“Change”.
That is what we hear time and again from the Labour campaign. Much like Boris Johnson in 2019, Labour also likes to say that there will be no more austerity.
A lot of people I speak to in Wales seem to be under the impression that if we have a Labour Government in Westminster the financial taps will be turned on. These are not stupid people. They are politically engaged. Some are even Welsh Labour politicians.
There is a genuine belief among some that, as soon as Keir Starmer crosses over the threshold of 10 Downing Street, that public services will be getting the financial shot in the arm that we can all see they desperately need. I was recently talking to someone working in local government in Wales who was telling me that they were really excited to start investing in local services again.
But to believe that this is going to happen if Labour win is to willfully ignore the evidence that Labour themselves are presenting to you. Let’s take a look at some analysis of both the Labour and Conservative manifesto by Wales Governance Centre are Cardiff Uni.
Same trajectory - Both the Conservative and Labour manifestos largely maintain the trajectory of existing UK Government spending plans. If they stick to their manifestos the Welsh Government would face “serious budgetary challenges”.
In simple terms this means that they are going to increase health and education spending (which is good) but at the price of deep cuts to “non-protected spending areas”.
What is a “non-protected spending area?” I hear you cry? Don’t worry it is nothing important, only:
Rail, bus and road transport
Business support
Communities and regeneration
Arts, culture, and sport
Housing and homelessness
How much are the likely cuts?
Under Labour’s plans the Welsh Government budget would increase by 1.1% a year in real terms till 2029. This means that in 2025/26, the WG will need to save £248m. By 2028/29 that will be £683m.
Under the Tories it is even worse. They will only give the WG a 0.8% increase meaning that by 2029 there will be a shortfall of £870m to avoid cuts in non-protected areas.
New schools and hospitals?
Both the Tory and Labour manifestos include big cuts in capital expenditure (money for large infrastructure projects). The Tories will cut it by 7.7% under the current plans and Labour will be 5%.
“Don’t worry, we will grow our way out”
Neither the Conservatives or Labour have pledged to loosen the fiscal rules imposed by the current chancellor. Added to this both parties have ruled out increases to the main revenue-raising taxes such as income tax, national insurance contributions, and VAT.
This means therefore that any scope for changing these post-election spending forecasts largely depends on economic growth, which influences tax receipts and affects many areas of public spending such as universal credit.
Labour are arguing that they will be able to invest more as we move forward due to economic growth. This prediction is underpinned by economic forecasting of the Office for Budget Responsibility. I really hope they are right about this. But it is worth pointing out that the OBR is being far more optimistic than the Bank of England or the IMF when it comes to forecasting our future growth.
Don’t despair
I appreciate that this is a pretty miserable start to the newsletter. I am sure that everyone would like to feel that our public services will be better after the election regardless of who wins.
I am not actually saying that things won’t eventually improve. Anything will be an improvement in my opinion simply because we will likely have a government after the election that is interested in governing. The latest iteration of the Conservative Party has been inept and lacking in ambition, creativity or flair when it comes to making our lives better. This is not about ideology or policy but the simple fact that what we have had for the last couple of years is a party that simply isn’t doing much of anything.
Vaughan Gething’s last hope rules out supporting him
This week I went to the launch of the Welsh Liberal Democrat manifesto at a coffee shop in Cardiff Bay. There I spoke to the party's Welsh leader Jane Dodds who is also their only MS. She categorically ruled out supporting Vaughan Gething to get his budget through in the autumn. She also made it clear that she would be willing to support Labour if they had a different leader. When asked why she made this decision she simply said “I have no confidence in him”.
This will be a real blow to Mr Gething who will have been really banking on Jane Dodds support to pass his budget (Plaid and the Tories certainly won’t be helping him).
What is a fairly delicious piece of irony is that, in his attempt to dismiss his loss in the no confidence vote, Mr Gething all but guaranteed that he will lose more votes. If you remember the First Minister (and most senior UK Labour politicians) described the no-confidence vote as a “gimmick”. This really did not sit well with Ms Dodds. Speaking to her, she takes votes in the Senedd very seriously and, as a Lib Dem, is predisposed to making minority Governments work. But the fact that her vote was dismissed as a “gimmick” by the First Minister seems to have set her against him.
You can add this to the long list of people who were inclined to back Mr Gething when he first took over but who he has now since alienated with his blase, right-to-rule demeanour.
Steel yourselves
This week it was reported that Tata is to take steps to cease operations at its steel plant in Port Talbot earlier than planned because of a strike by Unite.
I keep promising to do a newsletter specifically about the steel works at Port Talbot and one is planned, but in the meantime it is worth briefly looking at the current situation.
Basically in September the company is going to close the final blast furnaces at the plant. This will impact 1,900 staff at Port Talbot and more at other Tata sites. The exact number of indirect job losses is not known but is expected to be many more thousands.
They will then build a greener electric arc furnace in its place. The UK Conservative Government has agreed a £500m grant which it says was the only way to secure any jobs at the site, although Labour opposes the proposal.
There is a lot to unpack here so let’s start with the climate change angle.
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