Part of the debate – in the Senedd at 7:02 pm on 9 February 2021.
Diolch yn fawr, Llywydd. I fully agree with the indictment that we just heard from Alun Davies of both the Welsh Government and, indeed, the United Kingdom Government for the limitations that we are faced with in this debate. It's a bit like a debate about moving the deckchairs on the Titanic as the Welsh economy hurtles towards the iceberg, and that's for two reasons. First of all, the Government's budget is of course restrained by the restrictions imposed by the UK Government, but also because health and education gobble up by far the lion's share of the total budget in Wales, more than 75 per cent, so there is a limit to the discretionary expenditure that the Government has at its disposal, which we can debate this afternoon.
The fundamental reality after 20 years of Labour Government is that Wales is not only older and sicker than other parts of the United Kingdom, but it is also poorer. We're at the bottom of the income tables of the UK for raising revenue in order to pay for the public services that are delivered—at less than £10,000 per head, compared with nearly £20,000 per head in London. As Adam Price pointed out in First Minister's questions this afternoon, the Welsh Government had a noble ambition to end fuel poverty by 2018 and end child poverty by 2020, and in both of those it has spectacularly failed.
On the one hand the budget is too small to pay for public services that we all want in Wales, and secondly, the Welsh Government lacks the tax and policy levers in so many areas that are required to make a real difference to the size of the economy, as Alun Davies pointed out. It's either that we have to raise more in taxes or we have to grow the economy, and the Welsh Government finds it very, very difficult to do either. Within the last year or so, the Welsh Government has had to write off nearly £500 million of NHS debts that have been run up since 2013, otherwise the health service would have been in an even worse state than it is now.
In other respects also, the Welsh Government does have levers of power that it insists on using in a way that is counterproductive from its own perspective in terms of improving the economy and increasing the well-being of the people of Wales. For example, in respect of environmental policy—green policy on renewable energy, et cetera—the effect of its policy is that it's using its powers to damage businesses and further impoverish the poor whilst pouring cash into the pockets of millionaire developers, who are invariably based in England. And meanwhile, the poorer of Wales in places like Blaenau Gwent have to pay exaggerated electricity bills in order to keep warm in the winter. Now, an average of £200 per household on everybody's electricity bill is accounted for by green taxes and charges.
I think what this debate illustrates is that the halfway house of devolution simply doesn't work, and I believe it can't work because public expenditure being constrained by the UK Treasury is never going to be a workable answer to Wales's problems. On the one hand, Westminster won't give Wales more cash. Why would a Tory Government in Westminster ever want to give a Labour Government in Cardiff more cash? Well, the answer is it won't. When we had a Labour Government in Westminster, that didn't see anything change very much either. The Barnett formula remains as it was in 1978 and Wales is institutionally disadvantaged by that.
On the other hand, independence is, I believe, a fiscal fantasy. The fiscal gap in Wales—the difference between what Wales raises or can raise in taxes and what the Government actually spends at all levels in Wales—is 25 per cent of Wales's national income, £4,300 per head. If we did have independence, that would immediately see either a collapse of Government spending in Wales or massive increases in taxation, although Rhun ap Iorwerth a moment ago was inveighing against the iniquity of the UK Government imposing borrowing restrictions on the Welsh Government. Well, I know that he has an insatiable appetite for English taxpayers' money, but I don't think the English taxpayer would be prepared to indulge him. So, the reality is that independence of Wales is bound to lead to that kind of squeeze that I've just mentioned.
On the other hand, the Welsh Government does seem to have plenty of money, in some respects, to waste. We know we spent £114 million on the M4 inquiry around Newport, although the First Minister said he would have vetoed the decision to have the M4 improvements whatever the inquiry had said. And—