Monday, October 27, 2014

The Return of the Dark Times

by Nick Davies

‘A naked people under an acid rain’ was how historian Gwyn Alf Williams, in closing his 1985 book When Was Wales?, memorably summed up the predicament of Wales and the Welsh.  The description encapsulated the Westminster-imposed de-industrialisation which was leaving Wales poor, the environmental cost to its people of Wales’ industrial past and the democratic deficit, famously encapsulated by the graffiti, ‘We voted Labour, we got Thatcher’.

Twenty years later, those dark times must have seemed a long way away. Wales had its own devolved government, a budget settlement from Westminster which,  by courtesy of a sympathetic government in London,  was increasing year on year,  and,  for the  more gullible, Gordon Brown  was announcing that he had re-written the laws of motion of capitalism and ‘put an end to boom and bust’.

We know what has happened since and two recent events remind us that, updated from the 1980s, the dark times are back with us.

The first event is the announcement of the Welsh Government’s provisional budget for 2105-16 under which Wales’ 22 local authorities will, between them, receive £146 million less: a 3.4% cut and a cumulative reduction of 10% in real terms from the settlement of  2010-2011.

Welsh council leaders have correctly warned that these cuts will result in the dismantling of key services and will test the ‘very fabric’ of communities.  Some of these are communities which, despite the interventionist efforts of the Welsh Government since 1999, are still poor after the 1980s and have been hit hard by Westminster’s attacks on social security – in particular, due to the nature of much of the housing stock, the bedroom tax.

Labour councilors are in an invidious position; they appreciate only too well the impact of these cuts on the poorest and most vulnerable in their communities, the people that voted them in and put their trust in them.  They have to try to preserve jobs and services. But they also, by law, have to set a balanced budget, otherwise, officers could simply step in and do the job, with a result that would almost certainly be worse. Those who managed to get through the last budget round without too much damage now find they have to do it all over again, only more so.

However, it is irresponsible, in the present circumstances, to demand that a Labour council should stand alone and set a deficit budget. Neither is it realistic to expect the Welsh Government, presently without the powers to borrow or raise taxes, to set a deficit budget. Councils might feel emboldened to consider such an approach in response to action from the labour movement and communities against the cuts – but, unfortunately, no such action is forthcoming at the moment.

The Welsh Local Government Association (WLGA) has complained that, for the second year running, local government has been ‘bottom of the pile’. The tendency among some in Labour local government circles, particularly those with residual anti-devolutionist sentiments, will be to blame the Welsh Government. No doubt many will be quick to see public services minister Leighton Andrews – widely regarded, while education minister, as having a centralising agenda and little time for local government – as the villain of the piece. However, it is necessary to look past Leighton, and the ongoing discussions about whether local authorities in Wales have the capacity to deliver public services effectively, to identify exactly where these cuts are coming from. And that, of course, is the Westminster Government, which has cut once again the block grant paid to the National Assembly.

Moreover, local government has been relatively well served by devolved budgets.  Welsh councils have, until the last two years, been free from the ‘English’ cuts imposed by Pickles over the past five. Further, for two years now, the Welsh Government has plugged the gap left by abolition of council tax benefit, saving Welsh councils from having to chase the poorest for arrears. Welsh governments are, under the present financial system, engaged in a constant juggling of priorities – in the present budget, robbing Peter (local government) to pay Paul (the NHS).

The government of  millionaires who serve the interests of the their paymasters in the City, and whose constituencies include Witney, Maidenhead and Epsom and Ewell, are happy to see Labour politicians in Wales blaming each other for cuts which threaten the health, well-being and life chances of some of the poorest communities in Western Europe. Their ability to divide and rule in this way reflects the fact that, notwithstanding the laudable efforts of both the Welsh Government and various Labour local authorities to alleviate the hardship faced by Welsh communities, there is no broad, all-embracing labour movement-based campaign against austerity.

The other recent event that makes the 1980s seem more contemporary was Cameron’s announcement that there would be no change in the formula by which the Welsh government receives its funding from Westminster. Devised in 1978 as a short-term solution and now disowned by its author, the former Labour treasury minister Joel Barnett, the Barnett formula adjusts funding on a per capita basis, rather than in relation to need. According to the economist, Gerry Holtham, in the way spending is allocated to correspond with spending in England, Wales, loses out by £300 million per year.

