GVA

The GVA figures are ouit and Wales is firmly anchored at the bottom of the league. Whereas we were in a straight fight with the North East for that dubious honour they seem to have pulled ahead. The link to the BBC story is here -

http://www.bbc.co.uk/news/uk-wales-35050611

The figures make grim reading. Wales is at the bottom of the regional table, west Wales and the Valleys is at the bottom of the sub-regional table and Anglesey is bottom of the local area table. Whilst the economy is growing it isn't growing as fast as everywhere else which is why the gap is widening. GVA for Wales is 71.4% of the UK average.

The news for Cardiff isn't great either. Of the 13 largest cities in the UK Cardiff has the lowest level of growth at 0.9%. Whereas just a few short years ago Cardiff's GVA was above the UK avearge it's now substantially less.

It's easy to point the finger at the Labour led admin in Cardiff Bay and they must bear responsibility. We were promised a devolution dividend if I recall the late 90's correctly but what we've received is the opposite. They've had 16 years of uninterrupted power and we've not even managed to stand still in that time.

But blaming Labour alone is missing the point I think. Structurally the Welsh economy is extremely fragile and the large numbers of people who earn their living over the border doesn't help matters. I wonder if GVA by household will make any difference to our standing?

Does anyone have any answers other than to blame Labour? Will the city region and the metro make a huge difference? Is this just the natural order of things - after all Wales is a sparsely populated, geographically challenging country with one medium sized city and very poor infrastucture, an older and less well educated population in comparison with other area's?

I've always had some worries about the measurement of local-area GVA. Their estimates for Cardiff in particular have been all over the place. Earlier figures had Cardiff at 117% of the UK average (enough to drag East Wales as a whole almost up to UK average), but revisions then saw it fall to under the UK average, then back to slightly above it.. and then below it again. The year-to-year change margins of error are wide, especially for the NUTS-4 'local area' statistics.

I think Cardiff and Vale is probably roughly at the UK-average. It has slightly lower than average salaries and lower-than average employment rate among residents, and probably a lower "profit share" in its production, given a big public sector, and the relative absence of HQ functions. But offsetting this is substantial in-communting. So on a "work place" basis, these might balance out. I think its probably maintained that "about average" position for most 10-15 years or so, after catching up a bit in the 1990s. Now that performance isn't actually too bad given it isn't really that big an urban area and its urban areas and above all London that have driven growth since the turn of the millennium.

Wales' performance looks bad compared to the UK as a whole - and bad compared to the Welsh Assembly's early ambitions to raise performance from 80% to 90% of UK average over the space of a decade. I think its important to note that we didn't fall from 80 to 71.4% - the earlier figures were downwardly revised to about 74%. So we have fallen a little bit relative to UK average, although not relative to the UK excluding London! Again this is a story about agglomoration effects.

So I would say performance has been middling - we've not seen a devolution dividend, but neither has economic performance deteriorated significantly since devolution.

That doesn't mean I think the Welsh Government have their priorities right though. I think it might need to reassess higher education policy - the big cuts to direct university funding yesterday were bad news, as HEFCW funds not only skills but also research. Wasn't collaboration between unis and business meant to be a key strategy? That must be harder when unis have less money. And more capital DEL should be allocated to transport - and maybe less to housing provision. Of course, the Welsh Govts position here isn't helped here by Osborne's fiddling in England (pushing up demand and in the end making problems worse not better). But we don't have quite the same issue with housing affordability as in many parts of England - and those we do could be partially addressed by releasing large areas of land for development, holding down prices more generally. That would free up capital from social housing provision for transport. But it would mean risking the ire of both the social housing sector, and home owners. There are quite powerful interest groups who benefit from our two-tier housing system!

The Independent has 5 year GVA figures, which are more flattering for Cardiff:

http://www.independent.co.uk/news/business/news/london-leads-uk-economic-recovery-but-its-not-fair-and-its-not-making-us-happy-a6766566.html

We're ahead of Liverpool, Edinburgh and Leeds/Bradford, but quite a long way behind Bristol.

The answer is that Cardiff needs to grow.. We need more houses and think more like a capital cit rather than compete with Bristol.

We need more emphasis on our tourism, our beaches and mountain ranges, areas of outstanding beauty.

A strong meaning business capital city will have an impact on the rest of Wales, unfortunately Cardiff thinks like a large town.

We also need more jobs for the valleys as that is where a lot of the issues are for Wales as a country.. how you sort that one out, who knows

Chris Giles has done a long piece in the FT on this for the true masochists. It's not great for Wales but actually not as bad as it might at first seem. The north east appears to have bucked the trend a little so Wales is now in last place. Everywhere is falling further behind the south east and Wales is no different. It actually seems to be the midlands that is relatively declining the most, so it's now pretty much on a par with the north. The gap between Wales and the midlands might have narrowed a little. Incidentally given the midlands seems to have slipped backwards one wonders why there is such a attention being given to HS2 and faster journey times between London and the north as some supposed economic panacea. If that's so important why isn't the midlands doing better? Seems to me that once you get outside the London commuter belt the picture is very similar and high speed rail won't fix that.

I think RC is quite right to focus on planning and housing. I heard it said recently that the UK has the most expensive land anywhere in the world except Monaco! Who'd want to invest in anything else? We desperately need political leaders who will tell the public the truth about this. Instead we have a ruthlessly political Chancellor who just wants to blame everything on Labour (and before Jantra gets all excited, no I'm not suggesting they are entirely innocent).

What could be done here in Wales under our devolved powers? Hard to say, but given we appear to be turning into a soft one-party state I don't hold out much hope.