The Great Cardiff Airport Swindle?

Were the Welsh Government diddled when they nationalised Cardiff Airport in 2013?
(Pic : Wales Online)

As others have said, the Welsh Government's reputation when it comes to spending public money has taken a big hit over the last few days, and brings what I said in Wales reacts to steel job cuts all the more into focus:

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Scots Wha Nae

"Freeman stand, or Freeman fa'"
(Pic : The Telegraph)

It's a bit strange to say this, but unfortunately I was right.

As expected, Scotland has rejected independence by 55.3% to 44.7%. I predicted a no vote of 56-44 on an 80-85% turnout (actual figure 84.5%), so I was pretty much spot on.


Why the No side won

"The Positive Case for Union" as presented by Better Together.

It's too early to offer detailed reasons why the Scots rejected independence, but there are a few things you can pick up from the campaign itself.

"Project Fear" worked – If you generate too many uncertainties in people's minds, the likelihood that they would reject a proposition will no doubt increase. A feature of other independence referendums, like Quebec, is that the closer polling day gets, the more likely people will opt for the "safest option". As I said yesterday, a lot of wavering undecideds, "soft yes" and "shy no" voters probably verged on the side of the status quo and voted no at the last minute. It looks like postal votes went heavily in the no's favour too.

There were too many questions that weren't answered by the yes campaign at the right time and to the right extent - using currency as an example. Concerns over currency might seem technocratic, but it guides absolutely everything from high end macroeconomics to daily life.

Although the position of independence and things like currency are debatable (a currency union was nailed-on despite the bluster, it's in everyone's interests), the doubts were always there. After everything people have been through since the Great Recession they were perhaps less likely to take a fiscal risk.

Yes Scotland lost women and older voters early on – I wouldn't be surprised if, when the number-crunching is done, the referendum was lost amongst middle-age women and pensioners. The polling figures have long pointed towards this being the case.

Better Together very nearly blew it with "Patronising BT Woman", but – let's face it – the archetypal small-c conservative mother wanting to "think of the children" would probably back the status quo anyway. The advert was simply preaching to the choir, and was done to stop their vote shifting yes-ward. Also, an independent Scotland shouldn't have any problem meeting its welfare obligations, but do anything to even hint at threatening pensions or elderly entitlements and you lose older voters.

Despite Alex Salmond's clear political talent, by the end, the campaign turned a bit macho and triumphalist with echos of Labour in 1992. Nicola Sturgeon and other senior women MSPs and personalities should've had a more prominent role in the yes campaign, and you've got to wonder what impact Margo MacDonald would've had if she were still with us.

Yes Scotland took a gamble, hoping there would be a similar bounce to the one the SNP enjoyed in 2011, but they didn't quite pull it off. If the referendum were a month later, or that YouGov poll were a week later....who knows?

"Astroturfing" wasn't enough – Yes Scotland was a very well-organised, decentralised, grass-roots led campaign that crossed all sections of Scottish society. The Anglo-Scottish media and Westminster machine are still a giant though. Until the panicked last fortnight, there was latent but not outright bias by British media establishment. Then it became more obvious, and disgraceful, and should – quite rightly – damage the global and domestic reputation of the BBC.

Trying to control the debate up against such a media machine - and pretty much the entire Scottish domestic mainstream press (notable exceptions like The Sunday Herald aside) - was always going to be a struggle. To their credit, Yes Scotland very nearly pulled it off.

The internet clearly isn't the be all and end all of political debate it's being made out to be. But sites like Wings over Scotland and Bella Caledonia probably played a role is getting the yes vote to as high a position it did. The future of the Scottish blogosphere is looking very, very bright indeed to the point of becoming mainstream. The same can't be said in Wales, unfortunately.

The arguments were weak and incomplete – I've read Scotland's Future from cover to cover because it'll certainly help me build up my own Independence Index for however long I'm blogging. Despite the pdf version being more than 400+ pages long, it felt incomplete. There was minimal coverage of many of the things I've covered even on this blog like abortion (which was mentioned in passing), genetic engineering, stem cell research, net neutrality....

It would've been better to have produced separate, detailed white papers on things like defence and foreign affairs and released them gradually over the course of the campaign. It felt too much like a policy push from the SNP instead of a neutral look at the sort of (largely limitless) options independence would've brought Scotland. So although the Unionist campaign was somewhat disunited, you can say something similar of the Nationalists. I doubt Greens, republicans and socialists would've liked what was outlined in Scotland's Future.

By the end, despite the widespread public enthusiasm, the yes campaign became a competition about how many Facebook likes and retweets you can get over the quality of the argument. The big rallies and publicity stunts were mostly an mirage - it's a mistake Plaid Cymru think they'll be able to repeat in Wales. It might look good on camera, but there's not much there. You can fill a public square with hundreds, even thousands, of supporters but elections are decided by the hundreds of thousands who aren't there.

It all probably relied too much on emotional/romantic "heart" arguments and gradually neglected "head" arguments in order to whip people into a frenzy.

What happens next?

"Politicians make promise on the hoof."
Let's see where this is heading....
(Pic : BBC)

That's unclear, and in a twisted way there's perhaps more long-term uncertainty now than there would've been had Scotland voted yes. If they'd voted yes, they would've become independent circa 2016 and all the issues like currency, debt and EU membership would've been ironed out one way or another.

