Faster action is possible

Tweet Last week's figures for the jobless numbers in Wales led to criticism of the Welsh Government by its political opponents. I suppose that's inevitable. To some extent, supporters of the government may have almost invited such a response by some over-enthusiastic cheer-leading for the government's Pro-Act and Re-Act schemes earlier in the recession.

We really need a calmer and more balanced assessment of the situation than using monthly numbers of jobless totals for political point-scoring – in either direction.

People start with an expectation that governments have more influence over the economic situation than is actually the case, and when things are going well, governments encourage this expectation by claiming credit for anything and everything. They should not be surprised if they then find it hard to convince people that 'it's nothing to do with me, guv' when things are not going so well. The truth lies somewhere in between.

As an example, I don't think it's fair to argue that Labour are entirely responsible for the economic catastrophe which hit us after the banking scandal (they can't really be blamed for sub-prime lending in the USA, nor for the short-selling of bank stocks, for instance). But neither can they escape all blame, given that they allowed the markets to do these things with no attempt at regulation as long as they were raking in the taxes, and were building up an excessive deficit even before the bail-outs.

Closer to home, the Assembly government cannot really be entirely blamed for the continuing job losses in the Welsh economy as the recession continues to impact on us. But neither can they entirely escape all responsibility for what is happening in the Welsh economy. (And it's really unhelpful for people to try and argue that the economic situation in Wales shows that 'the Assembly' is a failure, and should therefore be scrapped. This is an issue for government, not the legislature.)

I happen to think that Pro-Act and Re-Act have been a little over-hyped; but that doesn't mean that they were the wrong thing to do. In fact, coupled with the series of 'economic summits' convened by Ieuan Wyn Jones, they showed that a Welsh Government has the capacity to respond quickly and innovatively to situations which arise, and that's an important foundation on which we can build for the future. The approach also earned plaudits from those involved, and a degree of envy from some over the border. As a nation, we're sometimes too quick to see the negative, and ignore the positive.

How much difference the schemes have actually made is something which I hope will be the subject of a proper study in due course – it's too soon to give a final judgement at this stage. Some of the grants made, particularly to larger companies, look a little strange to me; but I do not doubt that there are a number of smaller companies in particular which have been enabled to keep people on at a time when they would otherwise have had to shed workers.

The real question revolves around what else the Government could and should have done - bearing in mind the limitations placed upon it in terms of both finance and powers. It's easy for political opponents to criticise, but where are the constructive alternatives? What would they have done differently?

For my part, I don't think that the government have gone far enough in looking at business taxation – they've certainly not gone as far as Plaid argued that they should in our 2007 manifesto. They don't have the power to cut Corporation Tax, but I do believe that they could and should have done more on the business rates issue, whilst recognising that that would inevitably have had implications for other spending commitments.

The refocusing of economic development activity away from inward investment and onto growing indigenous SMEs is happening, but it's overdue, and happening too slowly for my liking. It seems to me that the biggest problem is a cultural one – too many strategies and too much consultation rather than getting on with it. A harsh criticism perhaps, but one which I would equally make of the UK government in the same context. What we've not yet learned to do is to fully capitalise on the opportunities that devolution gave us to be more fleet of foot and more flexible.