Winging it

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The report of the House of Commons Foreign Affairs Committee on the intervention in Libya contained a damning indictment of the former Prime Minister, David Cameron according to all the newspaper reports.  In some ways, though, it’s a pity that the investigation and report were limited to the issue of Libya.

At one point, the report said that “…former prime minister David Cameron was ultimately responsible for the failure to develop a coherent Libya strategy”.  It struck me that the sentence would still ring true if the word ‘Libya’ was deleted.  The debacle over Brexit, for instance, was a result of the same tendency – a lack of a coherent strategy and a tendency to fly by the seat of his pants, making it up as he went along.  Overconfidence in one’s own ability to ‘wing it’ is not a sound basis for good government.  In the case of Libya, it probably led to many needless deaths as well.

Ignoring difficult questions

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Instinctively, it seems to me that anyone who took to any part of the Welsh media to argue against government intervention in the steel industry in the light of the Tata announcement would be a very brave person indeed.  But someone actually has, and in fairness, some of the points he makes deserve consideration rather than outright rejection (which is not the same as saying that I concur with his conclusions).

Much of the reaction to Tata’s decision looks like knee-jerk stuff – ‘the government must do something’ – rather than a thought-out strategy for responding to the underlying problem of a globalised economy in which an outdated industry in Wales is struggling to compete.  Paul Swinney’s point about it not being clear how any government bail-out “would help turn around the plant’s fortunes” is an entirely valid point to raise, and one which cannot and should not be dismissed lightly.

He also questions whether we should even be trying to compete with lower wage economies elsewhere for such basic industries as steel, or whether we should accept that our future lies elsewhere.  That’s not an easy question to be asking either, but it is another brave one.  For various reasons which I won’t go into here, I don’t think that it’s the right approach, but merely asking the question raises doubts in my own mind as to whether either the Welsh or the UK governments have any sort of coherent strategy either way.  Sometimes they seem to be paying lip-service to the idea of maintaining a heavy industry element in the economy; at other times their actions seem to suggest that they’ve already written off that approach and are only interested in the new.  But committing to a coherent strategy, one way or the other, would surely be better than merely reacting to events.

Many of those suggesting some form of nationalisation seem to see it as a purely temporary situation, pending the onward sale of some or all assets.  It’s an approach which meets the requirement of ‘being seen to do something’ in the short term, but could all too easily lead to a cherry-picking of assets with the biggest loss-makers simply ending up as the responsibility of Government.  It doesn’t look much like a long term strategy – nationalisation is being regarded here as a response to market failure rather than as an option for a sound long-term economy.

Adam Price’s article in today’s Western Mail offers a glimpse of a more forward-looking strategy in which we would have a Welsh steel company with an entire portfolio from steel production to high-end value-added products.  If the steel industry is to be a viable part of the Welsh economy for the long term, that ‘entire portfolio’ is surely one of the most important factors; the more conventional approach of insisting that each individual component turns a decent profit is a recipe for ending up with nothing. 

It’s not a problem-free solution, however, and I’m far from certain that it isn’t glossing over some of the issues.  One of the problems causing the industry in Wales to lose out to competitors elsewhere is precisely the fragmented and dispersed nature of the industry here compared to more integrated plants elsewhere.  Steel travelling by road or rail from one plant to another to be processed is a factor in the production process which places us at a disadvantage and one whose rational resolution in order to make the industry more viable would itself be far from painless.

And that issue of competition with other plants elsewhere brings us to the central economic question which we need to be asking.  The intensity of that competition itself varies over time.  That’s partly a result of the economic cycle; the demand for steel is closely related to the health of the economy at a point in time.  It’s also partly a result of developing economies not wanting to be dependent on others for basic materials.

Nationalisation in itself, whether in full or in part, addresses neither of those issues and that makes it very much a short term response, because neither issue is going to disappear.  Given the immediacy of the requirement to respond and the failure of governments to have an industrial strategy in place, it may well be the most realistic option, but unless there is a longer term industrial strategy to underpin it, it’s unlikely to offer much for the long term.

Capitalism has, over the past half-century or so, become increasingly short-term in its outlook, but there are parts of the economy which require a longer term view to be taken.  Non-interventionism has become almost a creed, for Tory and Labour alike, who prefer to let ‘the market’ decide.  But what if ‘the market’ is unable or unwilling to take the longer term view required?  If government won’t do so either, then we are at the mercy of short-termism.  What is being presented and treated as a short term crisis in one industry is actually drawing attention to a wider economic failure – a failure of vision, strategy, and direction.

Riding the wave?

Tweet A strong and clear part of Plaid’s appeal for electoral support over the last week or so has been the fear hat Wales will get “left behind” if there is a large group of SNP MPs in the new parliament, and only a small group from Plaid.  The fear of getting left behind is entirely valid, and an electoral appeal based on truth ought to be a good starting point.

