WELSH LABOUR this week (Apr 18) said the Assembly elections on May 5 represented an important £200m choice for Welsh parents.
During an election visit on Monday Welsh Labour’s Julie James contrasted her party’s pledge to invest a minimum of £100m in Welsh schools over the next term with the Welsh Conservatives ‘secret plan’ to turn every school in Wales into an academy.
She said the Tory plan would cost more than £100m and said the election was a clear £200m choice between the two main parties.
A plan in England to turn every school into an academy was announced in the March UK budget. It was also later revealed that the cost of converting each school into an academy was £66,000 per school. A similar move in Wales would cost £109m in legal fees and other costs.
Speaking on Monday (Apr 18), she said the plan would be ‘a disaster’ for Welsh Schools coming on top of a 12% cut to education and local government budgets that the Welsh Conservatives already had planned.
Julie James said: “Welsh Labour has been very clear about its ambitions for Welsh schools over the next Assembly term. We want to build a world class curriculum and teacher training system and move the Welsh teaching profession onto an all-Masters footing.
“To support this plan we will invest a minimum of £100m of additional funding in our schools over the next five years. This contrasts clearly with the secret Tory plan to turn every school into an academy, as they have done in England, needlessly wasting millions of pounds in the process.
“The UK Government have already admitted the cost of converting each school to an academy is £66,000 per school to cover the legal fees and other costs of the change.
“Indeed, we know that just days after the Chancellor’s plan was announced, solicitors and lawyers were already sending out letters to Headteachers offering to assist schools with their plan
“That is exactly what will happen here in Wales, we will see millions of pounds being leached out of Welsh schools. To convert every one of the more than 1,600 schools we have in Wales to an academy would cost more than £100m.
“So this election is a clear choice between a Labour Government led by Carwyn Jones that would invest in frontline teaching and learning and a Tory Government that would spend millions on a wasteful reorganisation.
“Of course this comes on top of the Tories existing plans to slash 12% off education and local government budgets meaning schools in Wales would be hit with crippling cuts at the same time as getting a huge legal bill through the post.
“The choice at this election is clear, it’s between a Welsh LabourGovernment that would invest an additional £100m in frontline funding or a Tory UKIP alliance that would waste £100m on academies and legal fees.
“This would have a devastating impact on Welsh school budgets; increase the workloads of our teachers and support staff and imperil the major curriculum changes schools are already planning.
“There is new momentum in Welsh education thanks to the reforms put in place by the Welsh Labour Government. Last year we saw record GCSE results, two thirds of Challenge Schools improving their results and the closing of the poverty attainment gap at every key stage of education.
“A Tory Government aided by their UKIP allies would imperil that progress and come at a huge cost to the futures of our young people.”
Kwarteng gambles on rush for growth
CHANCELLOR of the Exchequer Kwasi Kwarteng unveiled his and Liz Truss’s economic vision for the UK on Friday morning.
The headlines are straightforward.
There will be £45bn in tax cuts by 2027; however, the largest cuts – national insurance cuts, the abolition of the cap on bonuses and the highest income tax rate- benefit only high earners.
Cut in the basic rate of income tax to 19% from April 2023;
National Insurance will not rise as scheduled, and the Government will reverse the current year rise as of November 6;
New Health and Social Care Levy to pay for the NHS will not be introduced;
The top rate of income tax was cut from 45% to 40%;
Cancel the rise in corporation tax which was due to increase from 19% to 25% in April 2023;
Rules around universal credit tightened by reducing benefits if people don’t fulfil job search commitments;
VAT-free shopping for overseas visitors;
End of the cap on bankers’ bonuses;
Planned increases in the duties on beer, cider, wine, and spirits cancelled;
Government to discuss setting up investment zones with 38 local areas in England.
Alongside the above, the Chancellor announced plans to remove environmental safeguards for building developments and reduce the regulatory burden on financial institutions.
