Ian Hargreaves argues that we need to become a more open society for the economy to prosper
Let’s face it, Wales since devolution has been a disappointment. Just look at the three undisputed top priority items in any country’s politics: economy, education and health.
The Welsh economy since devolution has gone from bad to worse to barely better. Economic valued added per head has fallen from 77 per cent of the UK average in 1999 to 75 per cent. By this same measure, West Wales and the Valleys run at 65 per cent of UK average: a pretty desperate state of affairs.
Structurally, the Welsh economy has not recovered from the short era of plentiful natural resources and associated heavy industry. It is, for reasons which are not agreed, stuck in yesterday.
Today, the public sector accounts for roughly two thirds of economic activity in Wales, which at times makes it feel closer to the monoculture of a late Soviet era satellite state, than a diverse modern economy operating in a global marketplace. Export performance is narrowly based; inward investment rates are fragile and there is an anaemic level of new business births.
In the next few years, as the public sector suffers further cutbacks in the cause of the UK as a whole maintaining credibility in financial markets, the Welsh public sector will shrink and more jobs will be lost.
From the first stages of devolution, politicians here have, of course, recognised the urgent importance of improving this situation. Patrick was always jubilantly sceptical about the chances of Wales out-performing other areas of the UK sufficiently to diminish the economic gap.
In a book published in 2002, the journalist Patrick Hannan ran his eye over Rhodri Morgan’s economic development strategy and applied what he called “the first rule of government plans: the likelihood of them being achieved is in inverse proportion to the number of adjectives used to describe the objectives”. Noting the First Minister’s belief that Wales could romp along in the tracks of the Irish Celtic Tiger, Patrick tersely noted the substantial differences between the two and concluded: “Not for the first time many people wonder what Rhodri knows that they don’t”.
Ten years ago, I thought Patrick was too pessimistic, but he was right. So far.
If you ask most economists what to do about an economy which has structural problems as severe as those which Wales displays, they will tell you that the long term, strategic answer is investment in education, the vital source of the skills enhancement needed to enable people and institutions to respond to economic change through innovation and entrepreneurship, which are the engine of jobs growth in the private sector.
Now Wales, supposedly, has an exceptionally strong cultural attachment to the virtues of education. We all know stories, like the one which saw Richard Burton’s elevation to greatness under the care of a super-teacher. But we also have to face the fact that Wales’ performance in education is nowhere near as good as it should be.
The so-called PISA rankings, produced by the Organisation for Economic Co-operation and Development and as close as you ever get to accepted comparisons across national boundaries, show that Wales currently ranks 38th among 67 countries in the world for reading, 40th for maths and 30th for science. Within the UK, Wales lags Scotland, England and Northern Ireland.
The picture in health and social care is even grimmer. We all know that a great Welshman invented the National Health Service. We also know that there has been no improvement in Wales’ key health metrics since devolution; Wales has a worse record on public health issues than almost anywhere else in the UK.
According to the most recent official survey of health in Wales more than half all adults are on regular, prescribed medication and a third of us report that we had attended the outpatient department of a hospital in the last year. Physical activity rates have been static for a decade. Nearly 60 per cent of adults are overweight or obese. And pressures on the health service in Wales will get much more intense, as the number of people living beyond 75 is due to double by mid century. As Dr Chris Jones, Medical Director of the NHS in Wales, has said, starkly: “If we don’t change we will be overwhelmed.”
It is, of course, a good deal easier to name these problems than to solve them. But it is also essential to avoid drifting on a tide of fatalism, where we start to think that nothing can change.
Those of a fatalistic disposition should look at countries as small or smaller than Wales on the opposite flank of Europe: countries which following the fall of the Berlin Wall in 1989 have had to deal with economic, social and cultural difficulties which exceed those faced here in Wales; countries which were indeed mono cultural Soviet satellites.
A good example is Estonia. It’s at the top right hand corner of the map of Europe and has a population of 1.3 million, which is less than half that of Wales. Or its larger next door neighbour, Latvia, which has 2.2 million people.
