Parity with Scotland?

There are many things to criticize Plaid Cymru for, but the one thing that has disturbed me most is in fact the central plank of their election campaign: namely that they want parity with Scotland both in terms of devolved powers and in terms of funding.

I don't have a particular problem with parity of devolved powers because, as things stand, our National Assembly has fewer powers than the Scottish Parliament, and therefore parity would be a practical first step. I would only qualify this by saying that I wouldn't want the powers of the Scottish Parliament to act as a limit. To give one example: it looks likely that powers to set the rate of Corporation Tax will be devolved to the Six Counties, but not to Scotland. Therefore I would want Wales to have this power too, irrespective of whether or not Scotland gets it.

For me, the principle is that I want everything that is currently decided at Westminster to be decided by our National Assembly ... in other words, independence.


But I do have a very big problem with the idea that Wales should get parity of funding with Scotland. And I am frankly amazed that Plaid Cymru has abandoned its previous position of wanting fair funding for Wales, and now wants something that is patently unfair.

Of course I understand why and how it happened, but that doesn't excuse Plaid's behaviour. The Holtham Commission did a good piece of work, demonstrating that Wales was underfunded relative to need on the basis of an objective formula. At that time, the block grant to the National Assembly fell short of what we would get by applying this needs-based formula by roughly £300m a year. This was set to get worse because of the Barnett Squeeze, but in fact has not got worse because cuts in public expenditure have put the Squeeze into reverse. However the shortfall will increase again when public expenditure starts to rise over the next few years.

Because of this shortfall, coupled with general discontent with the way Barnett worked anyway with regard to Scotland, there seemed to be consensus among all the parties in the Assembly (the Tories, Labour and LibDems as well as Plaid Cymru) that Barnett had reached the end of its working life and needed to be replaced. The problem is that just before the Scottish independence referendum, those three Unionist parties panicked in the face of closer than expected opinion polls, and made a vow to retain Barnett.

It was at this point that Plaid Cymru panicked ... with the result that they came up with a policy to demand the same amount of funding per head as Scotland gets. Of course not all public spending in Scotland is channelled through the Scottish Parliament (for example most benefits and pensions are paid directly to individuals and families) but if the same "block grant per head" were paid to our National Assembly as is paid to the Scottish Parliament it would indeed, after making allowance for different devolved functions, result in Wales getting something like an additional £1.2bn in block grant.

Now what's wrong with that? Well, to put it bluntly, any child could see what's wrong with it. Why pick Scotland? Why not pick England instead and demand that Wales gets a block grant equivalent to the same level of funding per head as England? Simple, because if Plaid Cymru picked England, Wales would get much less of a block grant than we do now. In other words, picking Scotland is a blatantly biased choice. If the principle you adopt is equal spending per head, then that has to apply across the whole of the United Kingdom—which, by the way, is UKIP's policy—it cannot be applied selectively.

In effect what Plaid Cymru are doing is asking English taxpayers to give Wales much more than we need on any objective basis, and very much more than they give themselves. It is a wicked and stupid idea, and I have to say I'm very glad that I am no longer associated with a party that can come up with something that can only be described as a total perversion of any concept of either fairness or reason.


In principle there are some very basic rules about how to redistribute funding between different parts of a state. We need to consider two things: how much each part of the state produces in terms of tax revenue, and how much each part of the state needs. One sum will be usually be higher than the other, and an equitable funding formula must be somewhere between the two. It cannot be outside that range.

A needs-based formula on its own will not work because, as the Holtham Commission noted, if it were applied to Scotland, it would result in Scotland getting maybe £4bn a year less in block grant than it does now. However that does not mean that Scotland is over-funded, because Scotland provides more per head in tax revenue to the Treasury than most other parts of the UK. In Scotland's case, the proportion of tax revenue it contributes to the Treasury is more than its relative needs, therefore it is right that Scotland gets more than it needs.

