Holtham's evidence on Scottish independence

I don't have time at the moment to write about Gerry Holtham's evidence to the House of Lords committee on the financial and economic consequences of Scottish independence, but it seems that others do. So please feel free to talk about it in this thread.

For those with an hour to spare, the video is available here, and David Williamson, who we can see taking notes in the background, wrote about it here in the Western Mail.

I've transferred the lengthy comment from the other thread to start the ball rolling. Have fun, and I'll join in later.

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Anonymous said...

The Holtham comments ARE relevant to this as they refer to what was said by LW. It was also only said y.day with next to no news of it on the Beeb so this is a good place to discuss it.

I respect Gerry, I really do. That's why I take his points extremely seriously (I'm not sure what his political background [if he has any]). The main thing I got out of it that we have no chance of having independence unless our economy improves. As he states we are a world away from Scotland, and I would suggest Catalonia. I wouldn't take this criticism from anybody that is against independence however as I think he is fairly independent I do take it quite seriously.

I always thought that having a body like the WDA and more manufacturing here would help us economically. But again he points out something I'd never thought of.

When the WDA was running Wales had some of the lowest paid workers in Europe. The WDA capitalised on that. This has now changed as the EU has expanded so the first call for any company is Eastern Europe. So I am going against everything I have said in the past as I don't think a body like the WDA would work or is necessary. Although the WG must work harder to actually get jobs here.

The only possible way I can see us getting a strong economy is by taking a risk and having substantial tax powers. Gerry rightly states we would be poorer if that was the case (in the short term) as Barnett would probably disappear. But by lowering the cost for business I think would work even if our public services would be stretched for a decade. Because of this, I don't think we can be ready until 10yrs after these sort of powers are transferred.

In the mean time we need to have a discussion about what we can do within the settlement we currently have. To me that is based on skills- something LW doesn't seem to talk about in the GPftV. We have to decide 'right we want our young people to be good in xyz' - this has worked in RoI as their work force are extremely well skilled within IT. We need to have an open discussion on this and go with it. Give grants for people to study these at A-levels and at Uni and scrap any kind of support for pointless subjects. If we can get a skilled work force in place, business will come to us.

Finally I will end on the language (very briefly as I think other are important). If we want independence people will have to vote for Plaid. I disagree with Adam Price that "labour will deliver independence" or something similar (he said it a few years ago).

The people of the Valleys are probably some of the most patriotic people in Wales yet don't vote for Plaid - in some cases we are even the 4th party. We have to ask why. Now although the Wales Online commenters are slightly extreme, it is indicative that the people of these areas don't want to vote for Plaid because they think we are obsessed with the language. They therefore don't want to be independent as they fear they will become 2nd class citizens (it's probably similar to the Unionists in NI - they fear unification in case they become 2nd class). I know a few cleaners from Barry, perfectly sound people- but they won't vote for Plaid because they don't speak Welsh.

This is therefore an issue and will get worse if English schools close and Welsh Med ones open up- they will fear under threat. This is a problem that doesn't exist in Scotland.

Because Plaid is so tainted by this I am of the view that maybe a new wing of the party should be set up - the Welsh National Party, a party that has a separate head (i.e LW) but will always work in coalition with her sister party - Plaid Cymru.


That's it!- I genuinely think the Holtham clip is interesting and you should blog about it MH. He raises significant problems in Wales that we seem to just want to brush under the carpet!. And whats annoying is that these problems have probably existed for two decades - when are people going to take action on this I feel that we are living in a time warp!

Anonymous said...

Holtham's clip is interesting. We have to front up though and be honest. Devo-max as is being discussed in Scotland isn't on the agenda. Plaid Cymru wants Barnett reform and to develop the Welsh economy. There is nothing wrong with being honest about that. Gerry's comments don't really apply to the Silk Commission, for example, and that's a major upcoming debate that needs to be had. I also agree that Plaid isn't addressing skills at the moment, surely a massive factor in the future of the Welsh economy.

