Must Wales fail?
Karel Williams
ESRC Centre for Research on Socio-Cultural Change
cresc.ac.uk
Financial crisis and Wales?
• Hard times/worse times because financial crisis ended the 30 year
enterprise experiment under Thatcher and Blair
• Wales needs to reframe its problems and adopt radical new
policies; economically challenged like the other ex industrial
regions of North and West but with the political advantage of
devolution
1. Social settlement 1979-2008: state filled in for an anaemic private
sector = de facto regional policy which eased downward mobility
for Wales
2. Economic renewal? not structural reforms plus bolt on industrial
policy; scope for regional and local guerrilla economic
development, devolution with an economic purpose
(2) Old social settlement:
the state fills in 1979-2008
Filling in:
Public spend (as regional policy)
• Under Thatcher and Blair the public sector filled in for an anaemic
private sector that couldn’t create jobs; spending on HEWS = de
facto regional policy as Wales plus rest of the North and West went
ex-industrial
• Historical long view (using health, education and public
administration as proxy): 2/3rds of extra jobs post 1979 ex public
sector; official stats confused by utility privatisation under Mrs T or
publicly funded private employers under Blair
• New Labour’s record: no net private sector job creation in the ex
industrial regions like North East or West Midlands (CRESC WP 75);
little autonomous job growth outside London which accounts for
43% of all extra FT jobs created between 1997-2010
•
UK private sector and public sector employees 1979-2010
(Public sector is the summation of education, public administration and health)
(underlying data relates to employees and excludes self-employment)
30,000
30.0
Thatcher - Major: Total 1,241k
Blair - Brown: Total 3,098k
Private 169k (13.2%)
Private 1,242k (40.1%)
Public 1,072k (86.4%)
Public 1,856k (59.9%)
Thatcher – Major – Blair - Brown
Total 4,339k Private 1,411k (32.5%) Public 2,928k (67.5%)
25,000
15,000
10,000
20.0
Private sector jobs No.
Public sector jobs No.
Brown:
Total -623k
Private -1,078k (0%)
Public 455k (100%)
Public sector share of jobs %
2010
2009
2008
2007
15.0
2006
2005
2004
2003
2002
2001
2000
1999
Blair:
Total 3,721k
Private 2,320k (62.3%)
Public 1,401k (37.7%)
1998
1997
1996
1995
1994
1993
1992
1990
Major:
Total -1,121k (0%)
Private -1,314k (0%)
Public 193k (100%)
1989
1988
1987
1986
1985
1984
1983
1981
1980
0
1982
Thatcher:
Total 2,362k
Private 1,483k (62.8%)
Public 879k (37.2%)
1991
5,000
1979
Number thousands
25.0
Public sector share of total jobs %
20,000
Regional percentage share of total UK full-time jobs growth 1997-2010
Total full-time jobs growth =875,600
50.0
43.3
Share of full-time jobs growth (%)
40.0
30.0
20.0
14.3
11.9
9.6
8.8
10.0
6.3
3.8
3.8
3.6
2.2
0.0
North East North West Yorks &
Humber
-10.0
-20.0
East
West
Midlands Midlands
-7.7
East
London
South East South West
Wales
Scotland
Falling behind:
North and West ex industrial regions
• 30 years of growing gap between London and the regions (and
within London): London GVA per capita X 2 in regions like North
East, West Midlands and Wales
• End of a trajectory by 2008 because filling in required continuous
increases in public expenditure
a. New Labour ramped public expenditure and hit 3% budget deficit
i.e. Maastricht limit
b. Financial crisis required public expenditure cuts i.e. Darling’s
£44billion vs Osborne’s £81 billion
• 2007-10 downturn worsens imbalance on jobs .... before the cuts
bite
Regional GVA per head compared to London in 1989 and 2009
(expressed as a percentage share of London's GVA per head)
100
1989
Regional GVA per head as a percent of London GVA (%)
90
2009
80
70
64
58
60
53
50
60
46
59
57
50
61
54
48
51
61
61
59
58
53
54
49
43
40
30
20
10
0
North East North West Yorks &
Humber
East
Midlands
West
Midlands
East
London
South East South West
Wales
Scotland
Jobs losses as a share of total regional jobs between 2007 and 2010
(Data relates to employees . Excludes self-employed and N.Ireland)
(March 2007 used as denominator. Total jobs losses 712,500. Source: Nomis)
1.0%
+5.3k
Job losses as a share of total jobs in March 2007
(Data in boxes =no. of jobs lost)
0.0%
-28.5k
-1.0%
-39.5k
-28.6k
-2.0%
-58.5k
-3.0%
-81.4k
-112.8k
-4.0%
-43.7k
-61.9k
-5.0%
-128.7k
-134.2k
-6.0%
North East
North
West
Yorks &
East
West
Humber Midlands Midlands
East
London South East
South
West
Wales
Scotland
(3) Economic renewal:
a purpose for devolution?
