Plaid Cymru leader Rhun ap Iorwerth sets out ‘road to Welsh prosperity’

Martin Shipton

Plaid Cymru leader Rhun ap Iorwerth has made a major keynote speech in which he makes clear his belief that the economic rejuvenation of Wales must be his party’s central mission.

Moving away from the emphasis on future independence that became predominant during the leadership of his predecessor Adam Price, Mr ap Iorwerth set out a series of five measures aimed at improving Wales’ economy while remaining a constituent country of the UK.

Productivity

Speaking at an event in the Senedd’s Pierhead Building organised by Cardiff University’s Wales Governance Centre, the Plaid leader outlined his proposals designed to boost economic growth and productivity:·

* Targets to meet our ambitious outlook;

* Establishing a development agency fit for the 21st century;

* Scrap the Barnett formula and enshrine into law an Economic Fairness (Wales) Bill to rebalance the wealth of the UK;

* Bring forward legislation that ensures an equal share of public spending across Wales; and,

* Give Wales the ability to set its own tax bands and rates.

Short-termism

Mr ap Iorwerth said: “My contention is that for too long, Wales has allowed ‘short-termism’ to pervade its decision making – entrenching inequality, stifling economic prosperity, and allowing corrective rather than genuinely productive measures to become the default policy option.

“Followers of political slogans will have noticed that fairness and ambition are central not only to my thinking but to the way I see Wales. Prescribing a label to my politics has never been a motivation of mine. What drives me is getting Wales moving and working better, where background is no impediment to success, where ill health is not defined by postcode and where I see no arbitrary boundaries to what we can achieve both as individuals and collectively, as communities and as a nation.

“And those two words – fairness and ambition – really are intertwined in my political thinking. Creating a fair society should be an ambition for all of us. Collectively. And we shouldn’t rest until we can look around our communities and see that no one is being left behind.

“But ambition in its wider sense is something I want Wales to embrace. A go-getting Wales, with an ambition to succeed. Not to tread water or get by. But to prosper. And to do so precisely because it’s for the common good, using that prosperity to further entrench the fairness we seek.”

Challenging backdrop

He said that falling political participation rates had created a challenging backdrop for political parties that wish to be vehicles for change: “If the paid-up critical mass, across the political divide, is falling, the ability to critically challenge internal and external forces will diminish too. I’d argue that the mechanisms of 21st century political discourse have also aided, abetted, and legitimised ‘short-termism’ – the age of the tweet, instagram posts and TikTok, and a pressure to quench the thirst of the 24-hour news cycle has eroded the importance of much beyond the here and now.

“And arguably the biggest obstacle put in the way of legislators is the election cycle itself. While free and fair elections are inarguably the bedrock of a healthy democracy, the spectre of facing the electorate injects the notion of instant gratification into the veins of voters and politicians alike, thus perpetuating the focus on sticking plaster solutions as opposed to long term answers.”

Mr ap Iorwerth said: “While culturally a new sense of nationhood has developed and there’s been a growing political understanding of the powers that reside in Wales – especially after our Covid experience – there remains a persistent underperformance on many metrics, including, crucially, economic underperformance, a 25-year Achilles heel which requires addressing and strengthening.

“If we fail in this endeavour, we will fail in our mission to secure a fairer, more ambitious Wales. Fairness and ambition are not mutually exclusive – on the contrary, they are intrinsically linked. Believing in the redistribution of wealth and a supportive state while simultaneously advocating for successful enterprise is not an either/or. Both have people at their heart, and the people of Wales are our greatest asset.

“If we truly believe that this isn’t as good as it gets for Wales, and I think that every day, then we must raise the bar and lean in on the priorities. A long wish-list in disparate fields does not constitute a whole, neither does setting a target to be dropped later when the going gets tough.

“My first proposal of the evening: embed into a new vision of the economy targets which meet our ambitious outlook. This sounds an obvious call, but few make it. During the first term of the Welsh Government (1999-2003) an explicit target for closing the gap in Welsh Gross Value Added (GVA) per head of population was set.

“It is regrettable that the target to increase GVA to 90% of the UK figure has disappeared from our government’s lexicon – a worrying trend which has also seen targets to eradicate child poverty and shorten waiting times in the NHS dropped or diluted. We should be more understanding and supportive of those who keep trying than those who move the goalposts. GVA is not the only measure of economic success, that much is true, and we must always be mindful of ‘jobless growth’ but it is an important indicator of the regional employment hinterland at the very least, and we should measure ourselves against it. And of course we need to develop the means to deliver that.

