We will feel the draught of English policy

Geraint Talfan Davies says the new policies being rolled out for England will have consequences for Wales

As the coalition government in Westminster rolls out its policy announcements – NHS reform, a graduate tax, the Big Society – there is a feeling in Wales that devolution will protect us from small government radicalism in England even if we are not shielded from the full force of budgetary retrenchment. This will almost certainly turn out to be a complacent assumption.

One of the worrying tendencies in political debate in Wales is the tendency to confine ourselves to discussing policy in relation only to devolved functions and to avert our eyes from what is going on in England. This is the reverse of the Westminster/Whitehall phenomenon, which sees policy being made without any regard for what is happening in the UK outside England’s borders. UK/English government, representing 85 per cent of the UK population, operates under no constraint, sometimes not even the courtesy of the good neighbour – witness Nick Clegg on the timing of elections and referendums.

But the issue of the timing of various polls – important though it is – may pale into insignificance compared to the impact of other policies.

Consider David Cameron’s Big Society. However sceptical one might be about the practicality of substituting volunteers for government on a large scale, it would hardly be appropriate for us in Wales – where the ‘third sector’ is written into the constitution of the National Assembly – to scoff at the principle of strengthening the voluntary sector. To the extent that it works in England, it is likely to engender greater pressures from the Welsh voluntary sector for a similar ‘liberation’ in Wales.

In England the intention is to finance this Big Society initiative by the application of dormant funds held by the big banks. When we start to see this money being disbursed in England people are going to ask how those funds are going to be disbursed in Wales. The sector in Wales, just like everyone else, is heavily dependent – some would say too dependent – on funding from the Welsh Government. Could the dormant funds be a new source of funding that would create some greater independence?

Presumably, we will also be asking whether these dormant funds are going to allocated around the UK on a population basis – as with the Barnett formula – or according to some assessment of need.

Then there is the graduate tax. Here is an area of policy where, despite being formally devolved, Wales’s freedom of action is severely constrained by what happens in England. For some time many have argued that the present way of funding students in Wales cannot long survive a further policy change in England – either the raising of student fees or the introduction of a graduate tax. The introduction of a graduate tax will surely raise a host of other questions.

Would a graduate tax be levied across the UK or only in England, or perhaps only in England and Wales? How would the proceeds of a graduate tax be shared between different government administrations  – again, on Barnett lines, or on respective shares of student numbers? Would the application of a graduate tax across England and Wales mean that, effectively, student funding policy had been repatriated to Westminster?

But if a graduate tax were not to apply in Wales, would the beneficiaries be only Welsh domiciled students or any UK students studying at a Welsh institution? It’s difficult to see the Treasury accepting such an easy way of dodging the tax. The higher education sector in Wales is so intertwined with the sector in England that it is difficult to see policy-makers in Wales – not to mention the universities themselves – living with such a severe policy differentiation, where the law of unintended consequences could operate with such potential severity.

And then there is the elephantine case of NHS reform. There is a little doubt that Andrew Lansley’s plans for the NHS in England are sweeping and fundamental. Unless they are fundamentally altered during their passage through Parliament – and their lack of an electoral mandate will empower opponents in all parties – they will involve an unprecedented degree of involvement for the private sector and, ostensibly, a loosening of central control.

Of course, this is not a road down which any prospective Welsh Government – Labour, Labour-Plaid, Labour-Lib Dem or even a Rainbow coalition – will want to travel. But if it were to work and stick in England it would be a rash person who would predict that there would not be, over time, some ideological spill-over into Wales.

Even without such spill-over, there is likely to be one consequence that will eclipse the effects of all other policies put together. That will be the potential end of nationally negotiated wage agreements. In England the intention is to allow the setting of local wage rates within the health service. The practice will almost certainly spread to local government. If this occurs Wales will not be able to stand aside.

