Budget fever grows but is Gideon up to the task?

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benefit cap, bubble, budget, business rates, cart, censure, Chancellor, Conservative, ConservativeHome, deficit, Democrat, finance, fuel, George, Gideon, help to buy, horse, housing, Lib Dem, Liberal, lorry, national insurance, NI, Osborne, pay, poll, pre-industrial, privatisation, privatise, privatising, Prosecution, public sector, social security, spending, tax, Tories, Tory, voodoo

Cart crash: In line with the theme explored in this article, not only is it likely that George Osborne won’t even have the right vehicle to carry his budget – he’ll probably crash it, too.

Part-time Chancellor Gideon George Osborne will be having another go at delivering a budget next week; while we can all hope he does better than the last four wrecks, experience – and a voodoo poll on the ConservativeHome website – suggests the opposite.

The poll asks readers to prioritise possible policies on a scale of one to 10, where one is “low” and 10 is “high”. The policies themselves?

“Cut spending further, so that the deficit can be reduced faster”. Clearly this is nonsense. Osborne’s massive spending cuts have, so far, delivered tiny reduction in the national deficit of only £7 billion – from £118 billion to £111 billion. In four years. Clearly, he needs to change his ways.

Other possibilities include cutting the higher rates of tax (or raising the threshold for them) – helping the very rich; extending National Insurance cuts for employers taking on young workers – helping employers; cutting business rates – helping businesspeople; and privatising more state assets, such as roads – helping rich investors and penalising the poor.

Other ideas intended to harm the poor include regionalising public sector pay, extending the freeze on public sector pay rises or cutting public sector pay, lowering the benefit cap to less than the current £26,000 per family and lowering a cap on broader social security spending that is yet to be introduced (it is scheduled for 2015).

All of the measures mentioned in the above two paragraphs will harm the British economy, rather than helping it. If Osborne includes any of them, he will deserve censure (if not prosecution, although it might be hard to find an offence on which to charge him after five years of Tory/Tory Democrat tinkering with the legal system).

By now, dear readers, some of you will be sitting with your blood boiling at this insolent blogger who’s telling you your prized policy ideas won’t work. You’re probably itching to demand what I would do to address the challenge.

I would have examined the economy from a different angle. Let’s look at it metaphorically.

Imagine the British economy is a haulage lorry or, better yet, a horse and cart. Tories are pushing us back towards pre-industrialism so we might as well get used to the idea. Either way, the job in hand is to take provisions to different parts of the locality that will allow the people there to prosper – and return with a share of that prosperity, to be distributed equally for the benefit of everyone.

Firstly, you need fuel. This is where we can prove that Osborne’s austerity is completely useless. How far can a lorry travel with an empty fuel tank? How far will a horse pull a cart if you don’t feed it? Not very far at all.

Then you need to make sure you’re providing the right kind of fuel. A diesel lorry won’t go far on petrol or vegetable oil before it starts to complain; give a horse the wrong kind of food and it will develop who-knows-what kind of digestion-related illness and keel over. This is what happens to an economy that is over-reliant on – for example – a single economy sector such as finance, or an economic ‘bubble’ like the housing growth triggered by Help to Buy (although this scheme could work well with the correct controls, in the same way you can probably keep a horse working with the correct medicine).

The result in both cases – no fuel or wrong fuel – is the same: Your supplies don’t get out to your people and they suffer as a result. The last four years of Tory/Tory Democrat rule has proved this.

In non-metaphorical terms: There must be investment, and it must be the right kind.

Then, of course, there is the question of what you have in the back of your lorry (or on the cart). You must be providing your people with what they need, otherwise there’s no point in making the journey and the fuel/food in which you have invested – in fact, the whole journey – will have been wasted (like Osborne’s last four budget attempts). Your choice of supplies will depend on what your people are doing – what crops they are growing or products they are making – and on whether these can be traded with your neighbours. If they have been misled into producing wares that can’t be traded, what good is that?

Get it right and you’ll be able to make a return trip laden with goods and supplies that will – with a bit of wise distribution and trade – help build up your society, meaning that the load might not be so great on the next trip. This means less fuel/horse feed will be needed and there won’t be as large a load in goods to be redistributed on the return journey (although an expanding economy means there might be farther to travel, so this must be recognised in the amount of fuel to be used).

That’s about as simple a metaphor as I can devise at the moment.

If I had to predict what will happen on Wednesday, though, I would probably expect Osborne to be demanding that we leave the lorry in the garage (or the horse in the yard), and struggle out on foot with all our burdens on our own back.

Not so much “all in it together” as “everyone for themselves” – and that’s how we’ll all be ruined.

Follow me on Twitter: @MidWalesMike

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Zones of growth – thoughts on how to improve Mid Wales’ economy

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Brecon, broadband, business rates, call for evidence, Enterprise Zones, film makers location office, government, Llandrindod Wells, Newtown, planning, Powys Local Growth Zones, sector focus, tax break, Welsh Government, Zone

Many of you may be aware of the proposal to create ‘Growth Zones’ in Powys – at Brecon, Llandrindod Wells and Newtown – roughly equivalent to the new Enterprise Zones created by the government elsewhere in the UK. My opinion is that these are a good idea. The Welsh Government has put out a call for evidence on the proposal and information can be found on its website here.

Unfortunately, the deadline for entries is June 1. I’m writing this on May 28 so, if you want to make a submission, you need to act fast!

What follows is my own submission. I want people to see what I’ve put forward because I think it might help them in shaping their own thoughts. I’m not saying it’s perfect because I hope others will have different or better ideas; I’m putting it up in the hope that it will stimulate your imagination, and the Welsh Government will get better submissions as a result.

I would also appreciate your comments and suggestions – just use the form at the bottom.

Here’s my submission:

All three possible locations must be able to compete with the Enterprise Zones that have already been announced, therefore the features common to all of those should be included here. These include: Government support to ensure super-fast broadband, achieved through guaranteeing the most supportive environment and, if necessary, public funding; low levels of regulation and planning controls; a 100 per cent business rate discount over a five year period for businesses that move into a Growth Zone during the course of this Parliament (although I recommend a graded scheme to reintroduce business rates thereafter, alongside a graded penalty scheme for businesses that choose to move away once the discount is removed); all business rates growth within the zone for a period of at least 25 years will be retained and shared by the local authority to support its economic priorities; and Government and local authority help to develop radically simplified planning approaches.

I believe funding should be provided for an office that would help film makers (cinema or television) find locations within Powys. Llandrindod Wells would be the best location (as it is in the centre of the county). Powys has breathtaking natural beauty that has gone unused by film makers, simply because nobody knows about it. A film locations office would bring income to landowners whose land would be used, and to residents who could be hired as ‘extras’ during filming.

Material I have read on Enterprise Zones has categorised them in certain ways, stating what tax breaks, planning controls and broadband levels might be possible, along with a line called ‘Sector Focus’, declaring what businesses should be encouraged into the zone. I would recommend:

Tax break: Save businesses money in foregone business rates.

Planning: Simplified regime permitted the change of use of existing buildings.

Broadband: Explore delivery of superfast broadband with suppliers.

This leaves the ‘Sector Focus’. I would like to propose several possibilities as follows, based on my knowledge of local industry and the possibilities that could be accommodated here in Powys:

Sector focus: Green technologies; Advanced technologies; Movable skills (small businesses that could benefit from working in a rural setting); sustainable agriculture (farming techniques that are beneficial to the environment); creative industries; energy sector (carbon-free/green).