This is a special one-off post and could be one of the most important posts I’ve done.

A few weeks ago, I saw a screencap of a thread from Desolation Radio’s Dr Dan Evans (via @MrsEff) talking about an economic advisory panel report that I doubt many of you will have heard of, despite said report being in plain sight for years.

The report seems to have been published in May 2006. That’s before the Great Recession, during the peak years of New Labour and Rhodri Morgan, at a time when people would’ve laughed at both the idea of a Conservative government and the UK leaving the EU.

Having flicked through the report (pdf) I decided a thread on Twitter wouldn’t do it justice and it was worth a proper look.

Why?

I don’t think I’ve ever come across an “official” report that’s been as upfront and open – in both a good way and bad way – about where Wales was going then and is going now. No wonder there weren’t any authors’ names attached.

Some of it has come true. Some of it was so wildly optimistic, that issues which were framed in a positive light in the report, we now consider serious long-term challenges. If its content has even mildly influenced economic and social policy thinking since it was published it may have put the future of the country in the balance.

There were four main cross-cutting themes. I’ll summarise the key points from each theme and include some commentary afterwards, with conclusions at the end.

1. Demographics

  • The population is ageing due to a combination of a low birth-rate and increasing life expectancy. There’s no evidence birth rates would recover to an extent that the numbers being born in Wales will replace those dying (replacement rate).
  • The panel didn’t believe there were many policies that could effectively make a difference to birth rates or fertility (except in areas like childcare and flexible working); they might not be worth pursuing because it’s unlikely to change the demographic picture.
  • Population growth will be maintained by increased in-migration, particularly of retired and older working-age people (mainly from England); if this didn’t happen, the Welsh population could fall by a fifth over 50 years (by the equivalent of about 600,000 people at the time the report was published).
  • The impact of an ageing population is limited economic growth because people’s productivity falls as they get older. Policies should enable longer working lives and remove barriers to the economic participation of older people.
  • The report predicts the proportion of elderly people would remain in line with England, while the dependency ratio (the proportion of children and the retired to working age people) will “increase modestly”; the numbers of children and young people could fall by 40% over 50 years, while the number of working-age people will fall more slowly.
  • Older people are likely to be more active and healthier and the costs associated with age and care will be “less than expected” despite being predicted to increase.
  • Reducing out-migration won’t deliver a stable population; the report accepts that the better educated are likely to move out of Wales, while policies such as reduced house-building – in order to retain locals and protect smaller communities – are likely to price said locals out.
  • The Welsh Government should take steps to encourage the best-qualified school leavers to attend Welsh universities.
  • “If the objective is to maintain overall population levels, policies will need at least to facilitate and perhaps actively encourage in-migration” and “will mean catering….to the preferences of prospective in-migrants over where to locate housing and the nature of housing provision”.The report openly accepts this could/would have a negative impact on the Welsh language, identity and culture.

Comment: As of 2016, 20.4% of the population in Wales were estimated to be aged 65 or over and in some local authorities – particularly in the north – it’s higher than that. At the time the report was published in 2006 it was 17.6% – so a 16% increase in just 10 years. The report laughably suggested it would remain in line with England when we’ve surpassed them by some way! Ask yourself what Wales is going to look like in 2026?

We all know those most likely to use hospital services are the over-65s and particularly the over-80s – that means more strain on the NHS and social care system; the other laughable prediction being that older generations will be healthier than previous ones when, if anything, people are living longer but aren’t necessarily healthier with dementia becoming a growing problem. As the panel didn’t see the coming financial crisis and cuts to public spending, it’s a policy that would have/will have left us with a big mess to sort out.

Catering to in-migrants and their needs and wishes over the resident population is straight-up internal colonialism no matter how you want to dress it up – and it’s there in black and white in a Welsh Government-backed paper. The simple acceptance of it speaks volumes.

There’s little benefit to replacing people of working age with the retired or nearly retired and it seems madness to suggest it’s fine. Before that’s twisted into suggestions of anti-immigration or anti-English sentiments, I’m in fact the opposite – I would be quite happy to see the population of Wales increase to 3.5/4million+; Cardiff, Swansea, Bangor, Wrexham etc. can double in size for all I care. However, it has to be through the in-migration of skilled working age people from pretty much anywhere, retaining the best of our own young people and matching population growth with economic growth and job creation. That’s sustainable. Our current path of becoming Cornwall-Max/Florida in the Rain isn’t.