KWARTENG LEAVES LABOUR AN OPEN GOAL
In an interview with Rishi Sunak during the Conservative leadership contest, Nick Robinson observed that it would be a nasty surprise for the former Chancellor when he found out who’d been in power for the last twelve years.
Kwasi Kwarteng followed Liz Truss’s preferred method of operation: he pretended they hadn’t happened.
The Chancellor comprehensively dumped on the policies pursued over the last dozen years by successive Conservative governments, for a decade of which Liz Truss has been a member.
His statement was, as one ministerial colleague said, “a game changer”, although perhaps not in the way he envisaged.
So complete was the change of economic policy that it leaves an open question about how Mr Kwarteng and his Cabinet colleagues ended up in the same political party as most of their backbench colleagues and served under the last three Conservative leaders.
Shadow Chancellor Rachel Reeves did not miss the open goal. Even as Mr Kwarteng and Ms Truss shook their heads on the government benches, she hammered home that the Chancellor’s statement was an admission the record of Conservative governments since 2010 was one of a failure to deliver growth or a viable economic plan.
THE SUPPLY SIDE FIX
The Chancellor and Prime Minister’s rationale is that cutting taxes for the already well-off will benefit all citizens as they are incentivised to invest and act in entrepreneurial ways. In addition, reducing regulation for businesses will encourage increased commercial enterprise.
They believe the growth stimulated will make up for any loss in tax revenues as increased economic activity, encouraged by lower taxes, leads to increased government revenues.
That approach is called supply-side economics, which focuses on increasing the supply of goods and services through growth.
In every developed nation where the Government’s brand of economics has been tried, two things have happened: a cataclysmic bust has followed a short-term burst of economic activity.
In addition, wealth inequalities – and the UK is already grossly unequal – are embedded and made worse.
Low taxes on the wealthiest do not distinguish between those who generate wealth through their industry or create economic activity through business investment and those who inherit wealth or sit on capital without producing anything.
“THE RICH WILL REJOICE”
Wales’s Finance Minister, Rebecca Evans MS, responded: “Rebecca Evans, Minister for Finance and Local Government, said: “Instead of delivering meaningful, targeted support to those who need help the most, the Chancellor prioritises funding for tax cuts for the rich, unlimited bonuses for bankers, and protecting the profits of big energy companies.
“Instead of increasing funding for public services in line with inflation, we get a Chancellor blithely ignoring stretched budgets as public services find their money is not going as far as it did before.”
Plaid Regional MS Cefin Campbell said: “This Budget will see the rich rejoice as their bonuses rocket and their tax bill sliced, once again it will be the poorest and most vulnerable bearing the brunt of the disastrous cost of living crisis.”
Plaid Cymru’s Treasury spokesperson, Ben Lake MP, added: “Tax cuts for the super-rich will do absolutely nothing to drive growth in the Welsh economy.
“I urge the UK Government to recognise that our Government in Wales must be given the fiscal tools to unlock our economic potential ourselves. That is the only way to improve the lives of people across Wales.”
Welsh Conservative Shadow Minister for Finance, Peter Fox MS, said: “Today shows that the UK Conservative Government has a comprehensive plan to provide a sharp boost to the economy by putting cash back into people’s pockets. Labour in Wales has the power to cut taxes in Wales but chooses not to.
“Mark Drakeford needs to take a leaf out of Liz Truss’ book and take immediate action to support hard-working people and struggling businesses, stimulating the Welsh economy rather than stifling it.”
Scott Corfe, Research Director at Social Market Foundation, said: “The Chancellor is taking a very high-risk gamble with the economy.
“If his package of enormous tax cuts and ‘supply side reforms’ fails to translate into significantly higher economic growth, we risk further falls in the pound and surging gilt yields as investors lose confidence in our ability to pay our way in the world.
“That, in turn, means higher inflation, an unsustainable trajectory for the public finances and steeper interest rate rises – potentially deepening rather than alleviating the cost of living crisis.”
