A more prosperous Wales? Part II of Constitutional Convention plans

Do we need more powers over our economy? Lee Waters invites you to help shape the design of the Crowd Sourced Constitutional Convention

The second stage of our Crowd Sourced Constitutional Convention will focus on the economy.

Just as we are ‘crowd sourcing’ the funding to try and help us hold this innovative experiment in deliberative democracy, we are also ‘crowd sourcing’ the design of the debate.  This week on Click on Wales we are posting the working drafts of our plans for each of the stages of the eight-week project for you to shape.

After considering what the purpose of the UK in the first week in our second phase, lasting a fortnight, we’ll be asking: How do we create a more prosperous Wales?

As with all the themes four cross-cutting themes have guided the design of our questions:

  • Performance to date
  • Barriers to progress
  • Capacity and calibre
  • Do we need more powers to identify these problems?

We’ll begin the phase with a series of open questions to encourage debate on how the Welsh economy has performed since devolution, and what lessons can be learned. This stage will be accompanied by pieces in the Western Mail Business section and on walesonline.co.uk. We’ll have a box on the page with ideas for ‘one thing to improve the Welsh economy’. The best of these ideas will then be voted on at end of the stage.

Here is our plan for the phase:

  1. A summary of the state we’re in – high level summary of economic performance

    1. In what areas could we do better?

    2. In what areas are we out-performing?

  1. Why haven’t we performed better?

    1. “It’s not just about powers” – use case studies of North east England Scotland & Northern Ireland

    2. Should we be focusing more on our Cities to drive growth?- why isn’t Newport/Cardiff and Swansea region over-performing?

    3. Case studies/ interviews/ vox pops about current Welsh/UK gov actions?

  1. What would ‘better’ look like?

    1. Set out levels of GDP growth needed to catch up to UK average

    2. Blue sky thinking – could we aim to be Number One for green technology, for example?

  1. What sort of jobs do you want your children to have?

  1. Are they being taught the skills needed to do those jobs?

  1. Summary of discussion so far – Performance versus powers

  1. Should Wales get extra powers? (Pose series of binary questions we’ll be able to measure responses to) :

  • Should Wales be given the same powers as Scotland to adjust rates of income tax?
  • Should Corporation Tax be devolved to Wales? (as it is to Northern Ireland)
  • Scotland is getting powers to receive the first 10 percentage points of VAT revenue, should Wales receive the same powers?
  • Should Wales be offered control of the taxes charged to all air passengers leaving Welsh airports?
  • The Silk Commission proposed devolving responsibility over the water industry, is this move beneficial to Wales?
  • Should Wales have direct control of regulatory powers over rail, ports and taxis as well as rail regulation?
  • Is it in Wales’ interests to have the power to approve energy projects of up to 350 megawatts?
  1. Conclusion – summarise the responses to the direct questions, and vote on the best ideas to improve the economy.

The overall aim of this phase is to debate the constitutional questions raised by the Silk Commission and the Smith Commission within the context of the track record of the Welsh Government and National Assembly since 1999. We’ll examine what factors need to be considered in improving Wales’ economic performance, and what role additional powers play. We’ll look at the specific proposals in the Smith Commission report for Scotland and ask whether they should apply to Wales.

We’d value your input to try and shape this attempt at engaging the public in a debate about our country’s future.  Also if you are able to make a financial contribution to help us reach the potential of this initiative please donate here.

[* The expert group we consulted on the design of the first and fourth stage included Sion Barry, Ian Courtney, Tegid Roberts and Rhodri Evans.]

Lee Waters is IWA Director

22 thoughts on “A more prosperous Wales? Part II of Constitutional Convention plans

  1. We often talk of powers (usually more because.more is “good”) in relation to the Welsh economy and the institutional capacity to formulate and deliver policy but we rarely if ever talk about competence.

    Welsh economic policy post devolution has been one train wreck or massive under performance after another. The EU Structural Funds in the Valleys aka the botomless money pit, Communities First, the Technium Centres fiasco, the self serving guff about an “Intelligent Region”, the Pop Factory, numerous community, regeneration and business development initiatives on going. And no-one, no academic, “expert for hire”, politician or civil servant is called to account. They merely blink and move on to the next flavour – “Today Mathew, I am a City Region”. We now also have an Economy Minister as remote and autocratic as the old Welsh Office ever was. Progress?

    Is this in the nature of Wales? The limit on talent or are there more immediate issues of an enclosed and defensive political culture? There is not a lot of point demanding and designing a new Rolls Royce constitutional vehicle if its drivers can barely navigate a back lane on moped.

