The state that we are in part one – is Wales failing?

Brian Roper

I write as an immigrant who graduated in Cardiff in the last century and who has lived in Wales for over twenty years. I am a Cymruphile but also a critical friend and one who is worried.

In this article I raise the first of three questions, “Do we have a problem?”

In summary, I argue that Wales is a small country with big problems and I contend that ‘Yma o Hyd’ is a necessary but not sufficient condition.

Fortunately, the cavalry are on their way.

I refer to the two horse (no women) race which is the Labour Party leadership contest and therefore the First Ministerial appointment process, in which most of us will not have a vote (only the 18,000 Labour party members in Wales are enfranchised) and the outcome of which, as I write, is undecided.

This matters.

This is not just another leadership contest of a type engaged in, or one might say indulged in, by other parties in recent years in the UK.

One-party polity

Wales has become a Labour one-party polity, an elective dictatorship, albeit one propped up in informal coalition with Plaid and the Welsh political system regarded by Stéphanie Bory as “A partisan system with a predominant party, in other words, a party governing without alternation, on its own, which is more or less the case for the Welsh Labour Party” while “[t]hus far, three of the four Labour leaders in Wales since devolution have both embodied and embraced Welsh Labour status as both a national and a centre-left party. It remains to be seen if that pattern continues”.

The “opposition” to Labour is either tactical, with Plaid, choosing its issues and shying away from overt Independence and the Conservatives braying from Whitehall briefings, attack dogs without teeth, facing political euthanasia as the aberrations of the last Senedd elections are expunged.

Challenges

I think that the Labour leadership contenders have some important challenges to acknowledge and some vision to share, assuming of course that they have any and that they ought to be now reaching out beyond their less sceptical electoral college.

Wales is, of course, not a State and any failures cannot logically be seen as State failures.

States were, essentially, nineteenth century phenomena. The Wales of that period was fast industrialising, was implicit in Empire, was the first and, later, last colony but it had not been a unified entity since the eleventh century and it missed the Independence boat in the nineteenth century.

The reluctant, messy and increasingly ossified devolution settlement will be under pressure with increasing expectations of it as the membership (and costs in salary and exotic expenses) of the Senedd increases, even as the electoral process becomes, hopefully, less opaque.

The Interim report by the Independent Commission on the Constitutional Future of Wales (December,2022) makes it clear that the current settlement is not fit for purpose.

This implies consideration of reversing out of devolution, an option which surprisingly given the narrowness of previous devolution results, is rarely discussed these days, or entrenching devolution by adding further powers and responsibilities, or flirting with federalism or dancing with Independence.

Of course in assessing the performance of Wales one has to recognise the limited powers which fall to a Welsh “Government” to perform and to acknowledge the scale of the challenges posed by being the smallest and barely growing part of the UK ( measured in population),the oldest, sickest and poorest with a poorly performing economy, low skill levels and levels of educational attainment, overdependence on public sector employment and the loss of a once world-leading entrepreneurial spirit now manifest in having only one Footsie 100 company headquartered in Wales.

Unique in UK

Compounding this are the endless comparisons with England (with a population twenty times larger), resented when Wales does badly, applauded when it does well and always on view as a Labour Government in Wales is unique in the UK.

The Welsh Government wishes to monitor its activities by reference to the themes in the Government’s Programme for Government (PfG) to be delivered in part in partnership under the Co-operation Agreement with Plaid Cymru to:

“Provide effective, high quality and sustainable healthcare

Continue our long-term programme of education reform, and ensure educational inequalities narrow and standards rise. Protect, re-build and develop our services for vulnerable people

Celebrate diversity and move to eliminate inequality in all of its forms; Build an economy based on the principles of fair work, sustainability and the industries and services of the future

Push towards a million Welsh speakers, and enable our tourism, sports and arts industries to thrive

Build a stronger, greener economy as we make maximum progress towards decarbonisation

Make our cities, towns and villages even better places in which to live and work. Embed our response to the climate and nature emergency in everything we do

Lead Wales in a national civic conversation about our constitutional future and give our country the strongest possible presence on the world stage.”