For what it's worth though I believe the democratic deficit and absence of media in Wales is just as big an obstacle to independence as the economy. We know people instinctively prefer self-rule to Westminster rule but making the leap from further devolution to independence would require a set of arguments to be made in the media.

Anonymous said...

I think the media is a significant issue not just for independence but democracy in general in Wales. I'm sure if people knew what Welsh Labour have done they wouldn't have done so well in 2007.

I do think it's time we face up to it and give up on a Wales based media. I think it is now dead (apart from Welsh language ones). Instead I think we shouldn't be scared in trying to encourage people like The Sun, Guardian and Daily Mail to have a genuine Wales edition. I don't know if this is possible under competition rules but why can't the Assembly Commission as these popular papers to give X% of their coverage on Welsh News/Politics and as a result they will get some form of grant. Another idea could be that the Assembly Commission could take a weekly advert in these papers stating impartially what happened in the Assembly. This is an issue we should all be concerned about. In fairness to ITV they have improved greatly, but the Beeb seem to be getting worse. What I'd like is something like Jason's Phone-in on TV, theres one thing we are good at in Wales- complaining and I'm sure this could work on TV!.

The one thing I was confused with Gerry is that he is agains devo max. However he wants some taxes to come to Wales. So what is the difference between some taxes devolved and devo max?. Is devo max just federalism.

Gerry's comments were frank, sometimes cringeworthy to watch but annoyingly he was bang on the money.

Anonymous said...

Anon 23:06 talks alot of sense (I wrote Anon 18:38). Because we don't have the population share we won't get buy-in to UK papers on merit alone, but purchasing that space should be done if it's possible. I don't worry about "lining the pockets of the media" in this case cause it's a necessary evil and the situation is appalling. ITV isn't that bad. I also don't think BBC Wales is that bad. The printed press is where there is a gaping hole, and the dead tree press isn't actually dying out that quickly and will still be around for some time, probably at least another two decades. And we aren't in it!

Gerry was talking about Scottish independence before the Lords which is way devo-max came up.

You could also have federalism without devo-max. Holtham basically wants a form of federalism short of devo max. Germany is a federal country and they don't have devo-max to their regions, neither does the United States have devo-max to the states. There are other examples but i'm not sure about them.

But in Wales there is basically no point distinguishing between devo-max and independence. The only reason it's on the agenda in scotland is as a compromise suggestion or fallback option. I don't think these comments will resonate, unlike other things Holtham has said.

Anonymous said...

Welsh editions of the tabloids (similar to Scotland) would be brilliant.

Cibwr said...

Be careful of what you wish for, I remember the Welsh Mirror, a nasty anti Welsh rag in every sense.

Anonymous said...

8.18 - maybe but it would be something!.

Anonymous said...

That's true but I think that tolerating a few anti-Welsh rags would be better than complete apathy.

The Scottish Sun has been pro-SNP in the past. Imagine if the hypothetical 'Welsh' Sun or Mail came out in favour of Plaid?

Robert said...

If Wales went right now to have independence it would lose even Devo max would be hopeless.

The simple problem for Wales is a hell of a lot of people are English, most who are Welsh see them selves as not being plaid, Plaid is now in a mess highly unlikely to take power any day soon, and looks way lost in the wilderness .

The simple question the Tories and labour would ask is how do Wales generate £15 billion.

I went to a meeting sometime ago in which according to Plaid the EU would treat us just fine like Ireland, well that's down the pan now.

So we were told Wales would become a country in which tax would be low and we would have firms pouring in, yes and other countries would do nothing at all if that did happen.

Plaid is not going to be able to win independence at least until the depression is over in thirty or forty years

Anonymous said...

"The simple problem for Wales is a hell of a lot of people are English, most who are Welsh see them selves as not being plaid, Plaid is now in a mess highly unlikely to take power any day soon, and looks way lost in the wilderness."

The truth.


What happens if the census reveals that there is an English majority in much of the North-East, Powys and Monmouth? Can our country survive this?

Anonymous said...

If the polls are anything to go by then it looks like the Assembly could look something like this...