Cardiff: Thousands line streets to welcome King Charles III and Queen Consort to Wales
KING CHARLES and the Queen Consort have visited Cardiff for their first official visit to Wales since the death of Queen Elizabeth II.
The Royal couple arrived by helicopter on Friday morning and were greeted by a 21-gun salute, before attending a service of prayer and reflection at Llandaff Cathedral.
The couple then visited the Senedd where they received a Motion of Condolence before meeting with Senedd Members and members of the Welsh Youth Parliament.
The King and Queen Consort then arrived at Cardiff Castle, for their final engagement.
At the castle, King Charles held a private audience with the First Minister Mark Drakeford and the presiding officer, before attending a reception hosted by the Welsh Government.
After the engagement, King Charles and the Queen Consort greeted members of the crowd in the castle grounds before departing back to London where the King will hold a vigil at the Queen’s coffin with his brothers and sister.
A KING FLYS IN
King Charles arrived in Cardiff via helicopter from his Gloucestershire home of Highgrove following a day of rest after a week of duties since the death of the Queen.
He and the Queen Consort were greeted by a gun salute at Cardiff Castle as they set foot on to Welsh soil.
Hundreds of people are gathered in Llandaff near to the Cathedral, where King Charles III and the Queen Consort will soon arrive for a service of remembrance.
A fanfare of trumpeters from the Regimental Band of the Royal Welsh greeted the King at the cathedral’s west door before Mr Drakeford gave a reading from the Old Testament.
King Charles III and the Queen Consort sang a number of hymns during the service, including traditional Welsh song Cwm Rhondda.
Archbishop of Wales, the Most Rev Andrew John, delivered an address to the congregation – which included Prime Minister Liz Truss in her first visit to Wales as the new Prime Minister – in both English and Welsh.
Paying tribute to her “extraordinary legacy of service and devotion”, the archbishop said the Queen had transformed the monarchy and provided a reassuring constancy through the decades.
Britain’s Prime Minister Liz Truss is greeted by Dean of Llandaff Cathedral Michael Komor upon her arrival for a Service of Prayer and Reflection for the life of Queen Elizabeth II
The archbishop said the late Queen’s skilful use of “soft power” came to the fore during her visits to Aberfan after the disaster there in 1966 when the community found her presence “deeply consoling”.
The hour-long service included hymns Pantyfedwen (Tydi A Wnaeth Y Wyrth), God is Love Let Heaven Adore Him and Cwm Rhondda and their visit to Llandaff ended with King Charles and the Queen Consort meeting schoolchildren in the crowd as they left the cathedral.
SPEECH IN THE SENEDD
King Charles III said Wales held a “special place” in the Queen’s heart as he gave a speech in the Senedd.
He addressed members of the Welsh Parliament in a remembrance event at the Senedd as part of the King and Queen Consort’s tour of the UK nations.
In a bilingual speech, King Charles gave the Senedd his “heartfelt thanks for your kind words”.
He added that it had been a “privilege to be Prince of Wales for so long”.
The King said Prince William, who was appointed Prince of Wales last week, had a “deep love” for the nation.
He said the “ancient title” dated to the time “of those great Welsh rulers like Llywelyn ap Gruffydd, whose memory is still rightly honoured”.
Thanking Members of the Senedd for their condolences following the death of the Queen at the age of 96 last week, the King said that “through all the years of her reign the land of Wales could not have been closer to my mother’s heart”.
King Charles said in Welsh: “Roedd lle arbenig i Gymru yn ei chalon,” which translates into English as “Wales had a special place in her heart”.
“Fel fy mam annwyl o’m blaen, rwy’n gwybod ein bod ni oll yn caru’r wlad arbennig hon,” which means “like my beloved mother before me, I know we all share a love for this special land”.
Welsh speakers said he spoke in clear Welsh, which he learned in Aberystwyth in the 1960’s
SOME BOOED THE KING
The reaction of the crowds that lined the streets of the Welsh capital was largely warm, but he was booed as he entered Cardiff Castle by anti-monarchy protesters and there were small demonstrations at Llandaff Cathedral and the Senedd building.