Those on the right see the change as a way of putting public sector trade unions in their place, but they also argue that it may be a way for disadvantaged regions to engineer their own devaluation, and thus make themselves more attractive for investors. If Wales or the North East of England cannot devalue a currency or set their own rates of corporation tax, then, it is argued, lowering wage rates is the only route to greater competitiveness.

As economic theory this has plausibility, and who is to say that it would not work in the long run. But, as Keynes said, in the long run we are all dead. In the short term, it is likely that it will only widen further the GDP gap between Wales and the UK and, given the centralisation of banking and investment in the UK, it would be a brave policy-maker who would foresee a beneficial effect within two or even three electoral terms.

This may the biggest policy issue facing Wales, but it has yet to be subject to the intense political debate that it deserves.

Geraint Talfan Davies is Chair of the IWA.

4 thoughts on “We will feel the draught of English policy

  1. A most interesting and informative article -and I say that as an Englishman looking in. It says so much about the consequences of devolution in general, how it is working out, its problems and its issues. I just wonder if the only adequate and long term solution is for England to have its own parliament and for Wales to have an assembly/parliament with all the powers that the Scottish Parliament has, and an English Parliament the same, so that the three nations of this island stand in exactly the same relationship to the Union and to each other. It certainly is wrong that Scotland has powers of home rule that Wales does not have. Very disjointed and unfair. The time has come, after 12 years of devolution, for a thorough rethink, for a brave look at federalism. It will be a different Union, but no harm in that. One thing is sure, the way we are limping and stumbling along at present, with the Westminster/Union Parliament making internal legislation for England as if England is the Union, ignoring the consequences for Scotland and Wales, which as Mr Davies says are inevitable, should not continue. The trouble is, the new Conservative Government seems to want to ignore the fact that devolution has actually taken place, seems to regard the Westminster Parliament as if nothing has changed since 1998. It just does not have the courage to face up to the facts. The facts are that Scotland and Wales have been acknowledged politically and constitutionally as distinct nations within the UK by the 1998 devolution legislation; and the consequences of that are just immense. They have to be faced up to. There will be no retreat on devolution. Instead we should face up to its consequences and make it equal between the three nations of this island. We must go forward, not stumble about as if it has not happened, which is what this new government is doing. There are two major first steps to take in my opinion. One is, to give Wales the same powers of home rule as Scotland has. The preferential treatment given to Scotland by the previous govenment in 1998 has never been justifiable. The second is to give to England the same constititutional and poltical recognition and standing within the Union as has been given to Scotland and Wales. The whole situation has to be regularised. That is for starters.

    Michael Knowles

  2. No constraint on England? What about the Welsh, Scots and N Irish MPs at Westminster? The last NHS ‘reform’, introducing foundation hospitals, was opposed by England’s MPs but was carried by the Labour Govt which called on its Welsh and Scottish MPs. The problem is that there is no ‘English’ government. If there were, it might have more regard for its neighbours, rather than acting as if they don’t exist.

  3. Many predicted that the ultimate result of devolution to the Scottish Parliament and Welsh Assembly would be the unravelling of the UK.
    There are two ways forward. Establish an English Parliament so that matters sucha shealth and education are clearly seperate from the UK in all the home nations.
    The alternative? Independence! Given the clear disquiet expressed in this article surely the Welsh must consider this option. An independent Wales could then raise its own taxes and spend the revenues in anyway it saw fit.

  4. Interesting article. The questions raised here about how dormant account funding from the banks would be distributed across the UK particularly caught my eye, for example: ‘When we start to see this money being disbursed in England people are going to ask how those funds are going to be disbursed in Wales’
    My understanding is that it is only English residents whose dormant accounts are to be targeted in this way (see http://www.thecep.org.uk/wordpress/2010/07/19/big-society-big-con). At all events, the very fact that it is unclear to most people that this is an England-only measure shows how sloppy and inadequate the reporting of English matters is by the British press. Roll on the day when an English parliament (or better, independence) puts an end to this confusion and the unfairness (to England) that underlies it.

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