Tuesday 31 July 2012

What price Independence? - Mabon ap Gwynfor

Mabon ap Gwynfor
One of the major arguments against an Independent Wales is that of ‘affordability’, with pro-Union supporters claiming that Wales could not afford independence.

Indeed if you are sad enough to read the comments section of papers like the Mail and Express (like i occasionally find myself doing!) you’ll see that it seems to be a commonly held belief that England subsidises everything in Wales. Dr Eurfyl ap Gwilym countered this argument brilliantly in his never to be forgotten tête-à-tête with Paxman on Newsnight.

However there are many within the Welsh national movement, many good friends of mine, who continue to argue that we cannot contemplate independence until we resolve what is called the ‘funding gap’, that is the gap between our income and expenditure.

Furthermore we are constantly told, by people in my own party as well as others, that Wales has become poorer over the years with our GDP falling

I am very uncomfortable with these arguments. Firstly the funding gap.

Do we seriously believe that Tom Clarke, Sean McDermott, Patrick Pearse, Joseph Plunkett, James Connolly and other leaders of the Easter Rising in Ireland discussed the planning of the Easter Rising then said “Hold on, how do we resolve the funding gap? Let’s wait a generation”, or more relevant maybe what if Vaclav Havel and the student movement in the then Czechoslovakia decided to hold off the velvet revolution for a generation because of the ‘funding gap’?

They didn’t because there was a fundamental principle at play, that of the right to self-determination (Copyright David Cameron vis-à-vis The Malvinas/Falkland Islands).

And in any case, what about the funding gap? It is said to be somewhere in theregion of £6bn in Wales.

Firstly the simple way to resolve any funding gap is to increase income or lessen expenditure…or both. There is no doubt that an Independent Wales’ expenditure would be significantly less than our current proportion of UK expenditure. We wouldn’t have Trident for one thing. It is likely that our military spend would be significantly less overall. We wouldn’t be subsidising London either. Neither would we have to pay back for enormously expensive English PFI projects. Looking at the political make-up of Wales today we can confidently say that Wales wouldn’t have developed a PFI policy – an exorbitant credit card scheme. And what about the UK’s light touch regulation of the financial sector and the public bailout? Would we allow this? But the most important point is that an Independent Wales would develop policies suitable for the Welsh economic climate. This would mean Wales developing tax policies suitable for Wales. Who knows what this would result in! However we can be certain that it would not be any worse than the current economic mess simply because there is NO economic policy for Wales. All this would result in a completely different Welsh economy relative to the state.

It also means that we are setting the bar extraordinarily high for ourselves. If producing a budget surplus is the definition of a free and independent state, then where does that leave The United States of America? Turkey? France? Or even our beloved United Kingdom? All of which are heavily indebted. The UK is the single most indebted state in the world according to consultants Mkinsey. OK, much of this debt also includes personal debts, but who now has to pay back the debts of the banks? Us, of course. The simple truth is that the UK cannot afford to be ‘independent’, yet there is no doubting that it is (unless you’re a member of UKIP).

Wales, like all other countries, would borrow money. Yet we also seem to be hung up about the levels of any proposed borrowing compared to our income and expenditure. But this is not how debt is measured. A state’s debt is measured based on it’s GDP. But we don’t know what the Welsh GDP is. Those figures aren’t available. A £6bn debt as a percentage of Wales’ GDP could be anything – we simply don’t know. But we do know what the Welsh GDP is as a percentage of the UK average.

And this brings me on to my final point. We always seem to measure ourselves against England. We go on about Wales having become poorer because our GDP has fallen. But have we? Seriously?

Pre 1989 Wales GDP bounced around the 85% of the UK average.  However post 1989 we have seen a steady decline, and today we are hovering around the 70% mark. But I would content that while statistically we might have become poorer relative to the UK average in this time, in real terms we have become slightly wealthier. The reason that Wales’ GDP has fallen dramatically in this period is because London has become significantly wealthier. Welsh GDP average as a percentage of the UK happened after what is commonly called the Big Bang – the de-regulation of the city and the creation of the Masters of the Universe, which has seen the City Of London sucking in wealth not only from the rest of the UK but also from across the world.

If you take London out of the equation then it is more than likely that Wales’ GDP comparative to the rest of the UK would probably continue to bounce around the 85% mark if not higher – again we simply don’t know.

The effect of this however is to play Wales down, and to feed into the UK unionist narrative that Wales is lacking in entrepreneurial spirit and couldn’t go it alone.

If we keep comparing ourselves with England (UK averages) then we will never raise our confidence and start convincing our people that Wales could become a successful independent nation state.

We need to start gathering accurate Welsh data.

Finally, regardless of Wales’ natural wealth which no one has properly valued (unlike, say, Scottish gas), our single most valuable resource is our people (as was argued by Leopold Kohr many decades ago) and no one can put price on the value of the people of Wales pulling together to build Wales up.


2 comments:

Jac o' the North said...

There is a mindset at work here which makes any talk of a 'funding gap' illogical. Because people like Holtham talk of an 'independent Wales' without being able to conceptualise it, and refusing to understand - or concede - that an independent Wales would be run very differently.

First, let's consider all those Welsh people, maybe the majority in employment, whose company's head office is in England and, therefore, have their taxes counted as 'English' contributions. This goes a long way to explaining the 'funding gap'.

Then, an independent Wales would have control over all assets and resources on or beneath the national territory. Without excessive charging, water, electricity and other cross-border supplies could help eradicate the 'funding gap'.

There are a host of other sources of income denied us today that would come with independence. The Crown Estates would become the property of the Welsh State. Tankers docking at Milford Haven would pay their fees to the Welsh government. Fuel duty, road tax, VAT, stamp duty and a host of other income streams would be diverted to the Welsh State.

An independent Wales would also be able to introduce new sources of income such as a tourist tax. Tourism brings more problems than benefits for the Welsh population, and is run almost exclusively by non-Welsh; so make it pay money into the Welsh exchequer that could be used to benefit us Welsh.

This debate cannot be left to those for whom an 'independent Wales' is just Wales as it is today, but without the 'handouts'.

llan said...

Briliant article Mabon, sums it u perfectly!