In about ten weeks weeks time, those of us who will bother to vote will elect a new Assembly and a "new" Welsh Government. My 2016 election coverage starts today with a mini series over three weekends focusing on three key areas of devolved public policy and how they've changed over the last five years : the economy, health and education.
As the Easter recess and de facto dissolution of the Fourth Assembly draws closer I'll cover the key achievements and failures over the last term, offer my final verdicts on the performance of government departments and hand out my end of term awards and admonishments too. I'm going to be relieved when all this is over.
This is a (sort of) sequel to my immensely popular Wales : An Economic Profile series from 2012.
Major Developments in Welsh Government Policy
Jobs Growth Wales - The scheme provides unemployed 16-24 year olds with paid work placements lasting for up to 6 months. It's said at least 15,000 young people have been provided with placements so far, with the scheme extended thanks to a new injection of EU funds. It hasn't been without criticism, with a major academic report suggesting many of the job posts funded through Jobs Growth Wales would've been created anyway and up to 73% of applicants didn't need the scheme to find work (see also : Does Jobs Growth work for Wales?).
Sêr Cymru - A £50million programme to attract leading academics to work on science and chair research projects in Wales. To date, it's funded research and academic posts in neuroscience, nanotechnology, solar energy and semiconductors, building upon existing university expertise and spin-outs such as IQE.
The M4 Newport Bypass Proposal – One of the big controversies of the Fourth Assembly, and threatens to drag into the Fifth Assembly too. The Brynglas Tunnels have long been considered a choke point for the economy of south east Wales. There's a split between those who would want to see Newport completely bypassed by a new motorway - potentially costing up to £1billion – and those who would prefer to upgrade the A48 to motorway standards, called the "Blue Route". The bypass has been given provisional Welsh Government backing, subject to further studies and consultation, but a change in government could put a halt to those plans or change them.
South Wales Metro – In seeking to emulate other major urban areas in Europe, this proposal for a fully-integrated combination of bus, rail and light-rail is one of the most significant transport developments in post-devolution Wales. Not much has happened yet, and numerous reports have been commissioned at great expense no doubt, but the Metro is said to be key to reducing travelling times between the Valleys and M4 corridor, and encouraging more mobility between the poorest and richest parts of Wales, potentially boosting the Welsh economy by up to £4billion (see also : The Welsh Metro; Metro a Go Go, Making the Metro).
Relative Health of the Welsh Economy
The 2011 election took place during the immediate aftermath of the Great Recession, with high unemployment and the UK being on the cusp of a "double-dip recession". The 2016 election is taking place during a period of both low inflation and steady, but unspectacular, economic growth.
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| Welsh GVA-per-capita relative to the UK - source |
The most immediate statistic to consider is gross value added (GVA), which measures the total production of goods and services within an economy. Since the early 1990s, Wales has trundled along towards the bottom of the UK's twelve nations and regions and it's no different this time around, with Welsh GVA staying relatively static at between 71-73% of the UK average.
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| Welsh GVA 2010-2015 - source |
GVA itself, in cash terms, has increased quite remarkably over the last few years. Welsh GVA is now £53.4billion or £17,573 per head, meaning it's risen by around £2,000 per head since 2010.
Any suggestion that the Welsh economy is "going backwards" or has in some way declined since devolution is utter crap; it's a relative decline with respect the UK not an absolute one. If you're clever enough to know the difference, congratulations.
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| GVA per capita by NUTS3 regions (1997-2014) - source |
However, we should be concerned about regional performances within Wales. West Wales & the Valleys have closed the productivity gap with the rest of Wales slightly, but our better-performing areas, like Cardiff, have lost ground with the rest of the UK. There's a danger all parts of Wales are slumping to an artificially low level of productivity.
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| Global comparisons of Welsh GVA-per-capita - source, based on currency values at time report was published (Oct. 2015) |
In terms of global comparisons, Wales has (nominally) jumped 10 places since 2011 to 29th in the world by GVA per head. Although this is probably down to economic slumps - like the PIIGS crisis or slowdown in the Chinese economy - any suggestions that Wales is "too poor" are bullshit. We're punching at our weight economically, it just "feels" as though we're slacking because we're the poorest part of one of the richest nation states in the world. Again, it's relative not absolute.
