Welsh investment spread too thinly

Alun Ffred Jones asks what Welsh economic priority sectors are for if all sectors are given priority

One thing we’ve never been great at doing in Plaid Cymru is heralding our own successes. It has often been said that as a party we’re too busy focussing on tomorrow’s challenges to be bothered with celebrating what we’ve achieved today.  So forgive me if I take this opportunity to talk about what is one of Plaid’s most significant achievements of our time in Government in Wales.

On the 14 December 2011, the provisional GVA figures for 2010 were released. They show that Wales’ GVA in that year reached 74 per cent of GVA in the UK. GVA is just one of a number of useful economic indicators, and the merits of measuring Wales’ GVA in comparative terms to that of the UK could of course be debated. However, these figures do provide a useful tool that we can use to track Wales’ economic performance over recent years. The story those figures tell is not a good one.

The figures show that since 1997, Wales’ GVA relative to the UK has been falling. From 78.2 per cent in 1997, the figures dropped steadily year on year. By 2009 the figure had dropped for the 13th year in a row, to 73.3 per cent.  As well as reflecting the effects of the more recent economic turbulence, the decline suggested systematic failings in the way the Welsh economy has been run.

That brings us back to 2010 – a year which saw the Welsh Government respond admirably to a recession. The Government of that time brought forward capital spending in order to stimulate the economy, worked with business in order to charter a course through the rough times while safeguarding as many jobs as we possibly could. We were responsive to the changing economic climate, eager to engage with business and unions, and willing to use all available resources in order to help.

We also saw the launch of a new direction for the Welsh Government in the way it approaches economic development. Ieuan Wyn’s Economic Renewal Programme was devised with input from the business community and workers at its heart. It would concentrate government efforts on specific sectors of the economy that had greatest potential for growth, concentrating resources on improving infrastructure for the benefit of all businesses rather than giving big hand-outs to just a few. Better broadband for example would help all businesses in Wales to grow.

Having witnessed the years of decline from opposition, Plaid Cymru was able to take its opportunity to bring about real change in government.

Now, the latest figures from the ONS suggest that our work really did have an effect. After those 13 long years of falling GVA figures, in 2010 the decline was halted. An increase of 0.7 per cent may not be much when we look at how much work still needs to be done – and it did start from a low base.  But what is significant is that the downward trend was halted. We had begun the process of turning our economic fortunes around.

However, compared with where we are today 2010 seems like a different world in economic terms. The renewed economic crisis is taking a severe toll in jobs and businesses throughout Wales. The new Labour Welsh Government seems strangely complacent and inactive during these desperate times. We’ve reached the beginning of 2012 and the Labour Government that was formed in May 2011 still cannot point to any new capital projects it has started. Small businesses in particular are struggling to maintain staffing levels and we’ve seen Welsh unemployment reach record levels.  Yet Labour refused to implement Plaid’s plan to offer extended help to SME’s via our Small Business Job Protection Scheme.

So if their crisis management is good for nothing, what about Labour’s management of the wider economic development plan that had been devised by our Minister for Economic Development  Ieuan Wyn Jones? Well the Economic Renewal Programme is already a shadow of the carefully balanced approach that was initially launched.

In true Labour style, they are already trying to fudge it.  The six priority sectors that were identified as areas for significant growth have already become nine.  What is the point of priority sectors if all sectors are given priority? Resources were already scarce. Now there is a real danger that they are spread too thinly to have any impact.  And how about the focus on improving infrastructure to benefit all businesses? No news. Apart from the schemes Plaid initiated while in government, this initiative seems to have been put well and truly on the backburner.

My view of this Labour Welsh Government’s inaction is not really the issue here. The issue is that when we step back and look at what the latest GVA figures mean, we can see that the decline in the Welsh economy that has been locked in for so long has now been broken. That 13 year long series of negative figures has been halted and the momentum could now be in favour of positive change.

That momentum cannot be wasted. The Welsh Government has to build upon it and enable the pace of change to gather. It is within their gift to achieve and our expectations of them can be no less.

Alun Ffred Jones AM is Plaid Cymru’s Economy Spokesperson

2 thoughts on “Welsh investment spread too thinly

  1. Congratulations Alun Ffred it is always good to see an elected Assembly representative address the issues of the Welsh economy. The Nation has been blighted by poor economic performance for too long. It may smack of a simple determinism but it seems to me if we can get the economy right many social issues e.g. poor health, poor housing will be easier to solve. The overwhelming challenge is to arrest and reverse an extended period of economic decline.

    None of this will happen quickly though. Contributors to this blog may be surprised to know that comparative performance between Wales and the UK has been dropping off for a very long time. Prof Robert Huggins of Cardiff University quotes data which indicates the gap between average UK performance (measured by GDP/GVA adjusted for population size) and that of Wales has been widening since 1907.

    I am broadly neutral as to whether a ‘sectoral approach’ makes sense, although I will add the observation there is nothing new in it. The WDA tried it in the late 1980s and the chosen sectors were with one exception identical to those contained in IW-J’s economic renewal strategy. As with all good ideas success will be contingent on effective execution and it will require at least 3 years before any judgements can be made.

    However debating the merits or otherwise of an emphasis on sectors is to my mind to miss the point. Where Wales has failed is in adjusting to the realities that whilst it was once an industrial society it now occupies a place in a post-industrial world. Old nostrums, especially about the role of the state in the process of improving economic performance need to be re-thought. There definitely is a role for public intervention and it goes well beyond the failed neo-liberal view of establishing a pro-business regulatory framework and favourable spending and tax frameworks and leaving the rest to the market. But government, particularly devolved administrations, need to be smart, agile and probably concentrate attention on those things it does best like education, infrastructure and providing the type of leadership that acknowledges that if we can get the economy flourishing many other things will fall into place.

  2. As Banker says it’s great that the economy is being debated. However, whilst I would not disagree with many of the sentiments expressed by Alun Ffred Jones, it’s worth querying the underlying implied message which seems to be that Wales’ GVA position has improved. I might be wrong, but I think that Wales’ GVA figures have fallen yet again, but that they have fallen less than the UK average. In other words, we’re not doing better than other parts of the UK, we’re just doing less bad. Personally, I still think that there’s something to celebrate in doing less bad than elsewhere, but I think it’s also pertintent to be completely transparent that that’s what we’re celebrating rather than create the impression that our GVA figures are improving.

Comments are closed.

Also within Politics and Policy