Continuing to invest where it is most needed

Alun Davies says Welsh Government has to pick up the pieces after the UK coalition’s economic crash

Alun Davies is Labour AM for Mid and West Wales

The Labour-led Welsh Assembly Budget of 2010-11 will be recorded by Welsh political historians as a watershed moment shaping Welsh society a decade after devolution. At a time when public finances are being squeezed beyond recognition, Welsh Labour has looked to its own defining principles to create a budget which is not only distinctly Welsh in its approach but also characterises the resilience of the Welsh people when times get tough.

From an episode when our financial institutions were in danger of collapse, the banking sector has stabilised but the trauma has left a legacy of personal economic uncertainty which taints every household in Wales. The dramatic spending cuts in Westminster are so deep that most people have nothing by which to measure their true impact. We know it’s going to be tough for a long, long time but nobody is sure just how tough.

This is the fourth in a series of commentaries we’re publishing on the Welsh budget. Tomorrow: Helen Mary Jones, Plaid AM for Llanelli.

Stimulating growth during those dark days of autumn 2008 and the continued need to print money to lift our economy from recession was never going to be easy. But we must bear in mind these necessary actions – to recapitalise the banks, to provide mortgage support for families, and the real need for low interest rates to protect those most vulnerable – saved the UK from financial and social disaster.To get a true flavour of our current situation we must remember the facts that got us here. They can and must never be understated. Some would like us to believe that our budget deficit was caused by the work of one political party, intent on spending until there was no money left. This is patently rubbish. The difficulties felt in our economy are not unique, as we can see from the global picture. Labour was absolutely right to continue investment in public services which, in turn, help the private sector facing unprecedented contraction, throttled by the credit crunch.

In that context it is easier to grasp the complexity of our current predicament. The One Wales Government, like Welsh Labour Governments before, has not taken for granted the budget increase delivered year on year by Labour Governments in Westminster. The money has been used wisely to rebuild crumbling schools and hospitals and to improve our infrastructure. That capital budget is now slashed by over forty per cent and the imperative has, this year, been to mitigate the worst excesses of the UK cuts.

It is this mature and responsible attitude to governance combined with strong Labour values that has produced a progressive and forward looking budget. I am proud to support a budget that tackles some very difficult issues whilst aiming to secure the social and economic fabric of our nation.

Anything less would be a betrayal of the people of Wales. Preferential support for one area of spending over another would do nothing to promote fairness and equality in Welsh society. Protecting the entire Health and Social Services budget over the next 3 years underlines our commitment to the NHS without compromising our priorities. The budget round is not over, of course. And the debate will simmer over the next month or so. The Tories’ demands for ring fencing the NHS budget in Wales have been shrill and strident. Yet health professionals like the British Medical Association and the Royal College of Nursing say this approach would be damaging because it would squeeze money from other vital areas like home care and that people would end up back in hospital more often.

What must have seemed to the Tories as a vote winning recipe is starting to sour. Their rushed and ill thought out position has not endeared the Welsh Conservatives to the Welsh public. Indeed, it has driven the first Welsh wedge between the Tories and their partner Lib Dems who have refused to support the ring fencing argument, for the same reasons as professional bodies.

Jane Hutt has been talking with public sector workers who deliver our Welsh services to see where efficiencies can be made without compromising the front line. It is a painstaking and largely thankless task. She has a tough job at the best of times. But her years of experience mean she has a steady hand in this, the toughest time in any of our lifetimes. It is a job which is safer in Labour’s hands than in the hands of the junior partner, Plaid.

The Tories with the Lib Dems support have cut our budget at risk of choking the support available to growing our economy at a time when it is needed most. We will experience a difficult 2011, I think, with our private sector in Wales suffering the loss of public sector contracts for schools and other public works. Not just builders, but anyone involved in the service sector, including the retail trade which will be hammered with a VAT rise to boot.

It is my belief that Wales will never, ever forget the UK government actions of the past six months, with the promise of worse to come. Setting a budget which looks after the people who need help, while providing business growth, is a balancing act. I believe the UK government hasn’t just stumbled in this regard – it has crashed. Badly. It is now up to the Welsh Government to make the best of the hand we in Wales have been given.

Positive thinking is paramount. I am cheered by the fact that Labour is still fighting for progressive priorities and the announcement this week of £16m to improve schools and further education, and a £13m boost for health for vital diagnostic equipment mean we are continuing investment where it is most needed.

This approach must be sustained and it will be the job of back bench AMs like myself as well as government ministers to protect and support the vital services upon which our constituents depend. That will need clear thinking and honesty. At the moment, only Labour is providing that in the Assembly, but I fervently hope other parties will come on board.

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