Wednesday, 14 January 2009

The State of the Nation: It's Looking Grim

I won’t lie to you, 2009 is going to be a grim year for Wales if the seasonal missives of our political leaders are anything to go by.

“I cannot say when the economic upturn will come”, First Minister Rhodri Morgan said in his Christmas address to the nation. “I can only tell you that it will.”

When interviewed in the Western Mail on Boxing Day, he said of the economic downturn, “It’s an enormous test for devolution, a much bigger test than foot and mouth was. People just don’t realise what was done to try to keep the normality of life going in foot and mouth. That was what we thought of as a real test – were we capable? Animal health wasn’t devolved to us, but we had to pretend it was, because that’s what the people of Wales expected.”

There are pressing reasons why the de facto Prime Minister of Wales seems to be suggesting that the big test now facing Welsh devolution is whether the Assembly Government is capable of pretending control of the economy has been devolved and whether the Welsh people will be sufficiently mollified by the pretence. The Welsh economy appears to rapidly contracting and devolution has stalled.

The de facto Governor of Wales, Secretary of State Paul Murphy, who has the power to veto any Assembly Government request with which he or his Westminster colleagues on the Welsh Affairs Select Committee take issue – indeed, as he recently did with a request to abolish the right of tenants to buy council houses - also offered cold comfort in his New Year message to the people.

“I want to reassure you that the Government will be continuing to work in partnership with the Welsh Assembly to ensure 2009 is as happy and prosperous a new year as possible for you and your families”, says Murphy. However, “the Government’s priority at the moment must be financial stability... there’s no silver bullet”.

Having concluded that there is nothing specific that can be done for the Welsh economy until Gordon Brown has fixed the global financial system, Morgan and Murphy both prattle on about our rugby team winning the Six Nations, again, Joe Calzaghe beating all comers, again, Only Men Aloud winning Last Choir Standing and Duffy being Top of the Pops, not forgetting Gavin and Stacey and Dr Who, our top TV ‘exports’. Murphy even wants us to celebrate that “a young girl from my own Torfaen constituency became the first Welsh winner of Big Brother”. Be thankful for small mercies, is it?

Unlike England and Scotland, Wales hasn’t needed to have its banks bailed out by the British taxpayer because it doesn’t have any banks. That’s why money invested in Wales simply trickles away.

Not that there’s any spare money to put in a bank. Data released by the Office For National Statistics last week showed that Welsh workers are the lowest paid in the UK, the average full-time salary being £25,677, compared to £46,462 in London.

Whilst the calculation method preferred by the Westminster Government suggests Welsh unemployment is only marginally higher than the UK average – now approximately 7% - more than 12% of the entire Welsh population of working age is claiming incapacity benefit. Put another way, Wales has less than 3% of the population of Britain but more than 10% of all incapacity benefit claimants.

Wales was already an economic basket case before the downturn. Add incapacity benefit claimants to job seekers allowance claimants to the long-term unemployed in areas such as Blaenau Gwent or Merthyr Tydfil and you find that the majority of adults are economically inactive. In reality, many women have unskilled or semi-skilled jobs that barely keep their families going, whilst older men particularly, those with no hope of ever finding job, often sit in the pub all day drinking away their benefit payment.

Is it any wonder that so many young people in Wales use drugs to dull the feeling of hopelessness, or that some go so far as to commit suicide? Others, of course, just sit around all day strumming guitars. That’s why so many good bands come out of the Valleys. There’s nothing else to do.

People in Wales are not refusing to work. There is not enough work to go around, and what jobs there are generally so poorly paid that there’s no incentive to do them. Creating new employment in Wales, given the overriding priorities of City of London-centric government policy, is a tough task for the Welsh political elite, whereas privatising the responsibility for benefit claimants represents an easy option that might help to appease the middle-England voters Labour thinks it needs if it is to cling to power.

The UK Government White Paper on Welfare Reform, introduced just before Christmas, which is intended to force benefit claimants to prepare for work or face losing payments, a proposal strongly endorsed by the Labour backbencher Peter Hain whose own Neath constituency is particularly blighted by such unfortunates, illustrates just how out of touch Westminster politicians are with these aspects of the Welsh experience and why Wales probably needs a far greater degree of devolution if it is ever to thrive.

The All Wales Convention, a commission chaired by former UN ambassador Sir Emyr Jones-Parry and charged with determining whether Wales wants its Assembly to have lawmaking powers ahead of a referendum, is not due to report its findings until the end of 2009. Yet the de facto President of Wales, the former-nationalist Presiding Officer, Lord Dafydd Elis-Thomas, thinks he already knows the answer. He argued in the Western Mail against holding a referendum on additional powers for the Assembly before 2011 because, “We have to move forward with the clear substantial consent of the Welsh people. There is no point in having governance which is not supported by a plurality-plus majority.”