“Proposal Number 2. Establish a development agency fit for the 21st century. In fact I’ve referred to that in the past, so perhaps as we’re heading deeper and deeper into this century without achieving the outcomes we need, I should say an agency fit for the 2050s and beyond, because it has to be forward thinking in its approach, tapped into the world of innovation, understating of Wales’s needs and agile enough to respond to changing landscapes. This isn’t about nostalgia or romanticising about the WDA – yes, it had many strengths, but also many weaknesses that we wouldn’t want to replicate. This is about being honest that there’s only so much a government can do directly. Yes, government has considerable reach across many areas of policy but without the expert intelligence and a sector-led approach it will fail to fully realise its strategic aims.

“Too many of our communities have faced the shuddering news of mass job losses at the height of a cost-of-living crisis, news that seemingly takes our government by surprise. We somehow have to be more proactive in our attempts to achieve a different outcome.

“Supporting Welsh business should be seen as a priority if we are to reverse our economic fortunes. At the top of the list is supporting those small and medium sized home-grown businesses, helping them to flourish. But we mustn’t be shy about talking about inward investment either… and again here’s where learning from some of the WDA’s mistakes is important. Never again should Wales be sold as a low-wage investment destination. A new, ethical approach to promoting Wales as a place to do business can help give a home to the skilled workforce of the future, drive up productivity and revive the economic buoyancy of our communities.

“No party makes the case more vociferously than mine that the Welsh economy is hamstrung by Westminster’s grip on the most significant fiscal levers, but I am far from persuaded that a Labour Welsh Government with 25 years in power under their belt has maximised the potential of the power it does have at its disposal.

“I do however remain sanguine about our ability to level the playing field – between Wales and the component parts of the UK and within Wales too. Inter-UK and Intra-Wales economic fairness, both lacking as guiding principles of governments red and blue, would kick start our pan Wales programme of investment. In our transport system, for example, which if I were to be charitable, I would describe as creaking in many parts of our country. In our digital infrastructure to get to grips with being ranked the lowest of the four nations in the Digital Connectivity Readiness Index. In our universities, the incubator of new ideas – crying out for a sustainable funding model. And in our apprentice programmes – hailed as an economic mission by the Economy Minister – and now aspiring First Minister – one week – but let down by his government’s budget cuts the next.

“Proposal number 3. Consign the outdated Barnett Formula to the history books. Again not a revolutionary idea as Joel Barnett himself considered it only a temporary solution for determining funding allocations between the UK’s nations, yet it remains in place 45 years later. By enshrining into law an Economic Fairness (Wales) Bill we would rebalance the wealth of the UK, ensuring that Wales gets what it’s owed and critically what it needs in public investment. It would take us away from the hypocrisy of the argument that most parts of the UK must live under the iron fist of fiscal responsibility while others benefit from the trappings of more spending as a pre-election sweetener.

“Without fairness at the heart of economic decision-making, Wales will always be hindered in its desire to be the ambitious and prosperous nation it strives to be. Had an Economic Fairness Bill underpinned by an independent arms-length arbitration body been on the statute book, the statistical rollcall of shame which highlights Wales’s underfunding would look very different.

“And intra-Wales fairness is also in short supply. Regional inequality touches too many communities and without action, it threatens to become an indelible mark. Being seen as a party wanting to Govern for ALL of Wales will always be a guiding principle for Plaid Cymru.

“Which brings us to proposal Number 4. Bring forward legislation in Wales that ensures an equal share of public spending for all regions. Not only would it inject life into economic deserts, but it would also reconnect its people with the seat of power from where many feel detached. That’s not to say that significant investment in Cardiff is not welcomed. I say that as the Senedd Member representing the constituency furthest away from our capital, and who often hears complaints that ‘everything goes to Cardiff’, or ‘everything goes down south’. If the South Wales Metro delivers on its promise to open up a range of job, leisure, business, and other opportunities, transforming Wales’ wider future economic prospects – that’s something we should all welcome.

“But if we don’t invest elsewhere, can we in all honesty claim to be any different in our approach than that of the UK government – the greatest proponents of overheating one part of England while keeping others in the cold? Announcing plans for a North Wales Metro prior to the 2016 Senedd election – a metro that only went as far west as Rhyl and can best be described as a cobbled together map – only feeds the cynicism that a south-of-Merthyr, or a Cardiff-centric investment mindset exists.

