a result of the Budget over next five years.
To reduce government borrowing, Labour chose to raise national insurance contributions rather than increase VAT. Now we have both.
Only weeks ago the Tories said the NI rise was a ‘jobs tax’. Last week we found that they are increasing the tax on employees.
And they have put up VAT to 20%.
Only weeks ago David Cameron said it was a tax rise we wouldn’t see.
And the Liberal Democrats condemned the prospect as a dire draconian tax bombshell.
Now they will try to force it onto the statute book, a fundamental breach of trust with voters.
This is the third time in a row that a new Tory administration has raised VAT despite denying any plans to do so – Thatcher in 1979, Major in 1991 and Prime Minister in 2010. What a hat trick.
And while pensioners were exempt from NI they are not exempt from VAT.
They say we are all in this together. But many people on low and middle incomes will see their earnings cut.
Child benefit frozen for the next three years for over 7 million families; tax credits reduced for families earning just over £15,000 and scrapped for families earning just over £30,000 in two years time. The Rt Hon Lady may remember specifically denying to me this would happen on our election TV debates. Yet another broken promise and one she also specifically denied on those same TV debates: hundreds of Welsh police and community police support officers are for the chop.
Yes there was a boost to child tax credit. But this was more than offset by housing benefit cuts, scrapping of maternity and pregnancy grants, along with other benefits targeted to support children.
And the Con Dem government has also launched a full-scale war on public sector pensions.
Now of course reform was needed – indeed Labour introduced radical reforms: postponing the retirement age and increasing public employee pension contributions, closing old schemes and starting new ones. All changes negotiated with the trade unions. But the orchestrated Tory Lib Dem assault on public pensions heralds a race to the bottom which will leave a huge burden on future taxpayers coping with pensioner poverty.
For every high earning public service pensioner who provokes headlines in the Tory media there are thousands and thousands on low pensions.
For example the average pension for female NHS worker is £5000; the median rate is even lower: half women NHS workers are on a pension of less than £3500.
For companies there is a reduction in headline tax. But allowances which make all the difference to investment and future jobs growth have been cut.
We shouldn’t be surprised. Just two weeks ago the new government scrapped our plans to extend a loan to Sheffield Forgemasters, and the promise of high quality jobs.
And Tories and LibDems should not insult our intelligence by trotting out the line that they can renege on their election promises because the books were worse than they thought. That is also simply not true.
The Tories and Liberals are constantly scaremongering, comparing us with other countries like Greece. That is ridiculous. We are a large developed economy. No-one believes our positions are anything like comparable.
The truth of the matter is that the Tories, with LibDem help, have done what Tories always do: cut, cut and cut again until public services for all give way to private profits for the few. This budget is a Lib Dem summer sell out. It turns the Lib Dem orange book into a Tory blueprint.
Where Britain needed a budget to give the green light to growth, instead it switched all the signals to stop.
Instead of driving the economy forward the budget has engaged reverse thrust.
Because there is no room left for interest rate cuts, this budget increases the danger of a double dip recession.
A double dip recession that could take Wales back to the dark misery of the 1980s and 1990s, when whole generations of young and old condemned to suffer.
It’s an outrage and I warn the Rt Hon lady: the people of Wales will not take this lying down. We will fight back.