Friday, 31 December 2010

Bleak economic outlook for Wales

Yesterdays Western Mail interview with First Minister Carwyn Jones was pretty grim reading for anyone hoping that the Welsh economy might be a priority for the Assembly in the coming years.

Firstly Carwyn seems to think GVA figures have improved over the last 10 years. In fact Wales has been sliding backwards at an alarming pace over that period despite the millions of pounds of extra spending brought about as a result of the additional Assembly related civil service.

Carwyn suggests that he wishes to see the GVA figures improve but like Nerys Evans the day before offers no actual solutions.

He seems to believe that additional law making powers for the Assembly will give him the tools to improve Wales's economic performance.

I am not sure which businesses Carwyn is talking to but I would be amazed if he could find one who believes that more legislation and more regulation is what they need to get their businesses growing. (Other than professionals & consultants who would be leeching more money in return for dealing with the new legislation)

It is clear that the First Minister like the rest of his Party is completely out of touch with the needs of Welsh Business and the Welsh Economy.

When the subject of tax-raising powers was mentioned he immediately talks of trying to increase tax rates, rather that lower them to encourage additional investment and attract new businesses to Wales.

Business responds better to the carrot (tax breaks) than the stick (further legislation) and if we wish to see an improved economic performance in Wales we have to accept that that will mean tax varying powers at some point.

Those in the Assembly who continue to argue for "fair funding" before discussing the issue will soon realise that they are not going to get anywhere. Why should the UK government increase our hand out when, rather that invest the money in economic development we spend it on freebies and tuition fees which are not available to their constituents.

If we want to improve our lot we need to take responsibility for ourselves and have the courage to find suitable long term economic solutions for Wales.

This will inevitably lead to us having less money to spend on health and education in the short term, but will lead to higher revenues in the future allowing Wales to enjoy the benefits of its improved economic performance.

Unfortunately the impotent electoral system in the Assembly means that it is highly unlikely that there will be any change in Government in Wales next May, meaning that the Welsh economic outlook continues to be bleak for at least the next 4 years.

Wednesday, 29 December 2010

What does the future hold for Plaid Cymru?

There is a very nice profile of Nerys Evans in today's Western Mail.

It is a very interesting article and was the first time I realised that potentially Nerys could be out of front line politics from May.

In the article Nerys is rightly proud of the progress Plaid Cymru has made over the last 10 years. She points out that despite devolution and the fact that Labour and the Conservatives have now re-branded themselves as Welsh parties, Plaid are riding higher than ever before.

However in my opinion the real challenges for Plaid still lie ahead. The re-branding of the Conservatives and Labour in Wales has so far been little more that window dressing. As devolution develops and evolves it is inevitable that the two main parties will seek greater autonomy in order to avoid disputes and conflict with their masters in London.

This is likely to lead to separate political parties in Wales who whilst aligned with the main parties in London, will be completely independent.

At this stage the question will be put to the Welsh public of small vs large state and Plaid may well be left on the sidelines. Chances are that the left leaning Plaid supporters will fall in with Labour whilst the pro business wing will jump on board with the Conservatives.

It is only when the dust of full devolution has finally settled will we finally know whether there is any future for Plaid Cymru.

Saturday, 11 December 2010

What is the solution to Wales's economic woes?

This week we once again saw Wales fall further behind the rest of the UK in terms of GVA.

For several years there has been general debate about how far Wales is behind the rest of the UK as several of the most commonly used measures of economic success do not take into account factors such as the lower cost of living in Wales as compared to the rest of UK.

The latest figures leave us in no doubt however that our economic performance is deteriorating.

Despite this the Welsh Assembly Government's budget made huge cuts to economic development. What is worse the Conservative opposition (who I always thought were a pro business Party) would have made even deeper cuts in their alternative budget.

If we want Wales to begin to close the gap we have to think big and think long term.

Cutting spending on infrastructure such as roads, rail & broadband may save money now but will leave us in a far worse position in years to come. These are they key arteries which allow Wales to trade with the rest of the UK. Failure will lead to businesses relocating to areas where the economy is taken seriously.

But we also want to trade with the World and to do this we need an airport in South Wales close to the M4 which has regular flights to key world destinations. This is a huge project and would cost billions of pounds but it is something we should be aspiring to. Cardiff International is in the wrong place and is frankly amateur. If we decide to keep it, at the very least it needs to have proper transport links (trains every 30 minutes to Cardiff and Swansea and decent access roads) and a car hire desk which stay open past 9pm!

If the Welsh Economy begins to recover many of the other problems facing Wales will begin to reduce, but it is bottom of WAG's list of priorities. Why?

One of the primary factors is that any upside in the Welsh Economy will have little impact of the Assembly. This weeks horrific economic data passed by with barely a mention in the Welsh Media and any improvement would probably get similar coverage. The real benefits of higher taxation revenue and lower benefit costs would instead be enjoyed by the Chancellor in Westminster.

This is a fundamental flaw in the current devolution settlement, and the referendum next year will not make things any better.

Businesses in Wales are already over burdened with paperwork and legislation and an additional layer of legislature could actually be a step back. If the Welsh Assembly was more responsible for raising it own income (rather than whining about the size of the hand out from England) the economy would certainly be higher up their list of priorities.

What is more important the Assembly would be in a far stronger position to make a genuine impact on the Welsh Economy if they had the power to cut taxes for Welsh businesses.

The Holtham Commission has already made the case for such a system and whist it would surely lead to short term pain for many area of Wales it is the only way that we will be able to get economic development back up WAG's political agenda and bring a end to the current economic slide.