After 35 years of Thatcherite economic policy pursued with vigour by both Tory and Labour UK Governments, the UK is the most unequal Member State of the European Union by some way when it comes to both income and wealth.
Inner London is the richest region in the Europe Union at the same time the communities I represent are amongst the poorest in the European Union despite only being only three hours away. The same can be said of Cornwall, the North East and North West of England, Yorkshire and Humber & Northern Ireland.
The legacy of a one trick pony economic policy based on the square mile of the City and inflating house prices and consumer spending has led to grotesque wealth inequalities within the UK which should shame us all. When India has a more progressive Gini Coefficient statistic you know you have got a problem.
Yet despite this wealth continues to be polarised, exacerbated by austerity policies that obviously hit the poorest areas harder as public investment is withdrawn. London and the South East are lavished with infrastructure development, meanwhile in Wales it is impossible to travel between the North and South of our country on the train within our own borders.
The UK’s highly centralised taxation system has not helped matters with revenues flowing in from all over the UK to London before distribution. The move towards fiscal devolution to Wales, Scotland, and Northern Ireland under the current government therefore is to be welcomed. However, why there is no consistency in terms of the lever being devolved is beyond my understanding. Corporation tax powers for Northern Ireland; full income tax powers for Scotland whereas Wales gets some minor taxes and a complicated sharing arrangement for income tax purposes. Fiscal powers for the Welsh Government would force it to prioritise economic growth in order to fund public services – and therefore the greater the exposure the better. At the moment it is merely a spending body with no incentive to develop the Welsh economy. Part-devolution however, will leave the door open to blame-shifting.
These growing wealth and income inequalities threaten the cohesiveness of the UK as a political entity and therefore I am amazed that Unionist politicians based in Wales seem content with defending the status quo.
The UK Government should embrace one of the best aspects of the European Union. Its regional policy aimed at converging the economies of the EU has led to three rounds of the highest level of structural funding for West Wales and the Valleys. The UK has no regional policy of its own and it is a glaring example of the failure of Westminster bubble politics.
Such is the seriousness of the situation we need a UK version of the Marshall plan as seen in Western Europe after the Second World War. We need an Infrastructure investment policy which looks beyond London and the South East. Foreign and Direct Investment needs to be incentivised to locate in the poorest parts of the State. In other words a reverse change from the current situation whereby London and the South East of England acts as a dark star sucking in wealth from other parts of the UK.
As Exchequers are set up to manage devolved and localised taxes, the Treasury needs to lose its judge and jury role over UK finances with the setting up of an arm’s length Funding Body to determine allocations across the State and arbitrate on future fiscal disputes.
My suggestion is that these ideas are encompassed in an Economic Fairness Bill, much in the same way that Germany following the fall of the wall immediately set out to equalise wealth between East and West.
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