But in the case of Wales, what we produce in tax revenue per head is quite a bit lower than other parts of the UK, and the sum is also lower than what we objectively need, based on the formula used by Holtham (which, by the way, is based on the way money is distributed by departments within England). It is therefore reasonable and justified to say that Wales deserves more money, but only as much as will bring us up towards what we objectively need ... not more than that. To ask for or expect more is nothing but greed. Yet this is what Plaid Cymru have sunk to. It's sickening and shameful.


It's also deceitful, because it is undeliverable. As I showed in the last post, even if the SNP win upwards of 50 seats on Thursday, they will not get to determine the direction of government. The same would be just as true if Plaid Cymru won 35 seats in Wales. 533 English MPs will never vote to give Wales more than it either contributes to the Treasury or needs.

That's not to say that there are other aspects of the way Wales is funded that can't be improved. In addition to the £300m shortfall in the block grant (or whatever it now is when the Holtham formula is applied) we can rightly call for our fair share of infrastructure investment so that, for example, Wales gets a pro-rata share of rail infrastructure investment or research funding relative to the rest of the UK. But we must make a reasoned and rational case for this, and we weaken any case we make if we, at the same time, are making unreasonable and irrational demands.


In closing, I would also ask people to consider, in practical terms, what the result of getting more money from England than we either need or contribute to the Treasury would be. How on earth would it help us stand on our own two feet as a nation? It would simply tie us closer into dependency on England. Yet this is party policy ... from a party that supposedly wants independence! Perhaps, under better leadership, Plaid Cymru might become a party that is worth voting for again ... but it certainly isn't worth voting for them now.

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Cockroaches, Kingmakers

The LibDems are rightly, though not flatteringly, characterized as the cockroaches of UK politics. Very hard to eradicate. Even when we might think we've got rid of them, they survive. Their overall share of the vote will certainly fall in this election, but I do not think the LibDems will do as badly as the pundits suggest in terms of seats. The average prediction at the moment is in the high 20s, but I think they'll get more than 30.

In Wales, I think Mark Williams will hold on to Ceredigion. The number one reason not to vote for the LibDems has always been tuition fees, but in any fight between the LibDems and Plaid Cymru (and Ceredigion is the only such fight) I don't think people will have forgotten that the Plaid Cymru leadership, against the wishes of the membership, broke exactly the same election promise when they introduced tuition fees in Wales after going into coalition with Labour in 2007. The details are here. I am fairly sure that the LibDems will lose Cardiff Central to Labour, but am less sure about the Tories being able to take Brecon and Radnorshire. However that is a side issue, in this post I want to concentrate on the UK-wide picture.


The other thing that marks out the LibDems is that they are prepared get into bed with either the Tories or with Labour. Indeed they have made this central to their campaign with their rather self-important idea of acting as the Tories' heart or Labour's brain. This will make them pivotal in determining who forms the next Westminster government. As I hope to show in this post, it is actually quite irrelevant how well other parties perform, because even though the SNP, the Greens and Plaid Cymru might win twice as many seats as the LibDems, these parties have sidelined themselves by refusing to have anything to do with the Tories.


Who the LibDems get into bed with will depend on the electoral arithmetic. But I think the number of seats the other parties get will work out in such a way that they will have a choice about who they support ... and I think they will choose to do a deal with Labour.

A coalition with the Tories would mean we get a continuation of what we've had for the past five years. But a coalition with Labour would be better for the LibDems in several ways: it would help remove the toxicity of the past five years and might lead to them re-gaining previous left-leaning LibDem supporters; it would show the public at large that they can be in government (and therefore be relevant) in a tight election irrespective of which main party gets the most seats; and, most importantly, it would mean that there won't be a referendum on leaving the EU.

The problem, however, is one of perceived legitimacy. Will they be able to get away with doing a deal with Labour, especially if the Tories get more seats than Labour? This will depend on the arithmetic.