Labour 33
Plaid Cymru 13
Conservatives 5
Liberal Democrats 4

UKIP in the Assembly would throw a spanner in the works and spice things up a bit. Plenty of anti-Welsh sentiment to play on.

maen_tramgwydd said...

I'd be the first to agree that the outlook for Wales is depressing. But then, its past has been depressing too.

In European terms, Wales is poor, no-one could disagree with that. It has every prospect of getting poorer.

There is a large fiscal deficit, we're all agreed on that one.

It's the solution that we disagree on.

The asymmetric Union, as far as I see it, is the primary reason for Wales' poverty. It is also the cause of the wealth of the City of London and parts of the south east. The fiscal transfers are a reflection of that fact.

According to Barnett there is a gradual convergence, by which Wales loses out regardless of whether or not the economy is growing. The Tories (and to some extent, Labour) wish to decrease the fiscal transfer further by introducing regional pay and benefits. Presumably, and logically, that would include the state pension.

Such policies will hasten Wales' descent into penury.

According to Holtham Wales has already passed the 'event horizon' - the point of no return in a black hole. He says that we are too poor to do without the fiscal transfers, which have been necessitated by decades of Westminster government neglecting investment in Wales and its infrastructure. He sees no prospect of that depressing cycle being broken. We are tied into a system which gives us no hope, only inadequate handouts.

Meanwhile the system legitimises foreign conflicts costing billions, and is spends enormous amounts of our money on armaments. The Olympics alone involve a fiscal transfer of £9bn from the rest of the UK to London, including £400m from Wales, which it can ill afford.

Plaid has been weakened by more than a decade of poor and uninspiring leadership, and some strategic errors, yet it remains the only potential vehicle to get Wales out of its economic and political black hole. The unionist parties promise only more of the same failed policies.

Holtham mentioned the issue of the language. In an independent Wales how on earth can a minority of around twenty percent impose its will on the rest?

Plaid has taken an important step of electing a leader who dispels that myth. The party needs to build on it and get on with the job of making the case that Wales will be better off governing itself rather than being governed by the types of people, unelected, wealthy and privileged, that Holtham was addressing in the Lords committee. Wales can never prosper under such people.

Anonymous said...

Very good comment from m_t. Accepting that the situation is depressing and we stil "need" fiscal transfers, the sensible outcome for me seems to be a fair level of fiscal transfers, coupled with the responsibility and freedom to vary taxes and accept the revenue hit that would entail. The power to also create new taxes and levies should also be granted.

Only then could a Welsh Government (regardless of which party it is) gradually lift Wales out of dependency.

If you had devo-max or independence overnight it would be a fiscal disaster, a catastrophe in fact. I don't say this with glee or as a Wales-hater but we are simply too weak. A gradual path of self-government, if Plaid Cymru was running things, could (or could not) see our country improved. But we have to be realistic about our current weak position. And the Treasury would have to give up some of its power to Wales.

My fear is that the Treasury, under the Tories or Labour, will simply not want to do this and will use fiscal devolution as a means of punishing Wales. They could devolve powers that we can never afford to use without destroying public services, for example.

Devo-max is simply not an option *at the moment*. Neither is independence. I can't help thinking that saying we don't want independence right now would actually be perfectly sensible and rational and could attract more voters to Plaid? Because it simply isn't as suitable for Wales at this particular moment. Maybe it wouldn't have any effect at all.

Anonymous said...

No, no, no. Independence is the only option. Economic shock therapy will hurt at first but it is needed in the long run.

MH said...

I'll make a few scattered comments.

On "devo-max". Noboby has yet defined what it means, but I assume that Gerry Holtham thinks it means responsibility for all tax and all public spending but with no mechanism for fiscal transfers to achieve a degree of equalization between rich and poor parts, as exists in most federal countries and in the four Basque provinces, and which are often referred to as "solidarity" payments. Without such solidarity payments devo-max is a bad idea, and I presume it's why he thinks it's bad for Scotland as well as for Wales.

