Statement on Wales 2010 Adopted at SPW Annual Conference 31-1-10 Economy The prospects for the Welsh economy are inextricably linked to the world capitalist crisis and the special crisis of the British economy. The British economy has followed the rest of the world economy and officially moved out of recession by growing at a paltry rate of 0.1% in the last quarter. But the hopes of some capitalist commentators for a sustained recovery will prove to be wishful thinking. World capitalism is heavily weighed under by the fallout from the financial crash and another dip back into recession is entirely possible. At best the British economy faces a long period of slow, anaemic growth with chronically high unemployment. The initial claims of Welsh ministers that Wales was escaping the worst effects of the British recession have proved to be false as unemployment in Wales continues to climb. 121,000 or 8.5% of the workforce are officially unemployed as what is left of manufacturing sheds factories and jobs, and the small financial services sector is, according to the Western Mail, “decimated”. Wales has entered the “Great Recession” still suffering the effects of the previous recessions. The decline of manufacturing and mining in Britain particularly affected Wales. Although official unemployment was not as high as in some regions of England, economic inactivity is the highest in i the United Kingdom . The destruction of mining and traditional manufacturing has not been replaced by the inward investment extolled by the Tories and New Labour in the 1980s and 90s. Traditional employers like Ford, Hotpoint, Hoover, Cadbury‟s, Anglesey Aluminium have closed factories or „downsized‟ in the recession or under the cover of the recession have moved production to eastern Europe or other sources of cheap labour. As we have warned in past perspective documents the inward investment celebrated by the Tories, New Labour and „Welsh Labour‟ has consisted mainly of „screwdriver‟ factories acting as satellites to the main production centres. Attracted by the relatively cheap and skilled labour in Wales and generous grants from the Welsh Development Agency and then the Assembly they have been cheap to open and very easy to close. This is partly because, in the recession the foreign-based trans- national companies have tended to concentrate production in their home countries, but above all they have been attracted to move production to where there is even cheaper labour in the so-called emerging economies in Eastern Europe, Asia and Latin America. In 1999 the Assembly government set the target of raising Welsh GDP from 80% of UK gross valued added (GVA) per head to 90%. Instead in 2009 it had declined further to 74.3% of UK GVA per head. At root the failure to increase GVA is because of the failure to protect and develop high value ii manufacturing industry . Employment in manufacturing has fallen by over 16% between 2001 and 2008 and the finance industry grew at a slower rate than the rest of the UK. The greatest growth was in the public sector which now accounts for over 30% of employment. So Welsh employment has been protected somewhat in the recession by the high proportion of workers in the public sector. But the cushioning effect of public sector jobs would turn into its opposite if the capitalist class succeeds in its desire to slash UK public spending. The attack threatened by both parties on the public sector after the general election would hit employment in Wales particularly hard. Whichever party wins the general election it will attempt to make working class people pay for the crisis of capitalism with a big cut in spending on public services. Wales would pay a very heavy price with its greater reliance on public services and public sector jobs, and there could be a serious struggle to protect them. 2 Barnett Formula The funding of public services controlled by the Welsh Assembly, health, education, local government, housing, transport, the environment, agriculture etc., is determined by the Barnett iii formula. The formula provides funds to the devolved nations in proportions that were set over 30 years ago. Since the decline of industry and the development of mass unemployment it is generally accepted that this formula has become outdated and does not take into account the relative needs of the four nations, under-funding the Welsh and Northern Ireland Assemblies. However neither New Labour nor a Tory government is likely to change the funding arrangements, (except to cut spending across the board for all public services in the UK) for fear of opening up a Pandora‟s Box of national antagonisms especially a new rift between a Westminster government and the Scottish government. So the relative under-funding of the Welsh Assembly will continue. This issue could assume a significance even greater than the Objective 1 match-funding controversy in 1999-2000. It has the capacity to break the Labour/Plaid coalition, although if there is a Tory government Welsh Labour might also take it up. Devolution The attack on public services in Wales after the General Election will make a significant impact on the devolution settlement. Already the existing arrangements have been strained. The Assembly government has been prevented from carrying out many basic measures by the limits of the Assembly‟s powers and its inability to pass primary or even some secondary legislation. A compromise which enabled the Assembly to promote primary legislation to Westminster through a complex process of Legislative Competence Orders (LCOs) has been slow and cumbersome and iv many LCOs have been buried or watered down in Whitehall . For example, despite housing being an area devolved to the Assembly, a proposal to restrict the right to buy council homes in areas of extreme housing pressure was rejected on the grounds that the Assembly might extend the measure to the whole of Wales. It has only been agreed with the