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Kwarteng gambles on rush for growth

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CHANCELLOR of the Exchequer Kwasi Kwarteng unveiled his and Liz Truss’s economic vision for the UK on Friday morning.

The headlines are straightforward.

There will be £45bn in tax cuts by 2027; however, the largest cuts – national insurance cuts, the abolition of the cap on bonuses and the highest income tax rate- benefit only high earners.

MAIN POLICIES

Cut in the basic rate of income tax to 19% from April 2023;

National Insurance will not rise as scheduled, and the Government will reverse the current year rise as of November 6;

New Health and Social Care Levy to pay for the NHS will not be introduced;

The top rate of income tax was cut from 45% to 40%;

Cancel the rise in corporation tax which was due to increase from 19% to 25% in April 2023;

Rules around universal credit tightened by reducing benefits if people don’t fulfil job search commitments;

VAT-free shopping for overseas visitors;

End of the cap on bankers’ bonuses;

Planned increases in the duties on beer, cider, wine, and spirits cancelled;

Government to discuss setting up investment zones with 38 local areas in England.

Alongside the above, the Chancellor announced plans to remove environmental safeguards for building developments and reduce the regulatory burden on financial institutions.

KWARTENG LEAVES LABOUR AN OPEN GOAL

In an interview with Rishi Sunak during the Conservative leadership contest, Nick Robinson observed that it would be a nasty surprise for the former Chancellor when he found out who’d been in power for the last twelve years.

Kwasi Kwarteng followed Liz Truss’s preferred method of operation: he pretended they hadn’t happened.

The Chancellor comprehensively dumped on the policies pursued over the last dozen years by successive Conservative governments, for a decade of which Liz Truss has been a member.

His statement was, as one ministerial colleague said, “a game changer”, although perhaps not in the way he envisaged.

So complete was the change of economic policy that it leaves an open question about how Mr Kwarteng and his Cabinet colleagues ended up in the same political party as most of their backbench colleagues and served under the last three Conservative leaders.

Shadow Chancellor Rachel Reeves did not miss the open goal. Even as Mr Kwarteng and Ms Truss shook their heads on the government benches, she hammered home that the Chancellor’s statement was an admission the record of Conservative governments since 2010 was one of a failure to deliver growth or a viable economic plan.

THE SUPPLY SIDE FIX

The Chancellor and Prime Minister’s rationale is that cutting taxes for the already well-off will benefit all citizens as they are incentivised to invest and act in entrepreneurial ways. In addition, reducing regulation for businesses will encourage increased commercial enterprise.

They believe the growth stimulated will make up for any loss in tax revenues as increased economic activity, encouraged by lower taxes, leads to increased government revenues.

That approach is called supply-side economics, which focuses on increasing the supply of goods and services through growth.

In every developed nation where the Government’s brand of economics has been tried, two things have happened: a cataclysmic bust has followed a short-term burst of economic activity.

In addition, wealth inequalities – and the UK is already grossly unequal – are embedded and made worse.

Low taxes on the wealthiest do not distinguish between those who generate wealth through their industry or create economic activity through business investment and those who inherit wealth or sit on capital without producing anything.

“THE RICH WILL REJOICE”

Wales’s Finance Minister, Rebecca Evans MS, responded: “Rebecca Evans, Minister for Finance and Local Government, said: “Instead of delivering meaningful, targeted support to those who need help the most, the Chancellor prioritises funding for tax cuts for the rich, unlimited bonuses for bankers, and protecting the profits of big energy companies.

“Instead of increasing funding for public services in line with inflation, we get a Chancellor blithely ignoring stretched budgets as public services find their money is not going as far as it did before.”

Plaid Regional MS Cefin Campbell said: “This Budget will see the rich rejoice as their bonuses rocket and their tax bill sliced, once again it will be the poorest and most vulnerable bearing the brunt of the disastrous cost of living crisis.”

 Plaid Cymru’s Treasury spokesperson, Ben Lake MP, added: “Tax cuts for the super-rich will do absolutely nothing to drive growth in the Welsh economy.

“I urge the UK Government to recognise that our Government in Wales must be given the fiscal tools to unlock our economic potential ourselves. That is the only way to improve the lives of people across Wales.”