Stripped of the hyperbole lies the brutal arithmetic.

The devolved Welsh Government responsibilities involve spending a budget of £20bn for the year 1 April 2023 to 31 March 2024 only 18% of which comes from Welsh taxes.

I have adopted, ex cathedra, a methodology and metrics which, I believe, best reflect the electoral salience of these issues, you may well disagree. This is not “science”, I have not orchestrated focus groups or hired polling firms.

The methodology and the metrics can be challenged but the objective here is to stimulate debate and to elevate it beyond lounge bar level.

The key components are ordered as in the Government’s accompanying commentary.

This article deals with the first four categories to which I attach the greatest weight.

1. Health and social services (Total revenue funding – £10.1 billion-Total capital funding – £375 million) taking just over half of the budget making Wales, de facto, one of the largest health boards in in the UK.

The context, as ever, is key.

Thes following observations are drawn from The Nuffield trust report “How well is the NHS in Wales performing”, June 2022.

As in many other respects it is frequently argued that Wales Is different, exceptional even but “Wales has the oldest population in the UK, with 21.1% of people above the age of 65 compared to 18.6% across the UK. However, a lower proportion of adults drink alcohol compared to England and Scotland and, while 25% of people in Wales were obese in 2019, this figure was 29% in Scotland and 28% in England…

“Wales gets far more funding per person than England – around 15% more, or £1,325 per person more in 2019/20 – but less than Scotland or Northern Ireland…Compared to England, Wales has fewer consultant doctors relative to its population size, but more nurses…The total number of GPs per person in Wales (63 per 100,000) is considerably lower than in Scotland (77) but higher than in England (57).

Staffing

“These differences are equivalent to Wales having 170 more GPs than if they had English staffing levels, but 470 fewer than Scotland…Wales has considerably more hospital beds than England relative to the size of its population. The latest figures from 2020/21 show that the Welsh health service had around 270 general hospital beds, not including maternity, mental illness or learning disabilities, for each 100,000 people. This compares to 170 in England…

“In short, the Welsh NHS is generally somewhat better resourced than its English counterpart – though the difference is not consistently large. Does this mean it is really better equipped to meet patient needs, or worse, given its higher levels of need?. However, Wales actually spent around 5% more than England in the year immediately before Covid-19.

“This smaller difference is because the Welsh government has prioritised health care slightly less aggressively and spends more on other services – including social care, where spending is 30% higher than in England…The average length of [hospital] stay in Wales is much higher than in England, at seven days against 4.3 in 2020/21.

“This is a very large difference: patients in Wales are kept in hospital more than one and a half times as long on average. The difference actually grew in the three years before Covid-19 as England improved.”

This is a difficult narrative to digest for a country claiming to have invented the NHS.

The summary is stark, “Firstly, although the Welsh NHS receives more money than the English NHS per patient, this may not be enough more to account for an older population with a higher mortality rate”. In the current climate this looks like wishful thinking.

Is anyone seriously going to undertake the long overdue of the Barnett formula which even its author thought needed major surgery (sic)?

Whitehall largesse

Increasing dependence upon the largesse of Whitehall is a risky strategy even if UK Labour can stomach it in a second term, Welsh Labour seems to have little such compunction and has thus far shown little appetite for the radical reengineering being promoted by the putative national Health Secretary

The report goes on, “A second reason may be that the NHS in Wales is less efficient or less focused on delivering timely care. While it may be influenced by the kinds of procedures people need, length of stay data appears to suggest that Wales is taking much longer to get patients treated and safely discharged. This may explain why it struggles to admit patients as quickly despite having many more beds.”

This is an endogenous factor which ought to be addressable in Wales but the ability of the current Health boards to deal with it is not encouraging given the difficulty that some of them seem to have with their day job and the current minister evinces little enthusiasm for the fray which would, inevitably, require tangling with the Health Trades Unions.