right of veto by the Secretary of State for Wales of whichever Westminster government is in power. To delay a vote on the issue of further powers the last Labour Assembly government set up the Richards Commission which recommended in 2004 that the Assembly‟s powers be expanded to allow law-making powers by 2011. One of the agreements of the Labour/Plaid coalition to form the One Wales government in 2007 was to hold a referendum to give the Assembly full legislative powers by May 2011. One of Carwyn Jones‟s first actions on succeeding Rhodri Morgan as First Minister has been to begin the process of moving to a referendum on the issue by raising the issue in the Assembly. First the Assembly has to request a referendum with a two-thirds majority (the so-called „trigger vote‟) and then the referendum has to be agreed by the Westminster parliament which could take months. So to move a referendum before the general election the Welsh Assembly government has to begin the procedure at the beginning of February at the latest if there is to be a referendum in the autumn. But Jones is reflecting the pressures the Welsh Labour leadership is under by moving as slowly as th possible towards a trigger vote on February 9 . One of Plaid Cymru‟s conditions for participating in the One Wales coalition was “a successful outcome of a referendum for full lawmaking powers…at or before the end of the Assembly term”. Failure to move to a referendum would break the coalition government in Cardiff. Under pressure from his Plaid Cymru partners in the government Carwyn Jones claims that he is sounding out other parties before moving to a trigger vote. But he is moving very slowly because of the pressure from Welsh Labour MPs who do not want a referendum that might diminish their influence at Westminster. A Welsh assembly with law-making powers would intensify the posing of 3 the „West Lothian question‟ that asks why Welsh and Scottish MPs vote on English public services in Westminster while the same decisions for Wales and Scotland are decided in Cardiff and Edinburgh. Welsh MPs would be less likely to receive ministerial positions and perks in Westminster if the Assembly powers are expanded and a Tory government might even reduce the number of Welsh and Scottish MPs. In addition the Welsh Labour leadership and Peter Hain, secretary of state for Wales, are not sure they would win the referendum. While the biggest proportion of Welsh voters have always supported the option of an assembly with law-making powers there is not a consistently clear majority on the v issue . And there is a possibility of a protest against the establishment politicians increasing the „no‟ vote sufficiently to defeat the referendum. Marxists and the national question Marxists have always supported the democratic right of national self-determination, including the right of Wales to secede from Britain if a majority vote in favour and the right of the Welsh assembly to call a referendum on Wales‟s relationship with Britain. Our party has always supported a Welsh parliament with law-making powers and the power to carry through socialist policies to benefit the working class like a decent minimum wage, the abolition of the anti-union laws and the nationalisation of firms threatening large scale redundancies such as Bosch and Anglesey Aluminium. We therefore support the calling of a multi-option referendum including the options of the status quo, full legislative powers for the Welsh assembly or independence. We would call for a vote for the second option in such a referendum and a „Yes‟ vote in a referendum on the question of more powers for the Assembly, linking it to the question of socialist policies to improve the lives of working people. Marxism‟s support for the democratic rights of nationalities within larger states in no way contradicts support for workers‟ internationalism and solidarity. Lenin‟s support for the right of national determination was crucial in uniting the working masses in the tsarist empire to overthrow capitalism and landlordism. We support a law-making parliament as a means of mobilising the working class in Wales to fight for socialist policies using the Assembly as a rallying point and linking with the English and Scottish working class. The principle issue is the unity of the working class to fight for socialism. It is for that reason that while defending the right of Wales to secede, we do not call for an independent Wales. A small minority of workers (between 10-15% of the population in most polls over the last decade) support independence vi which is why even Plaid Cymru does not call for it . A call for independence would be a barrier to most Welsh workers at this stage and would divide the Welsh working class. There is a greater resistance to the idea of independence in Wales than in Scotland because there are greater economic, social, geographical, cultural, legal and historical ties with England. However this could change in the case of a big independence movement in Scotland and a right wing Westminster government carrying through big attacks on the working class in Wales. Even then we would not call for an independent capitalist Wales but call for an independent socialist Wales as part of a socialist federation of Wales, England, Scotland and Ireland. Consequences of a Tory victory The most likely result of the general election at the moment is a Tory victory although a hung parliament and coalition government is also possible. Such is the disillusionment with New Labour the Tories are likely to make significant gains in Wales, but it is most likely it would remain a minority party in Welsh politics. The national question was raised under the last Tory government by this „democratic deficit‟. This is likely to be repeated with the additional factor that the Tories will be cutting the budget of a Labour/Plaid assembly government in Cardiff. 