There are, however, two important factors to consider, and unless both of those apply, then the argument will only ever have any traction with those who are already minded to vote for Plaid.  There is a danger that it will be a case of preaching to the converted.

The first of those factors is this: are voters sufficiently convinced that being left behind is necessarily a bad idea?  Much as I’d like that to be the case, I’m not convinced that it is.  Yes, I know that opinion polls tell us regularly that there is a widespread feeling that Wales should have parity with Scotland, but they don’t tell us how strongly that view is felt.  In particular, they don’t tell us whether, or to what extent, that widespread view is one of the top factors in deciding how people will vote.

In the absence of hard data on that, we can only guess, based on our own prejudices and what people around us think and say.  And my personal view is that, much as I’d like to believe otherwise, it isn’t a top issue for most, and there’s some wishful thinking behind the assumption that it is.

The second factor is this: even supposing that the support for parity with Scotland is a strong motivating factor in deciding how to vote, is it sufficiently clear to people that there is one clear option on the ballot paper which delivers that result?  Again, I fear that this is being taken as read, when to those on the outside it is by no means as clear as they seem to be assuming.

Wales is not Scotland, as people are fond of reminding us.  We didn’t start in the same place, we haven’t got to the same place, and we haven’t followed the same processes in between.  Reading across from one country to the other is always dangerous.  But, having said that, there is one clear difference which needs to be highlighted, and which is, in my view, a significant factor in the very different electoral position in the two countries in the run-up to the UK General Election.

In Scotland, the voters have heard a clear and consistent message in support of independence over decades, and that simply isn’t true in Wales.  Particularly since the advent of the Assembly, the Welsh case has been put intermittently at best, and Plaid has often seemed to fear the issue.  And it’s only a year or two ago that the party told us that Wales was too poor to be independent at present.

It’s only possible to ride a wave if that wave exists; and the big question in adopting this strategy is whether enough has been done to create the wave.  Internal groupthink doesn’t necessarily come to the same conclusion as a more objective analysis.

What does 'success' look like?

Tweet When the then Tory government nationalised Rolls-Royce in 1971 because the company was in deep financial trouble, one wag penned some new words to the tune of “the Red Flag”.

The People’s Flag is deepest blue

We’re buying up Rolls-Royce for you

But if it makes a profit then

We’ll flog the b*****s back again

The Tories’ call for the privatisation of Cardiff Airport doesn’t even have the merit of being able to sell it as a successful profitable company.  It’s based instead on little more than blind faith – the assumption that, as they put it, selling it off would “encourage private sector investment”.  That is, of course, precisely what was not happening before it was nationalised, and unsurprisingly, they offer no evidence that the situation would change if the airport were to be returned to the private sector.

That’s not to argue that the Welsh Government’s strategy for the airport is any better – not least because there’s no obvious sign that they have one.  When they bought the airport, they claimed that we needed to have more scheduled flights on which business people and inward investors could fly direct to Cardiff.  The immediate motivation for the Tories’ latest call is the continued drop in numbers of passengers using the airport – which they brand as some sort of failure.  But there’s nothing inherently unsuccessful about a fall in total passenger numbers (from holiday flights, for instance) if there were more scheduled flights to key capitals, if that’s what they are trying to achieve.

An opposition approach which concentrated on the lack of any obvious strategy for the airport, let alone any way of monitoring the success of such a strategy, would be a start.  Even better would be an approach which started to ask some fundamental questions about whether we should be encouraging more flying, whether having direct flights actually makes much difference to the Welsh economy, and whether simply moving flights to Cardiff from other airports by reducing Air Passenger Duty is worthwhile (all of which seem to be taken as read by the political consensus) would be even better.  These are open goals left by a government which seems not to know what ‘success’ might look like.

Simply arguing that success is measured in terms of total passenger numbers, accompanied by an expression of blind faith that that number would increase if only the airport were in private hands, is completing missing the point and resorting to dogma.  It’s certainly not constructive opposition.

More funds from the EC

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Whilst the third round of European funding will be welcome in Wales, it is disappointing, to say the least, that we should still be in a position where we qualify for such aid.  We have managed, as a nation, to get through two sizeable tranches of such aid with no obvious movement towards the stated objective of closing the gap in GVA.

The first round, Objective One, seems to have been largely frittered away on a series of projects most of which looked good in themselves, but which seem to have realised little long term benefit.  At the time, the impression that I had was of a large pot of money for which projects could bid, accompanied by a complex bureaucracy, within which some of the money was spent on advising others how to apply for it and then spend it.  There never seemed to be any ‘big picture’ view of what the outcomes should be; it didn’t look joined up.

For the second round, the government said that it was going to be more strategic by having fewer and larger projects.  I wasn’t convinced that they succeeded.  The words were all there, but in some cases it looked as though having ‘fewer and larger projects’ simply amounted to giving large sums to consortia of councils which then took on the distribution to the same sort of projects as in the first phase.  The difference was simply that there was an additional layer of bureaucracy between the Government and the projects being funded.