Another, more informal, way to measure the strength of the Welsh economy is the performance of our major companies (via the Western Mail's Top 300 publication). By and large, the names are the same, but there've been movements up and down the rankings.
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| How the Top 20 companies in Wales have changed over the Fourth Assembly |
What's interesting here is the growth of some of the companies outside the Top 20, with price comparison site Moneysupermarket.com and Cardiff-based car financiers MotoNovo making big strides in a relatively short space of time. Although manufacturing dominates the top of the list, it's a sign that financial and professional services are starting to grow in Wales.
Iceland and Admiral remain, by some way, Wales' biggest companies (excluding the likes of Tata, which would probably easily top the list) and the total turnover of the top 20 in 2015 was £13.92billion, up £2billion on 2011. There are some things to point out. The Top 20 employed more than 59,000 people in 2015, which is largely the same figure as in 2011. So the balance between new jobs created and jobs lost has been static.
Also, many of Wales' big companies have big turnovers but still make losses – Llanelli-based Calsonic Kansei (there's a typo in the graphic) and Celsa UK being amongst them, the latter underlining the slowdown in the steel industry.
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| Gross weekly average earnings 2011-2014 - source |
How does all this affect ordinary people? The best measure there is earnings. Generally it's good news, with average weekly earnings having risen an average 3.7% since 2011. Some parts of Wales have seen even bigger rises; Anglesey, Ceredigion and Carmarthenshire all saw increases of more than 10%.
When you take inflation over the same period into account then these figures perhaps aren't as great as they first seem, and make declines in incomes – up to 3.1% in Newport – all the more impactful. This won't have been helped by cutbacks to welfare and an increase in precarious zero hour contracts.
Business Health, Trade & Investment
Of the 231,000 registered businesses in Wales in 2015, 94.7% employ fewer than 10 people – similar to 2011 (source). In fact, aside from a 2% growth in lone-traders/self-employment you can argue the business structure of Wales hasn't changed at all during the Fourth Assembly and is remarkably stable.
When it comes to business survival, there's a mixed message. For businesses started in 2009, the 1 year and 2 year survival rates exceed the UK average, but it starts to fall behind the UK after 3 years.
Despite this, some local authorities not traditionally associated with entrepreneurship – like Rhondda Cynon Taf and Merthyr Tydfil – do better than most English regions on 5-year survival rates (source). Rural areas of Wales do particularly well too, presumably because of farmers and agricultural subsidies from the EU.
The number of start-ups has steadily grown, particularly during 2013 and 2014 – 8,225 businesses were started in 2011 compared to 11,345 in 2014 (source). The latter figure is, however, around 3.2% of the UK total, which is below Wales' population share.
As I've said on many occasions, exports are important to the Welsh economy, and Wales has maintained its position as a net-exporter of goods throughout the Fourth Assembly. At the middle of 2015, Wales was one of only four nations and regions of the UK to still be a net-exporter.
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| Welsh balance of payments 2010-2014 - source |
The UK as a whole is a net-importer of goods with a large trade deficit; Wales has a trade surplus, which amounted to £5.9billion ($8.6billion) in 2014 – though the value of exports has fluctuated wildly over the last few years in line with the general state of the UK and EU economies. However, as this only takes into account goods, once services are included it's likely Wales "imports" most services – like banking and insurance – from England, particularly London.
One issue that's rumbled throughout the Fourth Assembly is business finance – which has dried up for smaller companies since the recession with banks increasingly unwilling to take risks. As the figures show, Wales is more dependent on small and medium sized enterprises than the rest of the UK and there's a danger many could struggle without proper access to capital, which explains poorer than expected long-term business survival rates.
The main idea put forward – in collaboration between the Welsh Government, Prof. Dylan Jones Evans, and backed by other parties like Plaid Cymru and Conservatives – is the conversion of Finance Wales into a Landesbanken-style "Development Bank of Wales" to provide financial support and advice to smaller companies (pdf).