  2. There’ll be ample opportunity to discuss the issues once the Constitutional Convention is up and running at the end of this month, it would be very helpful if you could comment on the plan we’ve outlined and suggest improvements

  3. I would like is to look at how the Welsh Government has utilised the tremendous amount of European Funding it has had at its disposal, i.e. Objective one and so on. Has this been used to provide a sustainable economy.
    Also during the time of the last Government the block grant was annually increased. Here again was this put to good use.
    There could be some useful lesson to learn here, which may be helpful in how Wales should use more powers.
    The Plan is fine. However, it must be the private sector that drives it forward. We should discover what conditions of operation people such as Sir Terry Matthews want, give it to them and let them get on with it.

  4. I think there should be a preliminary or perhaps parallel (technical) discussion on how fiscal powers are actually used by governments to shape, redirect, and influence an economy, with particular reference to the different levers available to a central government and those of a sub-state government. E.g. How many members of the IWA (even) can explain how assignment (and not setting) of sales taxes is “used” by a government to “improve” its economy? Is it simply a passive influence (a heightened awareness of responsibility for the performance of the retail economy in Wales) or can it actively be used in some way to change economic activity? If you can’t answer that question there is little point asking whether 10% of VAT receipts being assigned to the Welsh Treasury is a good thing or a bad thing.

    Having established what the functions of fiscal levers are (and crucially their limitations), you should then ask if their application will have any effect on the problem areas of the economy. “You now know how those things could be used by a Welsh government and what real areas of the economy they might affect (and crucially what they can never affect), do you think the Welsh Government should have them?”

    You may think that your potential audience understands macro-economics, but I suspect you’ll be disappointed with the output if you do. This is a time to be bold, and to lead the debate. That may require a degree of education and the risk of telling a few old-timers how to suck eggs, but the outcome will be infinitely better if participants engage with the questions and the issues on the basis of common understanding. Based on what they have written before, I suspect Messrs Holtham and ap Gwilym would be able to frame such an exposition perhaps better than anyone else?

  5. It would be criminally naive to separate the question of ‘powers’ from the question of how those powers are likely to be used.

    In particular, there is no doubt that the ‘power’ to cut red tape and to simplify taxes could do much to promote a dynamic enterprise culture in Wales if used properly for that purpose. Yet how likely is it that the sort of people likely to be elected here will use such a ‘power’ in that way? Is it not more likely, given the political history of Wales, the policies of the parties, and the lack of business experience within the ruling class, that any such ‘powers’ will be used in the opposite direction, increasing the burden of red tape on businesses in Wales and putting them at a competitive disadvantage?

    That is probably the most important practical question in the whole debate. If the answer were the opposite of the one it is at present, many Unionists might be more open to Nationalism.

  6. @ JWR

    The issues you raise are bureaucracy for businesses, simplifying taxes and creating a dynamic enterprise culture. The worth of these arguments are not founded on whether someone is going to listen or agree or otherwise. These arguments have to be made and are pertinent to the discussion on economic development.

  7. I have no wish to sidetrack your initiative Lee, and at least you are attempting something whilst I (and others) roll our cynical eyes. But surely the elephant in the constitutional room is Scotland. All turns on where and how Scotland heads. In my opinion, “out” before very long, Wales has little or no leverage in this post Ukania constitutional debate despite Plaid fantasies and Unionist flag waving. So I will in future tend to my garden. Good luck.

  8. There are two issues I would like to see addressed by the convention. The first is the publication of economic data regarding the performance of the Welsh economy. We need a set of IFS style data against which we can measure the effectiveness of government policy on economic data. This falls into two parts: the first is technical data at a level that can sustain academic and policy discussions and form the basis for authoritative decision-making; the second is public data which can give a snapshot of how the economy is performing in general and against which they can engage in discussion and judge for themselves how government policy is performing.

    The second is the financing of economic development in Wales. How is such development currently financed and does the current setup prevent economic development? If so, what other financing structures are required to overcome these difficulties?

  9. Erratum

    “…the effectiveness of government policy on economic data.” should read:

    “…the effectiveness of government policy on economic development.”

  10. RBJ, the point here is in fact a much broader one: structure can and should only be considered in the context of culture. That the development – one might say the establishment – of an enterprise culture in Wales is essential to our economic future is beyond reasonable doubt. All but the most Neanderthal of unreconstructed socialists now accept that, however grudgingly in some cases. The question now is whether structural change will assist or impede that development. The answer to that question cannot be considered independently of the political, social, and economic context.

    As any good management consultant will tell you, organisational leaders like the quick fix of structural change, because it gives the illusion of doing something decisive, when what is required is cultural change, a far more difficult and prolonged process.

  11. Lee, the feedback is that your approach may be too narrow.

    There are two alternatives. The better would be to initiate an overall debate on the Welsh economy and include any structural recommendations that come out of such a debate alongside non-structural recommendations. This would comply with a basic principle of management theory: strategy should determine structure, not vice versa.

