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Whiterock Wales

Budgets and best guesses


Tomorrow sees Chancellor George Osborne present his budget to Parliament.

At one time, this was quite a big deal with massive secrecy surrounding details hidden away in the red dispatch box.

These days, we get much of the dirt in advance, on the proven basis that the best kind of leak is the one you engineer yourself.

Things have also changed to the extent that Chancellor’s budgets and autumn statements are seldom about shaping an economy. They’ve become more a reflection of the Treasury’s estimate of current trends and a best guess as to what will happen next.

I have to say that what we’ve heard so far doesn’t sound great.

We know that billions in further spending cuts are planned. That’s bad enough but when George Osborne warns how “hopes of a stronger global recovery have evaporated" then it’s possibly time for the economy to go to the mattresses.

This official unease may well explain unpopular moves such as a larger tax bite on insurance premiums. Even so, it’s a counter-intuitive action by a Chancellor looking to become the next tory leader.

Osborne has shaken off a succession of missed targets and clumsy U-turns. He can live with critics like Patrick Minford questioning his grasp of tax benefits. What he can’t afford is being seen as the problem instead of the solution.

Of course, governments like to blame their predecessors for any economic malaise. Cameron points the finger at Labour for creating the current deficit. Baling out the banks was a strategy backed by the Conservatives, but history is written by the winners.

Tony Blair was no different in his day. He regularly taunted the tory benches over how John Major and Norman Lamont had brought the UK economy to near disaster by flirting with the European Exchange Rate Mechanism (ERM).

Sooner or later though, things start to unravel on your own watch and it’s easy to get distracted from the bigger picture, especially with EU referendum disunity as a backdrop.

We’ve seen the economic growth measure of deregulated Sunday Trading ditched in the name of expediency. We can expect more of the same.

Borrowing will be back on the agenda, and as exchanges in the Commons demonstrated last week, approaches depend on which benchmark you choose and where you start measuring.

Richard Murphy of Tax Research insists that Conservative governments have historically borrowed more than Labour, even when you factor in that they’ve had more years in office. Labour on the other hand repay national debt more rapidly in absolute and percentage terms than the Conservatives.

Another discomforting factor is that although health spending in the first six years of David Cameron’s premiership has been constant, it’s been falling as a proportion of GDP. In fact, the UK is currently spending less on health than many of its larger European neighbours.

As it happens, Cardiff Bay could soon have supplementary tax-raising powers of its own.

However it definitely won’t be one of those situations where a problem shared by Westminster is a problem halved. Budgets don’t work like that – ever.

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The price of disability

You may not be aware of it, unless you happen to be among the 640,000 people affected, but new rules are soon going to hit those who most need support in coping with disability.

The government aims to cut £1.2bn by recalculating the Personal Independence Payment (PIP) for disabled people. More than half a million families could lose out as a result of further changes over the next four years to welfare payments.

The rationale put up by the Department for Work and Pensions is that a "significant number of people" could be receiving benefit because of disability but who are not necessarily incurring extra living costs.

So far the government has been unable – or unwilling – to fully explain how this is possible or produce evidence to back up their claims. Then again, they don’t think they have to.

There are plenty of people, like Macmillan Cancer Support benefits advisers, who definitely think otherwise. See you in court.

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Time to dump bad attitude

It’s funny how everyone becomes an expert after the event. I’m talking here about criticisms of how a £40m Welsh computer network has not delivered on the number of jobs pledged for the five-year project,

HPC Wales was set up in 2010 by six Welsh universities to deliver high-end computing services. Supercomputers are regularly used by larger businesses and retailers. They process huge amounts of data at speeds considerably faster than standard set-ups.

According to the company, the network has been used to configure a diverse range of projects - from modelling the behaviour of a world land-speed record car to developing the most efficient shape of a well-known crisp brand.

It’s a uniquely Welsh thing that some people now think the biggest issue is how no-one accurately predicted how a prototype business model would perform over a five year period.

Can you imagine that kind of attitude thriving in Japan?

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