Assuming no abstentions, any potential government would need to get about 322 to survive a vote of confidence, because of the Speaker and Sinn Fein. So if the Tories got 290 and came to a coalition agreement with the LibDems on 35, that 325 would just be sufficient. On these numbers, it would actually be very difficult for the LibDems to avoid this, because they have said that they consider themselves duty-bound to talk to the party that gets the most seats first. But I don't think the Tories (or Tories and LibDems together) will get that many seats.

If the LibDems really wanted to go into coalition with the Tories, their combined total could, at a pinch, go down to 315, bolstered by an agreement (not a coalition) with the DUP (say 8 seats) and the fact that UKIP (say 3 seats) would not vote against it, because a Tory-led government is the only way they would get the referendum on EU membership they want more than anything else. But because the LibDems don't really want another coalition with the Tories, they should be able to shy away from such an arrangement, claiming that it would be unstable.


In contrast, the electoral arithmetic for a coalition between Labour and the LibDems is quite different. This is because any potential opposition to such a coalition would be divided. It is all but impossible to imagine the Tories, UKIP and the DUP voting in the same way as the so-called "progressive alliance" of the SNP, Greens and Plaid Cymru. The opposition on the left would always cancel out the opposition on the right. The Tories would, on principle and as we would expect, always vote against a Labour/LibDem coalition government in any vote of confidence; but, more critically, the SNP and Plaid Cymru could not vote against it because the only alternative would be a Tory-led government. The numbers mean they would probably be able to abstain, but I'm sure they would hold their noses and vote for the Labour/LibDem coalition if they had to.

For this reason, a Labour/LibDem coalition would not need to get 322 seats between them. They could govern as a minority with a surprisingly low number of seats. Indeed the more seats the SNP, Greens and Plaid win, the smaller the combined total of Labour and LibDem MPs would need to be. The only problem is one of perceived legitimacy, for it would be very hard to avoid an outcry if the combined total of Labour and LibDem MPs were less than the number of Tory MPs.

I think the Tories will be the largest party in the Commons with between 280 and 285 seats. But if the combined number of Labour and LibDem seats is more than this, they will form the next government. This means that Labour only need to get 255 or so seats on Thursday ... something that I think they'll manage quite comfortably. In fact I think they'll get about 270.


The hard truth for those who support the SNP, Greens and Plaid Cymru is that they will, in effect, get no say in who forms the next Westminster government. Labour and the LibDems will be able to ignore them, because the only way they could have any influence would be by siding with the Tories ... and it would be electoral suicide for them to do so.

Perhaps they will be able to exercise some influence on some individual issues over the next five years, but it will be a game of brinkmanship that they will have to play very carefully if they are to avoid accusations from Labour that they are siding with the Tories.


The big question is what the LibDems are going to demand in return for choosing Labour. As I see it, there's hardly any difference between Labour and the LibDems in terms of austerity, and therefore the only thing that really matters in the long term is changing the electoral system. It is worth remembering that Labour offered changing to the Alternative Vote without a referendum in the negotiations following the 2010 election55. I think the LibDems made a huge mistake by not taking up this offer, for even if that government were to have proved unstable, the following election would be that much fairer.

That offer cannot be made now because AV was overwhelmingly rejected in the 2011 referendum and that decision cannot be ignored. But, paradoxically, that defeat might help. We need to remember that AV is not a proportional system, and an element of proportionality is what we need. My preference will always be for STV, largely because it puts choice of who is elected in the hands of voters rather than parties; but the additional member system is not such a bad second best. What matters is the number of additional members compared with the number of constituency members. If, as in our National Assembly, the number is low (20 additional members and 40 constituency members) there is still a considerable degree of first-past-the-post bias. But if, as in the Scottish Parliament, the number is higher (56 additional members and 73 constituency members) the number of seats more closely reflects the number of votes cast ... although not completely, for in the 2011 election the SNP achieved an absolute majority of seats with only 44% of the vote.

More by luck than judgement the LibDems are now going to be given a second chance to introduce the electoral reform they have always claimed to stand for. It would be unforgivable for them to squander it again.

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