The story of Estonia is one which has combined radical policy thinking, such as the country’s flat rate income tax; with an exceptionally strong commitment to digital technologies: I-pads are replacing physical text books in schools as well as in Cabinet meetings and internet access is better than the UK.
Like all European countries, Estonia was battered by the 2008 banking crisis, but in the years before that its growth rate averaged 8 per cent a year and by 2010 it had already recovered to today’s growth rate of around 3 per cent a year. Latvia has also hit bumps, but it is now vying with Estonia as liveliest of the Baltic Tiger economies, both liberal in outlook and successfully responsive to change.
Estonia, I should add, is way ahead of Wales in the PISA education rankings, though it trails its neighbour to the north, Finland, which is Europe’s top performer.
The journalist and academic Anne Applebaum, an American who is married to a Polish politician, has written brilliantly about the end of the old Eastern Europe and the inspirational instructiveness of these political and economic stories. Applebaum spends some time working in North Africa and says that since the Arab spring, there’s much more interest in the stories of Latvia, Poland, Slovakia and Estonia than France, Italy, Portugal or Greece. Or, she might have added, Wales. What serious effort is Wales making to learn from these countries?
In a recent article in Prospect Magazine, Applebaum asks herself what is the single most important factor in determining whether a given post-communist country succeeded or failed in its transition to liberal capitalism. This is how she answers her own question:
“I would point to the existence, or absence, of an alternative elite. And by alternative elite I mean something specific. Not just a few economists, but a larger class or group of people who had worked together in the past, who had adopted an alternative set of values and who, by 1989 or 1990, were at least somewhat prepared for Government.”
It is, no doubt, an exaggeration to compare the political and economic momentum occasioned by the end of the Cold War with the tide of events that made devolution a reality for Scotland, Wales and Northern Ireland. But it is worth reflecting upon these questions of motivation and readiness. Or, at least, recognising that when we discuss faults and potential solutions, we should look first and foremost, if not first and last, to ourselves.
When I discuss with friends in Wales the decade and a bit since devolution, I often hear it said that the level of energy and optimism in and about Wales has diminished rather than grown. People sometimes then add that this reflects an anxiety among politicians and others not to create waves which might damage or undermine Wales’ fragile new political institutions, which opinion polls suggest have, in a quiet way, gained wider public acceptance following the hair’s breadth Yes vote in the devolution referendum.
Andrew Davies, the former Labour Cabinet Minister, has used the term “captive state” to describe the unwillingness of people in public life to speak out strongly on the issues as they see them: to avoid rocking the boat.
Which brings me to my main point. Given a choice between doing something in a way which is open, transparent and contestable or in a way which prioritises privacy, obscured authority or even secrecy, we should never be in any doubt:
Or, as the point is often put in debates about information and the Internet, we should set the default switch to open and then mitigate the risks of being open, rather than first and foremost worrying about loss of control. And we should use these open channels to design solutions around the expressed and researched preferences of users of services – of citizens.
With open also comes plurality – healthy competition between individuals and institutions. The opposite course tends towards the concentration of information and power in the hands of a few: a real danger here in Wales.
So, we should be open to
- Competition from wherever competition stems.
- New ideas and innovation, even where change is painful.
- The movement of people, ideas and culture in the confident belief that strong cultures learn quickly and become stronger as a result.
This open versus closed argument has run through our economic and political life in the last century. It informed every breath of the great economic arguments of the 1970s, 1980s and 1990s, when a politics based upon unrealisable protection against the consequences of economic change was overwhelmed not so much by an alternative politics, but by an alternative world. We re-visited some of this debate on the occasion of Margaret Thatcher’s death. We also still hear it, here in Wales, in Labour Party reflections upon the Blair legacy.
Let me be clear where I stand on this. Tony Blair, in my view rightly, told the Labour Party that it must choose open for its approach to the economy, casting aside controls in favour of viable regulation of an economy rooted in market information and market transactions. Only this would protect the funding of what needs to remain public and enable us to address other questions of fairness.