This isn't a crippling blow to Scottish nationalism and, if anything, if Westminster now fails to deliver on any of promises as a result of a no vote – or if there's some sort of pathetic "backlash" from the rest of the Union - all those who hesitantly voted no will vote yes in any future referendum. The momentum will still be with yes long after this vote, it'll just climb slower. With every single setback at Westminster, I fully expect  #ShouldveVotedYes to become a popular hashtag on the Scottish Twittersphere.

Now, instead of the certainty of independence, we have the uncertainty of constitutional fudging done on the back of a fag packet.

Although the UK will survive for the medium-term, Scotland's position remains awkward as it's still unclear what constitutional reforms will take place. It'll be odd if Scots have rejected the chance to control and shape things like foreign affairs, welfare and defence for the sake of controlling the "Work Programme" and rail franchises.

Westminster needs to play this carefully, and the Scottish Government still have a strong hand to get "Devo Max" out of them, which could settle the constitutional argument for several decades. Scotland could get as close to independence as possible without actually threatening the Union, like some sort of confederal arrangement.

The status quo would only have been a serious option if this had been a very strong no (70-80%) – like the 1979 devolution referendum in Wales. There's absolutely no way Westminster can roll back devolution either without prompting a serious constitutional crisis that – judging by the polarisation seen in Scotland – could turn nasty.

I suppose I've been slightly prophetic. Back in 2011, I compared the Scottish situation to Quebec, and that's precisely where were are now. The no vote wasn't a strong endorsement of the Union – but it was enough to win the day; while the yes vote was sizable enough to mean this is unlikely to be the end of the matter, despite failing.

Will we have "neverendums" in Scotland until they're ready to say yes? Alex Salmond has ruled it out for a least 18 years (not that he'll be SNP leader that long). So again, just as I said a few weeks ago – we'll probably return to this in the 2020s or 2030s. Sometimes I don't like being right.

I imagine David Cameron is a very, very relieved man. If this had been a yes vote it would've been very hard to see him continuing as Prime Minister. That doesn't let him, or the other two major Westminster parties, off the hook. Labour's campaigning was an absolute shower, while the Lib Dems were nowhere to be seen. If they don't realise how close they came to blowing it, and come to see this as a vote of confidence and not a last ditch call for radical constitutional reform, some very senior politicians need to take a long hard look at themselves. Judging by their initial reaction to the result, it looks like they realise the desire for concrete change.

To even get into a position to ask such a question is damaging to the Union. Of the officially-recognised independence referendums during the 19th and 20th centuries, most have eventually led to independence.

This will have caused no real problems for the SNP (or other parties that supported independence like the Greens and Scottish Socialists). This will go down as a glorious defeat, and they're nailed-on for a third term in government - even if they take a hit in 2016.

It's unclear what the future holds for Alex Salmond. He can, if he wants to, bow out with his head held high, or he can carry on the momentum into 2016 and beyond. With Alex Salmond stepping down, Nicola Sturgeon is a leader in waiting but will have to be careful not to oversee a split between centrist-liberal and more socialist wings of the SNP. If Scotland had voted yes I would've expected the SNP to have disbanded anyway into two or three separate parties, or bolster what remained of Labour, Greens, Conservatives etc.

On what happens to the rest of us, I'm convinced there won't be a grand pan-UK "Constitutional Convention". It looks as though any changes are going to be fast-tracked before the Westminster elections next year and that's simply not enough time to get decent proposals on the table. There's no doubt in my mind that Wales will get further powers down the line – especially over criminal justice – but it'll be a negotiation between Cardiff and London and will be unrelated to the independence referendum. Silk (Part I, Part II) is all we're getting.

Carwyn can say what he likes but it's not as if he's been listened to so far - something I said almost a year ago to the day. I might not be a journalist or have the inside track into what's happening in Cardiff Bay, but most of the time I do know what I'm talking about. I'm getting fed up of saying things months, sometimes years, in advance that "our betters" only cotton on to at the last minute. AMs - in particular Welsh Government ministers - appear to have a very inflated sense of their impact and influence.

It'll be interesting to see what will happen in Catalonia next, who will probably have received a psychological boost due to the close(ish) result (or a hit due to the no vote), and are moving towards their own independence referendum despite constitutional interference from Madrid.

You could compare this campaign to a very bruising Rocky-style 30-round heavyweight contest. In the end, both sides are completely battered, knackered and have sustained heavy injuries. The underdog Nationalist boxer might well have collapsed at the end from a few heavy punches, but the Unionist boxer – although standing – is walking off dribbling and completely unrecognisable.

The National Assembly is due to debate Scotland's decision next week, and of course I'll cover what's said.

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A oes heddwch?

The Temple of Peace is more likely to be used for exams or to film Doctor Who nowadays,
but will its original vision find new life one day in a Wales Peace Institute?
(Pic : BBC Wales)

On Wednesday, the National Assembly debated a Petitions Committee report into a proposed Welsh Peace Institute. The report itself (pdf) was published in October 2013.

The original petition calling for a Wales Peace Institute received over 1,500 signatures, though it took four years from receipt of the petition to get this far. In the process, the Committee received more than 50 representations to their consultation, which they claim is the most responses they've ever had.

The Committee made only one recommendation - that the Welsh Government work to bring interested parties together to flesh out what such an institute would do and how it would work.

The Report's Findings

The report cites three other examples of "Peace Institutes" across Europe, the
Flemish one being all the more poignant considering the anniversary this year.
(Pic : centenarynews.com)

The petitioners provided some outline of what they wanted an institute to do, backed by Plaid Cymru MEP, Jill Evans.

