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Thursday, February 12, 2009

Has One Wales changed anything?

If the One Wales agreement between Labour and Plaid Cymru is famous for anything amongst us anoraks it is its opposition to public private finance.

Despite the looming £500 million cuts that the Assembly Government may shortly have to make to key services, Plaid Cymru politicians still roam around Wales claiming that they have persuaded the government to rule out private finance options in the delivery of public services.

Disappointingly the only reference to this I can find in the document itself is the section on health where it states: We will rule out the use of Private Finance Initiative in the Welsh health service during the third term. Still it is an article of faith that must not be challenged or is it?

Plaid Cymru Assembly Member, Leanne Wood must have been shocked when she discovered that the Assembly Government had nevertheless gone ahead and re-established a new public-private partnership unit, so much so that she asked a question about it yesterday:

Leanne Wood: Can you tell us what the thinking was behind the establishment of a new public-private partnership unit, five years after your predecessor, Sue Essex, wound up a similar unit? Do you agree that, at a time when the private sector has become dependent on state handouts, due in large part to its own recklessness and greed, Welsh public services would be exposed to unacceptable risk if anything were done to make them more dependent on private capital now? Furthermore, will you give an assurance that no existing public sector staff will be transferred, under any partnership deal, to either a private or a third sector organisation?

She did not get the answer she was looking for:

Andrew Davies: I want to make it absolutely clear that there is no change to our existing policy. However, as the Minister with responsibility for finance, I am determined that we will make the maximum and most effective use of our resources, particularly our capital resources. As we know as a result of the recent pre-budget report, it is a possibility that our capital allocation will be reduced substantially. Therefore, it is even more important that we make the maximum use of our resources. The public sector generally, across the UK, has not been good at using capital. In many cases, we do not have the skills and expertise required to make the best use of our capital expenditure, and there is a whole range of programmes, information communications and technology projects, and e-government and other projects where the public sector does not have the skills and expertise required. The idea behind setting up the partnership Wales unit, as I have called the public-private partnership unit, is to ensure that we have that expertise, and are able to deal with the private sector and other public sector bodies in a realistic way, ensuring that we make the maximum use of our resources. To recap, we have not changed our policy; however, it is about making the maximum use of the resources that may be at our disposal.

Of course this unit and this approach would not have been agreed without the consent of Plaid Cymru Ministers, something that the Finance Minister confirmed later on, but the really devasting news for Plaid members must be the statement that Assembly Government policy has not changed.

In other words the One Wales Agreement has not made the slightest difference and that if private finance proves to be a viable way forward then it will be used. With the All Wales Convention looking increasingly like it is dead in the water and with a whole host of other policy failures Plaid Cymru must be wondering what it is that they have signed up for.

You can be assured that Andrew Davies will not be able to use private finance in any context that involves the transfer of staff. He will not get agreement from the TUC to this, and without it, in the world of Welsh Labour 'real politik', he will be unable to proceed. You mark my words this will not happen, no matter how much Andrew ideologically would like it to.
If you think that the changes achieved in health policy are not significant then you obvioulsly haven't been speaking to people who have seen their services in their local general hospitals saved.

You have also missed the recent development of a (potentially) nation changing LCO on the Welsh language. And planned improvements to welsh transport infrastructure.

Obviously we would all have liked to have seen a better financial situation so that more money could be spent on priorities but the truth is that tight budgets have ment that prefered projects of the one wales government are being delayed. You can't spend money if it isn't there.

I still find it humourous that the same people who chose One Wales as the government are the people who try and judge it. The Lib Dems had the choice on who would govern Wales. You chose not to enter coalition with Labour. Then you chose not to enter a coalition with Plaid and the Tories. You left Wales with no choice but a Plaid Labour coalition. That coalition has managed to run the country extremely well with (remarkably) few problems. We have a stable government providing (generally) good governance.