That zone of reasonable regulation is where we need to build our confidence in addressing issues that the market cannot address, from climate change to constructive honesty in banking. But capitalism’s shortcomings do not alter the need to set the default switch to open; rather they reinforce it.
Tony Blair, however, was only half open. To his great credit, he delivered the 2005 Freedom of Information Act, which gave citizens the right to access much more data and information about life inside government. Here, alas, is what Blair wrote in his memoir, published in 2010:
“Freedom of Information. Three harmless words. I look at those words as I write them and feel like shaking my head till it drops off my shoulders. You idiot. You naive, foolish, irresponsible nincompoop. There is really no description of stupidity, no matter how vivid, that is adequate. I quake at the imbecility of it.”
Several fulminating paragraphs later, Blair’s source of regret is clear: he thinks that he gave something away to journalists, rather than to the people, and that this has made it harder to govern well. Wrong on both counts.
Journalism, for all its current travails, exists to serve people and that includes challenging politicians. Strong and empowered news media make good politicians better and help us dispose of bad ones.
And, in the still unfolding age of the Internet, open data has enhanced value, because of the ease with which we can organise and distribute it. But let me give you a more congenial example, where Wales has done a great job, compared with, say, Scotland, in choosing open versus closed: football.
For those who don’t follow the sport (I know it’s second fiddle in Wales) Scotland has its own premier league, in which Scottish teams play Scottish teams, as a result of which a Scottish team always wins the championship. Fry the haggis whole!
Wales, by contrast, is part of the, dominantly English, premier league, which is a global market leader and so, rich, because of the value of its television rights. Even if you don’t follow football, you will know that Swansea secured promotion to the premier league in 2011 and that Cardiff City have just secured the right to join Swansea in the coming season, after a 51-year exile from the top flight.
Both clubs, but especially Swansea, have made progress by taking a very open and cosmopolitan view of talent recruitment. Swansea are managed by a Dane, who admits that he can get better value talent by shopping outside the UK. Cardiff are managed by a Scot, who Cardiff City fans like me are hoping will be as good at this aspect of his job as Swansea’s Michael Laudrup.
It is also true, however, that setting the default to open in Welsh football involves discomfort. For years, Wales had no club in the top tier. Some argue that the arrangement also weakened the structures of football within Wales – there is a similar argument in Welsh rugby.
Cardiff’s success in the last two years has depended upon risky and high profile foreign direct investment from Vincent Tan, a Malaysian businessman, who has angered many loyal fans by changing the team’s colours from blue to red; awkward if you’re known as ‘the Bluebirds’, but apparently rational if you are thinking about the marketing potential for Cardiff City in Asia.
Half way through this last and eventually triumphant season, Bristol City came to the Cardiff City stadium, occupying the small wedge of seating reserved for away fans. They brandished their St George’s Cross flags and taunted the home fans with songs about human-sheep interaction. Then, when a reference to Malaysia was shown on the stadium’s big screen, they jabbed their fingers in jeering unison with a line which we’ll translate roughly as: “what the hell is that?”
I wanted to go over and have a little chat with them about how Bristol’s greatness and prosperity have grown from centuries of global trade and open-ness and that south Wales will be very happy to show Bristol the way from now on, starting with the construction of the River Severn tidal energy barrage.
So, what might setting the default to open mean for Welsh politics, the economy, health and education?
It would mean that information about every area of Welsh public life is as open as is consistent with reasonable defences against breach of personal privacy. It would also mean that Government ensures that not only is the information and data needed to form judgments about policy and other matters available, it is also there in a form which makes it readily usable.
This is the only way to ensure that the evidence used to justify policy decisions and political thinking is of the best possible quality. It is also the only way to deploy the insight of those outside government, from the individual citizen to big business, in designing solutions to policy problems.
In the world of digital communications, where I spend much of my time, people talk about this Big Data being “the crude oil of the new economy.” That is why the likes of Google, Facebook and Apple are leading the gold-rush, if you will excuse the mixing of metaphors from different extractive industries.