This is clearly work in progress.

Unacceptable

On the ground the reality is the unacceptable performance of the Health Boards where “The Auditor General has concluded that eleven out of the twelve NHS body accounts recently published present their financial positions fairly. However, six of the seven Health Boards failed to meet their statutory duty to break even over a three-year period.

As a result, the Auditor General qualified his regularity opinion for those bodies as failing this duty means that the bodies have exceeded their authority to spend. The three NHS trusts and two special health authorities all met their duty to break even” (Audit Wales,8 September 2023),

The painful (in all senses) progress of The Welsh Ambulance Service, hospital waiting lists and the near scandal which is General Practice in Wales compound to paint a very unhealthy picture.

I assess the NHS in Wales as 10/20.

2. Finance and Local Government ( Total revenue funding – £5.8 billion-Total capital funding – £224 million) covers “ funding for local authorities supports schools, social services, housing and a wide range of other local services which we all rely on” ( https://gov.wales/welsh-government-budgets).

It has been estimated that:

“The value of government grants to local authorities fell by 16.8% in real terms between 2009−10 and 2019−20.

“Council Tax now accounts for a significantly larger share of the total tax take in Wales (5.4%) than in England (4.3%) and Scotland (3.8%).

“Spending on local authority services fell by 6.0% in real terms between 2009−10 and 2019−20. Adjusting for population growth, spending per head is 9.4% lower than it was a decade ago.

“More than £500 million was delivered to local authorities through the Single Hardship fund during 2021−21. In total, the value of Welsh Government support to aid local authorities’ response to the pandemic exceeds £1 billion.

“On central projections, meeting local authority spending pressures in full entails an average increase in spending of 3.4% a year (in cash terms) between 2020−21 and 2025−26 (2.5% and 4.4% in our lower and higher cost scenario, respectively).

“Despite the considerable uncertainty around the ongoing costs of COVID-19, they are dwarfed by the underlying demographic and inflationary pressures. Unfunded costs associated with the pandemic account for only 9% of total spending pressures in 2022−23, and this share continues to fall in future years.

“By 2025−26, social services accounts for 55% of all local authority spending pressures, with school pressures accounting for a further 21%.”

The outcomes for schools are sketched in the next section.

In the case of social care and childcare the annual report suggests that:

“As you read this year’s report, you will no doubt be struck by a sense of déjà vu, that many of the issues outlined in our 2021/22 Annual Report remained as acute in 2022/23.

“It is easy to use words like ‘crisis’ or ‘unprecedented’ when describing some of these topics but, for those working directly with people who use care services, this is their day-to-day reality.

“The number of people needing care and support has continued to increase which in turn is creating unsustainable pressure on social care services.

“The workforce continues to tirelessly improve outcomes for people but recruitment and retention in social care and childcare and play remains at crisis point.

“There is a lack of suitable placements for children who are looked after.

“We see lots of positive practice across Wales” (Care Inspectorate Wales, Chief Inspector’s Annual Report 2022―23).

The picture with housing is also problematic.

In her evidence to the Senedd, Amanda Power of Shelter Cymru said:

“Even prior to the cost-of-living crisis, we undertook a YouGov poll at Shelter Cymru and that identified that one in three people in Wales had issues in terms of their housing—facing significant issues, whether that was around the safety of their housing, the affordability of their housing, the fear of loss of their home, and facing discrimination in accessing a home.

“The most extreme denial of a right to adequate housing is homelessness. So, there’s a continuum, and rough-sleeping is at the furthest extreme, really, of the absence of realisation of that right. The latest Welsh Government figures showed 100-plus people rough-sleeping and over 9,000 people in temporary accommodation. And within that 9,000, we know that 2,700, approximately, of those people were children

“Beyond that end of the continuum in terms of homelessness, what we also know is that we’ve got 89,000 people on housing waiting lists, waiting for social housing in Wales, and that really reflects the legacy of long-term underinvestment in social housing and a lack of social housing stock

“… beyond that, there are issues around quality as well as access to housing…

“The Welsh housing conditions survey, last done in 2017-18, showed that 18 per cent of the stock had category 1 housing health and safety rating system hazards…that same report identified that investing in addressing those issues of poor housing would result in savings to the NHS of £95 million annually, and therefore would pay for itself within six years.