Charles is not universally popular in Wales and his announcement that William is to be made Prince of Wales has been greeted with anger by many. Some see it as a symbol of English oppression over Wales.
Laura McAllister, professor of public policy and the governance of Wales at Cardiff University, said: “Having the Queen’s support helped add gravitas, status, legitimacy and profile to an institution that was crying out for it at the start. I think Charles will approach his engagement with devolution in the same way.”
Auriol Miller, the director of the Institute of Welsh Affairs, said: “It is heartening to hear the King make clear his intention to serve the whole of the union.”
There was a small protest outside the Senedd but a larger one at the gates of Cardiff Castle, where Charles had a private audience with Drakeford.
Banners featured the slogans: “Abolish the Monarchy”, “Citizen not subject” and “Democracy now”. Glyndŵr flags were flown and one man held up a placard saying: “End Prince of Wales title.”
Organisers had said the protest would be a silent one but there were boos as the King entered the castle. One protester, Ryan, from Newport, south Wales, said: “The monarchy is a feudalistic anachronism. Passing power on others by virtue of inheritance does not strike me as compatible with the principle of democracy. We should rethink.”
Freeport will not be a silver bullet
AT THE beginning of September, before political focus temporarily dimmed, the Welsh and UK Governments invited applications for Wales’s first freeport, which is planned to be up and running next year.
After years of wrangling, Welsh Ministers agreed to support freeport policies in Wales after the UK Government agreed delivering them would meet the Welsh Government’s demands for a “partnership of equals”.
Part of the agreement reached placed Wales on the same footing for starter funding after three years in which the UK Government refused to fund Wales to the same level as Scotland and England.
A Welsh freeport will be a special zone with the benefits of simplified customs procedures, relief on customs duties, tax benefits, and development flexibility.
Milford Haven Port Authority, which has already expressed interest in Freeport-status, to push the Haven’s claims to be the location of a Freeport in Wales.
WHAT IS A FREEPORT?
Freeports are a special area where normal tax and customs rules do not apply. These can be airports as well as maritime ports. At a Freeport, imports can enter with simplified customs documentation without paying tariffs.
Businesses operating inside designated areas in and around the port can manufacture goods using the imports and add value before exporting again without ever facing full tariffs or export procedures.
Suppose the goods move out of the Freeport into another part of the country. In that case, however, they must go through the full import process, including paying any tariffs.
The UK was previously home to several Freeports, including Liverpool, Southampton, and the Port of Tilbury.
The legislation governing them was not renewed in 2012 because – while the UK remained a member of the EU and in the EU customs area – the economic case for keeping them was lost.
The UK could have chosen to retain freeports; nothing in EU law prevented them. Ending them was a political choice made by the then-administration.
Despite the absence of freeports, England remains home to 24 free zones, which operate on the same principle: in the Tees Valley and Manchester.
THE BENEFITS FOR PEMBROKESHIRE
The Milford Haven Waterway, a busy energy industry hub, is also a sensitive marine environment.
Supporting a scheme which could potentially undermine the Haven Waterway’s environmental status while pursuing a green energy future will be a difficult balancing act.
Milford Haven Port Authority argues that locating a Freeport in Milford Haven makes sense due to the Haven Waterway’s status as a nationally strategic energy asset and a key trade hub for the British energy supply.
A Freeport, it claims, will be an essential vehicle to help safeguard the existing professional energy jobs and skillsets to utilise for low-carbon ambition while regenerating the economy.
The Port Authority says the port’s existing energy infrastructure presents the opportunity for large-scale hydrogen production and injection with minimal additional infrastructure requirements. Alongside strong wind, wave and tidal resources, deep water access has already accelerated an emerging renewable sector such as floating wind in the Celtic Sea.
The Authority claims that a Freeport could support supply chains from equipment manufacturing to system integration and power connectivity, helping companies develop bankable projects and lower energy costs for UK consumers.