The Government of Wales needs urgently to ensure that it is an outstanding player in this game, along with the rest of the Welsh public sector, and that Welsh technology companies, small and large, are well positioned and encouraged to take advantage. As they are in Estonia.
In education, we have seen too many political jitters about the case for putting information openly in the public domain. School league tables are an obvious case in point; the debate about school banding is another. The current Education and Skills Minister has, in my view correctly, made strong use of the PISA international comparisons, but he has encountered considerable resistance, from teachers’ unions and from the kind of public sector managers who simply don’t want others to be able to debate the quality of what they do.
So let’s take another example, this time from health. Professor Brian Jarman is an exemplary and stubborn academic, who worked out more than a decade ago that mortality data, that is death rates, adjusted for variables like demographics and time patterns, could be used to provide an early warning system against the risk of life-endangering underperformance by individual hospitals. His work was largely unknown and, he says, deliberately sidelined, until the scandal of the Mid-Staffordshire NHS Foundation drew attention to it. Professor Jarman has argued that 20,000 lives were lost that might have been saved had his research been deployed when it was first available.
How does Wales today stand with regard to Professor Jarman’s risk-adjusted standardised mortality data and its deployment in the interests of high standards in the Welsh NHS? Well, according to data released last month the Wales figures are not good in two senses: first they appear to indicate what an un-named official in a BBC news report termed a “fire alarm” by showing that 11 out of 17 district general hospitals in Wales have higher death rates than the norm; but that this conclusion has to be qualified because of the poor quality of the data collected for Welsh hospitals.
I very much hope the new Health Minister will put the collection, maintenance and publication of quality performance NHS data high on his list of priorities.
In the economy, absence of openly disputable evidence is also, very frequently, a problem. When I investigated Wales’ creative industries in 2009, the job was made harder by the absence at the time of anything resembling an up to date map of what was actually happening on the ground. I also drew attention to what I felt were weaknesses in the transparency of governance applying to some areas of public investment. Business is currently lobbying the Welsh Government to provide the quarterly economic growth data which is available for Scotland and England, but not for Wales.
All of that, however, is small beer compared with the calamity of the Technium business incubation centres, initially the brainchild of the Welsh Development Agency and its academic advisers. This has cost Wales an estimated £100 million since the programme started. Six of the ten Techniums, in Aberystwyth, Baglan, Bangor, Pembroke Dock, Llanelli and Bridgend, were axed in 2010. Ministers have blamed civil servants for not telling them what was going on and others have blamed the Ministers.
My colleague at Cardiff University, Professor Kevin Morgan, has studied the matter in detail and sums up as follows:
“The failure to calibrate supply and demand, the lax administration of grant aid, the inability to learn from mistakes and the hubris of ambitious politicians who rolled out the centres before they had been properly evaluated all played their part.”
Lack of the right evidence, evaluated in the right way at the right time, plus a disinclination to be open about what evidence there was cost – £100 million. Setting the information default switch to open would not, in itself, of course, guarantee a better outcome, but it would stimulate informed discussion and analysis. From this, errors can be corrected and new paths explored.
8 thoughts on “Wales needs to catch up with Estonia”
I don’t know what you teach your students, Ian, but start by telling them that Estonia is an independent sovereign state, whilst Wales has minimal, primarily executive, devolution of the palest kind. Whilst I would agree that Labour has failed to use even that to advantage, it’s a bit much to suggest that devolution is responsible for Wales’ economic decline.
You failed to mention that the UK has also declined and is declining. There is one significant difference between Wales and the rest of the UK, particularly England. The latter has a sovereign legislature vested with all the powers available with which to direct its economy. Even so, the UK has probably the most unbalanced economy of the western democracies, with seventy-seven per cent of its GDP coming from the service sector, and a large slice of that dependent on unreformed casino banking and financial services in the City of London.
“…how Bristol’s greatness and prosperity have grown from centuries of global trade and open-ness..”
Would that have been the slave trade? I hope your students have supplementary history lectures.
