NI exemption is positive step, but we need a compliment for poorer areas

I welcome the news in the Budget that National Insurance will be waived for the first 10 employees for businesses that set up outside the South East of England; it’s some positive news for Wales and a welcome focus on job creation after WAG’s failures and a very tough budget that will have a big impact on Wales.

But I do have a nagging concern and that is the areas that badly need job creation and business investment probably won’t see many benefits from the measures, I mean why would you set up a business in Llangefni or Rhyl when you get the same benefits from starting up in Wrexham or why set up in the Valleys when you can be in the Cardiff, which like Wrexham has better infrastructure, a bigger talent pool and a bigger customer base, it makes far more sense from business point a view.

I accept that people can travel to work or even move to those areas plenty of people already do, but if reducing the welfare bill is a major priority for the Westminster Coalition as George Osborne spelt out, then both WAG and the UK Government are going to have to come up with something to compliment the NI scheme or as I have said before unemployment will be back to its current levels in 18 months whatever the state of the economy.

I have no doubt that the NI holiday will have positive effect on the Welsh Economy and if the Regional Growth Fund also announced is available for all of the UK it will provide much need additional finance for those willing to take the risks involved in business start that all areas of Wales need but not enough to mitigate other measures, my worry is that past mistakes are being repeated here in Wales and the investment will go to those areas most able to exploit the them, rather than other areas that could do with a economic boost.

UPDATE Its always nice to be agreed with and The Observer's Editorial says much the same about job creation today.

Some question for Wales leaders following Julia Gillard’s success

Congratulations to Julia Gillard on becoming Australia’s new Prime Minister and being the first woman.

She was born in Barry and emigrated with her parents to Australia in 1966 as a ‘Ten Pound Pom’ and made it all the way to the top of Australian politics.

However as Wales celebrates after giving the World another strong and decisive leader, it’s perhaps a good time to reflect on all AM's in Cardiff Bay and Welsh MP’s at Westminster and their less than scintillating leadership over many years and the mess Wales finds itself in, and also how unlikely it is for Wales to have a female First Minister anytime soon despite Labour's Edwina Hart and Plaid Cymru's Helen Mary Jones standing for their parties leadership.

More problems for the Lib Dems

As if taking most of the flack over the emergency budget and being accused of treachery wasn’t bad enough the Lib Dems have also lost funding for staff and research in Parliament and at Party HQ since joining the Coalition at Westminster, the so called Short money.

According to the Times ‘Nick Clegg has learnt the true cost of power after his party lost almost £2million a year as a result of entering a coalition with the Conservatives.

The Liberal Democrats no longer qualify for state funding for opposition parties to support their work in Parliament, known as Short money. Last year the party received more than £1.7million. It was paid a further £237,000 for work in the House of Lords.

The party’s highly regarded team of parliamentary researchers face redundancy in consequence.

The Lib Dems, who have far fewer private donors or other benefactors than the Tories and Labour, relied heavily on such funding for their staff.

Some have transferred to jobs funded by Whitehall as special advisers or in other roles but will be more closely bound to the coalition government rather than working for an independent party. But there is particular concern over the party’s parliamentary work monitoring departments in which there are no Lib Dem ministers — the environment, food and rural affairs; culture, media and sport; international development; and Wales and Northern Ireland.

One MP asked: “If a minister in one of these departments brings something to the Commons, what are we supposed to do? Just support it?”

The Conservatives have lost larger sums, but the proportional impact will be much less due to the party’s wealth.

Mr Clegg’s advisers are seeking to negotiate the rules so that the party would continue to receive some money, to reflect its position as the junior coalition partner. The party hopes that an arrangement in Scotland which lets the smaller of two coalition parties receive payments could be applied at Westminster.'

Estimates in different papers vary, but it seems the Lib Dems could lose up to 20 staff, that will certainly have an impact on what the party can do to keep its independence while in Coalition with the Conservatives.

MORE from Jaxxland and Valleys Mam

What about a Council Tax freeze for Wales?

Not had a chance to go through the budget in any detail but here’s one for our politicians, rather than wallowing in the misery of others and moaning endlessly about the unfairness of the budget, how about Labour, Plaid Cymru and WAG Ministers take proactive steps to mitigate some of the downsides of the Conservative/Lib Dem budget and negotiate a freeze Welsh Council Tax with the WLGA for next year?

The Scottish Government has managed to freeze Scottish Council Tax for the last 3 years with a block grant like Wales and Councils in England will get assistance to freeze English Council Tax as the Chancellor George Osborne announced today, so is it really beyond the capabilities of the folks in WAG to sort this out for families in Wales who have been hit particularly hard.

This is a real opportunity for the WAG to prove its worth to Welsh voters and with a referendum on more powers due next year would be smart politics to pursue, but will the governing parties in Cardiff Bay seize the opportunity or will they as I expect revert to type and just complain bitterly over the cuts and rehash the old 1980’s tune about the ‘nasty Conservatives’ with a new chorus about the ‘sell out Lib Dems’ in the months and years ahead.

Does this spell bad news for Labour in the medium and long term?

