Warning: cuts are bad for the economy

This week a lone voice was heard in the mainstream media. He has different ideas as to the best way of tackling the UK's estimated £178 billion budget deficit. Up until now newspaper readers have been bombarded by pledges from the three main UK political parties about how they will butcher the public sector in order to balance the books.

The consensus is that big cuts are needed. The argument is about how wide and deep cuts should be. The Tories seem to be winning the PR battle by hinting at the type of cuts that will devastate the lives of millions but won't scare the wealthy and influential bankers who got us into this mess in the first place. A banking crisis has now become the problem of the public sector in one of the great conjuring tricks of recent years.

Anyone familiar with Compass, an independent left-wing think tank, will know they have produced a paper called ‘In Place of Cuts’ that stands as a compelling and coherent alternative to the cuts agenda. It promotes the scrapping of socially useless projects such as Trident and the watered down ID card system and introducing a fairer tax system that makes those who can afford it, pay more as a means of protecting jobs in the public sector. It has received little coverage in the media and the leaders of the main UK political parties have either ignored it or dismissed it. Are we living in a political climate where anyone opposing the cuts agenda is accused of living in ‘cloud cuckoo land?’

This consensus was delivered a mortal blow when a very cogent voice in the world of economics entered the debate this week. Joseph Stiglitz, a Nobel Laureate and former special advisor to Bill Clinton, warned against the dangers of “fiscal fetishism.” In an interview with The Independent newspaper, Mr Stiglitz explained: “Because cutting back means the economy goes into a downturn and the markets lose even more confidence, as it will trigger another recession or depression." What you’ll get then, he said, is a double-dip in the economy.

He also raged against the reverse Robin Hood distribution of wealth from the poor to the rich since the crash of the banking sector in 2008. On this he said: "The current crisis has seen the government assume a new role – the 'bearer of risk of last resort'. When the private markets were at the point of meltdown, all risk was shifted to the government. The safety net should focus on protecting individuals; but the safety net was extended to corporations, in the belief that the consequences of not doing so would be too horrific. Once extended, it will be difficult to withdraw. Firms will know that if they are sufficiently big and their failure represents a sufficient threat to the economy – or if they are sufficiently politically influential – the government will bear the risk of failure."

When we unveiled our plans to introduce a living pension so that pensioners would have enough money to heat their homes as well as eat (how unreasonable!), Plaid Cymru was attacked for being irresponsible by our political rivals. We proposed finding the money to fund the first phase of this policy by simplifying the pension system so that pension credits no longer go unclaimed and by the scrapping of Trident and the ID card system. Perhaps the guardians of fiscal responsibility will remember the words of Joseph Stiglitz before saying this is 'cloud cuckoo land' politics next time.

Who is fuelling who?

British Gas have announced a price cut of 7% which could see the typical household bill being reduced by hundreds of pounds as well as triggering a price war with the energy giant’s competitors. There is speculation that we could see prices fall even further over the coming months.

Great news for the consumer? Yes, but why has it taken so long to come about and why is the cut so paltry? The wholesale price of gas fell over the last 18 months at a staggering rate. According to an independent energy analyst, the wholesale price of gas on the day of the price cut was 35p a therm – about one third of the price of 100p a therm in mid-2008. A year ago, the price was 60p a therm.

These figures put the 7% British Gas price reduction, the first in those 18 months, into context. Meanwhile Centrica, the owners of British Gas, is making hundreds of millions of pounds in profit every year. Centrica are predicted to have profited by an extra £40 million to £50 million during the recent cold snap alone.

Meanwhile more and more pensioners are dying in the winter because they cannot afford to heat their homes. Families on low incomes have also been badly affected. Figures from the National Statistics Office show that there was an estimated 36,700 more deaths between December and March 2008/09 compared with the average for the non-winter period. What will the figures look like after this year’s harsh winter?

Plaid Cymru has argued for the need to introduce a living pension as part of the UK General Election campaign, which would go some way to off-set high fuel prices.

On the day of the 7% announcement, British Gas’s Managing director, Phil Bentley, said: “I'm pleased we're able to offer our customers some extra help with this gas price cut - and that we're able to do this while it's still winter, allowing our customers to really feel the benefit.”

Why couldn’t you have done that last winter Mr Bentley?

Not such a warm welcome

I have been horrified by the report featured in the Guardian newspaper of a former case worker’s experience at the Border Agency offices in Cardiff.

What Louise Perrett discovered during her three and a half months of employment last summer makes for uncomfortable reading and questions need to be raised at the highest level.

Her account suggests racism is rampant and asylum applicants are treated inhumanely, at best. In one of the more shocking anecdotes, Ms Perrett said her former colleagues kept a stuffed gorilla dubbed the “grant monkey” which was placed as a badge of shame on the desk of any officer who approved an asylum application. A manager is also reported to have said of the asylum-seeker clients: "If it was up to me I'd take them all outside and shoot them."

Just as worrying was Perrett’s claim she was given the power to make legally binding decisions on whether asylum seekers were granted or refused asylum after five weeks of training. If life-changing decisions are being taken after an induction lasting just over a month, then the legitimacy of so many applications have to be questioned. People in desperate need may have been deported from the UK on a whim because of a lack of understanding and a lack of knowledge, stemming from a lack of adequate training.

As I write, a protest against charter flight deportations is taking place outside the Border Agency offices on Newport Road by No Borders South Wales. It has greater significance in the light of these allegations.

There have been calls for an investigation. I hope that no stone is left unturned if an inquiry is given the go-ahead and that robust action is taken if the allegations are proven. This behaviour has no place in Wales. Racist attitudes in a high-profile Government office charged with making life or death decisions should not be tolerated.

Nick Breakfast

In the last week or so the re-branded, caring and sharing Tories seem to have reverted to type. As the Tory party spin machine in Westminster recovers from sleepless nights over these comments, the Welsh Conservatives have now shown their mean streak by setting their sights on the popular free school breakfast scheme. Welcomed by parents and teachers alike, this initiative ensures children get the best possible start to the day by providing a decent meal. A nutritious breakfast has been shown to enhance concentration levels and improve social skills for those pupils taking part.

The Tories are now saying this money would be better spent elsewhere and that it should be the role of parents to provide breakfast. In an ideal world there is a possibility this argument could have merit but, as David Cameron likes to keep reminding us, we don’t live in an ideal world. The reality is that some children, for whatever reason, are not given breakfast at home before being sent to school and would therefore have to make it through to lunch time without having eaten any food. This not only impacts on the child’s health but also has long-term consequences for his or her education.

Of course the Tories have form for abolishing such schemes so it is not entirely unexpected that they are finally showing their true colours. However, have the Tories really looked at the benefits of this free breakfast initiative in close enough detail? Being able to leave the house that little bit earlier and drop your child at school for breakfast can, in many cases, be the crucial difference between a parent deciding whether it is worth going to work or not. Putting aside the advantages it holds for children, there are clear economic benefits to the free breakfast scheme. In their haste to slash public expenditure, the Tories seem to have overlooked this. Or is it Nick Bourne simply wants be known now as Nick Breakfast?