However with a degree of such solidarity transfers, then a degree of responsibility for taxation and spending is OK. In effect, such solidarity transfers aren't too different in principle (though maybe they are in scale) from independent countries which are net contributors to the EU or the foreign aid that most rich countries give poorer countries.


He did make a slip when he said that Wales is running an econonic deficit of 25% of GDP. What he meant to say was that there was a deficit of 25% (just over £6bn) between public spending in Wales and taxation accounted as having been raised in Wales. But I'm sure a note to the committee will correct that in the records.


I think his view on renegotiating Barnett is coloured by his exasperation and inability to understand why his idea of a Barnett floor was not taken up either by Labour when they were in power at Westminster or by the Tories and LibDems now. I fully sympathize. Setting a floor would have been an easy thing to do, and the fact that it hasn't been done shows that UK governments are terrified of changing anything to do with Barnett, probably because they fear that opening that can of worms is bound to increase support for Scottish independence.

But for me, this is a sign that the UK government will come up with a new formula after the Scottish independence referendum, whatever the result. However we shouldn't kid ourselves that a new formula will be any fairer to Wales than Barnett is. Gerry is right to say that we have nothing to negotiate with, and therefore shouldn't expect to get anything much. From England's point of view the problem with Barnett is that England is unfairly treated by it, and any new formula is bound to concentrate on that rather than Wales.


Turning to the rest of the evidence session, I was amused by Nigel Lawson and Michael Forsyth's line of questioning. It was patently obvious that all they were interested in was getting a few quotes to put into thier report which would "prove" that Scotland would be worse off if it were independent. Having come to understand a little of Gerry' Holtham's dry sense of humour, I think about half of what he said was too subtle for them to understand.


As for the comments here, I think the idea of Plaid splitting into two parties is as silly as Gerry Holtham's idea of a divide in Wales based on language.


I'd agree that media plurality in Wales is badly lacking. But one obsevation I would make about having separate Scottish editions of British London-based papers is that it can be used to keep the readers of the other edition in the dark. Scottish readers don't see the overtly English jingoistic articles and comments, and vice versa. It would be the same if there were sepatate Welsh editions.


Ireland is far from "down the pan". Times are tough, and the cheap credit fuelled construction boom has hit them particularly hard; but Ireland is still richer per head than the UK, as I noted here.


I pretty much agree with everything in MT's comment.

Anonymous said...

The above comments have possibly been the best I've read on this blog. Frank and honest which is always good on any blog.

I have to say looking back at what is said I become increasingly angry with politics (and if I'm honest I am quite disillusioned already with it). I'm angry that the Barnet formula problem has been around for ages and nobody seems to do anything about it. I'm most angry at Labour but Plaid MP's must also share the blame on this as clearly they have not campaigned enough on this. The ideal time was during the devolution changes of 1998 and we can forget a change in Barnett now until after 2014. I disagree with you MH that there will be changes if there is a no vote- a UK Gov will have to 'keep the Scots sweet' for a few years. Otherwise it'd be like what happened in Ireland- after the Easter Rising there was NOT a majority in favour of independence, but after the way the "British" treated the rebels, the nation turned the other way.

If the Scots say yes I can't see how a government would give a better Barnett system for Wales - there would be no votes in it for them.

It's really interesting the comments about devo max. I'd agree it would be dreadful for Wales in the short, and maybe the medium term. But d'you know what? Our problems are massive, having a tiny change to a fairly minimal formula will not help us. And so I am definitely of the opinion that we should just bite the bullet and give devo max a go.

This is the only way I think we can fix our problems. And it is awful to say this, but I see absolutely no point in voting for Plaid Cymru until this settlement changes. If there was a Plaid Cymru government in place in Cardiff - what exactly could it do?.

I've come to the conclusion that the government is basically there to manage Wales and not reform it.
But really, Holtham has made me reflect on such a dire situation we have here. And it is grossly unfair.

It's a depressing picture of centuries of London rule.

Anonymous said...

(following on from 20.25).

I'd really be interested with your answer on this- an honest one.

What are the current running cost of Wales a year?
What is our tax revenue?