This is an argument that has been rumbling on for some years now, but the immediate context was  Cameron’s moment of panic that he might be the leader of the Conservative party who ‘lost’ Scotland and a series of on-the-hoof promises to keep Scotland in the UK. The events around the Scottish referendum saw Cameron at his most cynical: wheedling and sentimental in his overtures to the Scots but quick to turn the ‘Vow’ into a devious manoeuvre to appease his back-benchers (and UKIP), promising ‘English-only’ votes in Parliament. Those same back-benchers were up in arms about any possible increased funding for Scotland (already proportionately better funded than Wales).  Therefore, stripped of all the unctuous rhetoric about the ‘UK family’ and Wales being ‘at the centre of the debate’, the chances of fair funding for Wales were always going to be slim and the fact that there is no question even of reviewing Barnett says everything about the contempt the Tories have for Wales.

There are, of course, proposals to give the Welsh Government tax raising powers: control over stamp duty, business rates and landfill tax and – subject to a referendum – control over income tax. In fact, recent changes have promised more manoeuverability for a Welsh Government by removing the ‘lock-step’ requirement that would mean that changes in one tax bracket would have to correspond with changes in the others.  First Minster, Carwyn Jones has insisted that the powers have to be linked with a revision to the Barnett formula. His fear, widely felt within Welsh Labour, is that Wales could be ‘cut loose’ by a Tory-dominated England: given more power but without the resources to use that power effectively, with Westminster keeping control of benefits and pensions, effectively marginalizing Wales, but cynically presented by the Tories as a new devolution ‘settlement’.

The £300 million shortfall is not the end of the matter, of course, and in the grand scheme of things it is not a financial magic bullet.   There is the wider issue of reparations for the Westminster policy, during the 1980s and 90s, of deliberately stripping Wales of its industrial infrastructure and the need to restructure Wales’ economy along sustainable lines, involving investment in renewable energy and integrated public transport. However, the Tories’ stance on the Barnett formula, echoed by the Labour leadership, living in terror of ‘unfunded’ promises, suggests that there is little chance at the moment of proceeding past first base.

This takes us back to the need for a Wales-wide campaign against austerity; linking the issues of the cuts and of devolution and funding, and tackling the crisis of representation faced by working people. The price of failure to build such a resistance movement could be catastrophic. Many of the measures taken by Welsh Labour in government have been a massive improvement on New Labour’s record: a publically funded and publically provided NHS, state education and no ruinous PFI schemes. However, on the ground, in the communities, Labour is weak. The absence from the British party leadership of a convincing, clear anti-austerity narrative and any challenge to the anti-immigration rhetoric and myth peddling of the media and the Tories make some Labour majorities vulnerable to the threat of UKIP’s right-wing populism.

The small print of UKIP’s actual policies is less important than the desire for a rejection – more a spasm than a political choice – of the Westminster consensus and a reaction against the closing-off in many communities of any chance of secure employment or affordable housing. UKIP at its most folksy and populist can sound disturbingly like the more benign conservatism of ‘old’ Welsh Labour.

We have already had a ‘dry-run’ in the Euro-elections, where the mistakes of an inept and muddled Labour campaign – which saw UKIP as a threat only to the Tories – were replicated in Wales. A sign of how wrong the party leadership got it was the result in Merthyr Tydfil, where UKIP was a close second. The Tories are an irrelevance in Merthyr; those UKIP votes must have come from Labour supporters.  Another example: in Blaenau Gwent (which has a population 99.1% white), UKIP scored 30.2%.

The trade union leadership in Wales condemns austerity and is pinning its hopes on the general election. However, the Westminster Labour leadership is pursuing a cautious, defensive ‘core vote’ strategy, with one small snag: its core vote hasn’t a clue what its message is. The party gives a strong impression of having forgotten how to think. A clear anti-austerity message, a challenge to the anti-immigration rhetoric, a commitment to bringing public utilities and transport under state control and to building council houses could, come May, rescue the communities of Wales from the grip of austerity and the poisonous embrace of UKIP.

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