Thursday, 19 February 2009

DIY is best

There's no arguing about the fact that Wales has a lower GVA per head than the UK average. Nor about the fact that this is a very long-standing problem. But whose fault is it?

During his flying visit to Wales, Cameron attempted to pin the blame on Rhodri Morgan and Gordon Brown – presumably hoping that voters have short memories. In reality, insofar as Morgan and Brown are guilty on this score, it is of failing to improve on the legacy left to them by the Tories, rather than creating it. (WelshPoliticalHistory comes to a similar conclusion, although it's disputed in some of the comments. In the narrow context of an utterly hypocritical accusation by Cameron, I agree with his conclusion). In fairness to the Tories – did I really just say that? – they in their turn were guilty primarily of failing to improve on their legacy from the previous Labour government. And so, apparently, ad infinitum…

That doesn't mean that I don't consider Morgan and Brown to have been a failure; merely that the accusation was disingenuous at best, given its source. Cameron is wrong to hurl the accusation at Labour without taking at least equal responsibility for his own party's past actions.

The problem of Wales' comparatively low GVA is a serious and deep-seated issue. It would be easy at this point to revert to the simplistic traditional position that it's not which party is in government which is the problem, but that London government in general fails Wales. I happen to think that that is true, but it isn't the whole story.

It is actually extremely difficult for any government to ensure that GVA per head is consistent across its territory. The very nature of the word 'average' requires that some areas are below it and some above it. There are differences between the different parts of Wales as well. Attention is currently focussed on the differences between Wales and England, but I am certain that in an independent Wales, the differences between Cardiff and Ynys Môn would be receiving a similar level of attention. It isn't just a problem for 'London government'.

Governments setting economic policy make choices. Maximising GVA per head in the economy as a whole isn't necessarily inimical to sharing growth and prosperity; neither are they automatically the same thing. But the belief that the 'free market' is the best way of achieving the former (a belief which is now common to both the Tories and Labour) will almost inevitably lead to 'regional' variations. The question is – how do we respond to that?

The least helpful – and least honest – response is to start accusing the least well-off areas of being somehow responsible for their own failure, of being dependent on handouts from the centre, and of whinging. It's unhelpful, yet it seems to underlie the attitude of a number of unionist politicians, who seem for some perverse reason to be almost pleased that - as a result of their economic policies - 'Wales is too poor to be independent'. Even more bizarrely, the only remedy they offer is more of the same.

A more honest unionist response would be to say something like, "Our aim is to maximise the prosperity of the UK as a whole. We believe that the policies which we are following are the right ones to do that. We recognise that this might well mean that some parts of the UK are relatively less well-off than others, but we will do what we can to redistribute wealth so that all citizens benefit from the prosperity which is being created."

It's a better line than complaining about having to give out 'handouts' to the poorer areas, an approach which serves not only to increase the likelihood of a dependency culture, but also to build resentment amongst both the givers and the receivers of the alleged largesse. The problem is that, to be credible, such a line needs to be backed up by precisely the sort of pro-active regional policy which has been progressively dismantled by Labour and Tory governments alike.

The other response, of course, is to argue that the best way of reducing the disparity in GVA between Wales and England is to have an economic policy focussed specifically on the needs of Wales – and that means maximising the economic powers of the National Assembly and/or Independence.

Nobody will be in the least surprised that I favour the latter viewpoint. I have zero faith that anything which Cameron would do in government would have any more impact than the efforts of previous governments – especially given his stress on cutting the public sector. Focus on, and ownership of, our own problems always seems to me to be preferable to expecting someone else to do something.


Anonymous said...

The truth is that the brain drain goes in the opposite direction. the whole system is set up so that the best and brightest leave the "regions" and head to London. No wonder then that most profitable businesses are in London.

As you say it is therefore the duty of the capital to redistribute.

Anonymous said...

the WM article says that Rhodri and Gordon are responsible for the economy for the last decade when GVA has fallen to a record low, what is inaccurate about that statement and how does this equate to the misery that the Tory Government inflicted on Wales's communties in the 1980's as they haven't been in power since 1997.

many bloggers reflect the level of immaturity in welsh political life and discourse in all parties, Tory, Labour, Plaid Cymru and Lib Dems where they seem unable to move on from arguments from the 1980's, we live in 2009 and face new challenges, we have record low turnout at elections and if our politicans want to engage with us and really change Wales for the better then they have to start debating 21st Century issues.

Anonymous said...

I think this is a very good post indeed (and not even because you endorse the conclusion I reached over Cameron's comments :-)). I also think you are right to highlight the disparity within Wales, as well as that between Wales and England as being an area that should attract more attention. Undoubtedly, the creation of a Welsh tier of government has helped to do that.

Thus far, however, the advent of democratic devolution has failed to close the gap; it is interesting to speculate whether that is because of a lack of power, a lack of time (i.e more than ten years is needed) or - most alarmingly - a lack of possible power.

I don't mean to imply the hoary claim that Wales is too small to exist on her own. That is not true. But I wonder whether even individual sovereign governments such as that of the UK are really big or influential enough to change their economies in any marked way. If now - and it is an if - we are left with the really disquieting conclusion that government per se may not be able to effect the sort of change necessary to address Wales's relative poverty.

John Dixon said...


I think you miss my point. I do not dispute for one moment that the current government - of whatever party - has to take a degree of responsibility for the absolute level of GVA; and the longer they have been in power, the greater the degree of responsibility. However, the accusation that Cameron was making was that the current government are also responsible for the relative level of GVA.

My argument on that is not whether 'government' bears responsibility (it clearly does), but whether one or other of the two parties which have been in government can be exclusively blamed, given that the situation has existed for so long, regardless of which party has been in government.

This isn't about going back over old arguments; it isn't even a particularly party political point. It's about questioning more than just current government policies.

I agree that we should be debating 21st Century issues - part of the point which I am making is that 20th Century approaches have failed, and that that isn't the same as saying simply that the approach of the current government has failed.


Thank you.

I think we have to start from an acceptance that no government can achieve an exactly fair and even spread of prosperity across the whole of its territory. The expectation is unrealistic. That doesn't mean that the disparity must necessarily be large; and a gap of 25% between Wales and the UK average is surely larger than is acceptable (but don't ask me to put a precise number on what would be acceptable!).

The idea that government per se may be unable to achieve the desired outcome is an interesting point for debate. If I believed that government was for ever doomed to be ineffective in that respect, I think I'd probably have to give up on politics. I think that government can do more to promote a more localist economy, and to share prosperity more evenly; but it won't happen if we leave every decision to 'market forces'.

And that is perhaps the nub of where the real economic debate within politics lies - to what extent are decisions made by 'government' and to what extent by 'the market'? It's a traditional and old fashioned fault line, but one that seems to have been forgotten somewhat in recent decades.