The Labour government in Cardiff Bay certainly needs a kick in the rear to get it off its backside, in my opinion, but to suggest that a lame Assembly is responsible for all of Wales’ problems is going too far. Give us in Wales the tools to do the job, as Wales and its people have never had a modicum of prosperity in the seven centuries since the conquest. Some of the former Soviet satellite states have overtaken Wales in just twenty years after obtaining independence, whilst most of Wales is now on a par with much of Romania and Bulgaria. No doubt they too will overtake us in the prosperity stakes in due course.
Very good post, and well worth being widely read. I’m a little more sceptical about looking at Estonia as a perfect model – indeed the only model – to emulate. The story of its success is a bit more complicated than you make out and there are other success stories that have pursued a different path.
Wales clearly is in something of a political and intellectual stagnation however. Welsh Labour have refused to take tough decisions and their comfort zone is to oppose anything that might be challenging to the 1945 manifesto. Both it and Plaid want Wales to be a public-sector country (which is assumed to be the only way to be properly lefty), with both competing to claim the mantle of being its true defenders. It’s notable that it’s biggest success has been in not doing things (such as PFI).
New thinking is clearly required; a regionalised economic plan, with high-tech manufacturing clustered around the south west,taking advantage of Swansea University’s top quality engineering and Life Sciences departments; north east Wales, with it’s tradition of Aerobus, and close links to the north west of England; a service economy clustered around Cardiff; and SME self-start ups and tourism focused development in rural Wales. Both Plaid and Labour – for differing political instincts – are wary of a non-national, non–state driven economic policy.
Education needs to be restructured so that it isn’t just focused on creating graduates. Those that don’t want to pursue an academic career shouldn’t just be taught vocational skills, but also how to start their own businesses (most entrepreneurs aren’t graduates and post-graduates), organisational skills, team-management etc. Young Welsh working-class people do have ambitions, but just don’t feel that they’re being catered to in an academia-geared education system.
For the political class of Wales – of civil servants, policy officers, researchers, journalists, and politicians – their university education was very important to their personal success, so they assume that that’s true for everyone in the economy – it isn’t. Speaking as a former SME director, policy officer and a current PhD student, it isn’t obvious that me doing a PhD will necessarily bring Wales more wealth than setting up a business.
As for the general political situation, there isn’t a political party in the Democratic World which is as secure in its position as Welsh Labour. There’s no press opposition, they are certainly going to be the most dominant political party for the foreseeable future, and the ‘worst’ thing that can happen to them is that they’ll have to share power now and again with one of two left-liberal political parties. It should be a platform to give them the freedom to be genuinely radical, but instead of that, they’re content for them – and the country – to wallow in complacency.
I fear that until Welsh Labour face genuine competition that will force them to think hard about where we should be as a country and how can we credibly get there, we’ll still be in a position of stagnation, falling ever behind.
Well we can congratulate ourselves that we in Wales have the Institute of Welsh affairs that is completely open to freedom of expression on any subject raised by the pieces that it publishes.
I am particularly fascinated by this: “The movement of people, ideas and culture in the confident belief that strong cultures learn quickly and become stronger as a result.”
Do you think, Professor, that we in Wales are completely open to inward migration and the energy and innovation and expertise that it can bring or do you think that we put up artificial barriers to the recruitment of just the people that we need to help us in our economy, in the health service and in Education?
Do you think there are any “No Go Areas” that none of our politicians will contemplate discussing?
I don’t share Professor Hargreaves’ rather right-wing politics but in this talk he is essentially correct. We are far too easy on ourselves in Wales… We persist with approaches that don’t work, whether it is promoting the language or stimulating the economy. We don’t look abroad and compare ourselves with the best and we habitually make excuses for poor performance, blaming anyone but ourselves – usually the poor old English.
I am a patriot who believes,against all the recent evidence, that we are a great people with the potential to build something very good. But the harsh fact is the data since devolution say something else: we are a shower and it is high time we pulled our finger out… More ambition is needed and the openness and intellectual honesty Professor Hargreaves calls for.
