Next, it’s time to look at some of the most popular tropes and idioms relating to the economy used by those opposed to independence.
Empty Pockets: “Wales cannot ‘afford’ independence.”
This is the most used/most popular one of the lot.
It’s quite telling though because it does suggest that if the economic conditions were right, many people could support independence as it’s not as if they feel much of an emotional or psychological connection to the Union. It’s like seeing something you want to buy and saying, “Maybe one day.”
I’m under no illusion that Wales has more spent on our behalf by the UK Government than we raise in taxes. Numerous estimates have put the Welsh “national deficit” – based on current public spending – at anything between £6-15billion over the last decade.
The key things to take away from here are “current public spending” and “national deficit”.
Basing an opinion on whether an independent Wales would be able to cover its costs using figures outlining what’s spent now is pointless.
We don’t know how much Wales would spend because we have very few accurate figures for how much is being spent now, nor how much Wales would spend on non-devolved policies like welfare, defence, foreign affairs etc. It’s likely to be a smaller bill and we might not have to pay the state pensions of everyone who retired before independence (based on comments from the civil service in 2014 and the fact state pensions are based on accumulative payments of National Insurance).
As for “national deficit”, national budgets aren’t run like a household’s budget. There’s a complicated relationship between the costs of borrowing, a nation’s ability to pay debt interest and other factors like currency valuation and credit ratings. It’s entirely normal for nations, including the UK, to spend more than they raise – there are very, very few nations that run balanced budgets.
The real question here is how big a deficit could an independent Wales realistically carry? The shorthand answer is probably anything between £2-4billion. I’ll inevitably come back to it another time.
Third World: “Wales doesn’t have the economy to support itself.”
Once again, it’s undeniable that Wales has serious structural issues with our economy – but it’s not a deal-breaker when it comes to independence and independence itself may be a major economic stimulus in its own right.
At a glance, Wales has a greater proportion of its economy devoted to manufacturing and public services and a lesser proportion dedicated to professional services than the rest of the UK (I return to some of this later).
Those professional services (banking, investments, finance, legal services, property, insurance) tend to be high-value industries because their entire purpose is to move other people’s money around. They also tend to be located in and around London, artificially boosting London’s economic output.
For example, if you bank with an English or Scottish headquartered bank – as pretty much every single person in Wales does – the assets and profits they make on your money will be counted as English or Scottish economic output.
There are two ways to contain this economic leakage: better accounting and monitoring by official statistics bodies and individual companies, or an international border. That way, anything leaving Wales would count as an export (even if it’s to England) and/or would show up in on our economic figures.
Our private sector isn’t as big as it should be, but does it really need to be?
If we kept more Welsh money in Wales, even through relatively simple things like major banks setting up a sub-office in Wales (which they would be forced to do if Wales became independent due to possible regulatory differences), it’s likely Welsh economic figures would look better.
There are also other avenues to prosperity to look at, such as the development of Mondragon-style co-operatives, helping Welsh brands to expand and looking to innovate in areas like housing, welfare and infrastructure.
Beggar Thy Neighbour: “Without England, Wales would be nothing.”
There is very close cross-border co-operation, both economically and in terms of public services, but yet again it’s not a deal-breaker when it comes to independence and the relationship isn’t as one-sided as you might think.
The part of Wales where this is most evident is the Flintshire-Cheshire area. Many major employers in the area (particularly manufacturing) and most of the people are located on the Welsh side of the border. The higher-value employers (finance, higher education) are located in and around Chester.
Across Wales as a whole, in 2019 it was estimated that 89,900 people traveled from Wales into England for work and 40,500 came the other way.
Likewise, some services at English hospitals could be unviable if they didn’t have a large Welsh catchment area; the Royal Shrewsbury Hospital immediately comes to mind.
Cross-border flow is completely normal and doesn’t undermine independence in the slightest. There’s heavy cross-border commuting between Germany and the Netherlands and between France, Luxembourg, Germany and Belgium. It’s also said around 30,000 people cross the UK-Ireland border every day to work.
In terms of the support we get from the UK, the UK government made economic development a priority in Wales in the past – industrial estates, power stations and new roads don’t build themselves.
However, 21st Century investment – research and development, IP-protected innovation, high-speed rail, international connectivity, high technology and attracting global capital – requires not only vast sums of money and skills (which needs a big return for a government) but political will.
The will by the UK Government to bring these much-needed things to Wales isn’t there, while the Welsh Government can look away saying “not our problem”, using constitutional trivialities as cover.
Despite protests over the failures of the Welsh economy and Welsh economic policy, it’s a situation Wales has largely accepted. For want of a better description, Wales has learnt to be poorer than our neighbours. We don’t have to be.
In Soviet Russia: “Too many Welsh people live off, or work for, the state.”
In June 2020, 27.4% of the Welsh workforce worked in the public sector compared to 22.1% across the UK as a whole; it’s rarely gone above 30% in Wales (it did around the time of the Great Recession). You see figures of 60-70% bandied about sometimes which is nonsense. Only eight local authorities have a proportion of public sector workers above 30%.
While the claimant count for jobseekers allowance is higher than the UK average – and you’re more likely to claim JSA for longer in Wales – the figures aren’t dramatically different.
Around 8.5% of working-age people in Wales were claiming disability-related benefits as of November 2016; higher than the average across Great Britain but by under 3 percentage points. In addition, about 30% of people aged over-65 in Wales weren’t born here and likely wouldn’t be eligible for a Welsh state pension unless they made NI contributions whilst working in Wales.
This article was originally published by stateofwales.com.