None of those involved are likely to admit any of this, of course; they were all caught up in the spin and presentation of success, the publicity which flowed to councils and ministers from a whole stream of flashy looking projects.  But phase 2 looks to have been as big a failure as phase 1 in practice.

Perhaps there’s something in the character of Wales as a nation, or in our style of politics which made this inevitable, but it seemed at times that being seen to share the cash around fairly and evenly, to ensure that there were projects benefitting in each and every corner of the aided region, was more important than ensuring that the GVA objective was achieved.

Whatever the cause, as we prepare for a third round of funding, I cannot say that I feel any real optimism that any lessons have been learned.  I still see no ‘grand plan’ for what we want to achieve or where we want to be at the end of the next round; and I suspect that, as a result, we’ll fall back on the tried-and- found-wanting approach of saying ‘Look, here’s a pot of money, who wants to bid for some?’, and then doling the cash out to the most telegenic proposals.

It’s not as if the Welsh Government is lacking in strategies; they’ve got several shelf-fulls of them in the Bay.  It’s more that there is a complete disconnect between those box-ticking strategies and actual government action.  A government which was serious about reducing the GVA gap would, by now, have a plan for doing so, and would see the inflow of large amounts of cash as being an opportunity to implement elements of that plan.  I won’t hold my breath.

Whose strategy?

Tweet It's always fascinating to read the words of Plaid's anonymous and generally self-styled 'strategists' in the Western Mail. Today's story is a case in point.

According to the paper, "Party strategists had been working on the assumption that the current leader, Deputy First Minister Ieuan Wyn Jones, would stand down at some stage during the next Assembly term, with Mr Price his obvious successor."

It's either an assumption which for some reason the 'strategists' chose never to share with the now ex-Chair or NEC - or else the Western Mail has been fed a piece of fiction. I know which I believe. But then if a story happens to fit a particular agenda...

Economic Renewal

Tweet I've never understood why governments can't write reports and strategies in simple clear language, and keep them brief while they're at it. Perhaps they just don't want people to read the actual documents, just listen to the spin.

The Economic Renewal document published yesterday is a case in point. The core of it – which could probably have been written in considerably less than half the number of words actually used – is a quite exciting departure from traditional economic policy in Wales. So why, oh why make it so lengthy and difficult to read? There's just so much unnecessary verbiage (and if you want a classic example, try the definition of innovation in the second column on page 30!).

I have a personal dislike of 'taking forward agendas' as a phrase; I suppose that it's intended to sound dynamic, but the phrase doesn't do it for me. And this document is full of taking things forward - agendas, actions, lessons and challenges - they're all going to be 'taken forward'.

Enough of a rant; down to the substance. I entirely welcome the shift from seeking to attract increasingly scarce footloose multi-nationals to growing and nurturing our own companies at home, as well as the shift from a grant-driven culture to an enabling approach.

It has often seemed to me that senior business people in Wales have been quick to criticise the 'dependency culture' when it applies to people receiving benefits, but demand more of it when it comes to grants to businesses. A simple market approach says that if a business isn't viable without a government handout; then it just isn't viable.

There is a 'but' of course. Wales has been using grants (to the dismay of some English regions which haven't been able to match them) to give us an edge over other areas, and it remains to be seen whether removal of that edge will damage Wales. Given that the Welsh economy has still lagged behind, despite having that advantage, I'm not convinced that it actually gave us that much of an edge in the first place.

The Welsh government has done a lot already, and is planning to do more, to roll out an advanced broadband infrastructure in Wales. They shouldn't really need to, of course, and it grieves me to see taxpayers' money going to large companies like BT which ought to be making this investment themselves. I'd personally prefer to see a much higher level of public service obligation placed upon them; but since we don't have the power to do that, and it isn't going to happen any time soon, it's better for us to spend the money and get on with it than not. It just means that that money is not then available for other projects, sadly.

The idea of trying to focus attention and support on those industries and areas where we particularly want to see development is one I welcome. It is, of course, in line with what Plaid were saying in our Economic Plan back in the late 1960s, and as far as pro-active activity is concerned, it has to be better than a scatter-gun approach. Whether they have hit the right sectors is a moot point, which I'm sure that some will argue with. I'd hope that that is something that can be reviewed over time.

The test of the strategy will come when difficult decisions have to be taken. What happens if a significant employer gets into difficulties and starts asking for handouts? What happens if a business not in one of the target sectors is seeking assistance? There's no easy answer to this sort of question, and only time will tell, but at least the government now have a framework in which to consider them.

PS. One thing slightly alarmed me in the document, although it wasn't directly related to the economic strategy as such. At the bottom of page 25, there is a reference to "the introduction of a clear and transparent fees policy for post-16 education and training". Fees for post-16 education?? A mistake, surely.