Nobody likes paying hospital car parking charges. People on low incomes are least able to. So there was a cheer at the announcement to abolish them. But are such Welsh government handouts really our priority for the future?
Economically and culturally, Wales has enjoyed a renaissance from the grim decades of mass unemployment and business failure: Wales now walks tall with a spring in its step.
However, we are still not anything like where we should be to compete with eastern and central Europe, let alone those economic superpowers of the future, China and India – countries with a combined population of over 2 billion people producing 5 million new university graduates a year, two-thirds in science, technology and ICT.
So prioritising public investment to cope with this competition will be vital. The Welsh budget has more than doubled since 1997 but that extraordinary real-terms rise could not continue without unbalancing the economy, causing a return to the instability, high inflation and high interest rates we inherited from the Conservatives and which plagued all British governments for a generation and more. That is why the next three years will still see real-terms increases in spending, though at a significantly lower rate.
In light of this, the finance minister, Andrew Davies is rightly insisting upon efficiency measures and reform.
However, Wales’ private sector is still too small. At just 41 per cent of GDP, it is smaller than any other part of the UK except Northern Ireland,well below the UK average about 56 per cent.)
To achieve at least equilibrium with the rest of the UK and the OECD countries, Wales must move towards a private sector at around 55 per cent of Welsh GDP. And to achieve this in 15 to 20 years we will need year-on-year growth of around 1 per cent faster than the UK average: no mean feat. But it is no good, as the right insist, simply leaving this task of catch up to market forces and the private sector. Government has a critical role to play.
As Rhodri Morgan has so eloquently said, the Wales of the future will be ‘a small but clever country’, with private sector growth in the right areas, and raised levels of educational attainment, skills and innovation.
Wales needs to compete in fast-growing, high-skilled sectors: financial services, electronics, nanotechnology, biosciences, molecular mechanics and ICT, with many more start-ups and high-tech businesses. We need to support vital new energies including renewables and biofuels.
Universities need to be at the heart of this. Singapore, a country roughly the same size as Wales, has demonstrated that this can be done: on a per capita income basis it is now one of the top 20 countries in the world. As I have seen myself during visits to Cardiff, Swansea and Bangor, our universities are already making a significant contribution to business, and substantial increases in the Government’s science and innovation budgets are enabling further improvements.
The emergence of so-called Technium innovation centres throughout Wales is hugely important in exploiting the talents of Welsh graduates in starting up new companies, especially in growing and important areas like financial services, nanotechnology, biosciences and ICT.
But we must do much more to inspire our young people to be entrepreneurial from school onwards, prioritising funding to enable our universities, colleges and schools to provide much better foundations for the businessmen and women of tomorrow to go on to become great Welsh innovators of the future.
Nevertheless there are currently some 50,000 job vacancies across Wales, because we do not have enough people with the right skills to fill them. Tens of thousands more people need to be moved off benefits and into these jobs, supporting them with opportunities to gain skills, access to medical and psychological expertise where appropriate, and, in turn, expecting them to prepare for work.
Despite coming down these past few years, the level of economic inactivity is still far too high in Wales, reflecting the dismal heritage of the 1980s and 1990s when numbers on incapacity benefits more than trebled and mass unemployment was a curse. The ‘sick note’ was cemented into the foundations of Wales, with claimants statistically more likely to die or retire on incapacity benefit than ever work again, and with their children more likely to suffer worklessness and illness too. Addressing this is essential to close the Welsh prosperity and GDP gap with the British average.
Government at all levels will have to raise its game. Decisions need to be taken more quickly and our Westminster government’s planned streamlining of planning for infrastructure and energy projects is vital to overcome endemic nimbyism and ensure Wales does not fall further behind.
Business also needs much smarter local government, modelled on Port Talbot’s record of excellence for quick decisions implemented speedily. The culture of cautious conservatism that is so rife in Welsh public services – from the civil service to local councils – needs radical reform if we are to build a truly competitive economy. As I know from working with them, there are many fine Welsh public servants. But, for Wales to succeed, our risk averse, can’t do culture must be replaced by a dynamic, can do culture.
Wales continues to improve but we can’t stand still. The alternative is to fall back. We must think and act globally, not merely nationally, and certainly not parochially ensuring we have a political, economic and social culture which is truly internationalist. We cannot look inwards, we must look outwards, as a small country with a big global vision.