The proximity to major shipping routes and the existence of LNG terminals mean the Haven Freeport could also support a cleaner global maritime sector.
NOT PLAIN SAILING
Although freeports could, theoretically, redress imbalances in the UK’s economy by encouraging economic activity in areas where the economy is weakest, a careful balance must be kept.
The use of government subsidies for freeports – whether through direct grants or tax breaks – potentially falls foul of the WTO rules upon which Westminster seems determined to trade.
While freeports are successful in stimulating investment and jobs in a range of locations worldwide, they are neither a “silver bullet” for all locations nor the only way of boosting the UK’s main global gateways.
Freeports are notorious globally for being used to evade tax, launder money, and ease the transportation of stolen or illicit goods.
Moreover, as the experience at the Teesside Freeport development shows, they can lack any form of accountability and create fewer and less widespread economic opportunities than hoped.
The financial scrutiny of the Teesside Freeport is not much more than zero, and a box-ticking exercise carried out without any forensic examination of where the money goes and how contracts are awarded.
Milford Haven Port Authority operates a trust port. There are no shareholders or owners, and, importantly, its Board has independence of action without independent oversight.
A freeport’s financial structure is, if anything, even more financially opaque.
As public money is being invested in a freeport, proper public scrutiny – not merely loose “oversight” or lip service -must be the minimum standard.
Moreover, a freeport could be a money pit and public funding magnet. Too big an opportunity and too large a political totem to allow to fail, even when its economics don’t add up, freeports could end up being propped up by public money while delivering less than promised on the tin.
In all the positive publicity about a possible Freeport in Milford Haven, the Haven is not alone in wanting one.
Holyhead is Wales’s largest Irish Sea port. It is also in the key marginal constituency of Anglesey.
The stalled Wylfa development for nuclear power (part of the UK’s Government economic and energy strategy) is also on the island, and an already massive and expanding wind farm lies off its coast.
Holyhead links the North Wales corridor to England’s northwest and the Midlands. Transport infrastructure is already better to and from Anglesey than from Pembrokeshire to those destinations and will need less investment.
Cardiff Airport is another potential rival and one that could be especially attractive to the Welsh Government.
Since it bought a controlling stake in the Airport, the Welsh Government has propped it up with loans and grants.
Without Welsh Government support, the Airport would be insolvent.
The Welsh Government might be persuaded that making Cardiff Airport the first of Wales’s freeports would kill two birds with one stone.
It would attract more air and freight traffic to the site and decrease the Airport’s reliance on financial help from the Welsh Government.
As with Holyhead, the transport and infrastructure links from Cardiff Airport to other parts of the UK – in this case, the Midlands, the M4 corridor, and Bristol – are superior to those connecting Milford Haven with those regions.
A substantial concern expressed in a report on the Freeport scheme presented to the County Council is the undeniable fact they often do not create jobs but move them from one area to another.
The economic displacement of employment and funding opportunities could pull jobs and investments from one community to another.
If a new freeport only moved jobs and capital from (say) Newport to either Milford Haven or Holyhead, the economic case for their creation becomes – at best – shaky.
That raises the question of whether freeports provide value for public money through direct investment or tax relief.
Freeports could also be used to erode the high standards the UK currently places on workers’ rights and the environment.
Granting freeport operators carte-blanche to do what they want within a designated development area: for example, by allowing shortcuts through planning and environmental law or through allowing employment practices prevented elsewhere, involves trade-offs with unions and planning authorities could find problematic.
While jobs are needed, it is reasonable to ask what jobs and at what cost.
The experience of Welsh Enterprise Zones suggests few new jobs at a massive cost per head.
At a time of enormous hardship, it’s easy to be gulled by the prospect of large sums of public money and the prospect of that money pulling in private investment.
Tax and tariffs apart, a cautious individual might wonder why, if freeports are such a sure-fire thing, they need so much public money.
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