They envisage :

• A "relationship" with the National Assembly in order to judge how their actions impact human rights, in addition to Welsh and UK defence and foreign policy. They want the institute to become a "non- partisan authority on peace issues".
• A single reference point for information and education about peace, conflict resolution, disarmament etc. and developing links with other peace institutes and international agencies (like the UN) which deal with human rights.
• Freedom to seek independent funding by commissioning research, as well as becoming a consultee with respect to the National Curriculum.

The petitioners explicitly say they're not expecting state funding, they simply want a look into how practical it would be to set the institute up. The Committee say that without that extra detail they found it hard to come to a conclusion, and could've contributed to the length of time it took to get through the Assembly.

The Welsh Government's initial response focused on the academic side of things, like university research and collaboration. The petitioners saw the proposed institute's role being much broader, taking research into "peace studies" out into the public sphere.
The report cites three examples of other "Peace Institutes".

• Flemish Peace Institute – Established in 2004 after powers relating to licensing the arms trade were devolved to the Flemish Parliament (could you imagine Westminster doing that!?). The remit was broad and covered international relations, polemology ("war studies") and peace in society. The Institute is fully financed by the Flemish Government and can also seek external funding.
• International Catalan Institute for Peace – Established via a Catalan law in 2007 following a public campaign. Its remit broadly covers conflict resolution and research relating to it. It's fully funded by the Catalan Government and has to publish an annual report to the Catalan Parliament. It's governing body includes Catalan MPs.
• Peace Research Institute Frankfurt – Established by the Landesrat (State Parliament) of Hesse in 1970, its funding comes partly from both the Hesse State Government and the German Federal Government. It undertakes research and practical work, and is the "leading adviser in Germany" to the German Government on some aspects of policy.

The Committee say there are three main things they can take from the other Peace Institutes.

• Political Independence – Many of the institutes stressed the importance of being arms length of their respective governments, but despite this there have been suspicions that such organisations are "leftist" (in my opinion, those suspicions are sometimes valid). This was overcome by trying to include more conservative politicians in discussions and undertaking academically rigorous research.
• Funding – All three stress that structural funding is more important receiving funding on a project-by-project basis. The Frankfurt institute even suggests funding could be based on an endowment (donations by individuals to a trust, with or without restrictions on how it could be used) in order to ensure independence. The Committee say it would be "difficult to assess how much a Welsh Peace Institute would cost", and that the Welsh Government would be reluctant to foot the bill.
• Regional Parliaments – All three were established by regional parliaments, which aren't responsible for defence or foreign affairs. So there shouldn't be any reason Wales couldn't establish such an institute either, in principle, as the same applies here.

Many of the consultation responses came from individuals and religious groups - Welsh non-conformist churches have a history of pacifism, for example. Many organisations believe a peace institute would be "desirable" – including the Welsh Refugee Council, their reason being that it would provide an independent voice for refugees and asylum seekers.

However, Higher Education Wales rejected the idea, saying many universities already have research programmes into peace that were "held in high regard".

The Committee concluded that although they can't map out what such an institute would look like, they "support it in principle", believing it could help "add value to the Assembly's work and wider civic society".

The Assembly Debate

The Welsh Government rejected the idea of a Welsh Peace Institute, but
broadly supports the concept of peace within public policy.
(Pic : Flakt Woods)

A large chunk of the Assembly debate itself (available here) went over many of the points raised in the report, so there's no need to go into much detail.

Christine Chapman AM (Lab, Cynon Valley) said that while peace, human rights and things like foreign policy aren't devolved, there's room for the Assembly and Welsh Government to get involved in this. She said that there's no need to "replicate exactly what they (other peace institutes) do", though there's no reason peace couldn't become a "cross-cutting theme" in Welsh public policy.

There was lots of support, including from (as you might expect) Bethan Jenkins AM (Plaid, South Wales West), Julie Morgan AM (Lab, Cardiff North) and Simon Thomas AM (Plaid, Mid & West Wales) – the latter needing some help in the cause of peace at the moment.

Support also came from unexpected quarters – Janet Finch-Saunders AM (Con, Aberconwy) for instance, who recalled hopes that the horrors of the First World War would create a culture of peace that, as we now know with the benefit of hindsight, didn't materialise.

There were dissenting voices. Nick Ramsey AM (Con, Monmouth) said he didn't support a Welsh Peace Institute, though – slightly strangely – the rest of his speech set out a backhanded case for one, and that "any discussion about peace is a good one to have in the long term".

Minister for Communities & Tackling Poverty, Jeff Cuthbert (Lab, Caerphilly), responded on behalf of the Welsh Government by saying any further work should be "undertaken by an independent body", effectively rejecting the Committee's recommendation, albeit not rejecting the idea of peace playing a role within public policy completely.

This echoes the Welsh Government's official response (pdf). The First Minister said despite the fact he "wholeheartedly supports the promotion of peace on our society", there was too little detail as to how such an institute would work, noting that the petitioners hadn't agreed on what an institute would do, so the case for it was "inconclusive".

He also believes any further work needs to be done by the petitioners themselves – not on behalf of the Welsh Government - as any formal Welsh Government involvement could give the petitioners false hope that an institute could be established.

Peace in our time?

There's a long tradition of pacifism amongst radical and religious groups in
Wales. But this idea looks as though it's - barring more detailed
proposals - going to rest for now.
(Pic : indymedia.org)

It's not over, but it could be a while before anything gets done. I don't want to stick the boot in, but this account from Caerau Greens perhaps indicates the size of task ahead, as there appears to have been some sort of disagreement between the alliance of peace groups which backed the petition in the first place.

