Theatre in Wales

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Plain Speaking on Wales' Numbers

A Political Diary

Commentators , Economy of Wales , December 20, 2020
A Political Diary by Commentators Political discussion rarely moves from spending to earning. These have been months of political quiescence. Investment in Wales from without has dropped from a peak of 22% of the total for the United Kingdom. The proportion is now regularly stated as 2%.

A writer wrote interestingly about the period. It cannot be tested as the writer kept to anonymity.

The contribution ran:

“It’s generally agreed that despite certain failings the Welsh Development Agency was doing a good job in attracting inward investment, and to this day many people still don’t understand why it was done away with...Rhodri Morgan. It was he, in a temper tantrum, midway through a phone call with the CEO of the Welsh Development Agency, threw his toys out of the pram when his instruction that the WDA should spend a chunk of it’s budget in a constituency of Cardiff where a certain Mrs Morgan was sitting MP.

“The CEO politely advised that this request could prove difficult because Cardiff was not in an EU Assisted Area . . . A person present . . . related that the First Minister threw his phone across the room. When he had calmed down (10 minutes later) he rang the CEO back and said that he was scrapping the WDA and bringing it’s functions under Assembly control.

“The CEO replied ‘Congratulations First Minster, you have just ruined the economy of Wales’... When the WDA was scrapped, Development Agencies in other countries were delighted . . . I was present at the party held by the Scottish Development Agency to celebrate the demise of it’s principal competitor for inward investment. English Estates, the Development Agency for England, was equally delighted for the same reason. That’s the real story of Wales’s decline as an economic force . . It will be a huge challenge to reverse this decline, but with the right approach, and a massive change of attitude in Cardiff Bay it conceivably could be achieved.”

Another writer, again anonymous, extended the discussion to corporate culture.

“I don’t know (the writer of the comment), but the account with regard to Graham Hawker (CEO) telling Rhodri Morgan he’s screwed the Welsh economy is correct. While there is much talked about the WDA and its dealings in its early to mid years, in its later life it was an organisation of people (predominantly Welsh people) who actually gave a f*** about trying to lift the prosperity of the country.

“To this day, I am convinced that the termination of the WDA was done out of both jealousy by Welsh Gov and also a disregard by WDA to service the needs and wants of Ministers as they became more and more demanding for information from the organisation. It was not designed to service Welsh Government. It was designed to deliver economic development to external customers and it did it well.

“To be fair to Hawker, he had instigated a re-organisation programme that would have addressed some of the issues, but Morgan had made his decision for the bonfire of the quangos. Hawker had resigned in front of Senedd committee. He made Morgan look stupid, who then asked him publicly to reconsider his resignation. He didn’t and he left.

“Following Hawker, Gareth Hall was installed as Welsh Gov’s puppet CEO. Rhodri Morgan stated publicly that WDA staff would not see any change in the transition to Welsh Gov. That was total bollocks. There was a culture of cleansing any entrepreneurial spirit and drive in the organisation and a clear move from answering to the WDA board to Ministers. Hall was very close to Marc Clement of Swansea Uni fame. The WDA was being steered by Andrew Davies as Econ Dev Minister at the time, again with close links to Swansea. Make of that what you will.”

A writer of independent spirit repeated some of this version of the past and boiled the economics of Wales to a few essentials.

“The WDA was not designed to service the Welsh Assembly Government. It was designed to deliver economic development to external customers. When First Minister Rhodri Morgan abolished the WDA as part of his ‘bonfire of the quangos’, its former CEO, Graham Hawker, told him he’d ‘screwed the Welsh economy’. Hawker went on to resign in front of a Senedd committee.

“Figures released last July by the Office for National Statistics showed public spending in Wales was £13.7 billion more than the total amount collected in taxes, which works out as a deficit of £4,376 per person...In 2018/19, public spending per person in the UK as a whole was £9,584, but in Wales, the figure was £10,656, which is 11% above the average. Social security spending (currently a non-devolved area) is £670 per person per year higher in Wales than the UK average.

“The deficit of £13.7 billion is 19.4% of GDP. This figure is alarming when put alongside the UK government’s deficit of £32.5 billion, which is just 1.5% of GDP...Total Managed Expenditure for Wales is estimated at £40.8 billion in 2017-18, around 5.1% of total UK expenditure of £794.9 billion, yet Wales has just 4.7% of the UK population.

“Nine of the 12 UK statistical regions carry a deficit. The three exceptions are London, South East England and East Anglia. All nine other regions are, in effect, subsidised by the three. The region requiring the smallest subsidy per person is South West England at £861, and the largest is Northern Ireland with £4,916. Wales is the second largest, at the aforementioned figure of £4,376, a considerably higher figure than Scotland’s £2,442.

“In the current financial year, 2020-2021, the Welsh Government will spend more than £18 billion. 80% of this, £14.7 billion, comes from the UK Government. £2.2 billion, comes from Welsh rates of income tax. £1.1 billion, comes from non-domestic rates. The remaining 2%, £281 million, comes from fully devolved taxes (£245 million from Land Transaction Tax and £36 million from Landfill Disposals Tax.)"

Reviewed by: Adam Somerset

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