I can't imagine there is a 25% difference. How has he come to this figure? As I've heard it is really difficult to know the tax revenue for Wales (as corporation tax is raised amongst others are counted as where the HQ of a company is- there arent many of these in Wales). Has he considered this?.

So what would your best bet be? and how does this compare to similar countries like Estonia?.

MH said...

Every answer I give is an honest one, Anon ... and I provide links so that people can check that for themselves ;-)

The figures are in the Holtham report, here, in the sections starting at 4.17. In very round terms they are:

Tax collected by UK treasury ... £17bn
Tax collected locally ... £2bn
Total tax take ... £19bn
Total expenditure ... £25bn
Deficit ... £6bn

Two ameliorating factors are that not all corporate tax raised from profits generated in Wales is accounted to Wales, and that the governments of an independent Wales would probably not choose to spend money on all the same things that UK governments do. But at most that might reduce the £6bn deficit by half.

It is then worth saying that the UK has exactly the same problem, but borrows money to make up for its shortfall. If people argue that Wales cannot be independent because of it, then the UK certainly can't afford to be independent either. Some borrowing is sustainable on the basis that growth in the economy will pay for it. But the current debt crisis has brought that all into much sharper focus for every country.

For our long term economic health as a nation (whether independent or not) we need to reduce that deficit. Though my guess is that we could probably afford to run a deficit of about £1bn or so.

MH said...

For what it's worth, this is from a statement on the UK's deficit:

The deficit is forecast to be £163 billion (11.1% of GDP) this year: a very high level by historical standards. The Treasury forecasts that this will fall to £74 billion (4.0% of GDP) by 2014/15.

We don't have GDP figures for Wales, but GVA is broadly equivalent to it. Wales' GVA is £45.5bn. 11% of that is £5.0bn, 4% is £1.8bn.

According to the Stability and Growth Pact of the EU, a member state's deficit should be no higher than 3% of GDP, which for Wales would be £1.4bn.

Anonymous said...

So called nationalists buy English news papers then complain about the state of the Welsh press. If the Western Mail sold ten thousand more copies then they might take on some more journalists. DONT BUY ENGLISH NEWS PAPERS!

Anonymous said...

"I'm most angry at Labour but Plaid MP's must also share the blame on this as clearly they have not campaigned enough on this. The ideal time was during the devolution changes of 1998 and we can forget a change in Barnett now until after 2014."

This is a bit unfair and I have to defend the Plaid MPs. In 1998 Phil Williams was warning about Barnett convergence and nobody outside of Plaid believed him! It has only become credible since Holtham put his name to it, and it took Plaid being in government to secure that.

But if Wales had been funded on a needs basis since the late 90s there would have been billions of more pounds injected into Wales by now. I'm sure alot of it would have been wasted by Labour governments but if enough of it had been ploughed into our awful transport network (perhaps realising IWJ's policies) our economy would have a much better chance at being competitive in the future. And for me it's all about the economy.

Anonymous said...

"It's really interesting the comments about devo max. I'd agree it would be dreadful for Wales in the short, and maybe the medium term. But d'you know what? Our problems are massive, having a tiny change to a fairly minimal formula will not help us. And so I am definitely of the opinion that we should just bite the bullet and give devo max a go."

I have a strong feeling myself and Anon 20:25 are on the same page, but I really disagree that this is a sensible way forward. As nationalists we think our problems are "massive" but do you know what? Most Welsh people don't compare living standards here to England. They think Wales is quite poor but that things are generally ok. If anything they think life here is better in terms of lower crime, less social problems, more green spaces. It will never ever be a worthwhile democratic political project to say "let's go for it" and turn off the Treasury tap.

If you can get the projected Welsh deficit down to £1bn you're probably looking at viability. But it has to be said that we're in a global economic crisis at the moment! And any policies to get the Welsh deficit down have to be popular, i.e based on things getting better not slash and burn or the 'shock therapy' someone called for above. Now is time for calm heads in my opinion and frank honesty. People in Wales won't believe dreams or fantasies they want real answers.