Any further work will probably have to be undertaken by the Assembly's Cross-Party Group on Human Rights in order for a serious proposal to be put forward.

Arguments that resort to violence as the first option are almost always on shaky ground, and far from being a sign of weakness, seeking peaceful resolutions to difficult problems is often the harder option and possibly, in some cases, a sign of strength.

However, the very concept of a world free of violence is depressingly out of reach.Violence is something that happens, is a natural behaviour and is sometimes necessary.

• See also : Defending Wales Parts 1-10

I'd support an independent Wales being a "neutral state" (more here) – which is very different from a pacifist state - oppose NATO membership (for practical rather than ideological reasons), and believe Wales should only get involved in various adventures abroad either in self-defence, as part of a mutual defence agreement, or under an internationally-agreed mandate - after all attempts at negotiation have failed.

Any future Welsh troops should be taught "soft" military skills - like dealing with natural disasters, disarmament, negotiation skills and humanitarian issues - as much as "hard" military skills.

If Wales is going to make a serious go at this, it should be linked to a university/universities and produce credible academic research – not just on international relations, but things closer to home like domestic abuse, alcohol-related violence, extremism, cults, football hooliganism, Carmarthenshire Council, organised crime and bullying.

That could be very useful for the Welsh Government, AMs, social services, schools and the police. Some Welsh universities are already doing that – Aberystwyth for the international side of things, Cardiff for things like alcohol-related violence, and Prifysgol Cneifiwr for Carmarthenshire.

A Peace Institute could bring all that together under one umbrella and link it to wider civil society instead of it being stuck in an academic bubble. I think that's what the petitioners were aiming for.

I have to agree with the First Minister though that this needs a clear "vision" to be credible, instead of becoming a "club" for committed activist groups who are perhaps just as motivated by politics and individual causes as promoting peace generally.

An interesting and novel idea, but the case perhaps just wasn't strong enough.

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Wales : An Economic Profile V - Wales in the global economy

What does the economy look like within Wales? What
is Wales' role in the UK, European and global economies?
(Pic : Wikipedia)

• Part I - Primary Industries & Energy
• Part II - Manufacturing & Technology
• Part III - Services
• Part IV - Public Sector & Universities

The economic geography of Wales

It's worth taking a look at the overall spread of the economy within Wales, and how it's changed over the years.

Firstly, in terms of average gross (before deductions like taxes) weekly earnings. Only eight local authorities - clustered in three areas - had an average weekly wage above the Welsh average in 2011 (£519.40) and that shows on the map below.

The three clusters are : the M4 corridor, north east Wales and Pembrokeshire. Pembrokeshire is the 2^nd highest on the list, and there are obvious reasons why, one being well paid contractor work at the various petrochemical terminals.

Gross weekly earnings by Welsh local authority
(Click to enlarge)

The M4 corridor is another obvious one, though it's surprising that Monmouthshire doesn't seem to get much out of it. Being "close to England" doesn't appear to be that much of a factor – look at Powys, Monmouthshire and Wrexham.

This might suggest that the south Wales economy is more self-contained that commonly believed. Other local authorities have taken advantage of vacant, flat land next to motorway junctions down the years for industry – especially in authorities like Bridgend and Neath Port Talbot. Cardiff's place is obvious, and the Vale of Glamorgan likely acts as an upmarket/attractive overspill for people commuting to Cardiff.

Flintshire is home to many large employers, so its high wages are not a surprise. People from Denbighshire are probably likely to commute there to work, and it's also where Ysbyty Glan Clwyd is. What stands out is that Wrexham doesn't appear to have had any knock-on from this - despite having one of the largest industrial estates in Wales. Average weekly earnings in Wrexham are, in fact, lower than Merthyr Tydfil and Rhondda Cynon Taf (which are both below average themselves, but not spectacularly so).

Pembrokeshire aside, almost all of the rural parts of Wales have average wages below the Welsh, and even south Wales valley, averages. Carmarthenshire was the highest-placed "rural" authority at £495.10, but the likes of Anglesey, Powys and Ceredigion were all below £470. One suggestion might be that higher population densities, equals more demand for services and more attractive locations for businesses – an agglomeration effect.

Where are those businesses? I decided to map the density of the Top 100 largest companies in Wales (from the 2011 Top 300) and the 2011 Fast Growth 50. This is imperfect, as some companies are listed in both and have been counted twice.

Density of largest and fastest
growing companies in Wales
(Click to enlarge)

In this case, the Cardiff-Newport area and Deeside-Wrexham appear to be the main business hubs. But perhaps surprisingly, the south Wales valleys – in particular Rhondda Cynon Taf, Caerphilly and Bridgend – do rather well. Authorities like Swansea did much better on the Fast Growth list than the Top 100 list.

One other thing stood out. More than half of the top 100 and fastest growing companies (92) were based in just six local authorities : Cardiff (32), Flintshire (15), Newport (12), Caerphilly (11), Bridgend (10) and Swansea (10).

You would think this suggests that urban areas outperform rural areas, but that isn't necessarily the case. Gwynedd (7), Powys (6) and Vale of Glamorgan (5) do quite well. The only two local authorities without listings were Ceredigion and Conwy, while urban authorities like Blaenau Gwent and Merthyr Tydfil (both 1) did poorly too.

Wages do seem to be higher in areas where there's a greater density of large businesses. This radiates out into neighbouring authorities – for example, the Vale of Glamorgan has some of the highest wages, but not a spectacular business density, perhaps reliant on Cardiff commuters living there.

