Welsh Labour made the wrong choices and now the consequences.

There is an election brewing and the Welsh Labour government is desperate.

You can tell how desperate by the constant haranguing by the First Minister and The High Commissioner for Wales Stevens.

In an attempt to highlight the benefits of two governments working together, they point to goodies coming to Wales due to that cooperation.

It’s Spin.

Billions coming to Wales, they say, from this cooperation.

No. Billions coming to Wales, over 10 years, because of UK government spending in England. 

It is a constitutional agreement, not a friendly gesture.

Neither is it billions that will remain in Wales. It is money used to lever more out of Wales.

Where is the financial legacy of  Wales coal and steel. Or the electronic industry, the auto industry.

Just jobs. Jobs that disappeared when the industries left.

What about the UK spending on Wales railway stations?

Well railway infrastructure is the UK responsibility and the’ friendly ‘ relationship only goes so far. The developments pointed to,, would not go ahead without a significant financial contribution by the Welsh government, even though it is not their responsibility.

And then there are the energy projects bringing ’  billions in investment ‘ and  ‘ thousands of jobs ‘

The Arwel y Mor proposal in North Wales is the first in Wales for a decade.

The construction jobs will be finished in 2 years and permanent jobs will total 50.

As for the supply chain. The next door neighbour, Gwynt y Mor, A billion pound project had less than 5% of its supply chain in Welsh or Wales based companies, with none in technology or maintenance.

As for the billions benefitting Wales. The developers are a foreign companies, with the profits heading abroad. The license fees issued by the Crown Estate and the proceeds to the UK Treasury as does any tax revenues.

As for Wales, it gets 50 long term jobs, although not guaranteed to be local.

Off the West Wales coast is Erebus, a floating turbine project

It will, according to the spin, put Wales as a world leader in this technology.

Erebus is a test and development project, consisting of 7 to 10 turbines.

Scotland has two floating turbine fields in operation and two more imminent, so Wales is hardly a leader.

Erebus developer is an Irish based company who have not yet decided on a turbine supplier, but the platforms will be supplied by an American company.

Then there's the good news for Ynys Mon. The new generation of small nuclear reactors. SMRs,the saviour of the UK energy industry.

An untested technology whose costs have risen by almost 40% from quote to offer price.

The waste management is also untested, with the UK government not yet found a suitable disposal site.

Many American states who had shown initial interest  in SMRs have cancelled  due to uncertainty over performance and escalating costs.

These are a microcosm of the 26 years of Welsh Labour’s governance in Wales.

Spin and exaggeration. 

Clear red water, that was First Minister Rhodri Morgan’s battle cry.

If only the actions had matched the rhetoric.

Primary legislation, Scotland and N Ireland but not Wales. The Wales government reached a compromise.

Railway infrastructure. Scotland and N Ireland but not Wales. The Wales government was  afraid to take it  on. It is estimated that this decision has cost Wales over half a billion pounds

Taxes. Scotland and N Ireland have greater tax raising powers than Wales.

Crown Estate control, Scotland achieved this a decade ago.

EU withdrawal Bill giving more powers to Westminster. Scotland opposed it. Wales made a compromise deal.

And the economy.

Since devolution began two decades ago, Wales GDP has not improved relative to England.

A decade ago, the Welsh average wage was 90.8% of the UK average. Today it is 91.1%.

Productivity in Wales is the lowest of the UK nations and regions.

This is not just an industry problem.

A report by Cardiff University said Wales has a chronic and severe problem of production and shares with the UK two decades of stagnant productivity. Significantly Wales has a severe and persistent gap with other UK nations and regions.

Low productivity may be driven by a combination of micro and macro factors and choices. An appropriate  policy mix requires a coherent and integrated approach to industrial and regional strategy. This is a cultural feature of policy making which over a quarter of a century of devolved government has been largely absent [ Bradbury and Davies 2022 ]

Productivity growth increases values of goods and services with the same input. It is critical for real wage growth. It raises profits, enables increased employment and investment, increases taxes and improves public services.