Owen said...

I don't want to derail this great discussion, but going back to the "national deficit", I recently wrote this piece on the issue. I'm not suggesting that a deficit doesn't exist, but I gave several examples of where our (notional) £6bn deficit might be significantly overestimated.

As MH said, Wales might not spend as much on defence as an independent nation, as is currently aportioned to us as part of the UK (£1.68bn). If we spent a similar amount to the Republic of Ireland, we could reduce it to a ballpark figure of £300-350m. That's money spent on Wales, that Wales doesn't really need if we take Wales's strategic defence needs into account (and I looked at this in detail a few months ago in five parts).

On home affairs, which is an EnglandandWales issue, I noted that actual outturn expenditure on policing on StatsWales in 09-10 (£670.8m) was £91.2million less that the Treasury PESA figure of £762million (page 152, 3.1)

There were similar overestimates in prisons (figure 3.4 PESA - double the average cost of a prisoner for every prison space in Wales) and fire & rescue services(figure 3.2 PESA). When you're dealing with a notional deficit of £6billion, these numbers matter.

If this is happening in one single department, where else is it occuring? You could be looking at perhaps several billion £ in Treasury overestimates for spending in Wales, perhaps even with some double accounting where devolved budgets are included in the figures twice. This money could theoretically disappear without anybody in Wales noticing.

I think the opportunity, and a threat, is that post-independence a lot of key state functions will need to be rebuilt from the ground up. Wales could institute dramatic reforms, perhaps streamline things a bit and run things far more efficiently (even cheaply) if we get the technical issues right. I'm slowly coming up with ideas of how this could be done on my own blog.

We might even have a better functioning country as a result. Plus all the other positives - a written constitution, new voting systems, a more progressive tax system, a Bill of Rights, perhaps a new head of state, our own foreign policy....

Anonymous said...

For years I've thought that our infrastructure was to blame for our economic problems.

Yes it's dreadful and doesn't help.

However even if we had the best roads and railways I don't know whether we would see economic miracles. This therefore suggest that Barnett reform isn't that big of an issue.

The infrastructure around the South East is decent, yet businesses don't establish there. Why?.

Well I am firmly of the view that because our economy isn't suitable for new businesses. We have high wages, high taxes, high everything. So if we can change our tax levels relative to other EU countries I think only then would we see growth as at the moment we are never considered (before they even look at infrastructure).

I've also changed my mind on who should do this. I now don't care where this power lays. And so perhaps rather than campaign for taxes to be devolved (which is a heated issue). Maybe we as a party should go back to what we're good at- campaigning- and campaign Westminster to lower taxes significantly in areas of Wales. This could go down well with the Tories as it is quite right wing. Maybe it's a non starter- but it's just a thought!.

(BTW- did anybody see the times this Saturday?. It said that poor islands of Britain like Ynys Mon and Shetlands should be tax free like the IoM to boost the economy.... what does everyone think of that!!??).

Anonymous said...

Just following on from the comment on Ynys Mon.
Interesting figures (not good but an improvement) is here: http://angleseytelegraph.blogspot.co.uk/2012/06/some-statistics-about-ynys-mon.html

And this is what was said in the Daily Mail (not Times.... I am embarrassed that I reveal I read this 'paper')

"Why do we have these tax havens? Should we have more to encourage development in some of our more depressed areas? Should Shetland, Orkney, the Hebrides, Anglesey , the Isle of Wight, the Scilly Isles, Lindisfarne, Coquet Island and the Island of Hart by the Pool (the Headland at Hartlepool) enjoy tax concessions too? The existence of Gibraltar is supposed to help the economy of the area of Spain that immediately surrounds it. Nice in France benefits from the existence of Monaco. If tax concessions are supposed to be such a help to the economy, why don't we have them in more areas and allow all our island communities to benefit? If not, why don't we abolish them for the Isle of Man and the Channel Islands and gather from those places the tax revenues the rest of us pay in mainland Britain? We must make serious attempts to tackle long-term unemployment in Wales, Scotland, the North of England and the South-West of England. Is this the way to do it, Mr Osborne?