2. The Economy

  • There was “no indication” the long-term rate of economic growth of between 2-2.5% a year would decline. Wales was expected to catch up with UK GDP-per-head within 8 years (2014) and London/SE England “perhaps” within 16 years (2022).
  • Wales’ low proportion of higher quality jobs in business and financial services could be explained by “not having a really large city”.
  • The trend towards knowledge-based jobs would “hollow out” the jobs market, with machines replacing people. Skills will become more important, particularly in jobs that are not automatable.
  • “If one were concerned exclusively with the prospects for Welsh people, one might restrict policies to those delivering enhancements to human capital (skills, creativity, knowledge, personality)”; the most cost-effective way of doing this was by intervening in early years education and targeting the most disadvantaged children.
  • Enlargement of the EU (in 2004) “does not signal the end of the supply of lower skilled jobs” in less-mobile services in Wales (what’s now being called the Foundational Economy).
  • “Greater Cardiff” isn’t socially diverse enough, as some measure of social segregation (presumably by class) is linked to affluence.
  • “Cardiff could either move into the top tier of UK regional capitals or play a secondary role to Bristol. The upper Valleys, in particular, could continue to lose out, though there may be scope to capitalise on the high-quality landscape. The economic performance of north-east Wales is likely to continue to be linked to that of the north-west of England.”
  • “Increasing integration at the European level may result in the continuing marginalisation of peripheral areas and Wales could suffer as a consequence.”
  • Strong growth in the rural jobs market was linked to in-migration; accommodating them might “see rapid population growth in some places and major social and cultural change”.

Comment: Ignoring the first prediction on growth – which was proven spectacularly wrong – by and large I’d say it’s spot on. It makes a clear nod to the introduction of Foundation Phase (“intervening in early years education”) and the future introduction of the pupil premium. Cardiff’s rise in influence and jostling with Bristol for “top dog” in the south west of Britain was also explicitly forecast (and Cardiff was clearly second fiddle around the time the report was published).

Some of these conclusions make grim reading; the Valleys were seen as an economic write-off then (let alone now) and the days of mass, low-skilled work appearing on people’s doorsteps were over – it’s something none of us (especially politicians) wants to come out and say, but deep down we all know is true. How is that problem fixed? Your guess is as good as mine, though I’ll be returning to the economy in the autumn.

Also, did the report foresee Brexit? A lot of the language used was based on an assumption that Wales will remain in the EU in perpetuity and had to adapt to the EU’s expansion into eastern Europe. However, it also listed some of the core reasons people may have voted Leave in 2016 – namely the “hollowing out” of the economy and that integration at a European level (i.e. more focus on major cities) could disadvantage more peripheral regions.

3. Science & Technology

  • Key trends include greater use of sophisticated computers across the entire economy; increasing use of biotechnology and nanotechnology; increasing use of IT which could lead to a “digital divide” as information access is restricted to those who can afford it.
  • “Despite the hype, there is little evidence that the pace of technological change is faster than, or different in nature from, that seen in the past.”
  • New ideas are “only valuable if they meet a market need” and are usually restricted to within large corporations.
  • Early exploitation of new technology and ideas “generally creates few jobs” and often end up used in radically different ways to how they were first envisaged.
  • For Wales, “applying new ideas, especially in services, may be more important than creating new products” unless research undertaken here is of genuine international quality.
  • There’s a need for flexibility and responsiveness in decision-making; public policy in itself won’t lead to long-term exploitation of new technologies, but the government can help by, for example, promoting the use of new technologies and brokering contracts between business and universities.

Comment: Biotechnology and nanotechnology perhaps haven’t taken off as expected (though Swansea is making strides in the former) but the report was onto the trend of increased digitisation/reliance on IT. Maybe it didn’t quite predict how that would happen – streaming services, tablets, social media, smartphones, free Wi-fi – but clearly, the Welsh Government paid attention by undertaking initiatives like Superfast Cymru (for better or for worse) and even Plaid Cymru’s noble-if-flawed policy pilot of free laptops for schoolchildren.