And yet as shown, Wales productivity has remained stagnant throughout devolution in large part due to Welsh government strategy, or rather lack of it.

The Welsh government has been timid and subservient to consecutive UK governments, compared to Scotland and even N Ireland.

Even the regions of England are demanding more compared to Wales

So lack of vision, lack of strategy and lack of ambition. This with its subservience to Westminster is the devolution story of the Welsh Labour government and now spin cannot mask that.

Welsh Labour’s response.

With the prospect of heavy losses in the coming election, Welsh Labour's reaction is limited.

Their record is difficult to defend, not least is their persistent failure to react positively to the clear shortcomings.

They must have been aware that the present constitutional arrangement was failing Wales, however, rather than the ‘ clear red water ‘ being widened, the concept was dropped.

So with little to defend and dubious claims of the cooperation of ‘ two governments working together ‘ its attack on the opposition is all that’s left.

Separatism is the present Welsh Labour buzz word..

Vote for Plaid Cymru, the likely challengers, and you vote for separatism. If only! 

It's all that’s left for them and they can’t get that right. The more the First Minister shouts separatism, the more popular it seems to become.

They also seem to be morphing into Reform, with their stream of promises and misleading arguments.

Now in desperation they have let loose the attack puppy. Mike Hedges MS/AS.

He is popping up everywhere, Facebook and Nation Cymru in particular, not defending Welsh Labour’s record, but to attack the opposition.

While attacking the opposition is fair game. It is best done with sound arguments and legitimate  facts. Two elements sadly lacking in Mike Hedges approach.

An Illustration of this is found within the piece he recently wrote for Nation Cymru.

It was on the subject of the path of devolution, but developed a theme of an attack on a move to Welsh Independence.

Plaid Cymru, he says, are guilty of ‘ salami slicing ‘ devolution towards Independence.

Then as if by rote he questions the ability of Wales to sustain Independence.

In support, he quotes David Phillips of the IFS as stating that Wales relies on financial support to the tune of £12 billion to £15 billion which translates into a  Wales budget deficit of that magnitude.

He also relies on the same source to argue that Wales spends 10% more on its public services than the UK average, in spite of raising significantly less in revenues.

MIke Hedges uses this source, due to the IFS reputation for impartiality and accuracy.

If we leave aside the fact that they are not David Philips figures, that he is re quoting figures from the ONS and that the IFS has carried out no independent studies into Wales deficit.

And if we leave aside that the ONS reputation has become somewhat tarnished and this particular data is highly questionable being the result of a high level of estimates, over 90% of the data have a non verifiable audit trail meaning it can’t be accurately checked and that an increasing number of economists are arguing that they are overstated.

If we leave those arguments for another day, we are left with Wales' financial and economic position, whatever it is, still the responsibility of the Welsh Labour government.

The financial transfers from Westminster are a result of the Welsh government giving up on any semblance of developing a coherent regional economic strategy and instead opting for the shortfall in Wales performance being funded by financial transfers from Westminster.

Wales  government economic strategy ended up as one large job creation. Jobs at any price.

Wales spends more on public services than the UK average, So it is argued.

But less per head of population at plus 12%  than Scotland at 13% , N Ireland at 19%  and even London at 13%..

Nor can it be properly compared with the UK  as the nations have different areas of public spending responsibilities than the regions.

As for the argument that Wales raises less revenue. That again is down to a policy failure of low wages and productivity.

Although the centralised tax collection service does Wales no favours as HMRC concedes that some revenues from businesses in Wales have been allocated to the HQs of those businesses outside Wales. 

It is true that while the present constitutional arrangements restrict Wales economic growth and prevent Wales reaching its full potential, it doesn’t explain Wales' failures compared to the other nations and regions of the UK. That’s down to government policy.

