Inflation continues in its upward spiral. The CPI annual inflation ’“ the Government’s target measure ’“ was 4.4 per cent in February, up from 4.0 per cent in January and is the highest point reached in 28 months. This will put pressure on the Bank of England to raise interest rates.
The inflation target set by government is 2 per cent and this has caused Mervyn King to put pen to paper to explain to the Chancellor the reason why the target is not being met.
That pen will again be out as a result of today’s figures, explaining that domestic heating costs, soaring oil prices and clothing and footwear where prices, overall, rose by 3.6 per cent following the January sales, all contributed to the inflation target being exceeded.
Whilst only three members of the Bank’s nine strong monetary policy committee voted for an interest rate hike to damp down on price rises last month it is unlikely that they will remain in the minority for much longer. Higher interest rates are coming sooner rather than later.
The RPI index, which is the measure of cost of living used in striking a wage bargain
was also 5.5 per cent in February, up from 5.1 per cent in January. So not much doubt what the benchmark for the pay deals will be this next year.
But if this wasn’t bad enough for young George, the Office of National Statistics dealt him another blow. They produced the latest figure on public sector net borrowing. This figure was £10.3 billion, a figure a lot higher than that expected by his friends in the City. they were expecting the figure to be nearer £8 billion.
In the light of these two set of economic indicators, what then can we expect from the Chancellor in his budget tomorrow?
The figures gives him little scope to prepare a goody bag for us all. There will be very little in the coffers for budget giveaways.
The budget will be a very cautious package, what he gives with one hand, he will take with another.
His fiscal stand will have to be tough if he is to prevent too large an increase in interest rates in the months to come.
For his dilemma is this. If the private sector is to expand, and it needs to expand to mop up the increased unemployment caused by cuts in the public sector, he must maintain low interest rates. But the inflation figures make this much more difficult to achieve.
So tomorrow’s budget can be summed up in those immortal words of Frankie Howard, “Woe, woe and thrice woe.”
‘There needs to be an orderly disengagement, if I can put it that way. We understand that as parties.’ So says Carwyn Jones, First Minister.
And the ’˜orderly disengagement’ he is referring to is how to break up the blissful coalition between Labour and Plaid Cymru that has ruled Wales these last four years.
But like every divorce, although the partners may want an amicable separation, there are always forces at work that mitigate against such a solution.
This separation is no exception. There are those that would introduce acrimony.
In this case its our shadow Secretary of State acting like the mother of the groom that says ’˜she was never good enough for you son.’
The words Peter Hain uses are different but the sentiment is the same, ‘It is difficult, I think, in the long-term to justify having a Deputy First Minister in the Welsh Assembly Government as ineffective as Ieuan Wyn Jones.’
In other words, – Carwyn Jones don’t think you can patch up your relationship with Plaid Cymru after May, the Labour party won’t tolerate it.
Now, clearly, if polls are to be believed the elections will go well for Labour. They may even have a majority. But because of the electoral system that majority will be small, one, possibly two.
The question is would any leader want to run an administration for four or even possibly a five year period with such a wafer thin majority. The answer is surely, no.
Carwyn Jones and I guess many if not all the Labour Assembly members recognize that in all likelihood a deal will have to be done with an opposition party to secure stable government.
There are only two choices Plaid Cymru or Peter Hain’s old party the Liberal Democrats. Which makes the most likely bedfellows?
A party that is already co-habiting elsewhere with Labour’s class enemy or a party that delivered without to much acrimony many of Labour’s manifesto commitments.
It’s not rocket science to work out which way it will go. I know it , you know it and so does Peter Hain.
The intriguing question is why has he decided in the last few weeks to put his tanks on Carwyn Jones’s lawn?
Does he hope that such posturing will endear him to his parliamentary colleagues? For he needs their support to muster those crucial votes needed to see him elected to the shadow cabinet in his own right.
For then and only then can he shed the cumbersome burden of shadow Welsh Secretary a post after last week’s referendum that is pretty meaningless.
In any stand-off between Carwyn Jones and Peter Hain surely the money must be on the only Labour leader that holds office in the UK, all be it with his little helpers in Plaid Cymru.
The referendum put’s right a wrong committed by the Labour Party on the people of Wales in 1995. For it was in that year the ruling clique of the Labour Party turned the conclusions of Labour policy commission on devolution on its head.
The Labour Commission collected evidence throughout Wales and the vast majority of the submissions received wanted the devolved body to make laws. This view was reflected in the final draft of the Commission’s report.
But, alas, the final report did not contain the policy. Why?
The Commission was swamped with representatives sent from the party leaders office and the shadow home secretary’s office to water down the report. So Messrs. Blair and Straw got their way and the spineless Wales Labour executive went along with these changes.
So Scotland got a real law making Parliament and Wales got its toothless Assembly.
It has taken a Commission by Lord Richard and a Convention run by Sir Emyr Jones Parry and an other Act of Parliament and now an unnecessary second referendum to give the Welsh people what they should have been on the table and voted on fourteen years ago in the 1997 referendum.
But now that these powers have finally been granted it is an opportunity for the parties in their manifestos next May to inspire with creative proposals as to how they will change Wales for the better.
The new settlement means that the Cardiff Bay politician can no longer blame Westminster. There is no hiding place. Law making rests firmly with the Assembly and they will be judged solely on their merits.
But does this all mean the end of the constitutional wrangling between Westminster and Wales? Not a bit of it.
There is still the vexed question of how Wales will should be funded. Scotland is moving ahead with new powers over their own finances. What about Wales? Will the Barnett formula be finally be scrapped and a new settlement that is more favorable to Wales’s needs emerge?
And what about other areas such as criminal justice and energy. How long will it be before the Assembly campaigns for power over these to be devolved? Will the agenda of Lloyd George and Keir Hardy of real Home rule be the next call to arms. We shall see.
For certain this referendum was a vote to put right what the Welsh people were cheated of on the ’˜90s. The next generation will have their own ideas of what they want for Wales and the political institutions will have to change to reflect these aspirations.
Below are the results as published by the Electoral Commission