Any party that chooses not to be part of government should be carefl about judgin people who are willing to take the responsibility.
Twm, you are entitled to you view but the facts are the Welsh Lib Dems voted to go into the rainbow coalition. It was Plaid Cymru who opted to form a coalition with Labour instead.
I do not know if it’s through embarrassment or naivety but I am sure deep down you know full well that had the Rainbow been ratified by the Lib Dems in the first place there would have been a rainbow government. The fact that it wasn't made it impossible for any party to go into a coalition with you. You were clearly too unstable a group.
Also Peter you should be thanking Plaid for their policies. Whilst the Lib Dem's health spokesperson was all for shifting Neurosurgery to Cardiff as a result of Plaid entering Government that has not happened.
The truth is of course that the Rainbow Coalition document contained a commitment to keeping Neurosurgery in Swansea, negotiated by the then Welsh Liberal Democrat Spokesperson. There was nothing unstable about the Welsh Lib Dem group. We had differences of opinion but then so did Plaid Cymru. The fact is that Plaid bottled the chance to have the post of First Minister and used this feeble excuse to enter what they saw as the safer and cosier option of going into coalition with Labour. That decision is now coming home to haunt them.
Hang on Peter! You're being a bit economic with the truth here aren't you?

The Lib Dems voted againts the Rainbow, Plaid went for red-green, the Lib Dems then changed their minds in another meeting.

What did you expect? That kind of behaviour would hardly have filled any potential coalition partner with confidence! It's hardly surprising you got left out in the cold.

Your problem was that you thought you were the king makers. You weren't!
er...no. The Welsh Lib Dem Executive did not vote against the Rainbow Coalition. There was a stalemate. The Party Conference then voted in favour of the coalition so that when Plaid made their decision they had two proposals on the table in front of them. It was Plaid Cymru who jettisoned the Rainbow in favour of the coalition with Labour.
Ok what's the Lib Dem policy Peter? Will you pass public sector staff over to the private sector and would you borrow money from banks that have already themselves borrowed the money from the government? Finally, how would you pay the private sector for the investment they provide? Believe it or not, private investment is not free. Every penny of it, loan, interest and profit has to be paid back either by the tax payer or by charges on services users. What is the Liberal Democrat position? I am sure thousands of public service staff under threat from such policies would like to know.
Nice try but this post is not about the Welsh Liberal Democrats it is about the systematic abandonment of policies and principles by Plaid Cymru now they have their backsides on ministerial limousines.

In actual fact the position negotiated with the unions that the Assembly would try to avoid private finance initiatives which involves the transfer of staff was established when we were in government and we stick to that position. But there are plenty of other models that involve private finance that need to be explored and which the One Wales government appear to be exploring despite Plaid Cymru's previous position.

The point is that government uses private finance and private companies all the time to deliver public services. That is the reality not the sort of stalinist fantasy land that you and your Plaid fellow travellers advocate.
Nice try Peter.

This is not about services already provided it is about moving services into the private sector currently provided publicly. It is also about borrowing money from banks that the state or users have to pay back. What is the point?

Straight answers Peter:

1. Will the Lib Dems rule out further staff transfer?

2. Do you still support borrowing privately in the knowledge that it all has to be repayed publicly at a rate much higher than if borrowed pubicly?

Consider your answer carefully given that private finance is completely discredited and we are now lending public money to the banks you and the right of the Labour party such as Andrew Davies are proposing to borrow from.

Is anyone in that building economically literate?
At least we can read. If you could read you would see that I have already answered your first point in my last comment. The answer is yes, we are not proposing transfering staff to the private sector as part of a PFI scheme.

Your second question is just nonsense. Just who lends this 'public' money? All government's borrow money from private sources at varying rates of interest. Except of course that the Welsh Assembly Government does not have the ability to borrow. It has to work within a fixed budget and so will need to formulate innovative private sector solutions to make its money stretch further. That is why Labour and Plaid have abandoned their pledge. They have to live in the real world.
No Peter you are wrong.

Governments borrow through issue of treasury bonds and bills and it is really a means of adjusting to different phases of the fiscal cycle as the relationship changes between tax revenues and receipts. In the medium to long run this position must balance. The rate government pays interest is always lower than if a loan is sourced in a PFI type transaction. There is also no profit to pay, no insurance for risk transfer etc. etc. Read Allyson Pollack if you need more detail.

The fact is that if there is less money allocated to WAG in future years there is less. You cannot invent more by private borrowing, you simply shift the problem from the capital heading to revenue, which is crazy as the projections show revenue will be tighter than capital.

We were both in Swansea together Peter, not sure I can remember seeing you in economics lectures......

As for my reading skills you did not say 'rule out' which was my question, you said 'avoid where possible'. Where I was taught to read those two phrases have very different meanings.
Clearly your economic lectures are only half-remembered. The money borrowed through treasury bonds and bills comes from the private sector.