The shortfalls expressed seem significant, but should be put into context.

A deficit of around £12 to £15 has been batted around as a significant impediment to Wales' journey to Independence.

This would be reduced by some billions with a correction in the corporate revenues wrongly allocated.

The Wales Governance Centre estimated that Wales would gain £5.6 billion per year in taxes if The Welsh average wage was on a par with the UK average.

Nat West study found that Wales' economy would be almost £2 billion better if its productivity was at the UK average.

Deloittes found that this gain would be £6 billion at the EU average.

If these improvements were enacted it would also lead to additional growth and wealth creation.

Policy decisions towards these ends would have eradicated the deficit and the need for reliance on the UK financial transfers.

It would also mean that increased tax revenues would improve Wales revenue position re the UK average

The Welsh Labor government had 26 years to improve Wales economic position re the UK, instead there has been no improvement in this regard over the period of devolution,

Welsh Labour once again failed.  Innovation research, development and skills, the drivers of economic growth, were ignored. Worse, their budgets were plundered in favour of more headline areas.

The Wales Governance Centre concludes that Wales only invests 65% of the UK average, and less than 50% 0f the EU average  in innovation , research and development.

The consensus with regard to Wales skills po;icy is that it is insufficiently funded, incoherent and uncoordinated.

A small country, says Mike Hedges is less able to weather economic storms and he cites in support, the problems of Iceland in the financial crisis. Too small to deal with it, he says.

Why is it that he chooses such poor examples to make his case

The Iceland banking system collapsed, not because of the country's size. But because of the decision to deregulate the banking sector as did the UK and the greed of bankers.

Iceland’s position wasn’t helped by the decision of the UK government to freeze Iceland’s UK assets using anti-terrorism legislation.

However, contrary to Mike Hedges argument, it was Iceland's size and ability for swift action that resulted in the quick recovery.

Iceland’s economy was still more resilient than Spain, Italy and Greece and its immediate policy was to protect the citizens. Unlike the UK, whose policy was to protect the banks.

It allowed the banks to fail, before nationalizing and introducing capital controls.

Iceland was the only country to jail bankers for fraud.

Today while Iceland has recovered and thrived, being one of the wealthiest countries, The UK continues to languish in austerity. That in spite of the UK government giving the banks £430 billion of public money and providing £1 trillion in guarantees.

The same is true of Covid, another international crisis, where Iceland managed the pandemic better than the UK and recovered from it faster. 

Mike Hedges cites the lack of progress through the four reviews and acts of parliament that should have defined Wales.

It is worth reminding that the Welsh government had a part to play in each of these and opportunities to advance areas they believed important, just as Scotland did.

The lack of ambition is illustrated by the Welsh government describing the 2017 Welsh Act as a good and long lasting settlement. Only for a Welsh Government Minister just 3 years later in a Senedd debate to describe it as not fit for purpose.

And herein lies the problem. Welsh Labour doesn’t know what they want from devolution. Doesn’t know what their version is. Are not sure of the end  game.

All they do know is that it must be a version where Wales remains in the Union.

Here again Mike Hedges piece shows us this confusion.

The UK could be a version of the USA, he says, or Germany, where power he believes is equally distributed among the states.

His vision doesn’t state where Wales lies in this fantasy.

In the American fantasy will they be Mississippi?. With its 30% poverty, or Colombia District, with three times the median income.

Or The German Lander system. Where Mecklenburg-Vorpommen, the poorest state,  has a poverty rate of 24% against the Black Forest with 7.4% and where Hamburg has an income over twice that of the poorest.

It is this desperate attempt to mould the UK into some kind of ideal solution, that ignores that this pseudo distribution of power, does not neatly transfer into economic or social equality.

It is this futile attempt, over 26 years, of scratching around, trying to define  devolution and therefore design economic strategies to f,t that has finally brought Welsh Labour down. 

 

 

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