Going back to Part IV for a moment, there doesn't seem to be any link/pattern between levels of public sector employment, average wages or "lack of businesses" – it appears to be quite random.

Pembrokeshire only had 2 companies on the business list, pays some of Wales's highest wages, but had one of the lowest public sector employment rates. Cardiff, Bridgend, Swansea and Rhondda Cynon Taf had some of the highest public sector employment rates and businesses densities, but varied in average wages.
Any suggestion that the public sector might affect the private sector's competitiveness in Wales doesn't appear to have any legs.

Then you look at how Welsh production has changed over the last decade or so.

GVA compared to the UK by NUTS3 region 1997-2009
(Click to enlarge)

Only three NUTS3 areas in Wales experienced an increase in GVA relative to the UK between 1997 and 2009 : Cardiff & Vale of Glamorgan (+2.9%), Anglesey (+7.6%) and Gwynedd (a rather modest +0.2%). Only Cardiff & Vale of Glamorgan had a GVA above the UK average average in 2009.

Some NUTS3 areas experienced wild changes over the period. Bridgend & Neath Port Talbot was 82.6% (UK=100) in 1997, this fell to 67.6% (-15%) in 2003, then recovered to 71.3% in 2009 (-11.3% on 1997). Swansea was the opposite - falling, then rising, then falling.

The most dramatic relative decline though, has been in Flintshire and Wrexham, where GVA relative to the UK has fallen from 99% in 1997 to 80.3% in 2009 (-18.7%). Maybe this explains the Wrexham anomaly in wages from earlier.

Wales within the UK

As highlighted above, there is a widening gap in productivity between Wales and the rest of the UK – this was the crux of Plaid Cymru's Offa's Gap report earlier this year.

Relative GVA of the UK's constituent nations 1997-2010
(Click to enlarge)

Welsh GVA per capita has fallen from 78% of the UK average in 1997 to hovering around 74% in 2010. However, this is a much slower slide than in the early 1990s. Northern Ireland also experienced a slightly sharper drop (from 81% to 76%) over this period. England remained relatively stable at around 102%, while Scotland's GVA per capita rose from 96% in 1997 to 99% in 2010 – perhaps boosted by North Sea oil. Most of the UK's GVA growth has been driven by England - in particular Greater London and SE England.

The depressing fact is that GVA per capita in Wales actually grew over this period, from £9,774 in 1997 to £15,145 in 2010. Despite this, Wales is rooted at the bottom of the 12 nations and regions of the UK.

Some people will say all Wales has to do to close the gap is match pace with whatever the rest of the UK is doing. If Wales did so, you would expect us to be much better off, wouldn't you?

Welsh GVA is economic growth matched pace with the UK 1996-2010
(Click to enlarge)

Well, if Wales had matched the UK's average growth rate year-on-year (including the recent downturn) since 1996, Welsh GVA per capita would only be £1,253 higher (+8.3%) than it is currently. Better, but not dramatically so.

Presuming all the other nations and regions remained unchanged, Wales would only move up two places in the "league table" to 10^th – above NE England and Northern Ireland and just behind Yorkshire & Humber. Welsh GVA per capita would've stayed static at around 80-81% of the UK average throughout the period.

So even in more favourable economic circumstances within the UK, Wales might never be able to realistically breach that 80-81% "ceiling".

It was once Rhodri Morgan's stated aim to get Welsh GVA to 90% of the UK average. A similar pledge was in the Welsh Conservative manifesto in 2011. So, Rhodri would've missed the target even if Wales matched pace with the rest of the UK. It's lucky we in Wales don't punish politicians for making promises they couldn't possibly keep, isn't it?

Wales is, first of all, starting off from a much lower base - the "precipitous decline" in the 1980s-1990s saw to that. For Wales to close the gap with the rest of the UK, the Welsh economy would not only have to match pace with UK growth, but significantly exceed it. Wales would have to try and close the gap without possessing a large financial service sector, having a sparse population and with a one-size-fits all monetary, tax and fiscal policy.

As I hope these pieces have demonstrated, there's not much fundamentally wrong with the Welsh private sector, but there are gaps that need to be filled. All those things Wales needs are currently based in and around London : great international links, a large financial service sector, excellent and extensive public transport and agglomeration.

To close Offa's Gap, Wales would need to become the fastest growing nation/region in the UK - sustained for at least 30 years. Your guess as to how Wales, in its current state, would be able to do that is as good as mine. Maybe the Welsh economy needs a big game-changing shock to the system. Something really dramatic to kick start it.

Wales in three scenarios : current, matching pace
with the UK and the "Flotilla Effect"
(Click to enlarge)

The Flotilla Effect report suggested, on a population-based model, that if Wales became independent around the same time as the fall of the Berlin Wall, and followed the "right" economic policies:

• Welsh economic growth would have been between 2.2% and 2.5% per year (compared to the actual 0.9%)
• Wales would be 39% "wealthier" now than it is currently.

If this were true, and presuming all the other nations and regions stayed the same, then Welsh GVA would be (approximately) £21,052 in 2010 – the 3^rd highest nation/region compared to the UK, and above the UK average, only behind London and SE England. If Scotland were independent, then maybe they would be above Wales, perhaps the overall English figures will have been dragged upwards too. More on that further down.

