Thursday, December 9, 2010


It is incredible to consider that some Welsh politicians actually went on record yesterday to shamefully state that qualifying for a third round of money as one of the poorest regions in Europe as "good news".

For crying out loud, should any self respecting Welsh person really believe we should be in this position after a decade of devolution?

More relevantly, have any of them stopped to think why, despite spending the billions of pounds of European money over the last decade, the Welsh economy continues to go backwards?

The fact that the private sector, mainly for narrow ideological reasons, has been largely excluded from developing projects during the last two rounds of European Structural Fund projects is probably one of the key reasons why very little economic progress has been achieved during this time.

For example, one of the major investments during the Objective 1 period was the Technium programme and much has been written about the so-called "Fields of Dreams error"  that was made in committing money to this scheme i.e. if you build it, they will come. I know because I have consistently been one of those critics of the way this project was developed.

Yet the simple fact of the matter is that if you let a red-tape obsessed Welsh Assembly Government run by civil servants with no commercial experience develop and manage an incubator unit, what do you think is going to happen?

The same applies to scores of other projects from business support to regeneration projects.

Rather than being seen as an investment to generate further wealth and jobs, European money has been merely been seen by public bodies as a bonus to their budgets with no real thought given as to whether that funding would generate long term sustainable growth.

More detailed discussion on this issue next week but, for the weekend, let me leave you with the following table, which shows which UK sub-regions have grown (or not grown) during the period 2000-2008 when West Wales and the Valleys received £1.3 billion of Objective 1 funding and a further £700 million of public matched funding.

As the table below shows, the relative prosperity of West Wales and the Valleys went down by -3.1% during this period, despite the fact that around £2 billion of European and public money was spent in the region.

Compare this to the performance of the other regions that were in receipt of European Objective 1 funding at the time and their performance. Cornwall increased its relative prosperity by 9.0%, South Yorkshire by 1.9% and Merseyside by 0.3%.

Can anyone try and explain why this is the case - that other regions in receipt of Objective 1 funding managed to grow their economies whilst it has declined in West Wales and the Valleys?

However, the real concern, and the one that Welsh politicians should really be worried about, is the fact that the prosperity of East Wales has declined by -5.2% over the same period.

In 2000, the region was almost at the same prosperity level as the UK economy. By 2008, it had declined to 94% of the UK's average prosperity. This is despite the so-called "devolution dividend", a doubling of the Assembly's budget and responsibility for economic development being firmly in the hands of our own Minister in Cardiff Bay.

Therefore, if the economic powerhouses of Cardiff, Wrexham and Flintshire are one of the five worst performing sub-regions of the UK, then the Welsh economy is in serious trouble.

More importantly,  if anyone still thinks that the naive document that makes up the Economic Renewal Programme is the answer to this decline, then god help us.