    The – cheaper – alternative would be to consider specific ‘powers’ one by one and then try to determine their likely outcomes, both positive and negative. The inadequacy of this approach should be obvious, but it would at least be preferable to the failure in 1997 to link change and effect.

  12. Lee, yes, I can see that is obviously your intention. Your numbered points could form the basis of an overall economic debate, while your bullet points could be the basis of a ‘power by power’ debate. The intention in both cases is commendable, but you are in danger of falling between two stools, especially given limited time and resources.

    You really do need to choose. The broader economic debate, possibly leading to both structural and non-structural recommendations, would be by far the most useful approach of the two, and also the one most likely to yield at least a degree of consensus. However, your current list of numbered questions is both too narrow in scope, because they do not address wider issues of socio-politico-economic culture, and simultaneously too detailed, because they frame the debate a certain way before it begins.

  13. Thanks John, I’ll reflect on that. We want to use the broader discussion to focus minds on the constitutional choices that we have as a result of the Smith Commission – one discussion without the other is in danger of missing the point current debate. We are working on a separate exercise through our economy group, led by Gerry Hotham with the support of a number of others, to set out suggestions for a broader economic strategy at the end of March

  14. Could we ask something about whether growth is the be all and end all, and perhaps we should measure wealth and progress using something other than GDP?

  15. I would reiterate the comments of David Jones. If indeed we are truly concerned with the happiness of future generations (as implied by the convention) it is high time we began to think critically and to question received wisdom.

    Specifically, ‘growth’ or GDP are not the ways we should be measuring the Welsh economy or our success as a society: http://b.3cdn.net/nefoundation/70e2c4fbed5826b19e_dvm6ib0x9.pdf

    Growth and GDP do not address issues of happiness, education or equality. A country can become a lot richer ‘on paper’ whilst simultaneously becoming far more unequal. Growth does not prevent immiseration- indeed in many ways it exacerbates it.

    Critical perspectives should be built into this conversation. This is hardly radical, for two decades of ‘orthodox’ approaches and thinking have clearly got us nowhere.

    In terms of how this can be practically achieved by the constitutional convention, the conversation and convention itself needs to move from the internet and into the real world (perhaps following the digital phase- I am not against an online conversation per se). It must become a widely publicized roadshow, bringing ‘experts’ and policy makers to community centres, where they engage with local people face to face. In an ideal world local community leaders would be told about this and local citizens would be encouraged to come along and to make their voices heard (and not just the same old faces). That is democracy.

  16. It makes sense to write of Welsh culture, Welsh agriculture, Welsh Government, Welsh Society perhaps but the term Welsh economy stretches the mental construct economy well beyond breaking point. National unification and identity would be enormously enhanced with a decent road and rail system between North and South. This might also go some way to produce that nexus of the exchange of goods, services and ideas to give the term Welsh economy some substance. In the meantime the reality is that South East Wales is much more a part of Severnside with Bristol as the hub whereas North East Wales connects with the Manchester /Liverpool nexus.

  17. @Richard Perkins

    Yes, you are right that in an applied sense, if ‘economy’ is thought to mean the exchange of goods and services and the movement of people and capital in a cohesive system of exchange, there are several ‘Welsh economies’ (connected with other regional systems, principally, but not exclusively, in England), not an integrated ‘Welsh economy’ (although show me any country in the world where this is the case anymore…).

    However, at an abstract level, there is very definitely a ‘Welsh economy’, when economy is taken to be understood as a ‘territorial accounting (and fiscal) unit’ and is given expression in financial terms (GDP, etc.). This is less relevant from a day-to-day management and future development perspective (as you suggest), but is central to understanding the collective health of the various ‘economical systems’ within the political and accounting unit of Wales and crucial (especially going forward through tax devolution) to understand what public expenditure we can afford.

    In the debate ahead of us it would be very useful if we could all group around some common concepts and technical terminology, and yes, at times accepting some prescriptive instruction from experts. I have made this point elsewhere in the feedback process for the convention, a point which as yet goes unanswered.

  18. A general comment as someone new to this: The design of the comments section on this site is unhelpful.
    A couple of considerations for improving the functionality and hence the quality of debate:
    – A like/recommend function. This can draw the reader or browser to the better posts and also engages the casual browser into the debate as they consider whether they agree or disagree with points made. It also gives feedback to posters, some of whom need to consider how well they are getting their message across
    – Functionality to respond to specific posts through nesting. The current structure makes it difficult to follow specific points and therefore leads to pontification and generalisation rather than the following up of individual thoughts and ideas. The specific and good gets buried in the noise of the general and shallow.

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