NIGEL BODDY, Darlington."

Pads said...

We can't attract business here on grounds of cost - that would mean competing with Bulgaria and Romania, and indeed China and India.

Depending on businesses (re-)locating here is not effective. There is a place for it but it is not an economic policy. It is still looking outside for solutions. We have to do it ourselves. We can hope other people will do it for us. They won't.

Hudson said...

I think infrastructure does play a massive role but it is only one element. There is only so much Government can do and infrastructure is one of them but the other glaring problem is education and skills of the workforce. Anon 15:00 is probably wrong to say "we have high wages, high taxes", as Welsh wages are pretty low and UK corporation tax relatively low as well. Cutting Welsh taxes in specific areas could well "work" but its not that different to just giving a company a grant which they can offset their tax bill with. Wales used to be really good under the WDA at grant-giving but eventually they mostly left. As Pads said if we're looking at building up our own Welsh economy that's going to be more sustainable. We're going to have to seriously look at education for that. That means more funding probably (I say probably not definitely), which suggests a widespread lowering of taxes wouldn't be affordable or wise. But these are issues that need to be debated further. I would like to see specific tax breaks for key high-value industries personally but Wales doesn't have the power to do that and the UK Government doesn't have the interest in Wales to do so. We would need a larger block grant to fund some of these targeted tax breaks I'm talking about so that's why annoying issues like Barnett reform are still worth mentioning, though don't bank on reform any time soon. There's also a case for a low tax and therefore low public spending Wales, with privatisation of education and health. I wouldn't ever make it because I'm a socialist, but others could.

Anonymous said...

what neither holtham nor any of the brit state unionist cheerleaders in the welsh media seem to have grasped is that the case for wales becoming a fully self governing nation isnt tied to economics...its based on the solid and unchallengeable principal that the people of every nation in the world have the right to manage their own affairs.....if we have to wait until the economic 'conditions' are allegedly right we will wait for eternity.....the welsh labour party and the british state will see to that....if we adopted holtham's criteria there'd hardly be a nation in the world that would have the right to manage its own affairs.....Wales is a nation and it has the right to be fully self governing should its people so wish......we dot have to justify this right to anyone........

Leigh Richards

Rhys McKenzie said...

I have nothing but respect for Holtham, but his comments on the viability of Welsh independence have little value. Outlining the problem (the state of the Welsh economy) and subsequently offering very little in the way of solutions is not a constructive argument.

“I think you get what you can negotiate and on the whole the Welsh have no cards so they will get what they’ve always got which is nothing.”

Well Gerry, I'm afraid nothing is just not good enough. I fully accept, just as anyone with a right mind would, that Wales runs at a deficit (though the size of that deficit is ambiguous), and it is the responsibility of us nationalists to recognize that fact and do some serious thinking about how we would seek to close the gap between taxes raised and money spent in Wales should the prospect of Wales becoming independent ever arise. Owen Donovan (above) has done some good work in that regard and I wholeheartedly recommend his blog.

However, I don't think that responsibility lies with nationalists alone. If independence is not a viable option, as Gerry Holtham suggests, then it is for him and unionists in Wales to articulate their vision for a better, more prosperous Wales within the UK, and explain how it will be achieved with all the constraints that being a part of this union places upon our nation.

Holtham did make some interesting comments later on on the potential devolution of corporation tax to the devolved administrations, with the capability of those administrations to vary the tax limited by the relative prosperity of the nations they govern. Hence, the Scottish Government could barely vary the tax rate at all, with Scottish GVA per capita being very close to the UK average, while Wales and Northern Ireland could reduce their tax rates considerably more, providing some of the poorest parts of the union with a competitive edge while avoiding the much-feared race to the bottom. In principle I quite like the idea, though a lot of meat still has to be put on those very skinny bones. A pity the Mule didn't mention these comments in its article.

MH said...