Before you read on, I think the Flotilla Effect figures are an over-estimate. I'm convinced GVA would probably be higher because Wales would have needed to prioritise economic growth. My guess is it would probably be halfway between where we are now and +39%, but I'm not an economist. It's unclear what impact independence would have had on things like the public service sector, the public sector/public spending, exports, employment law etc.

For now though, the Flotilla Effect is the best thing we have to base an estimate on. I fear it's going to become a Welsh equivalent of the McCrone Report, except written with the benefit of hindsight.

Wales within Europe

Rough estimate of Wales' place within the European Union in 2011
Based on the "three scenarios"
(Click to enlarge)

Based on 2011 figures (so not 100% accurate, as my GVA figures are from 2010), Wales would be, alone, the 19^th wealthiest EU nation, with a GVA per capita at $24,534 (based on mid-2011 dollar conversion rates). Wales would also be the second poorest nation in what we would call "Western Europe" or "Old Europe", snuggled between Malta and Portugal. It's around 78% of EU-27 average GVA per capita ($31,607).

This isn't an awful place to be in compared to some of the EU nations ranked below us. Using football terminology, you could say Wales is in the "lower half of midtable."

"Poor" within the EU is a relative term. The only parts of Europe - including non-EU nations - you could genuinely describe as poor are places like Albania and Moldova.Wales also significantly outperforms the vast bulk of Eastern Europe, including EU members, on a nation-to-nation basis.

Notice that bit of orange where West Wales is (and Cornwall)?
But there's also a bit of green too - which is good.
(Pic : Eurostat)

However, on a regional basis, West Wales and the Valleys does compare unfavourably to some parts of the former Warsaw Pact (as you can see above), while East Wales compares relatively favourably to the European mainstream.

Based on Wales matching pace with UK, Wales would only move up two places to 17^th - above Greece and just below the Czech Republic. Wales' GVA per capita of $26,565 would also be boosted to 84% of the EU average. Wales is still in that "midtable" position, but closing the gap with "twin countries" (nations that are similar to Wales in many respects) like Slovenia.

Now the Flotilla Effect figures. Wales would be 11^th place, with a GVA per capita of $34,101 (108% of the EU-27 average). Wales would be pushing very close to the productive mainstream of the EU : Finland, Germany, Denmark, as well as above Spain and Italy. All of this is conjecture, as I noted above.

It's unclear what effect independence, or matching pace with the rest of the UK, would have on the intra-Wales regional differences. Would West Wales & Valleys be wealthier? Would all the economic growth have come from East Wales? You can't really tell.

It's worth noting that presumably, were Wales independent, the UK would cease to exist. Thus, England, Scotland, Northern Ireland (and at a stretch Cornwall and the Crown Dependencies) would be in the list in their own right. You also have to take into account other stateless nations like Catalonia, the Basque Country, Wallonia, Faroe Islands and Flanders.

Rough estimate of Wales' place amongst the "stateless nations" of
Western Europe
(Click to enlarge)

Where would Wales place amongst these? The above is an estimate based on various sources and timescales, so it's only a rough guess. I'm also including the Brussels city region as they are neither Flanders or Wallonia and have been mooted as some sort of EU "federal district" should Belgium split.

Catalonia and the Basque Country perform particularly well alongside England and Scotland. Wales, Brittany, Cornwall and Northern Ireland less so. Greenland isn't in the EU of course, but remains part of the Kingdom of Denmark (along with the Faroe Islands). Despite only having a population of around 60,000, the Greenlandic economy has been boosted by the discovery of large mineral deposits, and possibly in future extractable supplies of natural gas and oil. There are obvious concerns about that.

The likelihood is that these nations would be ranked above Wales, pushing Wales down the rankings a few places and changing the EU averages. I've treated this, in part, as though the UK disappeared into a puff of smoke - frankly because I couldn't be bothered to work the figures out and I'm not paid to do this. You get what you (don't) pay for. I think you can forgive me for that - and I am noting it.

Wales and the World

The global economy is becoming ever more interdependent, and Wales is as much a part of it as any other nation. It's worth looking at where Wales stands amongst the 183 nation-states listed in the International Monetary Fund list of nations by per capita GDP for 2010-11.

Rough estimate of Wales' rankings globally
(Click to emlarge)

Currently, Wales would be ranked 39^th , based on the same figures given for Europe above, nestled between the Seychelles and Saudi Arabia. The UK is currently 22^nd. This means Wales is pushing into the top 20% of all nations.

Based on the matching UK pace figures, Wales would be bumped up to 35^th place, between the Czech Republic and Oman. This, again, is around the top 20% mark for all the nations.

When it comes to the Flotilla Effect figures, Wales would be 25^th place, between Japan and South Korea, and ahead of nations like Israel and The Bahamas. Wales would have been within the top 15% of nations.

Whichever way you look at it, Wales is undoubtedly a "first world economy" - even in its current state. When people talk about poverty in Wales, it's always in a relative sense. For example, someone used to shopping at Waitrose having to shop at Asda would probably consider themselves "impoverished" somewhat.

However, the vast bulk of the world don't even have the luxury of a Lidl's. When we talk about "poverty" in Wales, or Wales being "poor", we need to remember that – for their sake.

When it comes to population, how does Wales stand compared to nations the same size as us (~3million)?

Wales' global rankings to similar sized nations in terms of population
(Click to enlarge)

Oil-rich Oman is the only circa-3million nation that's wealthier than Wales. If Wales had matched pace with the rest of the UK even modestly, Wales would be #1, with an even wider gap in respect of the Flotilla Effect. So you could say that Wales is one of the richest nations in the world with a population of around 3million.