A poll for Ipos MORI for Reuters found that most people in the UK believe that there will be a lot of short term economic pain but that the current UK Government has the right policies to get the economy moving in the longer term.

From Reuters ‘Britons expect the economy to deteriorate over the next year but are optimistic that the coalition government's policies will pay off eventually, a poll showed on Monday.

The Reuters/Ipsos MORI poll, released on the eve of what is expected to be the toughest budget in a generation, also showed Prime Minister David Cameron enjoyed an approval rating of 57 percent after just over a month in the job.

Cameron's Conservatives and their smaller Liberal Democrat partners have formed Britain's first coalition government since World War Two. Chancellor George Osborne will present an emergency budget on Tuesday which will set out tax rises and spending cuts to plug a record peacetime budget deficit.

Support for the Lib Dems had slipped five percentage points to 19 percent since the election on May 6, while the Conservatives were up two points at 39 percent among those certain to vote in a general election, the poll said.

Some Lib Dem members fear the coalition with the Conservatives could cause the party long-term damage through a loss of identity.

Forty percent of those surveyed thought that the economic condition of the country would get worse over the next year, while only 35 percent saw an improvement.
This puts the poll's Economic Optimism Index reading into the red at -5 percent after being in positive territory since the start of the year.

However, 61 percent of those surveyed believed the new government's policies would improve the state of Britain's economy in the long term, against 29 percent who disagreed.

That compares with responses last November when only 40 percent of those surveyed thought the policies of the former Labour government would improve the economy.

Osborne said on Sunday that huge budget deficit the biggest threat to Britain's economy and that the emergency budget will save the country from the fate of debt-stricken Greece.

Measures expected to be included in the budget include a bank levy and reform of welfare benefits and public sector pay. Other plans include payroll tax breaks for new businesses, a council tax freeze and a review of public sector pensions.

Three in five people agreed that the government was being honest about the state of public finances, a sign that the government's warnings of hard times to come have hit home.'

I wonder if these findings might also help change the nature of what I expect to be a pretty one dimensional debate in the run up to the Welsh Assembly Elections next year from Labour and Plaid Cymru in trying to blame everything on the Tories and Lib Dems and trying to keep their own record in Government away from any serious scrutiny.

‘How the banks won’

Whatever side you’re on over the cuts to come most of us can agree that the banks played a large part in the recession and anemic growth we now see across the UK and the tax payers will bear the brunt of the pain for years to come.

With that in mind and ahead of George Osborne’s budget tomorrow I would recommend Channel 4’s Dispatches from last Monday entitled ‘How the Banks Won’ to see how the bankers remained on top during the recession and still do in the UK and around the World.

It’s available for about three weeks.

Will the real Liberal Democrats please stand up?

There are two articles on the Lib Dems and the widely expected VAT rise in next week’s budget that show the party’s dilemmas

The first is from John Rentoul at the Independent on the fate of Australia’s Liberal Democrats after they supported a VAT rise by a Conservative Government Down Under and for many Lib Dems will make uncomfortable reading.

He writes ‘Not long ago, in a country far, far away, there was a party called the Liberal Democrats. They were a party of the centre, concerned about social justice and with the best green credentials of any in parliament. They did quite well in a general election, although they came third behind the two big parties. During the campaign they opposed the Tory policy on tax, but after the election they voted to support it. They never recovered. Eleven years later, they were down to 1 per cent of the vote and lost all their seats.

Welcome to Australia, where I have changed only one detail in this fairytale horror story of Nick Clegg's future. The party that now barely exists after its leaders betrayed its principles is called the Australian Democrats. In the election of 1996, it won 11 per cent of the vote. After the election, it held the balance of power in the Australian upper house, the Senate. Its senators provided the key votes needed by John Howard, the conservative prime minister, to get his Goods and Services Tax through. The GST, equivalent to our VAT, was a hugely divisive issue in Australian politics. Although the party leaders felt they should take a pragmatic position, making changes to the coverage of the tax, the party's members and voters saw it as an issue of principle, and they hated it.

He goes on to say 'Could someone just remind me what the Liberal Democrats get out of the coalition with the Conservatives? The personal allowance for income tax will be raised by a few hundred pounds, a cut that will be clawed back from other bits of the tax system. And the capital gains tax rise, which was Lib Dem policy, has been watered down so much in the pre-Budget haggling that there will be little left by the time George Osborne speaks. The lobby against CGT is one of the most inexplicably powerful in British politics, able to generate so-called news stories in the Daily Mail and The Daily Telegraph, which suggest that any tax on property or the sale of businesses is a Marxist plot to suffocate the entrepreneurial spirit of the second-home owner.'

The second is from Welsh Liberal Democrats Leader Roger Williams who told the Politics Show today that he does not support a VAT rise.

He called the Tax a "very regressive tax that falls most heavily on the poorest in society"

And went on to say ‘"I don't think this is ideological actually. This is dealing with the practicalities of a terrible situation that was left by a Labour government," he said.

"We have been left with a very large deficit and if we don't tackle that then the first thing that's going to suffer is public services and the second thing that's going is the poorest and most vulnerable in our society."

So will the Liberal Democrats really avoid the fate of other Liberal Parties and Junior Coalition Partners around the world?