A tax on workers to pay for retirees won’t solve Wales’ ‘brain drain’ problem

Ifan Morgan Jones

Wales has for centuries had a ‘brain drain’ problem. That’s a side-effect of being on the economic periphery of one of the world’s richest regions, the south of England.

To give you an idea of how far back this phenomenon goes, it has been estimated by historians that in the 17th century about one in every six people spent some time living in London.

Indeed, the economist Brinley Thomas suggested that if the industrial revolution had not happened Wales’ would likely have been almost completely drained of its young talent.

They would have left for London or the United States, and Wales would have become a ‘costa geriatrica’ of elderly retirees.

With the industrial revolution having now long receded into the past, the Welsh economy is once again stuck in a rut.

Things are likely to get much worse before they get better, with a hard Brexit set to literally decimate the Welsh economy.

If this happens the ‘brain drain’ is likely to accelerate further, with young people gravitating towards the prosperous areas that are set to be less affected by Brexit, such as, of course, London (plus ça change).

Creaking

Of course, as people of a working age move out the housing stock is more likely to be snapped up by elderly retirees from elsewhere in the UK, exacerbating the problem still further.

I call this a problem not because of ageism but because this elderly population will need to be cared for.

When the bulk of the current ‘baby boomer’ generation hit their late 70s and 80s and just keep going, the burden on the Welsh Assembly’s already-creaking budget will be enormous.

Research by the Wales Public Services 2025 think tank has found spending on social services for over-65s by Welsh councils would need to increase by 18% (£101m) over the next decade just to maintain the current level of spending per-person.

Politicians have been slow to face up to this problem for a number of reasons. Firstly, it’s a long-term problem that goes far beyond the next election.

Second, this older cohort vote in much larger numbers than the young, so the problem needs to be approached with sensitivity.

Thirdly, the issue of retirement into Wales is a sensitive one for a Labour government keen to avoid any accusations of crypto-nationalism.

As a result, this is the biggest challenge facing Wales but the Welsh Government does not seem to be in a particular hurry to do anything about it.

No incentive

This week a solution was suggested by Finance Minister Mark Drakeford, which was an income tax in order to fund elderly care.

The average wage earner would pay “somewhere between £250 and £300 a year” and that money would go into a fund dedicated to elderly social care.

On the surface, it’s a good, workable solution. But I’m concerned that they’re on the wrong track here, for a handful of reasons:

The challenge here is not really to find money to care for the elderly but to find a way to convince people to stay and spend their working lives in Wales.

If that happens then the income tax that they produce will close the funding gap.

Far from achieving that, this tax would be an extra incentive to leave the country, on top of all the economic incentives there already are.

In effect, we’ll be asking people to stay put in a comparatively poor part of the UK where jobs are scarce, and pay an extra £300 pounds on their income for the great pleasure of doing so.

Reward

The pattern of young people moving out of Wales and elderly people moving in also raises questions of fairness.

Will people be able to avoid this tax all their lives and then return, or arrive for the first time, and reap the rewards?

Prof. Gerry Holtham, who suggested this new form of national insurance, has said that those who retire to Wales should not able to take advantage of the fund.

However, again, with Labour’s aversion to any accusation of crypto-nationalism, and fear of conservative voters in key marginals, how likely would such a provision be?

And if Wales does become Brinley Thomas’ ‘costa geriatrica’, will there be a financially viable Welsh state still in existence when today’s young people reach an age when they want to take advantage of this fund?

Problem

While it’s encouraging to see the Welsh Assembly getting to grips with this problem, the impression given is that they think that a band-aid will cover a festering, centuries-old wound.

The only solution to this problem – short on another industrial revolution – is a transformation of Wales’ economy from a peripheral backwater.

When Wales is a country young people want to move to, and the elderly retire away from in order to take advantage of lower cost of living elsewhere, the problem will be solved.

This does not, however, seem to be a problem that the Welsh Government has any real idea how to solve.

Whatever the solution, it probably involves incentives, rather than disincentives, to stay in Wales.

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Angharad
Guest

The irony of asking the young, who voted overwhelmingly against Brexit, to shoulder the costs of the care of the elderly, who voted overwhelmingly to make the country poorer, and remove the younger “foreigners” who contributed so much to the economy, and thereby also to their pensions, won’t be lost on them.

