Prosperity gulf opens between Wales and London

Dafydd Wigley says we need a new deal to tackle Wales poor economic performance

In the frenzy of debate about the Census figures on the Welsh language a few weeks ago, few people noticed  the annual tables for average income levels in Britain. These statistics reveal a continuing north/south divide.

Average income  is measured as ‘Gross Value Added’ (GVA) per person. The income gap  between Wales (or  Northern England ) compared to  Southeast England, is staggering. Wales has the lowest income per head of any nation or region in the UK.

West Wales and the Valleys –  including Anglesey, Gwynedd, Conwy and Denbighshire – had the lowest  average GVA of any sub-region in Britain (£13,573). This was under half the figure for Berkshire, Buckinghamshire and Oxfordshire (£27,795). And it is and less than a quarter of that for Inner London (£62,398).

It isn’t Wales alone which suffers low incomes.  Cornwall was next to bottom at £13,848; and Teesside & Durham only slightly better at £14,627. There is a  chasm between prosperous Southeast England  and the old industrial areas.

On a local level, the disparity becomes even wider. The Wirral is  worst (£11,167); the Gwent Valleys  second worst (£11,626) and also in Britain’s poorest five areas is Anglesey (£12,624).

In contrast  ‘Inner-London-West’ – Kensington and Chelsea – have a staggering GVA of £111,519 per person. The richest areas of London  have ten times more income than the poorer areas of Wales.

Recently the relative gulf has closed marginally,  arising from  the slowdown in London’s financial sector. However, since 1997, the overall gap widened appreciably, with  the share of the UK’s GVA  attributed to London increasing from 18% to 22% now.  The share enjoyed by Wales and Northern England has fallen.

There are some hotspots away from London. Edinburgh grew from 53% above the UK average in 1999, to 64% above the UK average in 2011, a rich city indeed.

A week before Christmas I sponsored a Lords debate on the recent  Silk Commission proposals for stronger  financial powers for the National Assembly. Silk recommended unanimously, with all party support, that the  Assembly should have tax-varying and borrowing powers. Unlike the Scottish Parliament, it currently  has no tax-varying powers. Community councils have more fund-raising power than  the Assembly!

GVA figures underline the need for change. The National Assembly has  responsibility for economic development in Wales. Yet it doesn’t have the tools to do the job. It needs the capacity to vary taxes, provide incentives in enterprise zones and borrow to facilitate capital investment programmes which stimulate the economy.

Since 2000, Wales has benefitted from European Structural Funds to help  poorer regions. Rigorous appraisal is needed to see whether these funds have been  used effectively. Over the period 1999-2011 the relative GVA of Wales’ poorest parts has been stuck at 65 per cent of the UK average. European Funds have not closed the gap. In contrasts, Cornwall – which also received regional help from Europe – saw its GVA increase from 61 per cent to 66 per cent of the UK average over that period.

Wales needs a new economic deal, as an urgent priority. Time will tell whether Westminster gives the Assembly the necessary economic levers. But it’s clear that unless we help ourselves, no-one else will do so.

Lord Dafydd Wigley is Plaid Cymru’s spokesman in the House of Lords.

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