Welsh Conservative Shadow Minister for Finance, Peter Fox MS, said: “Today shows that the UK Conservative Government has a comprehensive plan to provide a sharp boost to the economy by putting cash back into people’s pockets. Labour in Wales has the power to cut taxes in Wales but chooses not to.

“Mark Drakeford needs to take a leaf out of Liz Truss’ book and take immediate action to support hard-working people and struggling businesses, stimulating the Welsh economy rather than stifling it.”

Scott Corfe, Research Director at Social Market Foundation, said: “The Chancellor is taking a very high-risk gamble with the economy.

“If his package of enormous tax cuts and ‘supply side reforms’ fails to translate into significantly higher economic growth, we risk further falls in the pound and surging gilt yields as investors lose confidence in our ability to pay our way in the world.

“That, in turn, means higher inflation, an unsustainable trajectory for the public finances and steeper interest rate rises – potentially deepening rather than alleviating the cost of living crisis.”

News

Pembrokeshire County Council invites public feedback on budget plans

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PEMBROKESHIRE County Council is calling on residents to share their views on the upcoming budget as it faces significant financial pressures.

The consultation, open until January 5, aims to identify which services are most valued by the community and where savings could be made.

An update on the provisional funding settlement from the Welsh Government was presented to the full council last week. Councillor Joshua Beynon, Cabinet Member for Finance and Efficiencies, noted that while the 3.6% increase—equating to an additional £8.1 million—was more favourable than expected, it still leaves a funding gap of approximately £28.1 million.

Councillor Beynon said: “Difficult decisions lie ahead despite the improved settlement. We need to prioritise services that matter most to our residents.”

Detailed reports on the settlement’s impact and the projected funding shortfall will be discussed by the cabinet and scrutiny committees early next year, before being presented to the full council in February.

Residents can have their say by completing an online response form available on the council’s website. A budget modelling tool is also provided for public use.

Paper copies of the response form can be requested by calling 01437 764551 or emailing [email protected].

All responses must be submitted by January 5.

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Business

Holyhead closure: Storm damage could delay reopening until March

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HOLYHEAD port faces an extended closure following significant storm damage, with fears it may not reopen until March. The disruption has caused widespread consequences for trade, travel, and postal services across the Irish Sea.

The Terminal 3 berth, used by Irish Ferries, sustained extensive damage during Storm Darragh earlier this month. Drone footage revealed a ‘dolphin’ platform had fallen into the sea, exacerbating the situation and impacting the adjoining terminal used by Stena Line.

Currently, all sailings are suspended until January 15, though experts warn this date may be overly optimistic. Garrett Bridgeman, managing director of An Post, Ireland’s national postal service, said: “I don’t think January 15 looks like the date. If you look at the level of work that needs to be done and the safety checks required afterwards, February or March seems more realistic.”

Stena Line stated their priority remains resuming operations safely, while the Marine Accident Investigation Branch (MAIB) is conducting an inquiry into the incident. A spokesperson for MAIB confirmed inspectors are reviewing evidence to understand the circumstances that led to the damage.

The Welsh Government has implemented contingency plans, with additional sailings arranged from Wales and the Mersey area despite challenging weather conditions. Welsh Transport Minister Ken Skates said: “This is a challenge we have never faced before, but we’ll continue working with UK and Irish governments to support businesses and travellers.”

Increased pressure on Fishguard and Pembroke ports

Pembroke Port this week (Images: Martin Cavaney)

With Holyhead out of action, Pembrokeshire’s ports—Fishguard and Pembroke Dock—are facing increased pressure to handle additional sailings. Stena Line and Irish Ferries have already announced extra services from these ports to help ease the disruption.

Irish Ferries has confirmed it will launch a new service from Fishguard, while Pembroke Dock is also experiencing heightened activity with extra crossings scheduled. Passengers and freight operators are urged to check ferry company websites for the latest updates.

Cabinet Secretary for Transport and North Wales Ken Skates praised the efforts of ferry operators and local authorities in managing the surge in activity at Pembrokeshire’s ports. “Both Fishguard and Pembroke Dock are playing a crucial role in maintaining the flow of goods and passengers across the Irish Sea during this unprecedented disruption,” he said.

