Gareth Hughes says that despite another set of dismal economic indices Wales should be aiming for the premier league

June 27th, 2011

Who ever coined the phrase that economics was the “dismal science” is hardly likely to have Wales in mind but the word dismal would be apt in describing Wales’s economic performance.

It’s ironic that whilst Wales has taken control of its own governance it’s economy seems to be out of control. The country has gone backwards economically since devolution.

In 1989 the GVA, previously known as GDP, of Wales was 84.3 per cent of the UK average of 100, England was 102.3, Scotland, 96.0 and bottom of the league Northern Ireland was 73.1 per cent. When Wales started the road to devolution the figure had slipped back to 77.3 per cent, as too had the Scots to 94.5 per cent with Northern Ireland overtaking Wales for the first time with 79.4.

After ten years of devolution the Scots have steamed ahead nearly on the UK figure of 100, with 98.8 per cent to be precise, Northern Ireland have maintained their position as have England. But Wales has slipped even further back and has a GVA of only 74,3 percent. Not only is Wales bottom of the nation league it is also bottom of the league when compared to the regions of England. If it were a football club Wales would have been relegated to a minor league.

Not an inspiring story, me thinks. It is an especially depressing story when account is taken of all the help the Welsh economy has had from Europe. From 2007 to 2013 Wales  either has received or will receive £2 billion from EU structural funds. Not an insignificant cash handout you’d agree. But where has all the money gone? Clearly, not spent on getting the economy up and running. It is has been used in various social engineering schemes. Worthy, but is it using this money wisely and to good effect?

Just to depress you further, dear reader, things are about to get worse.

Our lack of entrepreneurship has made us over dependent on the public sector for jobs. Cuts in this area will be 10 per cent in real terms over the next four years. This is likely to hit the Welsh economy particularly hard, as the proportion of the workforce employed in the sector is greater than most elsewhere in the UK.

If you’re a youngster in Wales your job prospects are bleak. They make up just under half of the 115,000 people of working age unemployed in Wales, despite being just a sixth of the total working age population.

Why has Scotland, and to a lesser extend Northern Ireland succeeded, when Wales has failed. Undoubtedly Scotland has succeeded because it has a greater control over fiscal matters and is likely to even have more such powers shortly. Wales in the form of Carwyn Jones seems reluctant to go down that particular road.

Scotland has Scottish Enterprise a quango that encourages economic development. Wales decided to scrap the WDA. Maybe Wales would have been better employed culling its badgers rather than its quangos.

Well, now the ball is in Edwina Hart’s court. It’s now up to her as the relevant minister to reverse the economic decline. European Funds have to be used to encourage enterprise. Wales needs to be a can do Nation. Control of Corporation tax and Income tax could help create such a culture. For that she needs to lobby the First Minister to give her the fiscal tools to do the job. Unless these things happen Wales will continue to be a basket case economy.

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Gareth Hughes is a political commentator and a freelance journalist who publishes his own blog here.

2 Responses to:“Ball is in Edwina Hart’s court”

  1. Chris Jones says:

    A good article. Nevertheless, “European Funds have to be used to encourage enterprise” is a throw away remark. How on earth are they going to do this? Many many things have been tried to stimulate ‘enterprise’ in Wales including throwing (EU) money at it. This is not the answer.
    We have to face up to the undeniable fact that Wales is not an ‘enterprising’ nation. In my view this is not necessarily a bad thing – after all who wants or needs a nation of Alan Sugar wannabes? We have other strengths and attributes that should be treasured and nurtured which includes many (but not all) elements of the ‘public sector’.
    That is not to say that the economy doesn’t need fixing urgently. It does. The way to do this using the next EU tranch of money is to concentrate on business finance reform, a certain amount of infrastructure rebuild, zoning/planning reform and a refocus on export and inward investment initiatives. Attempting to dish out the money again through WEFO projects and so-called ‘delivery partners’ will just lead to it being frittered away as has happened in the past.
    You say the ball is now in Edwina Hart’s court – let us hope she doesn’t kick it into the long grass.

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  2. Gethin says:

    This is a myopic article.

    Chris Jones above has demonstrated the vacuity of the phrase “European funds have to be used to encourage enterprise,” but other examples abound.

    For example, “Undoubtedly Scotland has succeeded because it has a greater control over fiscal matters” is clearly nonsense – the Scottish Parliament has precisely one fiscal power that Wales doesn’t; the power to vary the rate of income tax. It has never used it. This can’t be the reason for better Scottish success. More likely it is due to their having pursued a more dynamic and business-growth oriented policy, rather than relying on inward investment and the public sector.

    “Scotland has Scottish Enterprise a quango that encourages economic development. Wales decided to scrap the WDA. Maybe Wales would have been better employed culling its badgers rather than its quangos.” This misses the point that Welsh GVA was falling even when the WDA existed – that organisation was less succesful than Scottish Enterprise, which in any case has a much wider remit. It was, instead, the focus of SE on innovation and enterprise-creation that helped boost the Scottish economy.

    “Control of Corporation tax and Income tax could help create such a culture. For that she needs to lobby the First Minister to give her the fiscal tools to do the job.” I must have missed the part of the Government of Wales Act that afforded the First Minister the power to dole out new fiscal powers. Perhaps she should instead by-pass a First Minister more concerned with obstructionist rhetoric than lobbying for increased powers, and instead lobby the Westminster government, who ACTUALLY have this power.

    We need a nuanced and complex debate, that doesn’t fall into the usual pitfalls of black-and-white analysis, rather than continued assertions that are poorly researched or skin-deep in their analysis. I’m not sure what this article adds to that.

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