“So, in summary, in terms of why we need a right to adequate housing, it’s because we can’t afford to leave access to such a fundamental human right as housing to people’s ability to compete for scarce resources..

“So, it’s not just the right thing to do morally as well—that moral case is strong and is widely supported—the cost-benefit analysis that we commissioned, an independent cost-benefit analysis…shows that it’s also good for the public purse…There is no social justice without housing justice”.

I think that this is a compelling narrative.

Taking these disparate but related services together I assess performance in this area as 10/20.

3. Education (Education and the Welsh language) Total revenue funding – £1.8 billion. Total capital funding – £373 million).

This is a high profile electoral issue and engenders high level media interest,

The Senedd’s research group reported in September 2023 that “The Welsh Government has had a ‘national mission’ to improve education standards for well over a decade, ever since the “wake up call to a complacent system” following the 2009 Programme for International Student Assessment (PISA) results…In 2018/19, the final year when Estyn used headline gradings and before inspections were suspended due to the pandemic, four (14%) of the 29 secondary schools inspected had ‘unsatisfactory’ standards, while a further 12 (41%) were only ‘adequate.

“Estyn continues to identify schools causing concern. Figures requested by Senedd Research show 22 primary schools (2% of total), 10 secondary schools (6%) and one all-age school (4%) are currently in a statutory category. This means they either require ‘significant improvement’ or are under ‘special measures…The Welsh Government continues to spend over £130m each year on the Pupil Development Grant (PDG), which supplements schools’ incomes based on their numbers of pupils eligible for free school meals (eFSM).

“Before the pandemic, Estyn reported that the ‘poverty gap’ between eFSM pupils’ and non eFSM pupils’ attainment had not narrowed over the previous decade and typically widens as pupils become older. Estyn has since reported (in both 2022 and 2023) that the pandemic has exacerbated attainment gaps and disproportionately affected pupils from deprived backgrounds.

“Research by the Education Policy Institute (EPI) found a wider disadvantage gap in Wales than in England, with both nations only making modest progress during the last decade. In Wales, GCSE attainment gaps between eFSM pupils and their peers widened between 2015/16 and 2021/22”

The Senedd Minister is a contender for the Labour leadership in Wales. The 2023 PISA results offer no significant sign of improvement.

The “Highlights” were:

Wales’ average score for mathematics in 2022 was significantly lower than the average across OECD countries.

Wales’ average scores for mathematics, reading and science have all declined significantly since 2018. This was also the case on average across OECD countries for mathematics and reading, although for science the difference between the OECD average in 2022 was not significantly different to that in 2018.

The gap in performance between pupils from the most disadvantaged backgrounds and the least disadvantaged backgrounds was smaller in Wales than it was on average across OECD countries for all subjects.

As with previous PISA cycles, the highest performing education systems tend to be in East Asia, with Singapore, Taiwan, Macao, Japan and South Korea appearing among the top performing systems for all three subject domains.

The issue of the Welsh language attracts attention disproportionate to the public expenditure actually devoted to its support and encouragement. Given that there are, these days, probably no monoglot Welsh speakers left it is curious that such a cultural heritage should attract such animus.

I assess Education in Wales as 12/20.

4. Economy (Total revenue funding – £436 million- Total capital funding – £106 million).

The Government Economist’s commentary on the 2023-4 budget is a message of more of the same expressed in a suitably anaesthetic manner:

“A key long run challenge remains relatively weak productivity, the main long run driver of sustainable increases in pay, prosperity, and the tax base.

“Challenges also remain in the labour market: employment opportunities are restricted for many disadvantaged groups, particularly the disabled, those with long term health conditions, and people with low skill levels.