Tired old economic paradigm
and industrial policy
• Old paradigm under Mrs T and New Labour = structural reforms
e.g. low taxes, flexibilised labour, deregulation; with regional policy
as infrastructure and work force training (no activity relocation)
• Exhausted but lives on with Osborne’s “growth strategy” =
<corporation tax plus <worker protection plus <planning controls
and enterprise zones (again)
• Now with added industrial policy i.e. Cable style interventionism
(a) central state (b) financial incentives via tax breaks and bank
reform (b) encourage virtuous productive sectors = lists of sectors
like autos, advanced engineering, games (c) visions of export success
• Won’t do much for Wales economically: there aren’t enough jobs
in this strategy; its 30 years too late for Llanelli steel, tinplate and
car components
Centralised political power:
London as a city state
•
•
•
•
•
London’s success determines your failure: centralisation of
economic wealth is underwritten by political power
Infrastructure claims; Crossrail and East/West axis in London and
South East requires £50k per new house
Labour market disconnects: London imports non-Brits with right
skills at top and bottom; regions left with redundant skills and low
wage/ immobile workforce (c.f. 1930s)
Why is this not a political issue? (a) financial elites speak for
London as “City State” with City of London Corporation, elected
mayor (b) mass parties decline so Westminster is metropolitan
cliques with finance providing 50% of national Tory party funding
Wales has a political advantage; devolved regional government in
Wales provides a basis for political resistance and economic
imagination which the North East or West Midlands don’t have
Economic renewal
via guerrilla development?
• Can regional and local authorities do what the central state can’t
do/won’t do?
• Focus on mundane activities which are major employers; not only the
public sector but also (a) the para state of publicly funded private firms
now ⅓ of public sector (b) link sectors e.g. food processing -feeds
supermarkets and largest consumer of machinery
• Regulate for sustainable chains (not point definition of success);
(a) visions of import substitution: why is 80% of our bacon imported?
(b) regional and local challenge on CSR; utilities and supermarkets with
what have you done for us locally in return for household spend of £100
per week
• Redirect financial flows e.g. using pension funds for local housing with
5% return and seek tax and revenue sources: model of 1890s
Birmingham with gas and water socialism ex utility revenues
• Can Wales lead on guerrilla economic development? You don’t need
more legislative power to challenge a supermarket
Limits of the
Welsh socio political imaginary
• Praise the Lord, we are a public service nation; a nation led by a
public service middle class as our genealogies show e.g. Rhodri
Morgan first minister, son of Prof T J Morgan, brother of Prys
Morgan; public service middle class did well out of the Thatcher
/Blair settlement which was disaster for the organised working class
now confined to the public sector
• The Welsh public service middle class has many qualities but lacks
a radical economic imagination; part of a historic division of labour;
our middle class managed the politico-social while large scale capital
and private management was provided by the English outsiders; it
used to be Steel Company of Wales and now its Serco
• The issue isn’t political nationalism but economic conviction: how
we perform nationality; can we commit to radical economic renewal
or will we hesitate and become the Woody Allen of the Celtic nations
.