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Western Mail, 6th July 2009
www.walesonline.co.uk/news/wales-news/2009/07/06/prepare-for-savage-spending-cuts-if-wales-drifts-back-to-tory-rule-91466-24080415/
As the debate on spending continues in Westminster, Peter Hain argues that Wales will benefit from increased investment now, followed by restraint but never savage cuts.
Wales knows only too well what Tory Government cuts meant in the 1980s and early 1990s - generations dumped on the jobless scrapheap, hospitals closed and falling school standards. Next year history could start repeating itself.
David Cameron has made it clear he plans savage cuts if the Tories win next time, just as they won in Wales this June 4th. Indeed, he seems to relish using the global financial crisis as an excuse to do what the Tories always wanted, namely to slash public services for the many to finance tax cuts for the few.
The global crisis has brought to an abrupt halt the long, unprecedented period of steady growth and rising prosperity that Britain enjoyed during ten years of Labour government. A decade in which the Welsh Assembly enjoyed huge increases, its annual budget more than doubling.
This past year, our key concern has been to stop the global credit crisis from triggering a slide into a 1930s slump. That is why we rescued banks and raised public investment to a 30 year high.
By investing more, and consequently borrowing more for a time, government can make recession less severe, keeping it as short and shallow as possible. We can protect people from its worst consequences, though we cannot insulate everyone from hardship, as those who have lost their jobs in Wales over the past year know sadly only too well.
By bringing forward projects originally earmarked for later, we have raised public investment this year to £44 billion, the highest since the 1970s and £9 billion higher than planned in 2008. It means investment rises today and is restrained tomorrow, but the same schools and houses get built, only earlier, boosting jobs and aiding economic recovery.
However, as the economy pulls out of recession, capital spending will drop back from this year's peak, and total public spending will be restrained over the three years 2011-14. There is no avoiding that as we look to rebuild the public finances. But public investment in 2013-14 will still be double the share of national income that it was last under the Tories in 1996-97.
Current spending will also continue rising in real terms, albeit slower than in recent years. With tax increases, especially on those on very high incomes that means government borrowing will fall by £75 billion between 2011 and 2014, enabling the public finances to be brought into better shape, as they must be while at the same time we are able to continue to invest in key front line public services.
From 2011 to 2014 the scope for real rises in departmental spending programmes will depend on economic growth, debt interest and falls in recession-related spending. The prospects for public spending and taxation after 2014 will depend on the pace and the pattern of economic recovery.
Once we emerge from recession, it is fair to state that a slower growth of public spending will be the best strategy. The next ten years cannot be the same as Labour's past ten years of record investment in our schools and hospitals spending. We will need patience as well as prudence. It will mean being tough on priorities and really going hard for efficiency. Every family, every business, every local council, every organisation is experiencing these kind of difficult choices now right across the world.
But such sensible Labour prudence over the medium term is quite different from Tory slash and burn starting right now. Labour's priorities will always be to protect the most vulnerable, the Tories' to protect the most rich.
That's why David Cameron displays a passion for public spending cuts almost regardless of the consequences; ironically, his cuts would increase the very government borrowing he obsesses about reducing. He is driven by right wing ideology.
Economic recovery would be choked off before it gets fully established, turning economic casualties into social outcasts and increasing government debt. Labour believes that the government's role is to support citizens, not to abandon them when times get tough. We also insist that the better off pay their fair share in higher taxes to help pay for this.
It is an outrage that the Tories first priority is a cut to inheritance tax, giving £200,000 to the richest 3,000 estates, and also that Andrew Lansley has set out sweeping 10 per cent cuts in public spending that they would impose across the board.
That would include thousands fewer police officers just when we are putting more bobbies on the beat. It would mean choking off European Convergence Funds which are regenerating West Wales and the Valleys, and cuts to transport, housing, social services, colleges, universities, business support and local government. They would roll the clock back on all Labour's huge investment since 1997 to repair the legacy of Tory rule.
At the general election the electorate will face a stark choice between an 'I'm all right Jack' Wales in which the weakest go to the wall, or a Wales of social justice and economic success. A very clear choice: prudence with a conscience from Labour, or savage cuts if Wales drifts back to Tory rule.
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