Dafydd Thomas
Guest
Dafydd Thomas

There is no practical alternative to independence. The huge social care bill is not only because a third of retired come from england but also the immigration of sick and disabled from England. Professor Holtham at least is addressing the problem which is to a large extent imported from England. But we have to remember that Welsh labour MPs are a menace, they opposed rail devolution which cost us £5 thousand million pounds in Wales while the labour leader for Wales is bragging in the new statesman that he has managed to get a couple of hundred million investment into… Read more »

Benjiman L. Angwin
Guest
Benjiman L. Angwin

Ceidw trethi is ein pobl iau.

Cyll trethi uwch drysor ein crefftwyr.

Cloriannwch hyn.
Bo dewis rhwng sosialaeth a’r Gymraeg.

Pa un a ddewisech?

sibrydionmawr
Guest

Once again, a load of rot. The only choice there is for the continued existence of the Welsh language are socialist values! Capitalism has been, and still is engaged on the wholesale destruction of the Welsh language, though i have to admit that Brit socialism hasn’t been any better.

Y Ferch Ddarogan
Guest
Y Ferch Ddarogan

The LaAnguage?

We are socialist! Socialism or the Language? We are socialist! EQUALITY! The language wont feed our CHILDREN! Our country is socialist!

Hywel Nantceiro
Guest
Hywel Nantceiro

Interesting article which however does not give the whole story. I am one of the geriatrics who are discussed in the article but have lived in Wales all my working life despite working much of the time in England: for 12 years in London, then for another stint mostly in Bristol but in London.also. I was not alone: travelling in the train to and fore I used to meet lots of men (mostly) but some women who did the same thing: many barristers living in Wales who worked all their professional lives in London, accountants who did the same, a… Read more »

Dafydd Thomas
Guest
Dafydd Thomas

Hywel,

Weekend commute is not alien to me either. I’ve been there. However with more functions of Government coming to Wales, the legal people etc will find the employment here.

David Thomas
Guest
David Thomas

That accountant was possibly my father, who did the same. However, the train to london then took 1hr45mins, which is about as fast as the “improved speeds” we will get with electrification. I now have a similar burden, working 1-2 days in London and 2-3 days in Cardiff (a 2 hour drive from my home if I don’t leave at 6am). You are right, if we can embrace the opportunities of the South East and combine them with better transport and regional hubs for jobs that can be done away from London all will be better. The fact Is, it… Read more »

Rob Bruce
Guest

If we’re going to be discussing the brain drain, we need to take a look at the Seren Network, which seems to be designed deliberately to encourage our brightest and best to leave Wales and, via Oxbridge, become assimilated into the ruling elite of the country next door. Surely this money could be better spent raising standards in Cardiff, Aber and Bangor? What other country invests like this in getting rid of its high achievers? I have direct family experience of this scheme. My daughter informed a facilitator at her first meeting that she was very keen to study Welsh… Read more »

Eos Pengwern
Guest
Eos Pengwern

This is article is further evidence that Ifan ‘gets it’ in a way that hardly anyone else in Plaid Cymru seems to; the path to a sustainable and prosperous future for Wales does not lie in increasing taxes and increasing the footprint of the State – that always makes things worse – but in Independence, so that we can stop the Labour Party’s cynical publicly-subsidised importation of social problems from England. Not that that would help us at all, of course, if we were still stuck inside the EU – Free Movement would continue to apply even if we were… Read more »

JR Humphreys
Guest
JR Humphreys

#metoo.

Dafydd Thomas
Guest
Dafydd Thomas

private industry needs less large expensive premises in London etc now. Engineers and designers can access powerful computer systems and simulators from home also expert systems will become more effective. So work will be devolved for the well educated, I know this from personal experience. Government functions will be location specific but there will be opportunities for a well educated workforce in Wales in private industry. We need a government in Wales with with control over justice etc. With more NOT less spent on the education of our children. But we need to remove ourselves from the Jurassic mentality of… Read more »

Angharad
Guest

Because of course we don’t want our young to be able to benefit from free movement. Stop them leaving, deny them the right!

