Economic advice that cuts through the bull

I would recommend Alan Trench’s excellent post on Assembly Politicians in particular and Welsh politicians more generally over their failure to debate, discuss and fully embrace the Holtham Commission’s two part report and the problems they are creating and lining up for themselves and Wales in the future.

But also worth highlighting were the last two paragraphs he wrote about the Welsh economy which deserve as wider an audience as possible.

He writes ‘The answers to those economic development problems are far from straightforward, and I’m not a specialist in them. But two points are striking. One is that the strategy followed for some time, of concentrating on attracting inward investment, hasn’t yielded sufficient dividends, for all that it consumes a large (and increasing) proportion of the Assembly Government’s budget. Maybe the new strategy recently unveiled by Ieuan Wyn Jones will herald a sea-change; but a new approach is clearly needed. The other is that tax-raising powers are one important lever to spur economic growth. Being able to offer a more attractive set of tax rates is a key element of securing economic development – just look, for example, at how Sweden was able to build its welfare state on a combination of low corporate tax rates combined with high personal and consumption ones. The pursuit of fiscal autonomy in Scotland (particularly ‘full fiscal autonomy’, as espoused by the SNP government) is rooted in a similar desire to shape Scotland’s economy in Edinburgh, to fit Scottish needs.

How Wales’s political parties respond to these challenges is up to them. But if they want a Wales that can sustain a generous, social-democratic welfare state, simply trying to screw more money out of the UK Government isn’t the way to do it – especially when that’s a Conservative-dominated government intent on cutting public spending, if not taxes. They need to ensure Wales is able to fund much more of its services than it can at present, and is less dependent on transfers from elsewhere. And a measure of tax autonomy may provide them with the economic and fiscal means to do that.

I couldn’t agree more with the last paragraph, but with the First and Deputy First Ministers more interested in playing politics over the cuts, than protecting Welsh communities and talking in apocalyptic terms about Wales's future, can we really expect leadership and maturity from Welsh politicians on this most crucial of debates, sadly I can’t see it somehow.Any source