The justification at the time was that the north-west needed ‘rural solutions’ – but with cuts to bus services and plans for a third Menai crossing scrapped, can anyone point to what those solutions have been?”

Brexit

Mr ap Iorwerth said it would be remiss not to mention Brexit and its direct consequences on investment: “Tighter rules on accessing European Investment Bank finance as a result of the referendum has significantly impacted the UK’s investing power. The four development banks in the UK have only replaced a third of the lost investment. And which country, when investment was calculated per capita, saw some of the highest levels of investment from the EIB? Yes, it was Wales.

“It is to the Development Bank of Wales’ credit that it surpassed its £80m investment target in 2021-22, but as a report by UK In A Changing Europe makes clear, it cannot replace the substantial sums invested by the EIB.

This is a real-world example of actions having consequences.”

The fifth proposal outlined by Mr ap Iorwerth involves increasing the Welsh Government’s ability to vary income tax. He said: “The Wales Act of 2014 has allowed our government to vary income tax, but the limitations set on those tax varying powers have been an impediment to effective policy making in Wales, particularly the ability to respond to the current cost-of-inequality crisis and crises facing our public services. What we have only takes us so far – and it is somewhat perverse that the only meaningful way of increasing the Welsh Government’s budget through taxation is by asking those who have the least to pay more in tax.

“If Wales had the ability to set its own bands and rates, we could better tackle the crisis in pay and morale facing our public services and tailor solutions to the challenges in our communities. And let us be in no doubt how significant those challenges are. It should shame us all that 102 ‘less resilient communities’ have been identified in Wales and a further 27 as ‘other deprived areas’.

“In Gurnos, Trefechan & Pontsticill, ranked number 1 in the Wales Community Resilience Index, they will rightly be asking how have our lives improved? Where is the hope of a better future and who is advocating on our behalf?

“Look at the tragedy of inequality in these less resilient areas. They have the highest percentage of young people. But unemployment is higher, life expectancy is lower and educational attainment is markedly below the Welsh average. They will be the living embodiment of short-termism – communities which are the recipients of a million here or a million there and made to feel grateful that there’s yet another plan to manage poverty rather than eradicate it altogether.

“Governing is about priorities and in Wales we need a more honest conversation about what those priorities are. If we truly believe that everyone deserves the same chance in life, a cornerstone of my politics, we cannot take money away from the avenues that allow that to happen.

“In the past three months alone we’ve seen a £40m in-year cut to the education budget for 2023/24 and the announcement of a further £56m in cuts as part of the Welsh Government’s spending plans for 2024/25. There’s also been a £17.5m cut to the apprenticeship budget – a short sighted tax on hope and incongruous in the context of the latest PISA results.

“In the same way as I want to be on the side of business for its role in letting us fulfil our ambitions, I want our moral compass to point in the direction of those whose skills will allow us to fulfil that ambition. The so-called efficiency savings in the apprenticeship budget was somehow spun as a good news story because the take up was low – an incomprehensible argument when employers tell me that the problem they face more often than not is a shortage of skills.

“We face the most rapid decline in training opportunities since devolution at the very time we should be investing in our young people, developing their skills to meet the challenge of climate change and the digital revolution.

“Priority area 2 in the Welsh Government’s recently published Economy Strategy is labelled Platform for Young People, fair work skills and success, and yet the rhetoric is drowned out by the reality of there being an estimated 10,000 fewer apprenticeship starts in 2024/25 – a reduction of 50%. This is a volte face of epic proportions and only goes to underline my earlier point that the carrot of communicating a strategy through soundbites is too often let down by the stick contained within the spreadsheet.”

Solutions

Mr ap Iorwerth concluded: “By resisting the urge to think in the short term, we can join the dots between the malady and the remedy and develop solutions more holistically. In the coming weeks and months I look forward to putting this approach into practice with the publication of [Plaid economy spokesman] Luke Fletcher’s new economic strategy, expert research into the governance of the NHS in Wales, as well as my party’s submission to the Independent Commission on the Constitutional Future of Wales.

“When we take the time to make the connection between these issues – the landscape of the devolution settlement, the future of our health service, and our nation’s economic prospects – that’s how we get a better understanding of how to build a Wales that is fairer, greener, more ambitious, and more prosperous.

“By slowing down our thinking, we can speed up our progress. At first, a contradiction in terms, but I hope this evening that I’ve gone at least some way to persuading you otherwise, and that a new approach can spark new and better outcomes for the country we all know deserves better.”