Eos Pengwern
Guest
Eos Pengwern

If our young people have the world-class education that they ought to be getting (and used to get, but quite clearly aren’t getting under the current Welsh government under whom we’re sliding steadily down the rankings), then they’ll have no problem going wherever they want to, so long as they have the talent and are prepared to put the work in. In any case there’s little value in being locked into free movement within an EU which is in long term decline relative to the rest of the world; the real opportunities are in the US and Asia. What we… Read more »

ERNEST
Guest
ERNEST

Independence is the only option for Wales ! The EU is not perfect, a lot of our exports from Wales go to the EU and therefore leaving the EU customs union could expose us to large tariffs. Since exporting to the USA will soon be hit with high tariffs then EU is our natural trading partners. On the Catalonia issue the EU does not want to sanction Spain as a member. This will soon not apply to our Wales as it looks as if the UK will sanction itself by leaving ! Wales as a newly independent state would be… Read more »

Gillian Jones
Guest
Gillian Jones

I live in a small market town ,which is being overwhelmed by English retirees.They have paid their dues to England’s NHS but are now using the Welsh NHS.Are we now being asked to subsidise them even more?

The Bellwether
Guest
The Bellwether

Interesting and apposite article. Like Hywel Nantceiro (above) I am a ‘geriatric’ Welshman who has earned a living in Wales, England and abroad (US). I still do and really resent being called a ‘retiree’. I will work at what I do until they carry me off kicking and screaming or prise the keyboard from my cold dead fingers. IMJ is right more needs to be done to keep working age talent in Wales. However this is easier said than done. The attractions of the ‘rest of the world’ are huge for myself, my partner and both my children or to… Read more »

JR Humphreys
Guest
JR Humphreys

So Why is it safer?

Eos Pengwern
Guest
Eos Pengwern

What you say rings very true; I was an early brain-drainer, working in Silicon Valley for ten years before coming back to Wales to bring up my family. When I say “to Wales”, I couldn’t prevail upon my English wife to live in Wales, partly because the standard of living, health service and schools are all self-evidently better on the Shropshire side of the border and so we’ve ended up living here in ‘East Wales’. Nevertheless I have worked in Wales the whole time, both in the technology business that I started myself on moving back here and in the… Read more »

JR Humphreys
Guest
JR Humphreys

Gosh, I didn’t know Labour had abolished the WDA. I left as my Nordic wife couldn’t find work (due to being `too highly qualified´). But my boss in Wales couldn’t praise the WDA too highly.

Robert Williams
Guest
Robert Williams

The range of responses that this piece has evoked, from rational apprehension – from Angharad, Hywel Nantceiro and Rob Bruce – to full-on bigotry – from many of the usual suspects – is an indication that Ifan has touched on perhaps the most important issue facing Wales: i.e. the unwanted exchange of populations, indigenous youth for incoming retirees. It’s an immense problem for which there’s certainly no simple solution. Clearly a vastly stronger economy, especially in the north and west is a large part of the answer, but how to bring that about is again a complex and demanding question.… Read more »

Wrexhamian
Guest
Wrexhamian

What is to stop a Welsh Government from introducing legislation to make it a mandatory for all employers to give priority in employment opportunities to people resident in Wales before advertising in the rest of the UK, as a means of putting an end to the brain drain? What is to stop a Welsh Government from insisting that Welsh higher education institutions give similar priority to applications from sixth-formers at Welsh schools before throwing it open to all comers? What is to stop a Welsh Government from introducing legislation that gives priority in the housing market, and in social housing,… Read more »

Robert Williams
Guest
Robert Williams

Sorry, I should also have mentioned the mature and interesting contribution from Bellwether.

Royston Jones
Guest

A thought-provoking piece, as usual from Ifan, and refreshing to see ‘decimate’ used in something approximating to it’s original meaning. Certainly Wales suffers a brain drain due to its relationship with England, but might this not happen even if Wales was independent? I ask because the brightest and best will leave almost any country if they think there’s a better alternative. Just consider the emigration from Europe to the New World and elsewhere over recent centuries, and not just from poor regions, or due to poverty, overpopulation, hunger, religious or ethnic persecution. Even as Germany was becoming the industrial powerhouse… Read more »

JR Humphreys
Guest
JR Humphreys

That was like cold water over my slumbering head, R.J.

Indeed, no more Uncle Tom talk .

Wrexhamian
Guest
Wrexhamian

Spot on! These problems have to become electoral issues, and a future Welsh Government must indeed confront them or cease to have any raison d’etre. I’ve suggested above that people pester their AMs with letters in the hope of forcing them to debate these issues. If this should be a waste of time, then the problems you describe will, I hope, be in the manifesto of the Plaid Newydd.

