Examining the national poverty question
Bubble — By Adam Higgitt on February 17, 2010 11:54 amWHY is Wales a relatively poor part of the UK? It’s a question to which a serious, sober answer is almost never attempted, despite the fact of relative national poverty being at the heart of almost every public policy debate, from devolution to economic development and the organisation of public services.
It is a question that almost seems to compel glib or rhetorical responses. Labour blames the legacy of Thatcherism. The Conservatives – pointing to the decline in Wales’s relative per capita GDP since 1997 - put this Labour government in the dock. Welsh nationalists ascribe it to rule from London or England, an analysis apparently shared by the former Permanent Secretary to the National Assembly for Wales and Welsh Assembly Government, Sir Jon Shortridge.
Simple answers to complex questions are, of course, easy to dismiss. What we do know about Welsh relative poverty is that it has been with us for a long time – before indeed either Labour or the Conservatives in their modern guise were around. A 2005 analysis based on the Geary-Stark proxy measure of GDP (based on census data on employment and wages, income tax assessments, and estimates of UK output for each industrial sector) showed it to be 88% of UK GDP in 1871 – almost identical to a century later, when the first official estimates appeared. As industrialisation intensified it rose, to 90.6% in 1881 and 96% in 1891. Somewhat depressingly, this was the high point; by 1911 the figure had dropped back to 90.1%. The story from there is well known. A part of Britain more dependent on primary extraction than any other, Welsh industry – and in particular coal mining – was allowed to become relatively unproductive by dint of the sheer volume and quality of its produce, while at the same time there was little diversification into manufacturing or other sectors that saw other parts of Britain recover from the depression of the 20s and 30s more quickly. Wales was thus uniquely dependent on the international trade eviscerated by that depression, and the decision to return to the pre-war gold standard (a decision endorsed by the Labour Party) made exports even less competitive.
But the swing away from Wales’s natural resources and heavy industries was longer-term and more permanent. Oil was supplanting coal as the fuel of choice in shipping. In tinplate and steel production the technological shifts were less pronounced, but the pattern of demand was just as unmistakably downwards. By the time that the facts of these structural changes had been identified as being other than merely cyclical, Wales was in the post war era. Here, some concerted efforts to restructure the economy did achieve results; between the mid 1950s and 1971 GDP increased from 82% to 87% of the UK average. But from here, the journey is again downwards, first toward the early 80% mark and then, from 1999 onwards, unmistakably into the mid 70s.
So Welsh national relative poverty is enduring, and Wales’s membership of the British state is enduring. The two are undoubtedly correlative; the more difficult question is whether the latter is causative of the former? Answering that based on the historical or international record is tricky. Comparisons with places like Ireland tell us very little, as does examining the fate of small states. In all cases, the economic and industrial development of these places are simply too different.
What is clear, at least to me, is that is not so much the nature of government in itself that has brought Wales to this point, but rather the actual decisions made or not made. From laissez faire industrial expansion, stripping the countryside of its workforce and destroying Wales’s antecedent rural industries, to a failure to develop beyond a narrow set of relatively unproductive activities uniquely exposed to global depression, to a further failure to diversify in the face of obvious and abject poverty, and then to the forced-march deindustrialisation of the 1980s, the mistakes have been specific, not systemic. Although the devolution dividend is yet to present itself (and so far has been a devolution deficit), the evidence from the post war consensus era is that planning and development aimed at redressing the specific, historical problems of the Welsh economy can work, and that government “from England” need not in itself be the problem.
Tags: constitutional reform, Economy, poverty
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20 Comments
“the more difficult question is whether the latter is causative of the former”
Spot on, in my view, and I’d even agree with your conclusion that government ‘from England’ need not in itself be the problem.
When it comes to the solution though, the question that matters is surely not whether things can be changed by UK government, but whether they will be so changed. Accepting your comment about the enduring nature of the problem, experience does not fill me with a great deal of hope on that score.