That we should be ‘catching up’ with Estonia is mind-boggling.In my very humble opinion the whole point of devolution was to satisfy the ambitions of welsh nationalists,and the need for old labour in Wales to get its hands on power.As we have seen both parties/supporters have got their way,with the approval (not overwhelming)of voters,however the fruits of devolution for the people of Wales will become increasingly bitter in future years. The politicians in Caerdydd have created a central policy vehicle,which in whatever it does must be in direct opposite to what either a)PM Blair wanted for public services,or b)PM Cameron and his administration,and therein lies the problem. The whole world has changed since 1945,and the pace of the power of the individual for both good,and less good cannot be put back in the bottle,however such facts don’t seem to matter this side of the border. I hope that for all our sakes,and in particular working class children that education is removed from the WG and LG as they have both failed,due in the main to the unholy and close relationships with trade unions who fund the Labour Party. We have the worst media this side of Iran,and that s why people take little notice of it as its seemingly obsessed with rugby football,which is a very marginal,and pretty irrelevant world game.With regard to the issue of SCFC being in the EPL for 2 years,and CCFC going in next season it is a pure accident of history,and the realism of the club owners over 100 years ago in joining the ENGLISH FL. The Scots have allways had their own league,but has now resulted in one of the greatest clubs in the world,i.e. Glasgow Rangers being bankrupted and now in their third division. Its interesting that both SCFC and CCFC have not had a welsh manager during their successful run,and 95% of their players are non-welsh!!.The success of both clubs (so far) have been based on operating in a capitalistic free market,and EVERYTHING based on results to get hold of Mr. Murdochs money which has changed sport for ever.Until public money become less and less available and services collapse then radical changes will never be countenanced this side of the border. in conclusion we have become a JOKE and irrelevance and worse its going to get in the immediate future.
Why on earth shouldn’t we blame England. They conquered us, they rule us, they force the single currency on us, they force their inefficient financial services sector on us, they decide what our government can do, they decide on how dependent we are on their public sector, they decide how much of our native language we can use, they decide how much we can spend and where we can spend it.
If it’s not the English Government it’s the English Unions, English busnesses and English political parties fighting the English Class System.
The UK is going down the pan. It’s always existed to exploit us (and others). Let’s hop on the life-boat named ‘Freedom’.
“As for the general political situation, there isn’t a political party in the Democratic World which is as secure in its position as Welsh Labour.” I think this is a really interesting claim which is aired alot in Wales. It needs much further examination and i’m not the one to do that, but in ‘regional’ governments in EU member states there have been some quite consistent examples of parties reigning for decades. The Basque Country & Catalonia had decades of rule by broadly the same parties since Franco died. Also one of the Italian regions (Emilia Romagna) has had the same centre-left President since 1999. If you compare Wales to independent countries, Labour’s electoral longevity is staggering and unusual, but if you compare Wales to other devolved nations or regions there are a few similar examples. I’m not saying this to excuse them or gloss over the issues around pluralism and the media and so on, but the challenge lies in convincing enough Welsh voters to opt for an alternative.
The full Patrick Hannan Memorial Lecture, on which this article is based, is one of the most open-minded, thought-provoking, and courageous pieces published in and about Wales since devolution. Anne Applebaum’s expression ‘alternative elite’ has unfortunate connotations, but the idea it conveys is essential to a true ‘civic society’ and it is something Wales lacks. Andrew Davies is honest to admit Wales is a ‘captive state,’ but what else does he expect? The Assembly has been hostile both to the private sector and to serious reform of the public sector. One of the better arguments in favour of devolution in 1997 was that it could lead to greater experiment and diversity in the way services are delivered, but this has not happened: on the contrary, at a time when both Labour and Conservative-Liberal administrations have been looking for new ways forward in English public services, especially in education, the Welsh response has been positively reactionary. The appointment of the Williams Commission on Public Service Governance and Delivery is at least an admission that there is a problem. However, it is hardly encouraging, albeit predictable, that the Written Statement which announced the Commission made only a negative mention of markets. It is also depressing that, once again, major change is being driven by means of an appointed Commission, rather than by the open clash of ideas in the democratic forum.
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