Where do Welsh exports go?

There have been concerns raised that many small and medium sized Welsh businesses aren't taking full advantage of overseas opportunities. It's quite plausible that this has been caused by the demise of the WDA and International Business Wales.

The make up of Welsh goods exports in 2011
(Click to enlarge)

Wales' exported goods worth around £13.4billion in 2011. At the same time, the UK's total goods exports were worth £293.6billion. So Welsh goods exports make up approximately 4.6% of all UK goods exports – roughly where you would expect Wales to be, based on population share.

Where did Welsh goods go in that year though? It's difficult to pinpoint specific nations, the only statistics I could find are on a global regional/continental basis, but there are some interesting findings.

Welsh goods exports by destination (and value)
(Click to enlarge)

Although the European Union is the single largest trading partner for both the UK and Wales, Wales is less reliant on exports to the EU than the UK as a whole (42.4% of exports vs 53.8% for the UK).
Wales' other major export destinations are Oceania & Asia (12.1% of exports), North America (29.4%) and Middle East and Africa (8.8%).

In addition to the EU, the UK as a whole exports more, proportionally, than Wales to : Oceania & Asia (14% of UK exports), non-EU Western Europe, for example Norway, (4.5% compared to Wales' 2.5%) and non-EU Eastern Europe (2.5% to Wales' 0.9%).

Whole UK goods exports by destination. Notice the
differences compared to Wales?
(Click to enlarge)

How do Welsh figures look on a UK scale?

Welsh good exports to North America for instance, amount to 8.8% of total UK exports there – well above our population share. This is similar for the Middle East and North Africa, probably comings and goings via Milford Haven (7.7%).

However, Welsh exports to the EU (3.6%), non-EU Western Europe (2.6%), non-EU Eastern Europe (1.6%) and Sub-Saharan Africa (3.6%) were well below our population share.

Exports to Asia & Oceania and Latin America & the Caribbean are roughly where you would expect them to be (4% and 5% respectively).

Trade in goods - differences between Wales and the UK
(Click to enlarge)

As I've mentioned several times, Wales has a trade surplus in goods, and has done for several years. In fact, the Welsh trade surplus in goods has risen from £2.23billion in 2005, to £5.41billion in 2011.

The UK, on the other hand, has a deficit in trade in goods, rising from a £60.5billion deficit in 2005, to  £143.5billion in 2011. (You can find all the figures on the HM Revenue and Customs website, here's just a selection)

It's very hard to pin down trade in services figures, but it's believed that if these were included, Wales would be in deficit, while the UK would be closer to equilibrium (thanks primarily to the City of London's financial service sector, I'd imagine). It's also hard to tell how much is exported/imported to and from the respective Home Nations, and what effect it would have on Welsh export figures.

It doesn't matter in the grand scheme of things whether a nation is a net-exporter or a net-importer due to global interdependence. Trade deficits are neither a good, nor bad thing really.

These things matter because economic policy should be shaped to inherent strengths. I'm not convinced the UK's import-based economy based on services (though the UK Coalition government have, nominally at least, focused on exporters/manufacturing) is to the benefit of Wales' export-based economy based around manufacturing and energy.

Exports can help determine currency strength, credit ratings as well as who your trading partners are and why you do business with them. It can even boost things like international profiles and university co-operation, while successful exporters could well beget other successful exporters. These are very important issues that should, ideally, be shaped to a nation's individual profile.

For now, we're going to have to work within the current framework, which boils down to : monetary policy designed to maximise tax incomes from the City of London financial service sector (without spooking them), making sure the London remains Europe's predominant financial servicecentre, bribing businesses to set up in undesirable locations and keeping our fingers crossed that we (Wales) might produce another Admiral one day (Part III).

The sixth and final part in this series, will offer my own conclusions on what the strengths, weaknesses, opportunities and threats are with regard the Welsh economy.

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What do we do with Cardiff Airport?

Hat tip to Andrew Davies AM and Click on Wales.

Cardiff Airport is in a hell of a state. Passenger numbers have plummeted over the years from a peak of around 2.1million in 2007 to threatening to fall below the 1 million number this year – the lowest passenger figures for the best part of 15 years. That's a catastrophic turn in fortunes for the airport and something that should concern Welsh politicians.

Niches, needs and propensity to fly

We need to take a look at what types of services Cardiff Airport offers compared to its main rival Bristol Airport.

Cardiff Airport's passenger figures tend to see upward trends when the economy is doing well seeing big rises from 1998-2001, 2003 and 2006-2007. This reflects the flight offer - "bucket and spade" charter flights to sunshine destinations in Europe, internal flights within the UK and the odd "hub" flight, in particular services to Amsterdam Schiphol and Paris Charles de Gaulle. It's very seasonal and dependant on consumer spending on holidays. Proper business destination flights seem to be few and far between.

At first glance, Bristol Airport offers largely the same type of flight on the whole, but there are several key differences. Bristol Airport has managed to attract key "low cost carriers" such as Easyjet and Ryanair which fuelled much of the growth in UK air travel the last few years. Many of these low cost services are to major European cities such as Berlin, Madrid and Rome in addition to major cities in eastern Europe. No doubt such links are useful for business and more affluent travellers.

Then there's the airports themselves. Despite ambitions of expansion, Cardiff Airport's terminal is dated compared to the airy and modern Bristol Airport - which is due to be further expanded in the future. Consumers now expect a certain level of service at airports and however well meaning Cardiff Airport's recent improvements are, I doubt they will ever offer the same level of service you can get at Bristol without a radical overhaul.