Part of my maximalist position on the constitutional question has always been that any Welsh government will inevitably have more incentive and pressure to address the issue than a UK government. It doesn’t necessarily follow that such a government would ultimately do any better, of course; independence is no magic wand, and I’ve never argued that it is. (It has to stand a chance of succeeding though, given the historic failure of the current set-up!)
What none of us should do is simply accept that the situation is as it is and evermore shall be so. I find it depressing that so many of those who oppose further devolution, let alone independence, seem to adopt that as their default position, effectively, if not always explicitly.
“What none of us should do is simply accept that the situation is as it is and evermore shall be so.”
Indeed. So many opponents of further devolution and/or independence hark back to the ‘here’s Plaid talking about constitutional issues again, at the expense of the economy etc…’ line.
But might another view be pondered. Why, given the historical poverty, is supporting the default UK system a more realistic position?
I am not inclined to promote the ‘well we cannot do any worse than the UK message…’, but I sense this is gaining traction to the man on the street. The expenses scandal has been a catalyst for a good many people to consider the very structure of our politics, and strategic people within reforming (and I see further devolution and independence as reforming) organisations are beginning to see the political traction in pushing for change now we are perhaps at a ground zero point in politics.
The comparison, while statistically sound, is always likely to be a bit fake. The South East of England is a case unto itself, so the historical comparison of the UK which includes that unique area does not help.
Is there regional comparisons available?
In theory there could well be a Government elected at Westminster that would adopt a policy of economic redistribution to the nations and regions.
In practice, it is not likely to happen because of all manner of practical reasons. There are Westminster decisions that political parties could take now to indicate a move towards changing the relationship the Welsh economy has had with the rest of the UK. But there has not been anything concrete on reform of the Barnett formula for example, despite non-partisan expert evidence from the likes of Holtham.
“In theory there could well be a Government elected at Westminster that would adopt a policy of economic redistribution to the nations and regions.”
I’m very much a novice on this, but doesn’t it happen to an extent in terms of things like procurement locations and relocating government bodies and jobs from London outward? Obviously that’s probably not on the scale you favour.
John said:
“the question that matters is surely not whether things can be changed by UK government, but whether they will be so changed”
Yes, absolutely. And that, I think, is where we now need to move to (and thus away from the discussions in which certain forms of government are axiomatically good or bad). According to one analysis, we have seen a period of highly centralist rule in which Welsh relative poverty was reduced, and one period of devolved rule in which it has gone in the opposite direction. But that is not an argument for supposing that devolution is bad for Wales (after all, many people argue that the Assembly’s limited powers is the reason for Wales’s relative failure here); it is merely a suggestion that, as you say, we have to look at what government’s do in terms of policy directions as opposed to simply what their jurisdiction is. As it happens, and over the longer-term, I tend to think that the record of government action to improve Wales’s economic performance has been either wrong-headed or inadequate. But it could have been otherwise.
“Part of my maximalist position on the constitutional question has always been that any Welsh government will inevitably have more incentive and pressure to address the issue than a UK government.”
And the logic to that is, in my view, sound. But it perhaps understates those areas in which functional co-operation between the nations of Britain could deliver additional benefits. Whether that necessitates formal political union, or merely some other agreement is open to debate. I don’t at all say it has to be the Union we currently have.
“What none of us should do is simply accept that the situation is as it is and evermore shall be so.”
Quite. I can understand why people look at the widening wealth gap and question whether the current arrangements are adequate. I understand rather less those who seem to carry on as if devolution should have solved Welsh relative poverty by now. There are some deep-seated issues.
Cyntaf said:
“The comparison, while statistically sound, is always likely to be a bit fake. The South East of England is a case unto itself, so the historical comparison of the UK which includes that unique area does not help.”
You are quite right. The sub-English story over the past decade or more is of the South East, London and to a lesser extent the South West doing very well and skewing the entire UK average as a result. Welsh GDP as a proportion of the rest of UK is probably a good deal rosier (though still towards the bottom). In a sense, the story is the south east versus everywhere else, rather than Wales versus the UK.
” In a sense, the story is the south east versus everywhere else, rather than Wales versus the UK.”
Is there a case, then, for Wales (and, specifically, the Welsh Government) sharing knowledge with other regions of the UK in the search for solutions?