The pace of change has been a lot faster than the report’s authors predicted and while they were discussing the impact of the likes of automation as early as 2004-2006, it’s only now in this 2017-18 Assembly term that it’s being discussed seriously by AMs; and even then, I’m not convinced the Welsh Government are taking it as seriously as they should, considering the continued influence easily-automatable manufacturing businesses and supply chains have on the Welsh economy (see also: How will automation hit Wales?).

Neither have the Welsh Government shown any signs they’ve pushed for greater use of technology in public services – learning from the likes of Estonia, for example. If they had, then maybe by now we would be being talked about in the same vein as Estonia and Rhodri Morgan’s vision of a “Small, Clever Country” would’ve seemed closer to reality and not just a soundbite.

4. The Environment

  • Some of the key trends include reduced reliance on fossil fuels (after a temporary increase in gas-powered electricity); increased value placed on the environment; increased need and availability of clean transport; rising sea levels and more extreme weather.
  • Wales’ industrial legacy has left it with a mix of industries that are “dirty”, while increased use of cars has led to Welsh greenhouse gas emissions increasing while they decrease across the rest of the UK.
  • Wales has the potential for the adoption of green technologies (wind & tidal), but the technology in the field is developing so rapidly it’s unclear which technology would be beneficial for Wales to manufacture; the “pre-selection of technologies for favourable treatment may lead to an inferior outcome”.

Comment: There are no signs yet that Wales is taking clean energy, clean transport and climate change seriously, mainly for economic reasons – it’s simply too much hard work and we saw what happened when the future of Port Talbot steelworks (arguably Wales’ single biggest polluter) was in the balance. That’s not a criticism really as the reaction was natural and grounded in political and economic realism.

The potential for Wales to produce all of its energy needs from green sources has been talked up time and time again. The Welsh Government have been told and have said exactly the same things time and time again. We have a so-called Future Generations Act, yet are about to spunk more than £1.4billion on a new motorway; that sort of money/infrastructure borrowing would be transformative for Welsh public transport and, for example, expanding the use of electric and clean fuel vehicles.

The good news is Wales is leading the way on recycling globally, not just in the UK or Europe. But really, the work should’ve started on greening the Welsh economy in the 12 years since the report’s publication. Instead, we’ve barely moved forward at all.

Conclusions

Too many people have bought into the idea that Wales should be “a nice place for people to die”, simply because it’s a lot easier to accept a greying, creaking Wales than instead taking concrete steps to retain our best and brightest.

It’s a vision that would, in Dr Evans’ own words, have seen/will see Wales become “Cornwall with an Assembly and a rugby team”.

But there’s always hope….

The report, in itself, isn’t a bad thing. By and large, I’d say most of the predictions and observations were grounded in mainstream thinking at the time. Apart from some of the more fanciful predictions and policy options, it presented – with a mix of mild optimism and realism – a pathway to sustaining Wales, not necessarily making it better. We don’t even need independence to address many of the points raised in it. We could do it tomorrow.

The question is, “What have we done since?” The answer is, apart from one or two areas, not very much.

It underlines just how much of a game-changer the Great Recession and banking crisis were, as well as the inadequacy of our politics – a Labour establishment whose only interest in staying in power for the sake of it so they do the bare minimum to get by, an ineffective and divided opposition, Plaid Cymru having a term in office at the worst possible time because it was dominated by the fallout of the Recession/financial crisis as well as falling public spending, and a UK Government who can’t see beyond the bottom line on spreadsheets and has never had our interests at heart.

….and God knows how Brexit is going to impact it too.

You can blame the report’s authors for painting Wales as a retirement colony, but the reality is they were only telling the truth as they saw it and the truth that we keep denying ourselves:

Wales is on unstable legs economically and demographically, but we can either have a soft landing and give ourselves a chance to get back up again, or a really hard landing that will leave us on the floor. This report was part hospice care plan (to prepare for the end), part social care plan (to keep things ticking over). You could even say that Wales is moving towards being a post-politics, post-growth country.

Wales can either be reborn with a new sense of purpose and through our own hard work, or it can be chucked into a hole because it’s the easiest option and we’ve all given up.

That choice is yours to make.

The next full update of State of Wales will be on 30th April and will be dedicated to equalities issues, laying some of the groundwork needed for future work on a Welsh Constitution.

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