Then there's propensity to fly. When the last UK Government consulted on the future of air travel, its figures showed that Wales has lower propensity to fly (0.6) compared to the UK average (1.3) and a small catchment area confined to south Wales, with minimal passengers from west Wales and the south west of England. 65% of air passenger traffic "leaked" from Wales to the likes of Bristol, Manchester, Birmingham and the London airports. Only the south west of England and north of England leaked more.

The blame game

There are many targets for blame for Cardiff Airport's decline. Firstly, there's Welsh Government for "not doing enough" or not getting its priorities in order - usually targeting the subsidy for the Anglesey-Cardiff air link, or not backing an improved road link. It's easy to blame them - and in some cases justified - but I've always got the impression they're as frustrated as everyone else.

Then there's the airport's owners Abertis. They are accused of using "sky high" fees to rake passengers and airlines. Fees like landing fees, parking fees and even fees for dropping/picking people up. Cardiff Airport's one-week parking fees for example are amongst the most expensive in the UK. Somehow Cardiff Airport is still profitable, so it's unlikely Abertis will just give it up that easily to another company, cooperative or even the Welsh Government.

The overall management and airlines strategy for the airport has also been brought into question. The failure to attract a major low cost airline has been highlighted as a possible blunder, as attracting Easyjet and Ryanair led to dramatic turnaround in performance at Bristol compared to Cardiff. There was hope that a new Welsh-based low cost carrier, "flyforbeans", would be up and running by now however it looks as though that has been postponed indefinitely for perhaps multiple reasons.

In a bit of good news, Cardiff Airport has managed to attract the Catalan low-cost airline Vueling and a service between Cardiff and Barcelona three times a week. Hopefully this could lead to more destinations in the future and close a gaping hole in Cardiff's offer.

Cardiff Airport's strengths and how to play to them

Firstly Cardiff has a longer runway than Bristol and can comfortable accommodate aircraft like the Boeing 747, which regularly use the British Airways maintenance facility at the airport. If long-haul flights can be enticed to Cardiff, then it would no doubt be a big boost, enabling travellers in Wales and the west of England to fly further without having to use Heathrow. Perhaps there is a case for a "one airport, two-sites" model for a merged Cardiff-Bristol "Severnside" Airport along these lines.

Contrary to popular belief, in my opinion, road access to Cardiff Airport isn't a particular problem and only requires modest improvement. Compared to Bristol, driving to Cardiff Airport is a breeze. The rail link via Rhoose is a welcome USP - albeit not an entirely direct service. It might be useful to have better connections with trains from the west of Wales (requiring junction improvements at Bridgend or service upgrades on the Vale of Glamorgan line). An express bus from the centre of Cardiff has often been thought of as a good idea and I agree. However in Labour's recent National Transport Plan, an express bus has now been pushed back to beyond 2015 which to me is completely inexplicable.

There's also an opportunity for the Welsh Government to throw its backing behind the airport. It's often said their hands are tied by various EU regulations on state support, but that isn't an excuse to not explore alternatives and loopholes. Manchester Airport is co-owned by 10 local authorities via Manchester Airport Group. One of the major loopholes in EU rules on state-aid is that if a government has an interest in an airport, then the rules are relaxed and options for support are opened up.

That could bring Carwyn Jones' hope for an air link to China and the Welsh Conservative manifesto commitment of an air link to North America closer to reality. There is proof that this kind of service is sustainable, as Zoom's service between Cardiff and Vancouver was by all accounts a roaring success until the airline collapsed. I don't doubt that a service to New York could be just as successful.

I think there is too much emphasis on outgoing passengers than incoming passengers. Helvetic Airlines service between Cardiff and Zurich clearly has demand from the Swiss end, but hardly any from the Welsh end, meaning the flight will now stop over at Bristol for the return journey. We might have to accept that Cardiff Airport is probably more likely to be used by incoming tourists than outgoing business travellers and passengers and adapt accordingly – working with local companies and hotels to provide excursions to castles and golf courses direct from the airport for example.

The ghost of Severnside Airport

I hinted above that a "one airport, two sites" model is a possible basis for a Severnside Airport. However was the "real" Severnside ever a goer or just a pipe dream?

The plans for a multi-billion pound airport in the Bristol Channel on an artificial island near Newport were certainly ambitious and promised as many as 13,000 jobs when first mooted. It would've been one hell of an entrance to Wales and indeed the south west of England. However it was claimed that the only way this airport would come about would be with the closure of the existing Cardiff and Bristol airports.

In the current Newport City Council Local Development Plan, the land for the airport island has been put forward as a candidate site. It would be a big statement of intent for the UK Government to drop plans for a "Boris Island" airport in the Thames estuary and instead build it at Severnside together with the phased closure of both Cardiff and Bristol airports, or even retaining Cardiff airport as a freight-only/maintenance-only airport (due to the longer runway).

An airport to the west of Heathrow might relieve some of the current pressure there, and with an appropriate upgrade to the south wales mainline, be readily accessible by public transport, negating the need for an expensive project at Heathrow.

Unfortunately there are several problems that make the Severnside project nothing more than an idealistic fantasy project. Firstly the obvious environmental concerns, secondly Bristol is unlikely to be satisfied losing "their airport" and thirdly the UK government is unlikely to put a single penny towards such a large, risky project in Wales – where the likelihood of a return is less compared to "Boris Island".

That's the trouble with Wales in the UK. Always the bridesmaid....

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