In my 16:44 comment, I said that Gerry had made a slip by saying that our fiscal deficit was 25% of our GDP. But I've just seen his piece for Dragon's Eye, and he made it clear that he was talking about GDP. If so, our fiscal deficit would be £11 or £12bn rather than £6bn. However in the same programme he also says that our deficit is the equivalent of £18bn.

I don't know where he's getting his figures from, and I've just written a new post to point out the discrepancies and ask (for he has told me he reads Syniadau) him to clarify things.


This doesn't detract from the point that we do have a deficit and we need to reduce it, irrespective of whether Wales is independent or not. Nor does it invalidate any of the comments people have made about what we need to do to reduce it. But it would help to know how bad things actually are.

Siônnyn said...

If every man woman and child is borrowing 6,000 per year in Wales, then surely, that is 18 billion in deficit. Is he saying he got his sums wrong the first time?

And the weakness of the Welsh economy is a direct result of being a part of a union that has neglected us, so what are we to expect if we supinely accept there is nothing to be done?

He says we are unlikely to negotiate a better deal than we have already done. Nobody has yet tried to negotiate a better deal! Carwyn bad mouthing the Tories does not count, in my book, as negotiating!

Siônnyn said...

The chap (or chapess) who suggested we change the tax status of the Isle of Man should know that it is fully independent, and the only way we (I assume by that is meant the London government) is by threatening to remove the 'crown dependency' status from them, and inviting Argentina or someone to invade. To be fair, that is about the level of thinking that the Unionist campaign in Scotland has descended to.

Gerald Holtham said...

I don't know if anyone disputes the right of the Welsh people do be independent if they want it. Certainly I do not dispute that. I am a democrat; if the people wanted it so be it. Currently there is no sign that they want it and while you can tell them they ought to want it you should not try to sell it to them on a false prospectus. Only a very small minority would accept independence at the cost of being some 30 per cent poorer. It seems clear to me if that minority wants to persuade their fellow citizens to opt for independence their priority should be economic development in Wales. We ought to be able to agree that is the first priority and discuss how to achieve it. You don't have to be a political nationalist to think the present situation of Wales is rather humiliating. Just being a concerned citizen will do.

Anonymous said...


First of all, I think you are to be applauded for joining this debate. I don't know whether you are open to questions. But it would be interesting to hear your views on European structural funding. Could it make a difference? And are you impressed with the way it has been managed in Wales thus far?

MH said...

Although I'd noticed Gerry Holtham's comments on the other thread, I've only just noticed his comment on this one.

I don't think there's any question about improving the performance of the Welsh economy being a priority for everyone who cares about Wales, irrespective of their political views or their position on independence. Nor, if I might speak for those who want independence, am I under any illusions about it being a minority position.

However for me, the real question isn't whether independence would lead to us being poorer in the immediate term. As I said on the other thread, it is not so much a question of being able to "afford to be independent" because we run a fiscal surplus relative to the state we are currently part of, as is the case in Scotland, Catalunya, Euskadi or Flanders; but rather of not being able to improve our economic situation until we have our hands on the fiscal levers and can use them to make our economy competitive, by playing to our own strengths rather than the strengths of other parts of the UK.

Yes, we would be poorer in the short term if we maintained current levels of spending; and yes, the governments we elect would not spend money on all the same things and we'd have to cut our coat to suit our cloth ... but even after we've not spent money on the "usual suspects" like nuclear power and weapons, wars and vanity projects, we'd still be a long way short.

However, if becoming independent is seen as the only way of getting us out of the culture of dependency we have fallen into, and seen as something which the over-centralized nature of the UK state perpetuates rather than reverses, then the arguments in favour of independence will gain traction and win the day. That's the game plan.

Although a greater degree of fiscal autonomy while remaining part of the UK will probably improve the situation to a degree, I don't think it will in itself solve the problem. As I see it, competitiveness is the crucial difference between devolved fiscal autonomy and independence. With the first, the state we are part of will not allow a subsidiary part of it to compete in a way that would damage the whole. Wales is only a very small part of the UK, so the UK would never run itself to suit our strengths. But with independence we could compete.

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