“Employment creation has been unevenly distributed across Wales.

“The rapid growth of remote working presents both a new challenge and an opportunity.

“Welsh population has been growing more slowly than in all English regions. With the number of deaths exceeding the number of births over recent years, due principally to a low fertility rate, in-migration has prevented overall population decline.

“Population change varies across Wales, with a number of local authority areas experiencing a decline in population over recent years.

“Demographic changes pose a number of challenges for Wales but also some opportunities.”

The economy portfolio is currently held by the other Labour leadership contender who did not enjoy the best pandemic as Health minister.

The Welsh economy suffers from endemic welfarism, a dependence upon publicly funded employment a lack of creativity in sourcing inward investment on the right terms, a continuing dependence on old extractive resources and out-dated manufacturing technologies, a vulnerability to foreign supply chains and infrastructural ownership and a failure to connect up the few major economic centres domestically or internationally.

The key to economic growth is innovation and productivity, both require investment in both the wider UK and especially in Wales.

The evidence is that “Wales has had a persistent productivity gap with the UK as a whole and with other international competitor regions. This has been an important economic feature possibly stretching back for most of the last century and certainly from before political devolution in1999. Because many potential micro-economic policy areas fall within devolved competency, UK-level industrial strategy has limited direct salience in Wales.

“However, disparities in productivity performance contextualise the UK’s government’s aspirations for ‘levelling-up’ and this is of considerable importance to Wales…[whilst] Economic activity rates in Wales have subsequently converged close to the UK average. Despite implementation of subsequent economic strategies, low productivity has remained a feature of the Welsh economy.

“Economic activity has proved amenable both to the passage of time (as the long-term impacts of industrial restructuring have worked through population cohorts) and to tractable policy instruments, many of them supported through the deployment of European Structural Funding.

“Productivity has proved to be a much more complex issue, linked far less directly to precise policy instruments. In consequence a series of subsequent Welsh economic strategy statements have dropped any explicit reference to GVA (Gross Value Added) or productivity targets.”

Productivity gaps

This pattern is seen across all sizes of companies “There are also productivity gaps between Wales and the UK across all size bands of firm (including within the medium-sized group) and by industry. Turnover per employee in Wales lagging that of UK firms. An important industry exception is production, where micro and medium-sized firms in Wales outperformed the UK average in terms of turnover per employee in 2018.”

In Wales in 2022 it has been estimated that “There were an estimated 253,800 enterprises active in Wales, employing an estimated 1.1 million people. Small and medium sized enterprises (SMEs) in Wales accounted for 62.9% of employment and 42.5% of turnover, with large enterprises accounting for the remainder.

“The majority of active enterprises were SMEs (0-249 employees), accounting for 99.3% of total enterprises in Wales in 2022. Micro enterprises (0-9 employees) accounted for 94.7% of the total enterprises in Wales. Large enterprises (those with 250 or more employees) accounted for 37.1% of employment in Wales compared to 39.7% for the UK. Around 0.6% of enterprises active in Wales were non-UK owned, accounting for 14.1% of employment.

“This relatively high employment share is because non-UK enterprises are more likely to be large enterprises than SMEs”. The under-investment challenge is compounded by the fact that “There is limited fiscal devolution and a small tax base, with few obvious sources of new revenue.”

According to The Institute for Welsh Affairs Wales lacks “Fiscal firepower” to make strategic investment beyond its  day-to-day resourcing and calls for “prudential borrowing powers” for both revenue and capital spending. It is to be  hoped that if granted that such powers would be discharged with more prudence than has been practiced in some English local authorities.

The current SNP model of high per capita public spending funded by already higher Barnett allocations now to be augmented by higher income taxes is not sustainable there and not desirable here.

I assess performance in the economy as 6/20.

By reference to these major Government priorities the emerging picture is not encouraging but by widening the frame of reference a more complete picture emerges.

These ideas are developed in the next two articles.