Local authorities and Transport for Wales are working to ensure traffic flows smoothly around these ports, with additional measures in place to minimise congestion and delays.

Meanwhile, the Irish Road Haulage Association (IRHA) has expressed growing frustration with the lack of clear communication from Holyhead Port authorities. IRHA President Ger Hyland said: “We need correct and true information with a definite timeline. The piecemeal updates have been unhelpful.”

Hyland highlighted the financial toll on hauliers, with some operators facing losses of up to €3,000 per vehicle weekly. He urged ferry companies to increase their efforts to ease the crisis and called on the Irish government to explore financial compensation for affected businesses.

The situation has been escalated to UK Prime Minister Keir Starmer, with calls for direct intervention to expedite repairs and alternative arrangements. Minister of State James Lawless, who met with haulage industry leaders, acknowledged the urgent need for clarity and support.

With Pembrokeshire ports now under increased strain, stakeholders are closely monitoring the situation, awaiting updates from Stena Line in mid-January.

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Education

Steinbeck’s Of Mice and Men cancelled in Wales over racial concerns

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WJEC, the Cardiff-based Welsh exam board, has announced that John Steinbeck’s Of Mice and Men will no longer be included in the GCSE English syllabus in Wales. The decision comes amid concerns over the book’s repeated use of racial slurs and its potential emotional impact on students.

First published in 1937, the novella explores the friendship between Lennie and George as they navigate life during the Great Depression. Despite its literary significance, the text will be phased out from classrooms starting in September.

Rocio Cifuentes, the Children’s Commissioner for Wales, supported the decision, describing the text as “psychologically and emotionally harmful” to Black students.

She explained: “During our research into racism in schools, many Black children specifically mentioned this text and the harm it caused them.”

In Of Mice and Men, the character Crooks, a Black stable hand, is subjected to racial slurs and repeated use of the N-word.

‘Not Censorship’

Ms Cifuentes emphasised that the decision was not about censorship but safeguarding students’ wellbeing.

“This is about protecting children who have told us how harmful classroom discussions around this text have been for them,” she said.

“They’ve often been the only Black child in the room when these discussions occur, surrounded by derogatory depictions of people who look like them.”

WJEC said the decision was part of a broader overhaul that merges English Language and Literature into one GCSE. The board also employed an anti-racism consultant to advise on the selection of appropriate texts.

A WJEC spokesperson said: “We’ve provided a choice of works from writers of diverse backgrounds, nationalities, genders, and communities. This new selection aims to enrich the educational experience with themes that resonate with modern learners.”

Tory Criticism

Natasha Asghar MS, the Shadow Education Secretary, has spoken out against the decision, arguing that banning the book is counterproductive and limits educational opportunities.

“Instead of banning Of Mice and Men, we should teach it within its historical context, showing students how overt racism and sexism were commonplace and accepted in the past, and why this was harmful and wrong.

“Censorship doesn’t solve the problem; it prevents young people from confronting and understanding these prejudices, some of which, sadly, continue.

“Even in 2024, we continue to see racism and sexism in society. If we want to tackle this, then instead of banning a classic text, we would do better to challenge media companies that produce music containing misogynistic language and words with racist connotations.”

Teachers React

Rhian Evans, an English teacher at Ysgol Gyfun Gymraeg Bro Myrddin in Carmarthen, acknowledged the book’s value but understood the reasoning behind its removal.

She said: “We always addressed the use of the N-word carefully in class, discussing why it shouldn’t be repeated. But as a white woman, I can never fully understand how it feels for a child of colour to encounter that word in an educational setting.”

She added: “There are other authors from diverse backgrounds who explore similar themes in ways more relevant to today’s students.”

Previously, Of Mice and Men and Harper Lee’s To Kill a Mockingbird were removed from the OCR English Literature syllabus in 2014, after then-Education Secretary Michael Gove pushed for the inclusion of more British authors.

The updated WJEC syllabus includes classics such as Jane Austen’s Pride and Prejudice, Charles Dickens’ A Christmas Carol, and William Golding’s Lord of the Flies. Contemporary additions include Matt Haig’s The Midnight Library and Christy Lefteri’s The Beekeeper of Aleppo.

The changes aim to ensure a more inclusive and representative literary curriculum for Welsh students.

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