Plaid Cymru MP, Adam Price, suggested in a separate article that the referendum question should be phrased so voters are asked to compare Wales with Scotland. “The question would be something like, ‘Do you think the National Assembly should be granted lawmaking powers similar to the Scottish Parliament?’” he proposed, as if this would help people better understand what was wanted from them.

As Lord Elis-Thomas presumably anticipates, the public’s poor perception of politicians and the unrepresentative nature of the Welsh political system might reduce the turnout to the embarrassing point where a vote in favour would not be sufficiently conclusive to confer consent. The options offered by the political establishment at the moment are whether we want more of the same, or not. The status quo is not up for review.

Confidence in the political process has been eroded by scandals such as that involving Peter Hain, who infamously failed to declare donations of £103,000 to his deputy leadership campaign, much of which came from an organisation that might be interpreted as having been established to disguise the true identity of Hain’s donors.

Allegations of impropriety are not limited to Labour politicians either. Welsh Conservative leader Nick Bourne is currently fighting for his political life after spending £229 of public money on an iPod, £119 on a trouser press and £5,003 on improving his bathroom.

At a time when ordinary people in Wales are being encouraged to tighten their belts, AMs voted themselves an inflation-busting 8.3% pay rise to take their salaries before allowances and expenses to £50,692 - twice the Welsh national average - in return for taking limited responsibility for affairs of state.

Thus, devolution appears to be in as sorry a state as the Welsh economy. So, what to do?

Even in adversity, Assembly Members might be considered worth their remuneration packages were they to use their existing powers courageously and imaginatively to tackle the worst effects of the recession. For instance, the lack of an indigenous banking system and the economic drain of Welsh benefit payments on the UK Treasury might together create the opportunity Wales needs to turn its fortunes around.

The Assembly could establish effective control of the Welsh economy and go some way towards resolving the endemic issues of poverty and economic inactivity, without recourse to Westminster, if it were to sponsor the introduction of a ‘national’ negative interest complimentary currency in which every Welsh resident, business and local authority automatically became a stakeholder.

Complimentary currency, as the name suggests, is a means of exchange intended to work alongside, rather than instead of, legal tender - in this case, the Pound. Such a currency, let’s call it ‘Uned Cymru’ or the ‘Unit of Wales’ or ‘Uned’ for simplicity’s sake, would be accepted in exchange for goods and services only within the borders of Wales in order to stop it flowing out of the country.

The Uned would be electronic and operate via a card account that would be administered by a service organisation with local outlets, the Post Office perhaps. Operating costs would be met by users paying a monthly fee, technically known as ‘demurrage’ or ‘negative interest’, based on a percentage of the Uned value moving into and held in each account.

Negative interest is an important attribute that discourages hording. Users would be likely to spend their ‘Unedau’ before it decreases in value. This would cause the currency to circulate at a much faster velocity than convention legal tender so that a Uned would create economic activity worth many times its face value. Rapid velocity in circulation will help to counter the lack of liquidity in the Welsh economy and would encourage economic activity where it is currently either sluggish or non-existent. Negative interest currency would also have the effect of countering both deflationary and inflationary effects in the mainstream economy and would, therefore, promote economic stability.

If users were able to pay for all their essential requirements - food, housing, utilities, clothing, furniture, entertainment, local taxes such as council tax and court fines - in Unedau as well as in pounds, then it would be possible to switch benefit payments from pounds to Unedau. The Whitehall treasury would lose some tax revenue but it would save billions in benefit payments.

Introduction of a Welsh currency would result in environmental benefits such as reducing carbon emissions produced by the transport of imported goods. It would also give Welsh businesses a competitive edge since it would allow for a proportion of costs to be paid in Unedau whilst sales are made in conventional legal tender.

Having fired the silver bullet in which the Secretary of State does not believe, the Assembly might then turn its attention to winning public support for devolution. A straightforward offer to establish a gathering of ordinary people selected on a nationally representative basis and expected to serve the nation in a similar manner to jury service, approving by majority vote all proposed legislation and expenditure, should be enough to swing a vote in favour.

Whether or not the Assembly applies ideas like these in 2009, at least we can be thankful for the small mercies that Paul Murphy and whoever replaces Rhodri Morgan as First Minister are likely to trumpet in next year’s New Year messages.

We might all be out of a job but our rugby team will win the Six Nations, Joe Calzaghe will beat all-comers, a Welsh singer will be Top of the Pops at some stage in the year, and the forthcoming series of Gavin and Stacey and Dr Who will be the critical success we always knew they would be. I can’t wait.

Blwyddwyn Newydd Dda!