Wednesday, 22 April 2009

A day of reckoning for all?

Apologies for the lack of regular blogging of late: I've been too busy working.

Today, as you might well have noticed is Budget Day, or "the day of reckoning" as the Tories would have it.

It's the day we discover just how deep in it we are - well, possibly. Treasury economic forecasts are not known for their accuracy of late.

We can predict political reaction with more certainty. Future public spending plans will be tight, and made tighter by what the Treasury calls "efficiency savings" - the ones that have alarmed Ministers in Cardiff Bay so much.

With overall public spending around £500bn a year, "efficiency savings" of around £5bn-£15bn don't sound like much, but the knock-on effects in Wales could be challenging.

Efficiency savings may be seen as Treasury-speak for spending cuts, although Peter Hain points out that they can be recycled to deliver improved public services. His view that the Welsh adminstrative bureaucracy has been too comfortable for too long may at least spark a debate in Cardiff Bay.

One of the consequences of a system where a Government is responsible only for spending (not raising) its Budget is that there is always someone else to blame - in this case, the UK (or London, if you work for Plaid Cymru) Government.

So expect howls of outrage from opposition parties in Cardiff Bay as the spending squeeze bites.

While Labour MPs hail "a Budget for jobs" (on the day unemployment rises again), Plaid Cymru will doubtless describe it as a Budget for the south-east of England (from a Scottish Chancellor).

Plaid argue that the UK Government's recovery plan has so far benefited largely London and the south-east of England, even if Northern Rock, the Royal Bank of Scotland, Halifax Bank of Scotland and the Dunfermline Building Society have their roots elsewhere.

The squeeze really bites from next year, by when there may be a change of government in London.

So today could be a day of reckoning for the Tories too. Will Tories in the Welsh Assembly agree with George Osborne that public spending needs to be curbed? (and not just in non-devolved areas)

Will the Conservatives at Westmisnter match Labour's spending plans? Almost certainly not.

Shadow Welsh Secretary Cheryl Gillan told me: "We will spend less than Labour - we are looking for less of an increase in public spending than Labour has planned in." A point worth remembering should the Welsh Tories bemoan lower public spending to come.

With spending cuts and higher taxes to come, next year's general election may be one not worth winning - "a poisoned chalice" as the Lib Dem MP Jenny Willott puts it.

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