4 The Welsh assembly government will pin the blame for the cutbacks on the Tories, or a coalition government, even though Labour in Westminster would also cut back the budget should it win the election. While the One Wales government is unlikely to decisively confront a Tory Westminster government it would pose as a left alternative and attempt to deflect the blame for the cutbacks away vii from itself. The „dented shield‟ argument , used under previous Tory governments, could be dusted off and used to excuse the carrying out of cuts in public services. Should a referendum on law-making powers for the Assembly take place just as a Tory government starts wielding the axe in public services then there could be a decisive „yes‟ vote. However if the cuts are delayed or have not bitten yet then there could be a much closer vote. The Assembly elections in 2011 would also be affected by the timing and the severity of the cuts in public services, and the struggles that takes place against them. Plaid Cymru has increased its support since 2007 by appearing to champion more progressive policies than the New Labour government in Westminster. While unlikely to make significant gains in viii the cockpit of the Westminster elections it could gain in the Assembly elections in the absence of a significant challenge from a new workers party. ‘Welsh’ Labour Welsh Labour could pose as left alternative to the Tories more successfully than New Labour in Westminster. The rejection of Alun Michael, parachuted into the First Minister‟s position by Blair, and his replacement by Rhodri Morgan and now Carwyn Jones has enabled „Welsh‟ Labour to develop a distinct brand from New Labour especially in the course of the One Wales government. Fundamentally Welsh Labour shares the same ideas as New Labour, accepting the primacy of the market and neo-liberal ideas. But under pressure from the working class and after suffering a series of bloody noses in its traditional heartlands from Blaenau Gwent People‟s Voice, Forward Wales and Plaid Cymru it has trod a slightly different path to New Labour in Westminster. In health the internal market is fading as the trusts and health boards are merged and foundation hospitals rejected while prescription charges have been scrapped. In education SAT tests and academies have also been rejected and top-up fees for Welsh students paid for until recently. Private Finance Initiatives have generally been avoided in public building projects and there have been other ix public service reforms emphasising public provision rather than private. However it would be wrong to imply there is a fundamental difference at this stage between New Labour and Welsh Labour. The „clear, red water‟ between the two is not very red. The tendering out of public services to the private sector continues in Wales under „red‟ Welsh Labour and cutbacks and privatisation have been driven through local government by the Assembly government. Welsh Labour‟s Designed For Life health service reforms proposed dozens of hospital closures which was only halted by its poor results in the 2007 Assembly elections and the formation of the One Wales government. The Assembly Learning Grant that paid the top-up fees of all Welsh students has been narrowed and concentrated only on the students from the poorest backgrounds. Welsh Labour continues to provide a large squad of right wing Labour MPs to Westminster who have enthusiastically voted for foundation hospitals and education academies in England, the Iraq and Afghanistan wars and other neo-liberal policies. The more progressive policies have been possible because by and large they have been possible without spending extra money (in many cases they have proved cheaper than the New Labour equivalent in England). And the two trends within Labour have been able to amicably coexist because Welsh Labour has not threatened the Blair/Brown leadership of New Labour. A non aggression pact between Blair and Rhodri Morgan has continued under Brown in which, after the debacle of the 1999 Assembly elections, New Labour has allowed Welsh Labour to paddle its own canoe as long as Welsh Labour did not criticise British New Labour. Welsh Labour MPs have been amongst the most loyal supporters of Blairism, many criticising the downgrading of privatisation by Welsh Labour and 5 the One Wales government. A potential source of conflict in the Welsh Labour party remains between Labour MPs from Wales and Welsh Labour in Cardiff but this is likely to be pushed into the background if there is a Tory government. Need for a new workers’ party As in the rest of Britain the situation is crying out for a real political alternative for the working class in the form of a new workers‟ party. There have been several opportunities for new formations to move in the direction of a new party in Wales. Forward Wales formed around the maverick Labour AM, John Marek, in Wrexham could have drawn around it a large layer of trade unionists and potentially won the support of the RMT, but Marek refused to develop it in this direction. Consequently Forward Wales did not take off and has now been formally wound up. And Blaenau Gwent People‟s Voice has gained a mass base with an MP and AM and a number of councillors but has refused to expand into a wider movement and has not developed outside of the Gwent valleys. Some of its councillors have voted for cuts in public services. The initial and local electoral success of these two formations have shown the potential for a new workers party to develop in Wales either as a Welsh formation or as part of an all-Britain party. But in the absence of a new workers party Plaid Cymru has benefited most as posing as an alternative. In the One Wales government they have been able to look relatively left compared to the Westminster government. This has not been the case when in power in local councils where they have been x indistinguishable from the other parties. While appearing to be more radical than the others