Bucketman and the Welsh Economy

One of Plan Flynn's most memorable lines was to compare Peter Hain with Odo in Deep Space Nine, a shape-shifter who, as he put it:

... liquefies at the end of each day and sleeps in a bucket to emerge in another chosen shape the following morning.

As we know, Peter Hain was the one responsible for taking the recommendations of the Richard Commission and giving us a watered down dog's breakfast called the Government of Wales Act 2006. By failing to implement what it recommended, we were instead landed with the tortuous LCO process by which the Assembly can—but only if the incumbent Secretary of State and Westminster allow us to—make laws in those devolved areas in which Welsh Ministers already have executive responsibility. This is the process that we will finally do away with when we vote Yes on 3 March.

He was also the person who said that this legislation would last for a generation, that he didn't want to see a referendum for many years, and that it could not be won before then ... even though the opinion polls were clearly showing the opposite. But then, when it became clear even to him that Labour was going to lose power in Westminster, he shape-shifted into a man who realized that the Assembly needed all the powers it could get to protect us from the worst effects of the public services cuts and privatization agenda of the ConDem government in Westminster.


But rather than being contrite after being shown to be so out of touch, Peter Hain has now emerged from his bucket to claim that this was all his idea from the beginning. And if we read this piece in the Western Mail yesterday, he does look like he is in favour of more powers for the Assembly ... until, that is, we look more closely. For in the same way as his fictional equivalent couldn't quite manage to get the shape of his ears right, the Odo-ous Mr Hain hasn't quite managed to shape-shift himself into a convincing pro-devolutionist.

A “YES” vote in the referendum on more powers for the National Assembly would give AMs the opportunity to “think big” and transform the economy of Wales, according to Shadow Welsh Secretary Peter Hain.

“I think there’s an opportunity now if we get a Yes vote in the referendum – and I don’t take that for granted at all – now for the Assembly to really lift its game and for everybody in Cardiff Bay and at Cathays Park to start really thinking big, and think about the big issues to transform the Welsh economy and make us world class, which we are certainly not.

Western Mail, 22 January 2011

We need to ask ourselves one simple question: In what way will voting Yes enable the next Welsh Government to "transform the Welsh economy"? The Assembly does not, and has never had, control over the levers of our economy. These are still firmly in the hands of the UK government at Westminster. It was for this very reason that Tory AM Alun Cairns decided to leave his seat in the Assembly and stand for election as an MP. Look at what he said in March last year when asked if he was doing the right thing:


Absolutely right. My greatest interest is the economy and business and that's where the powers lie for economy and business really, where I'd like to be able to make a contribution to the constituency.

... When you look at the economy and business and in terms of overcoming deprivation, child poverty and those sorts of issues, it is Westminster that has most of the levers and that's really what can make the biggest influence and difference to the Vale of Glamorgan and other constituencies.

Just about the only lever on the economy the Welsh government has is the ability to set the multiplier for non-domestic rates. But even this is not a matter of devolution, but of centralization. For local authorities had the ability to set this before Westminster took central control. And in the case of Wales it only has a marginal effect anyway because the money goes to the Treasury in Whitehall before being redistributed back to Wales.

We need to be clear that what is devolved to Wales is not the economy, but economic development. In essence, the Welsh government can spend some of the money it receives in the annual block grant as grants or loans to encourage businesses to locate in Wales, and fund schemes like ProAct and ReAct. These are of course useful, but only marginally effect the economy. To create a climate in which business as a whole, rather than just a few selected companies, can flourish we would need to have wider control over things like rates of business and personal taxation, national insurance, VAT and monetary policy.


So when Peter Hain shoots his mouth off and claims that voting Yes will "transform the Welsh economy", I have to wonder which side he's batting for. He's doing just the same thing as True Wales: ignoring what this referendum is actually about and claiming that it is about other things instead. Now whatever else Peter Hain is, he is certainly a shrewd political operator. It might indeed be reasonable for him to assume that the eyes of ordinary people in Wales will start to glaze over at the technicalities of what this referendum is about, so that in order to get people excited enough to get out and vote the thing needs to be sexed-up into something more interesting. Certainly people are more concerned about the economy because it affects fundamentally important issues like jobs and the level of public services.

But it's a mistake to do it; not only because it's dishonest, but because rash promises that you have no means to fulfil have a habit of coming back to bite you. Labour have form on this, after all, the previous ten-year plan was that Wales would improve its GVA figures relative to the UK as a whole ... but instead the gap has widened. Why? Because there was no mechanism by which the Welsh Government could pursue different economic policies from the remainder of the UK. We had a few limited powers which we could target at a few companies or sectors, but no power to make an across-the-board difference. Nor will this referendum give us those powers.


The only grain of truth linking a Yes vote to the ability to improve our economic performance is that the ConDem government in Westminster has made it clear that they will not consider the issues raised in the Holtham Report—either fair funding or devolution of some taxation powers—unless we vote Yes. But even a commitment to "consider" the Holtham report is no guarantee that Wales will get what it recommended. We might get yet another watered-down dog's breakfast instead of the real thing.

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Owen said...

Peter Hain is more comparable to Weyoun than Odo, but I digress.............

There may very well be opportunities for wider cross-cutting Assembly legislation (post yes vote) in fully devolved matters though, like education and health. In that case he may be right. He's making the fundamental mistake of dragging irrelevant matters to the referendum, probably in the hope of getting a bounce for Labour. As you've said the only link to the economy is the potential Holtham "review" as a result of a yes vote.

It's all part of the stop-start, "leave them wanting more", devolution process. It doesn't matter if the current settlement works or not, as long as Westminster (whether Labour or Con-Dem) can be seen to be bestowing gifts. The new Scotland bill is one for Scotland, devolving justice was one for Northern Ireland. Remember it's the National Assembly for Wales not of Wales. It can be taken away at any time if we're naughty boys and girls, we have no constitutional right to it.

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