Progress has come to a standstill. Since the turn of the millennium, Welsh child poverty rates have stagnated at around 30%, relative levels of GDP per person have failed to rise far above 75% of the UK average, and relative levels of disposable income have plummeted. For the benefit of the nation, changes need to come. But what exactly could - and should - be done?
A report by the Independent Commission on the Constitutional Reform of Wales set out three potential fundamental reforms to the relationship between Wales, the United Kingdom, and the rest of the world. These range from a more consolidated form of devolution, to a federal state system, to full-blown independence. None of the options are without pitfalls, and any choice will doubtlessly spark wider debates on political and cultural identity, allegiances and trajectories. But for the sake of a brighter economic future, are any of these paths worth taking?
The most conservative approach is to increase the strength of the systems already in place. Devolution was first granted to Wales by the Government of Wales Act 1998, and since then, the country has gradually been rewarded greater autonomy - at least on paper. The Government of Wales Act 2006 allowed Y Senedd, the Welsh National Parliament, to create primary legislation on domestic affairs, placing its legal governing power on par with Westminster. Finally, the Sewel Convention, published as part of the Wales Act 2017, was a non-legally binding, although mutually agreed, clause. It stated that the UK Government would not try to legislate on any areas usually reserved for devolved powers and that it would ‘not normally’ pass any motions which affected them without their consent.
Despite this supposed agreement, Westminster has repeatedly interfered in areas understood to be governable by the Welsh. This is especially true in the post-Brexit era. The Internal Markets Act 2020 is a large step backwards from the promises of the GOW Acts. It aimed to deal with trade and finance management after leaving the EU but directly contravened the Agriculture (Wales) Act by removing the country’s ability to regulate food imports. Now, if an item meets the general British standards, it is illegal to forbid its usage or sale anywhere in the UK. The Welsh Government argued that this was a ‘race to the bottom’ in terms of quality and safety. Given that several highly hazardous pesticides banned by EU convention are now allowed to be used within the UK, it comes as no surprise that there are concerns about agricultural safety. The fact that the Bill was even passed shows how little Westminster is concerned with the notion of power-sharing, as both Wales and Scotland issued a Legislative Consent Memorandum withholding their consent from its publication.
More widely, the Act allows UK ministers to “help” the devolved nations by starting growth projects without their consent. The most notorious example in Wales was a relief road for the M4, pushed forward by former Prime Minister Boris Johnson despite its previous rejection by former First Minister Mark Drakeford on cost and environmental grounds. Johnson failed to consider factors like planning permission and Welsh Government cooperation in the road’s construction. The project was doomed to fail.
I am not trying to argue that the Welsh side is always right with regard to individual policies, nor are they blameless for their failures - internal disagreements plagued the M4 road project before Johnson stepped in. However, these examples demonstrate the British government’s condescending attitudes towards the Welsh and their general disregard for current devolution legislation. There are other instances in which further devolution could solve some of Wales’ key issues. The creation of several nationally-controlled taxes would be an opportunity to fully capitalise on public revenue in a nation whose tax income profile differs substantially from the rest of the UK. However, Westminster clearly doesn’t want to hold up their side of the deal, and Wales will struggle to improve if it remains in conflict with an overbearing and patronising parliament.
A federal United Kingdom might be better as it would retain the core values of autonomy and self-governance that devolution is supposed to provide while protecting them far more robustly. It would be simple to implement gradually as there is already a call to introduce a devolved justice policy in Wales (similar to that of Scotland) and to make the Sewel Convention legally binding.
However, true federalism requires the decentralisation of power, something that could not be achieved as long as England remains one cohesive structure. Movements centred around self-determination within England are still fringe, other than the Mebyon Kernow for Cornwall. While other bodies like the Northern Independence Party are aiming for the same result in the midst of similar regional inequality, they are very much in their infancy and have no guarantee of wider appeal.
Both federalism and complete independence also raise economic concerns. Currently, Wales is given a lump sum of money each year from the UK Government, which it spends in various ways. Around 75% goes to ‘identifiable sources’, such as healthcare, infrastructure, and pensions - the latter currently being the single largest expenditure by the Welsh Government. The rest principally contributes to UK-wide issues, such as defence and British national debt. While a federal state would give more options as to what can be done with the first category, it is likely that only full independence would allow Wales’ complete economic autonomy.
Of course, the creation of an independent Wales would not be without its own risks. The most challenging problem to solve would be its constant fiscal deficit. Although this fact does highlight the shortcomings of the current system, it is nevertheless an unfortunate reality that the nation annually spends around £13.5bn more than it is given. While a research paper by academic Prof. John Boyle states that the figure would be far lower if independence were achieved, many of his points are not comprehensively explained. For example, he argues that corporation tax would dramatically increase, given that each large company would have to pay its share directly to Y Senedd and not just to its London headquarters, as it does now. This fails to consider whether businesses would actually choose to set up a separate headquarters in Wales, given its far smaller size and far lower population density. His calculations also rely on several uncertainties, such as who would pay for Welsh pensions or Wales’ portion of the British national debt - of which there is currently no consensus. Even if all of his predictions came to pass, it would still leave £2.6bn left in debt completely unaccounted for.
Despite the benefits Welsh independence may one day bring, it is obvious that the short-term economic risk greatly outweighs longer-term potential gains, so less radical options should be considered instead. Current evidence suggests that a more gradual increase in self-governing powers, which Westminster is forced to honour, provides the best solution for now, although in the long term, only full state sovereignty is likely to provide Wales with the full autonomy it desires. Whether this is realised through the federal UK depends largely on the development of relationships between Westminster and other areas of England and how they choose to rectify their own regional inequality.