Private public partnerships are not normally about borrowing money they are about adding value by bringing in additional capital.

This could be by issuing bonds (precisely the mechanism you are in favour of), a deal that involves land swap or some other arrangement such as contributing a public asset to subsidise a private development that is going to have a public gain. As such it is perfectly reasonable to pursue such schemes.

As I said WAG cannot borrow but surely you do not expect us to sit by and just accept the consequences of reduced resources when we can use those we have much better though partnerships with the private sector so as to improve services. That is cutting off your nose to spite your face.

Hopefully, you are now content with my clarification on staff transfer. Alas, I think you are being naive on how government works. I may not have been in economics lectures (though I do have an A level in economics and did economic history in my first year at Swansea) but I do have decades of experience as an elected politician, some in government at local and national level.
P.S.Allyson Pollack is not an economist either I believe. She is a health professional with a background in public health.

Her critique of traditional PFI schemes as an alternative means of structuring debt is quite right but then I am not arguing for those sorts of arrangement.

I think she is wrong in saying that it is borrowing money off the private sector. PFI is an alternative form of procurement whose costs need to be compared with the traditional financing methods of public sector projects to establish whether they are value for money. The problem is that the Treasury stacks the comparison to favour PFI.

However, as I said, there are different models that also add value and can assist in the delivery of public services without those disadvantages.

When the private sector 'adds to the investment' they borrow money that they then have to fully recover from the government or service users plus profit etc. etc. they therefore ultimately add nothing. This whole idea was originally concocted to take assetts acquired in this way 'off balance sheet' so they did not contribute to PSBR. It was also to allow entire public undetakings to be handed to the private sector in the erroneous belief that such services would always be better run.

Taking off balance sheet has since had to be rescinded. It now counts in just the same way as public investment. And the private sector running public services better than public bodies is long discredited. They can't even run the banks for heavens sake. Time for them to put their own house in order before bring their snouts back to the trough of public income flows I think.

As to shared buildings etc. etc. this usually involves staff transfer in some form of other (e. g. post office counters in WH Smith) which I assume you wouldn't support.

My experience is these companies want to get their hands on the staff as this is where the profit lies for them. They only stump up some capital to achieve this end.

As for Allyson Pollock, her analysis is highly respected and she has just been engaged by Edwina Hart (a true socialist unlike Andrew Davies) to advise on policy development for the Welsh Assembly Government.
I fear that this thread is going off message as the post was not a discussion on PFI but...oh, yes...about the fact that the One Wales Government have reneged on another promise.

I am not disagreeing with you on the history of PFI but then again I am NOT ADVOCATING THIS SORT OF PFI! Nor am I advocating staff transfer. I am sure I did not mention shared buildings but if they work then why not. After all the breast screening place in Swansea is part of a housing development, a method of procurement that no doubt brought some economies to the NHS.

Your views on the private sector may well be justified but then again the public sector has an equally chequered history in delivering services and special projects even when private money is not involved. In the real world you cannot do without the private sector. It creates wealth. You cannot govern in isolation. You have to engage. That is why the fantasists in the One Wales Government have had to compromise on their so-called 'socialism'.

Interesting that Allyson Pollack has been engaged by Edwina Hart especially WHEN THE ASSEMBLY GOVERNMENT IS IN FAVOUR OF PUBLIC PRIVATE PARTNERSHIPS. However, you did not say what policy development she is advising on. Presumably it is Public Health policy which after all is her speciality.
Just had a look at Allyson in wikipedia. Here's an interesting quote: 'Jeremy Colman, former deputy general of the National Audit Office and the current Auditor General for Wales has supported Pollock's findings' Its referring to PPP not public health by the way......
Now you are just arguing with yourself. If you read what I said: 'Her critique of traditional PFI schemes as an alternative means of structuring debt is quite right but then I am not arguing for those sorts of arrangement.' then I am not surprised that Jeremy Coleman agrees with her.

From the same Wikipedia entry: 'Professor Allyson M. Pollock is Director of the Centre for International Public Health Policy (CIPHP) at the University of Edinburgh. She was previously Professor of Health Policy and Health Services Research at University College London' That is Public Health (her specialism)!!
I wasn't arguing with either of us.......just pointing out the suprising discovery that our own Audit Commission supports Pollock's analysis. I wonder if Andrew Davies knows this.....
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