LibDem Maths

It's clear enough from the headlines in today's Western Mail:

Lib-Dems £3.1bn plan for green jobs

The Liberal Democrats yesterday launched a £3.1bn plan to create green jobs and bring £125m to Wales.

Western Mail, 20 April 2010

Yet the first thing that struck me was that this was far from being a good deal for Wales. Nobody needs a calculator to work out that our rightful 5% share of £3.1bn is £155m ... so we in Wales would immediately be short-changed relative to the remainder of the UK by £30m. On second thoughts, perhaps the LibDems do need someone to buy them a calculator.


But let's leave that to one side, because any additional spending on the Green economy is something I would welcome. Let's look to see if this still a good idea ... even if the rest of the UK will benefit from the money more than Wales. Their version of the story is here.

Did I say additional spending? Well, it turns out that it isn't additional spending at all. This is what they say:

The plans target £3.1bn of public spending that can be stopped and the money used to create jobs and protect the environment.

But as we might expect, there is absolutely no mention of what particular areas of public spending are in line to be "stopped". The Health Service? Education? Police? The Fire and Rescue services? Who knows? ... for the LibDems certain aren't telling us! We are simply expected to trust Kirsty Williams when she says these are "credible and costed plans". My guess is that these must yet more of the fabled "efficiency savings" that spring up whenever an election is called ... but haven't the LibDems banked on these savings at least once already? Perhaps we should just marvel at how a new batch of these savings can be plucked off the tree whenever the LibDems want to publicize a "new" idea.


But let's still give them the benefit of the doubt and look at how they intend to spend this money. As it happens, the MPs that we are about to elect to Westminster are not going to spend it at all ... they're going to give this £125m to the Assembly with "suggestions" about how it should be spent, since most of the things they want to spend it on in England are devolved matters in Wales and Scotland.

But here we hit a snag. For even though the LibDems aren't specific about which public spending budgets they will "stop" in order to create this new "Green" package, the Welsh block grant will have to be reduced by 5% of the £3.1bn they intend to save in the UK as a whole, because the Barnett Formula works both ways. So in fact this loudly proclaimed £125m—which would have short-changed Wales by £30m if it were additional money—is in fact a £30m cut in the block grant Wales would otherwise get ... a block grant that we already know is going to be cut back, and in all likelihood will be cut back further no matter which, or which combination, of the three UK parties forms the next Westminster Government.

In short, you couldn't make it up! Unless you're a LibDem, of course. This is the sort of maths that only makes sense on planet Clegg as seen from its attendant moon, Kirstopia.


Now at this point I want to be clear. I do agree that we should invest more money in the sort of things that the LibDems "suggest" the Welsh Government should spend things on. But devolution doesn't work that way. Those decisions are not for our MPs to take in Westminster ... the LibDems should save their "suggestions" for the Assembly elections next year, because it will be up to the AMs we elect to the Assembly to decide how we spend our block grant. That will include, if the LibDems get into a position to implement this new plan of theirs, the headache of how to do things with £30m less than we would otherwise be getting.

And many of their suggestions turn out to be things the Welsh Government is already doing. For example, the LibDems suggestion to expand the Home Energy Efficiency Scheme would be fine but, on a pro-rata basis, we would not have £20m more to do it with, but about £5m less.

The LibDems might have their hearts in the right place, but as soon as you look at what they propose in any degree of detail it doesn't take long to realize that it's the disconnexion from their heads that is the problem. It's all very well to put a "Green label" on any idea you come up with. But to really create a more Green economy, our thinking needs to be much more radical ... and our maths much more accurate.

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Anonymous said...

The Western Mail article says they will fund it by "reforming tax credits and stopping Government payments to the Child Trust Fund".

Anonymous said...

The Western Mail article says they will fund it by "reforming tax credits and stopping Government payments to the Child Trust Fund".

MH said...

I'm not entirely sure what's happened, but I've received a few email notifications for the same anonymous comment, though none of them has actually appeared on the blog. It said:

The Western Mail article says they will fund it by "reforming tax credits and stopping Government payments to the Child Trust Fund".

Thanks, Anon, and apologies if you were confused about what happened to your comment. It does say that, but I tended to discount it because the full article on the LibDem website (which I linked to) didn't say that. I thought it was merely a gloss by the reporter—that he was just mentioning two areas in which LibDems would get money to pay for their programme in general—not least because reforming tax credits doesn't exactly fit the description of "public spending that can be stopped".

But I've just looked done some Googling, and came up with this article:

Clegg unveils spending priorities

This says,

"The party plans to raise £3.2bn by abolishing tax credits for better-off households, a measure which would affect about 2.5 million people" and "other proposed savings include ... scrapping the Child Trust Fund - which would raise £300m".

So the figures more or less match up with this £3.1m Green package. However, this BBC report says that the money (together with money from a few other sources) will be used, "to spend billions more on childcare and schools".

The same money can't be used twice, so the LibDems seem to be double counting.


However, I accept that if the money for the Green package were to come from abolishing tax credits, it would mean the UK Treasury would collect more tax. This would not constitute a cut in any public spending, so we would not lose money from the block grant under Barnett. But Wales would still be short changed by £30m through not getting our fair 5% share of the £3.1bn package.

Anonymous said...

Green economy, kirsty w does not knw what green is

Iestyn said...

Surely we can always trust the Lib Dems not to manipulate figures. After all "Only the Lib Dems have a chance of beating (enter your MPs name) in this seat..." If their electoral manipualtions are an indication of things to come, heaven help us all!

Illtyd Luke said...

It's a disgrace that Nick Clegg avoided scrutiny because the other two UK leaders were so weak. A Plaid or SNP voice would have been able to outflank him, quite easily. Syniadau could have done the job.

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