(with apologies to Benjamin Disraeli)

Much has been written about the Welsh economy. Wales is poor runs one view, Wales is not poor, runs the other. Despite growing evidence that the former is simply not the case, there remain those who insist that Wales is poor, and independence will make things worse.

I have been a nationalist all my life and it seems the recurring “poor nation” theme has always been a part of it. Two recent articles in Nation Cymru provided a positive picture of the present-day Welsh economy, but it occurred to me that this may well be the case now, but what about the past? Were we really a poor nation all the years of my life?

Then I remembered a pamphlet written by the late Professor Phil Williams as part of the Cyfres y Cynulliad series published by Y Lolfa to mark the establishment of the Assembly in 1999. It makes interesting reading.

It synthesised research on the Welsh economy that had taken place since the end of World War two up until 1995. The first of these was by the late Professor Ted Nevin (no nationalist he) who examined income and expenditure for the Welsh economy between 1948 and 1956 and found a surplus of £40million, easily more than £2billion or more today.

He later revised and extended the research for the period 1948 to 1962 and again found a surplus, of £50million.Williams writes “…this confirms that in the 15 years after the war, …Wales accounts were in the black.” What is even more remarkable is at this time almost all countries, including the UK were running significant deficits. Wales was not.

This further work was significant in that it also looked at the wider economy and predicted that without an appropriate policy response, there would be extremely high unemployment between 1964 and 1970. Sadly, this proved to be the case, the Labour government of the time dismissed the findings as “a product of the ivory tower.” Surprise, surprise.

In 1970 together with Dafydd Wigley, Williams went on to produce accounts for the Welsh economy for the period 1967-68 and once more found a surplus in this case, £36milliion. This work is of interest because it was based on accounts as applied to an independent, sovereign state. Interestingly, at the same time, the government through the (then) Welsh Council commissioned Bangor University to undertake an independent examination of Wales accounts for 1968. A surplus of £33million was reported.

This of course did not fit the narrative. Enter George Thomas and the infamous television broadcast “…don’t let the English know how much they are paying for our health service …and roads.” This from a Labour Secretary of State. a party to which the people of Wales had given unquestioning support.

There was little further research until the late 1990s when, with devolution on the horizon and questions again being asked about the economy, the government swung into action. In 1997 = the year being no coincidence – the then Welsh Office under the leadership of William Hague published research showing Wales in the period 1994 -95 had a deficit of £5.7billion. However, as Williams notes the document was “…so full of omissions, errors and absurdities that it could not be taken seriously” and that in allowing the publication of a document that was so faulty the civil servants involved “…had seriously damaged their professional reputation.”

The response was further research by Williams, this time for the period 1994-95. Although the research clearly showed that the Welsh Office figures for this period were wide of the mark, Wales had moved into deficit of £2.4billion. However, there are caveats. The first is that during this time the UK had incurred its greatest ever deficit, the inflation of the 1970s, Thatcher’s disastrous economic policies and the recession of the early nineties had resulted in the UK economy becoming the sick man of Europe – and Wales was dragged along. The second illustrates the on-going dilemma of allocation and interpretation. In this research Williams included notional expenditure allocated to Wales which was not a direct cost to Wales but to the UK: defence, debt interest and a contribution to the National Debt. With these reduced or removed, the deficit moves into surplus.

This dilemma underpins the current debate on the Welsh economy The Office for National Statistics publishes income and expenditure accounts for the Welsh economy. However, to develop a picture of the contemporary Welsh economy, the ONS accounts are deficient in two important ways. Revenue is unclear, not least because of the many externally owned organisations operating in Wales which declare taxation at their home, non-Welsh address. Expenditure is the most challenging and misleading, further costs are added to actual expenditure to reflect the fact that Wales ‘benefits’ from UK activities: defence, debt interest, overseas activities and sundry other endeavours. These alone amount to £9billion,12% of GDP or a ludicrous 30% of tax revenue. The two reports published by Cardiff University on the Welsh economy in 2016 and 2019 which proclaimed that Wales had a deficit of over £13billion made absolutely no allowance for these notional costs.

As with any research and published data there remains the question of relevance and interpretation. No more so perhaps than in discussing the Welsh economy. Nevertheless, although the reports published by Cardiff University – and which began the ongoing debate - were accurate in presenting the data as it stood, there was no meaningful questioning of the assumptions that underpinned the data.

I calculate that, after making reasonable adjustments to allocated notional expenditure, the Welsh budget is in surplus by £350million. Frankly, this is not a lot and there are no extras or allowances, but the fact remains, there is a surplus.

The upshot of all this? Such data that has been available and research undertaken has shown that Wales is not a poor country and certainly for most of the twentieth century and much of the twenty first, we have paid our way.

Wales is poor. Leon Trotsky sums it up.

A lie told once remains a lie but a lie told a thousand times becomes the truth.

Dr John Ball 

Ref: Williams, Phil The Welsh Budget (1998). Talybont, Y Lolfa

This article first appeared in Nation Cymru.

Dr John Ball is a former lecturer in economics at Swansea University and currently working on a book Free to Choose: New Economics for a New Wales