For example, we might naturally look to the North East as somewhere comparable to Wales. That may be true for South Wales, but that isn’t the case for the rest of the country, which is more likely to have closer experiences with regions like Devon and Cornwall, and the Highlands and islands of Scotland. You could, of course, extend such a search across Europe.
Adam makes, IMHO, an excellent case that it is definable and often isolated economic decisions that have led Wales to where we are now, and that the current problem has many fathers. If that is so, should we not try to think sideways, and away from an all-Wales solution?
Thanks to Jill Evans, I’ve just read the full article by Jon Shortridge, here. As it happens, the “governed from England” quote was just an “it can be argued” point made at the end of the article. Which just goes to show how the media can blow things out of proportion.
On this subject, I’m pretty much with John Dixon (quelle surprise!) though I would amplify the point made by IL about redistribution. At a NUTS 2 level the UK has a disparity between its richest and poorest parts of a factor of 4.34 (Inner London 79400 – WestWales&Valleys and Cornwall 18300) which is much greater than in any other EU member state. The Eurostat info is here with 2006 as the latest year. The next biggest disparities I can find are Bratislava to Vychodne at 3.3 to 1, Brussels to Hainault at about 3 to 1, Prague to Severozopad at 2.67 to 1 and Hamburg to Brandenburg-Nordost at 2.65 to 1, but almost everywhere else the disparity is never much greater than about 2 to 1 even in places where we’d expect there to be big variations, such as north and south Italy. If that is not the starkest illustration of the UK’s huge over-centralization compared with other countries, nothing is.
I’d agree with Adam that this overcentralization might not necessarily be an inherent problem, because any UK government could have embarked on policies to reverse this. But no UK government has taken any radical action to do things differently, so for me the best answer is structural change. Far from Wales being too poor to be more autonomous or independent, we simply cannot afford not to be, because taking more control of our own affairs (whichever Welsh government we elect to do it) is the only way to ensure that the decisions we make are in our best interests.
“Which just goes to show how the media can blow things out of proportion.”
The “it can be argued” part of the sentence was reported on the BBC’s website.
“taking more control of our own affairs (whichever Welsh government we elect to do it) is the only way to ensure that the decisions we make are in our best interests.”
Unfortunately, it’s this sort of short-circuiting of the logic chip that I was complaining about. It’s not the only way, as you acknowledge two sentences before this statement. That’s just rhetoric.
Adam, please don’t let antagonism get in the way of what could be a constructive discussion. Don’t rush off answers without carefully reading what has been said.
First, the BBC made one small point at the end of what Sir Jon wrote it’s headline. The WM’s headline was an even worse “Wales is poor due to English rule”. Others, I hope, will read the full four page article and decide for themselves whether the thrust of either report fairly reflected what Sir Jon had to say.
Second, you didn’t notice the difference between the two points I made when I said “best way” and “only way”. The first was about the practical solutions to the problem of inequality, the second was about who makes the decisions. A UK government might or might not make decisions that improve the situation in Wales; but a Welsh government will by definition always make decisions which it (reflecting the opinion of those who voted them in) considers to be in the best interests of Wales. In the first there is a potential conflict of interest between Wales and the UK as a whole, in the second there can’t be. That’s why I used the word ensure.
On reflexion, perhaps I should have made that even clearer by saying: ” … is the only way to ensure that the decisions made for Wales are in our best interests.”
MH
Re: Sir Jon – The BBC featured his qualificatory preamble. Whether you felt the need to read the entire article or not is a matter for you, but it’s not right to say that what you deemed to be an important part of his statement was not there to for people to reach their own judgments about it. It was.
On the substance – I accept your clarification, even if it doesn’t really help your point. For as long as you accept that the UK government is capable of making decisions in the best interests of Wales, it stands to reason that independence is not the only way to ensure that such a thing happens.
I hope I might still persuade you to read what Sir Jon said, Adam. It’s well informed and timely. To me it seems very strange for you to make reference to something he said without wanting to read it in context. It’s only four pages. It can’t take more than ten minutes of your time.
