.comment-link {margin-left:.6em;}

Monday, November 28, 2011

Plan B?

In fact the Chancellor's statement on Tuesday does not constitute a fully fledged Plan B because the billions of pounds extra he plans to spend on infrastructure projects has largely come from savings. Nevertheless. a refocusing of expenditure can deliver a more beneficial multiplier effect, especially as much of this expenditure is designed to lever in huge sums of private money.

The Independent says that plans for a £30bn infrastructure programme will be a key element in the Chancellor's Autumn Statement. In addition the Government will underwrite loans of up to £40bn to small businesses and will increase the levy on the banks' balance sheets:

Among the first projects to get the go-ahead tomorrow will be a £600m programme of school building to create some extra 40,000 places, mainly for primary-age youngsters, over the next three years.

The cash will be targeted on major cities facing demographic pressures. Other plans will be announced to build roads, bridges, public transport and telecommunications links and power stations, as well as to roll out broadband across the country. Mr Osborne hopes the schemes will generate contracts for industry, safeguarding and creating hundreds of thousands of jobs.

He will attempt to increase the amount of credit flowing in the economy by underwriting up to £40bn in loans to small and medium-sized companies. The move will enable the banks to borrow more cheaply, passing on the savings to firms in the form of lower interest rates.

From the Welsh perspective, we will be waiting to see how this re-ordering of Government spending translates into consequentials for the Assembly's budget. It is not a straightforward 5.9% as it depends on whether we have already had a consequential from previous spending plans or not.
Westminster, will I am sure, apply a fair and equitable settlement to Wales, why would the coalition do otherwise? We are, in Wales, part of the United Kingdom and the settlement will go far to disabuse the nationalist rhetoric.

"Westminster, will I am sure, apply a fair and equitable settlement to Wales"

Just as Wales didn't get its fair share of Olympic funding.

As far as I can see huge sums are being and will be invested in infrastructure developments in England, of which Crossrail and High Speed Rail are examples. Wales gets chickenfeed.

The state of Wales today is testament to Westminster's abysmal failure.


One wonders if this infrastructure funding will include rail electrification to Swansea. That's Westminster's responsibility, perhaps you could find out for us, Peter?

As far as I can see, Westminster doesn't seem to give a damn about Swansea and South West Wales.
This move, while welcome, doesn't fix the underlying problem; the EU/UK/Wales business model is not working. We are fixing our navel while China et al are forging ahead with increasing $$$$ exports. A lot of this building work will actually lead to more imports thus making the trade imbalance even worse.

All we are doing here is kicking the can down the road and building up even more piles of debt that will be paid by our children. Also, the liabilities on the government will expand exponentially - it is the government and hence the tax payer that is offering guaranteed returns to the private investors in this multi-billion initiative. We have seen this cycle before; e.g. does Northern Rock ring any bells?

The Lib-Dems who were very sceptical of PFI initiatives; Vince Cable offered scathing criticism for such initiatives. So what's going on here? We are worried that we are now staring over the precipice? It's been on the cards for quite a while and these new PFI initiatives, which is what they are in all but name, will actually HURT our long term competitiveness as they are built on moving risk from the private sector to the taxpayer and ultimately risks collapse of the pension system.

What we need, and something that Wales has yet again ignored (In re Welsh Government's "extra £39m stimulus") is spending considerably less money on protecting and exploiting our greatest most valuable future economy building asset: Welsh intellectual property. The rate of issued patents from Welsh institutions remains pathetically low leading to a HUGE opportunity cost in terms of future genuine job creation.
Just heard that "the country's books will still not be balanced by the next election". I think of two things when hearing this:

a) as a Liberal Democrat it makes me feel sad that this may meen the final nail in our coffin for the next election- as we all hoped that we went in for the country- and got a result. This seems, not to be the case.

b) as a young person, I feel depressed. So many of my friends are unemployed. And it seems that I will have to leave the country at the end of the country. What's worse- you are quite powerless to help me!

Why can't everyone in the UN come together and just say "tell you what- we'll all have a clean slate, you won't owe us anything, and I won't owe you anything" - like we do with African debt..... it seems this is the only way we'll get out.

P.S Peter: you probably don't know- but who the hell are we paying this debt to exactly? Who are these bond holders!?
Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?