Only self-governance will get Wales out of this economic rut

 

Joe Chucas

We’re too small to make an impact in Westminster. Wales’ 40 MPs and 3 million inhabitants are easily overruled by the UK’s 650 MPs and a population of 60 million.

As a result, we continue to accept the same pathetic ‘common sense’ conservatism that means allowing our country to wallow in poverty while subsidising fossil fuel companies, paying for nuclear weapons we can never use, tax breaks for the rich and reducing benefits for the disabled.

Wales has been in the bottom quartile (3 of 12) of UK regions (in terms of GDP) since 1985. The results are dismal – a quarter of our population live in poverty (as of November 2016), and the average male life expectancy at birth in Blaenau Gwent is 7.5 years lower than in Kensington.

We are the poorest country in the UK, which itself has the lowest rate of economic mobility (a person’s ability to rise in economic status) in Western Europe.

Brexit also means things will get worse before they get better;

• Two-thirds of our Welsh goods exports currently go to EU member countries outside the UK
• Wales received £245 million more out than it paid in to the EU.

We have a two-party state intent on closing its borders and stopping the free movement of people, industry, and goods, all on the false premise of ‘caring for our own’.

When they say ‘our own’, they don’t mean us here in Wales.

Little Britain, Littler Wales

How on earth has our country found itself in such a predicament?

Firstly, it is Wales’ inability as a post-industrial region to adapt to the internationalized economy.

This is because the UK Government has prioritized the development of a services-led economy in the South-East of England.

There’s nothing unusual about this. Across Europe and the USA, post-industrial areas have struggled as service-led economies have developed in the cities.

The costs of sickness and unemployment that come in the wake of the demise of industry leads to a vicious cycle.

Post-industrial areas have fewer resources to provide for their youth, who are then incapable of reaching their full economic potential.

Here in Wales, the asymmetric economic shocks of recent public spending cuts and globalization have also produced vicious cycles of losing educated labour and the capital required for innovative products and capital-intensive industries.

We lose university graduates to England, and currently have only 1 FTSE 100 company.

Core

What devolution there has been to Wales so far has been too weak to counter these problems. We are still lacking the primary legislative or tax-varying powers that would allow a greater degree of economic management.

But Westminster has no interest in Wales, and why should it? We have neither much of an economy or that many voters that need courting.

Wales is a postcolonial periphery, in a cultural, political and economic sense.

For the UK parliament, cheaper political gains are to be made by appealing to London and the South East, and so the economic focus is on London and South-East England.

Crossrail, Heathrow Terminal 5, HS2 and the London Olympics all benefit the core region.

Meanwhile, Wales is in the club of three European countries without an inch of electrified rail, along with Albania and Moldova.

Fate

Wales is in a pathetic state.

The monolithic nature of the UK is such that a small region like Wales cannot change, and finds no mobility.

But while our people remain apathetic and wedded to the political status quo, our country’s dire state will not improve.

An improved political settlement of a pluralistic Parliament with legislative and tax-varying powers in Wales is needed to ensure that policy-making tools can be used to create virtuous cycles.

For example, Research and Development tax credit and support infrastructure would create a synergistic feedback loop of improved employment prospects and capital accumulation, thereby improving Wales’ export base.

This would improve sectoral expertise and cultivate a positive environment for innovation and business operations, creating jobs and reversing the outflow of capital and labour.

Technological spillovers could then be absorbed by this business community, through whom joint ventures and regional ownership (potentially with a Welsh Parliament) would be possible.

It is impossible to improve a situation without a degree of control over the factors that influence it. Legislative and tax-varying powers are necessary for Wales to flourish.

Despite the severe limitations of the conferred powers model, the modest success of our own government gives us a glimpse of what could be.

With the modest powers in its possession, the government that has maintained lower tuition fees, managed a 23.8% reduction in end-user greenhouse gas emissions (from 1990-2010) and eliminated the prescription charge.

A brighter future

Wales requires a decentralization of the political processes that determine our future to a Welsh Parliament.

Under a reserved powers model, with the necessary fiscal and legislative powers, it will be possible to adapt.

From this position, it could ideally go onwards to an interdependent state in a looser British politico-economic union (similar to the Benelux Union).

To build a prosperous, fair and open Wales, we need to make our own decisions and thereby be able to walk with our backs a little straighter, and our heads a little higher.

We need to see a future outside being merely a destitute, subservient periphery with a toothless government, going cap-in hand to the Westminster masters.