And please let me decide what points I want to make. I’m happy with what I’ve said, and I’m sure the distinction I made will not be lost on everyone.
“As it happens, and over the longer-term, I tend to think that the record of government action to improve Wales’s economic performance has been either wrong-headed or inadequate. But it could have been otherwise”
And on that we agree. Whilst I do not argue that UK government decisions in relation to the problem will inevitably be either wrong-headed or indequate, there is another factor which tends to make them so, I feel. And that is to do with timescales.
As the period since the establishment of the Assembly has shown (and you alluded to this in your response to my earlier comment), a short period (as compared with the length of time for which your analysis shows that we have had the problem) is simply not enough to address deep-seated problems. For that, we need a determined and consistent approach (in the sense of consistency of purpose at least) over a lengthy period. One of the problems which gets in the way of that is that the UK has switched its electoral support between parties which have very different approaches. Since we can’t simply abolish elections (even if we wanted to), that problem is inherent in the current structure. Even if we had a government in London which really wanted to take the right decisions, and which put the right policies in place, the chances of that surviving for long enough are pretty slim.
The closest I can remember to a government which seemed to want to address the issue was the Wilson government from 1966 to 1970. We could argue about the extent to which they were reacting to by-election results, but I’ll park that one. (In the first place, we wouldn’t agree on the relative importance of the various factors, and in the second it’s not relevant to my point here!). Since 1970, the commitment to interventionist policies and regional development has withered (under governments of both parties). Maybe Wilson had it right, maybe not. It’s hard to judge, because the apporach was simply not pursued for long enough. And to return to my main thread here – I see no realistic prospect of any UK government keeping the focus on reducing the differences for long enough to make the essential difference. Not because they can’t; but because in practice they won’t.
MH
You suggested that the media had failed to adequately cover what you consider to be an important qualification to the Shortridge comment. They did, or at least the BBC did, and I merely corrected your error. I’m really not sure why you are now veering off into whether I’ve read the piece, or even why you feel this important to an article that merely notes his comment in passing. It’s obvious that my piece isn’t about JS or his views on rule from England. This sub-strand to a sub-strand is a distraction.
Nobody’s stopping you making whatever points you wish to make. I’m just pointing out that they aren’t consistent or logical.
John
It’s funny, but to me your argument makes perfect sense from the point of view of someone who wants a a further stage of devolution, hence ensuring that the long-term consistency of approach that you rightly identify is secured, without abandoning a number of other features that we might want to maintain.
Great discussion guys. In response to Daran’s comment which was also interesting, I would have to call on MH’s data as my defence, and also thank him for backing up my argument, something which I don’t have the time or inclination to always pursue.
It is very interesting to learn that the UKs regional disparity is the widest of EU member states. It won’t come as surprise to nationalists, but I have never before seen evidence to back up the assertion that we somehow get left behind.
This is a very healthy debate, you simply don’t see this level of discussion at party conferences let alone in parliamentary or Assembly discourse.
A dispassionate debate, hard as it is, about Wales’ economic status within the UK is essential. Nationalists are as guilty as anyone else (including Ramblings in our blog on this topic) of clouding the debate by making the same old assertions without providing solid material to back up our points. So it’s welcome to see some stats from MH.
From this discussion the pro-national side can learn that its policy content that has informed Wales’ development or lack of, not the location of government. It’s the head, not the heart. A point the likes of John Dixon (let’s call them Logic Nationalists) have been labouring to make.
Likewise, the pro-UK side of the debate can see that British rule (just realising English rule is inaccurate) has not delivered any policy content that would close the gap. So hopefully both sides of the debate will be doing some soul searching and looking at where they stand.
This issue will be revisited across the blogosphere and media after the Holtham Commission produces its next report.
“So it’s welcome to see some stats from MH”
Indeed, although some care needs to be taken with the interpretation. It is true that the figures given for Inner London are correct, as are those for Cornwall/WW&V, and therefore the ratio put forward by MH is right. However, it is important to note just how extraordinary the figures for Inner London are, not just in comparison with every other NUTS2 area in the UK, but for every other one in the EU. Compare Inner London to virtually any other NUTS2 area and you will be able to produce a very wide disparity of per capita GDP, compared to a similar exercise using any other two such areas.
