Manifesto Check: Plaid Cymru rejects austerity, but their policies could cost taxpayers

Plaid Cymru will appeal to voters who oppose austerity. Matt Dunham/AP

Plaid Cymru’s manifesto on growth combines a clear rejection of austerity with a mix of industrial intervention and directed use of public expenditure to support and nurture the Welsh economy. This is line with the approach being taken by other smaller parties in the general election, including the SNP, the Greens and (in some respects) the Liberal Democrats. It is pitched at the sort of left-leaning voter these parties are hoping to attract away from Labour. The numbers more-or-less stack up, but there are issues around whether some of the policies would represent value for money for taxpayers.

Anti-austerity

Plaid’s approach is based around a rejection of the austerity policies, which the coalition government has followed for the past five years. This is in line with other smaller parties such as the SNP and the Greens and, to a lesser extent, the Labour Party. More widely, views on austerity are mixed. Already, 100 business leaders supported the continuation of austerity in The Telegraph, but a clear majority of the leading economists does not, instead arguing that it harms growth.

The manifesto argues that “the cuts … have had such a detrimental effect on our way of life and hit the poorest in our society the hardest”. Evidence from the Institute for Fiscal Studies supports this view, but on the other hand, the increase in taxes has fallen most heavily on the richest 10% (in terms of cash – but not as a share of income).

Investing in infrastructure

The manifesto says, “we will commit 1% extra of UK GDP to infrastructure investment each year. This would secure £800 million to invest in Welsh infrastructure projects each year.” This figure is broadly correct, providing that the 1% of UK’s £1.7 trillion GDP is allocated in proportion to population.

But if the investment were allocated according to GDP, the share of Wales would be only £578 million, giving a gap of £222 million. This is because Wales accounts for 4.8% of the UK population but only 3.4% of UK GDP (as of 2012.

Conflict of interests

The manifesto commits to “creating 50,000 jobs in Wales by giving more Welsh public sector contracts to companies working in Wales, so that our economy benefits more from the £4.3 billion spent by the Welsh public sector each year”. The figure of £4.3 billion is from 2013 and so is probably a slight under-estimate of the current figure. This represents about 25% of total pubic expenditure in Wales.

There is considerable controversy about the impact of public expenditure on employment, but an estimate of 50,000 jobs – equivalent to 1 job for every £86,000 of public expenditure – is not out of line with most estimates. However, ring fencing expenditure within the regional economy may conflict with getting value for money for taxpayers. For example, buying Welsh-made paperclips will support Welsh jobs, but may not be an attractive option for consumers if Chinese-made paperclips are half the price.

The Conversation’s Manifesto Check deploys academic expertise to scrutinise the parties’ plans.

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