Reports have been filed but, to date, nothing concrete has happened, with concerns the Welsh Government might have too much of a hands-on role in any such bank.
Employment & Skills
There've been sustained falls in both unemployment and economic inactivity (people of working age, but unable to work; i.e. the long-term disabled) since 2011.
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| Unemployment rate 2011-2015 - source |
Unemployment rates are close to half what they were at the start of the Fourth Assembly and – at time of writing this – was only slightly higher than the UK average (5.5% vs 5.1%). However, there was another large fall in the last set of figures, so it's different now.
One of the big problems is long-term unemployment, defined as people who are registered unemployed for at least a year. In September 2015, the Welsh rate (35.2%) was higher than the UK (31.4%) with some parts of Wales – like Gwynedd and Ceredigion – having long-term unemployment rates approaching 60% (source).
Unemployment also disproportionately affects the young – 18.3% of 16-24 year olds were unemployed in January 2016 (pdf) – and men, who have an unemployment rate of 6.7% compared to women's 4.1%.
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| Economic inactivity rates - source |
Economic inactivity rates have also fallen and are primarily made up of the disabled (30.3%), early retirees (15%) and home-makers (20.6%). Although economic inactivity rates in Wales (20.7% in 2015) remain higher than the UK average (18.4%), there are massive variations within Wales, with the former south Wales coalfield authorities having significantly higher rates than other areas. We already knew that.
It's also unclear what impact the UK Government's disability work assessments will have had on economic inactivity rates, as it could've pushed many people who would otherwise be counted as disabled into near useless training schemes or into unemployment.
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| Public vs private sector employees - source |
In the year ending September 2015, there were 379,600 public sector employees (27.3% of the workforce) compared to just over 1 million private sector employees. This compares to 406,700 public workers in September 2010 (31% of the workforce). So Wales has lost about 27,000 public sector jobs over the course of the Fourth Assembly, offset by an increase in private sector jobs of 105,000.
This is inevitably going to be down to austerity, and although Wales still employs more public sector workers than the UK average (22.5% in 2015), the gap has closed slightly.
This might be cause for celebration amongst fiscal conservatives, perhaps the Welsh Government too, but none of this gives any indication on the quality of these new jobs – a majority of self-employed people earn under £15,000 a year (and a large chunk less than £7,500 - xls) and are set to be pummelled by changes to tax credits and universal credit, while there are things like zero hour contracts.
On skills, at the end of 2014, 35.6% of the workforce were qualified to first-year university-level or equivalent (NQF Level 4) – this is compared to 31.5% in 2011. To complement this, the numbers of working-age adults with no qualifications fell over the same period from 11% to 8.9%. The majority of the workforce are qualified to Level 3 (A-Level/GNVQ or equivalent).
Conclusions
There's good news and bad news in there, but what's most important is figuring out who's responsible; are things like the decent economic growth figures and falls in unemployment down to the Welsh Government or the UK Government? That's exemplified further with Aston Martin's announcement earlier this week - both governments can take partial credit.
The Welsh Government probably have more to be pleased about than disappointed and, all things considered, the economy is – arguably – a broad area of strength for all parties (except UKIP and the Greens) who can each take positives from it in one way or another. Labour and Plaid because of foundations laid during the Third Assembly, Tories and Lib Dems because of UK Coalition policies.
For that reason this is a very difficult area for the opposition parties to attack Labour on, and they'll have to be very specific : the slow progress on business finance and business rates reform, decline of the steel industry, fluctuations in both Welsh export value and tourist visits being examples of weaknesses.
It presents the Conservatives in particular with a problem. There's clear improvement which will be in part down to the UK Government, so if they attack "Labour's record on the economy" are they in danger of inadvertently attacking themselves? If they only take credit for "the good news", will the public see through that?
Quality of jobs, the impact of public spending cuts on public employees and the long-term future of particular sectors – the steel industry again comes to mind – are going to be the big points of contention here, but issues like farming (particularly the dairy sector), tourism and transport shouldn't be ignored as a result.
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