Does this matter? It still shows a vast concentration of wealth in one part of the UK, and relative poverty at the other. True, except that the designation of NUTS2 areas is far from consistent. Some – including Cornwall – are very small (in population terms) while others are very large indeed. Take Ile de France for example; it is a region of France that takes in Paris in its entirety, plus much of the dormitory belt. It does very well in GDP terms (40100, nearly twice as rich as the neighbouring region). What would the figure look like if just Paris were designated as a region on its own? I suspect that it would have a far higher figure, perhaps moving towards the Inner London figure. This is supported by what we know about another city area to get its own NUTS2 designation – Brussels – where the figure is 55100. So, if you wanted to compare like-with-like you’d compare Brussels with Inner London – and then you’d find a disparity not nearly so great. Alternatively, you could redesignate Inner and Outer London, together with perhaps some parts of the Home Counties (Ile de France has a population of over 11 million) as a single NUTS2 area and watch its GDP tumble down towards the sort of of 2-3:1 ratio we see elsewhere (Outer London’s GDP is a much more egalitarian 25800, lower than Eastern Wales as it happens).
Earlier in this thread, I suggested a “south east versus the rest” analysis of regional wealth in the UK. This is that – on steriods. By designating Inner London a NUTS2 area on its own, the statistics show an area massively more wealthy than any other part of the UK or EU. Move Inner London out of the picture, or designate it in the same way as other major European cities, and the gross disparities begin to look a little different. In fact, outside of London, the ratio between the richest and poorest parts of the UK is 2.1:1 – or the average MH cites for the rest of the EU.
“It’s funny, but to me your argument makes perfect sense from the point of view of someone who wants a a further stage of devolution, hence ensuring that the long-term consistency of approach that you rightly identify is secured, without abandoning a number of other features that we might want to maintain.”
I think it’s pretty natural actually. Stripped of the emotional arguments about whether Wales should be independent or whether the Union should be protected, we can quite quickly get down to a rational consideration of what policy choices Wales needs to make, and how they can best be implemented. For those of us who reject the idea of permanent relative poverty, it’s quite easy to reach a consensus that the best way of securing a consistent long term focus on reducing the gap is to have a government in Wales with more influence on the economic levers that is currently the case. There is a status a long way short of independence which would enable a lot of progress to be made in that direction; but it’s not the current status. On that, we can probably agree – but it doesn’t mean that some other arguments have gone away!
Incidentally, I don’t reject outright the idea that there might be “a number of other features that we might want to maintain”, and don’t see that as necessarily inconsistent with my overall position – but that would be off-thread here, and we can save it for another day!
Having read each contributor carefully, there is a common theme, government in-charge of economic activity, Mr Dixon sums up this theme very well when he writes …
“… it’s quite easy to reach a consensus that the best way of securing a consistent long term focus on reducing the gap is to have a government in Wales with more influence on the economic levers that is currently the case.
… for the life of me, I cannot put my finger on any business managed by government (more influence on the economic levers) that has created a profit. Politicians might like to listen to business and ask what it needs from government, I would suggest it might be fewer levers of control and more supportive measures, not subsidies, but good transport links, children educated with good basic skills, further lifetime education and training, sufficient housing that is of a good standard ……
Not more levers …
I’ll just take issue with one point, the idea that centralised government in the UK could reduce inequality by redistributing wealth. This is all very well in theory, but is it likely to happen in practice? Such a policy would be by its very nature left wing, or at least centre left. The nearest thing to a centre left party at the UK level are the Liberal Democrats (does anyone seriously believe that New Labour are left wing?) and they won’t be forming a government any time soon.
By the same logic we could propose abolishing all national governments and having one central European or even world government, after all there’s no reason why such a government couldnt treat all nations and regions equally.
The reality is – call it realpolitik if you like – is that no nation can suceed unless it has its own government to stand up for its own interests as everyone else will be standing up for theirs.