Pen-Cloch
Guest
Pen-Cloch

It begs the question “Should a thrusting young Welsh Brain who sees an English retiree prostrate on the pavement, twitching and in need of medical aid go over and attend to them?” “A tax on workers to pay for retirees won’t solve Wales’ ‘brain drain’ problem” reads the Headline to the article so we have three distinct entities at play here. The Worker, the Retiree and the Brain Drain person. We do like to box people into categories don’t we? Presumably all these are human with a pulse and a heart and some compassion whatever their ethnicity. The worker if… Read more »

sibrydionmawr
Guest

I think the only practical solution is to draw a very definite line under what has happened in the past. In response to your hypothetical situation in your first paragraph, a ‘thrusting Welsh brain’ shouldn’t even need to think about whether they need help: anyone prostrate on a pavement is in need of help, so that is what they must receive, no matter their origin. However, as it becomes clearer and clearer that there is a correlation between the rising costs of supporting Wales’ aging population and reduced spending on our education system then there needs to be serious consideration… Read more »

Wrexhamian
Guest
Wrexhamian

Years ago, there was a large piece of graffiti on a wall in a run-down part of Cardiff saying “Wanted: jobs, homes, for Welsh people”. The sign’s gone, but Welsh people, young and older, are having to compete for jobs and homes with people from England and (for the present) the EU. The solution for this, as you rightly say, should lie with the Welsh Government. They will do nothing unless we badger them. It’s the very sort of issue that they should be debating in the Senedd. Instead, they have been complicit. Those living in Wales should be prioritised… Read more »

Nigel Bull
Guest

The movement of the WDA “functions” in house was one of worst decisions taken by Labour and we are still paying the price. There was a “we can do, let’s take the risk” attitude within it. Nothing like the inept slow moving WAG that took it on then shit most of it down. Yes it was capitalism, but the ethos that Peter Walker pushed into it was a great success and we recieved so much outward investment, out of all proportion to our size within the whole country. Yes he was a Tory, but Thatcher let him get on with… Read more »

sibrydionmawr
Guest

Nigel Bull
Guest

Oops, so sorry “shut”! Strange how a freudian slip can be closer to the truth than I intended!

Red Dragon Jim
Guest
Red Dragon Jim

Does independence mean we stop free movement with England? This seems very strange to me as it isn’t the case with Scotland or the SNP. We would need a hard border with England. I feel like I have a duty to point out that this seems unrealistic, and would in no way be democratically supported. I can picture independence being saleable if it involves minimal disruption, allows free movement and trade with England and Scotland, and keeps the Common Travel Area which also includes Ireland. It would be odd for Wales to leave the CTA but for Ireland to stay… Read more »

Eos Pengwern
Guest
Eos Pengwern

I write as someone who lives in Shropshire and crosses the England-Wales border a dozen times a week… Free movement and free trade are not the same thing as unrestricted residency. This is true even within the bounds of the UK as it stands today: for example, there are no tariff barriers with Jersey, and you don’t need a passport to visit there, but there is no automatic right of residency for a British citizen. It is perfectly consistent to seek tariff-free trade with England, and a customs-free cross-border commute in both directions, while imposing restrictions upon who can rent… Read more »

Red Dragon Jim
Guest
Red Dragon Jim

That’s a good point although I think in Jersey the restrictions are on property rights, not residency rights. UK and Irish nationals have automatic residency rights in Jersey according to google. My concern is that there are no such property restrictions between Ireland and the UK, and that Jersey is not that good a comparison to Wales because its a microstate. But while an independent Wales couldn’t do anything about immigration, it could perhaps do something about property. I wonder if it would depend on our economic relationship with England? I also wonder how attractive it would be and whether… Read more »

Eos Pengwern
Guest
Eos Pengwern

You’re right about Jersey – it is property rights rather than residency rights per se, but the point stands that there is a precedent for restraining immigration into a part of the British Isles, which doesn’t involve tariff barriers or a hard border. As I see it, in Wales there are two specific and largely non-overlapping problems that need to be addressed: Wealthy immigrants from England buying up property in the most attractive rural parts of Wales, either as second homes or retirement homes, and so pricing out local people while depressing local economic activity and placing strain onto social… Read more »

Eos Pengwern
Guest
Eos Pengwern

That was meant to be an HTML bullet-point list; if Ifan is thinking of introducing a paid subscription for this site, I’ll pay it happily if he introduces a comment preview and/or edit facility, but not before then!