Plaid Cymru is still a pro-capitalist party that does not rest for its support mainly on the working class. Its leadership‟s support for the abolition of the Assembly Learning Grant exposed the divisions within Plaid and the possibility of future splits. If a new broad workers‟ formation was to develop from the Trade Unionist and Socialist Coalition then it could provide a real alternative in the Welsh assembly elections and gain a significant vote. Such a formation could gain significant support in the Welsh trade union movement. The role of our party will be crucial in developing a new workers‟ party. As well as the possibility of an initiative developing in Britain as a whole after the general election, new formations can arise from obscure or accidental beginnings in the new epoch of capitalist crisis. The situation is slightly more fluid in Wales than in England. Left splits from pro-capitalist Welsh Labour and Plaid Cymru could develop into new formations as they combine with movements in the trade union movement. And the development of our party as a large Marxist party with a deep base of support in the workers movement in Wales can rapidly accelerate this process. We have to be alive to the possibilities of new formations in Wales acting as a bridge to a new workers party. Socialist Party Wales is probably now the most authoritative and largest socialist formation in Wales with a significant base of support amongst the most active and militant trade unionists. Most of our rivals have disappeared or are in crisis. In the struggle at Linamar we have shown that just one revolutionary workers‟ leader working in the correct way can win important battles. We can demonstrate that our party will lead victories in other battles in the immediate future that can change the political landscape in Wales and provide the welsh working class with a leadership that can open up a struggle to transform Welsh society towards a socialist Wales leading to a socialist Britain. 6 i Of the top 10 Parliamentary constituencies with the highest incapacity benefit claimants in the UK, the south Wales valleys contain five. Three regions of Wales – South West Wales, the Gwent Valleys and Anglesey – were among the five poorest in the UK in 2005. There has been a reduction in the GVA head in Powys from 75% of the UK average in 1999 to 70% in 2005; its GVA/head is now lower than that of Swansea or Gwynedd. The Flintshire and Wrexham region has seen its GVA/head decline from 102% of the UK economy in 1999 to 85% in 2005. It has been growing at only a third of the rate of the Welsh economy during the period 1999 to 2005. ii According to Dr Eurfyl ap Gwilym, Deputy Chairman of the Principality Building Society and an economic advisor to Plaid Cymru, of the 25.7% shortfall in GVA compared to the UK 12% can be accounted for through the low rate of pay, 6% due to the high proportion of retired people caused largely by younger workers moving to other parts of the UK, and another factor is low level of profits in low capitalised industry in Wales. In other words highly capitalised, highly paid industry could have raised GVA in Wales towards the UK level. iii The Barnett formula assigns funds to Wales, Scotland and Northern Ireland according to a formula devised by Joel Barnett, Chief Secretary to the Treasury in 1978. iv Measures supported by the Assembly government but thwarted in Westminster include environmental protection and waste management; the prevention of physical punishment of children; the use of the „fourth option‟ of retaining and improving council houses rather than privatising them; and restrictions on the right to buy council homes in areas of extreme housing pressure. v A YouGov poll published in November 2009 estimated that 51% would vote in favour of a more powerful Assembly and 30% would vote no. The All Wales Convention poll the same month found 47% in favour and 37% against. vi Plaid Cymru‟s support for independence has been further undermined by the fate of two of their models of independent small nations, Iceland and Ireland. Plaid leader Ieuan Wyn Jones said in 2003 “Like Ireland, we believe Wales in Europe could become a beacon of regeneration” The left Plaid Cymru AM Leanne Wood wrote in 2007 “Take Iceland as an example. It has a population of around 300,000 and is the fifth most prosperous country in the world... If Iceland can do it; Wales can.” Today the Icelandic economy is bankrupt with half the population considering emigration. Mired in a huge economic crisis, Ireland has carried through massive cutbacks in public spending to remain within the euro. vii The „dented shield‟ was the argument used by Labour‟s right wing under Neil Kinnock in the 1980s to justify Labour councils implementing Tory cutbacks. They argued it was better for Labour councils to be a dented shield and implement the cuts more humanely than risk being removed by the Tories if they defied the government as Liverpool City Council did under the leadership of our party when it was know as Militant. viii Plaid Cymru‟s support is usually not fully reflected in general elections as their supporters see little point in sending a handful of Plaid MPs to a parliament of 653 MPs. Its vote picks up significantly in Assembly and local government elections. 7 ix „Pro public‟ reforms introduced by Welsh Labour or the One Wales government include the abolition of prescription charges, free hospital car parking and museum entrance and free bus travel for pensioners. x In Gwynedd they have closed schools and introduced charges for school buses. In Rhondda Cynon Taff they introduced cuts in the council workforce and public services when in power in 1999-2003. In Cardiff they were dubbed “Lied Cymru” by environmental campaigners after supporting plans to build on city parks and have given support to the schools closure programme in coalition with the Liberals.
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