A New Agenda for a New Wales

A New Agenda for a New Wales:
BY WAYNE DAVID

(MEP for South Wales Central and Leader of the European Parliamentary Labour Party)

A few months ago I decided that next year I would seek election to the National Assembly for Wales. At the same time I indicated that I would not be standing again for re-election to the European Parliament.

When announcing my decision, I made it clear that I was not expressing any sense of disillusionment with the European Parliament. It is beyond question that the Parliament is now a significant European institution whose influence is growing. I also stated that my decision was not a reflection of diminished enthusiasm for European co-operation. More than ever before, I strongly believe that the reality of our interdependent world necessitates international partnership.

In fact, it is precisely because I believe so strongly in the principle of internationalism that I wish to bring the experience I have gained at a European level to the National Assembly. Europe is not only about inter-governmental co-operation, it is also about developing tangible links between people, regions and small nations.

Since my election to the European Parliament in June 1989, my main area of interest has been Regional Policy and, in fact, for 2½ years I was Vice-President of the Parliament's Regional Policy Committee. Consistently through this period, and especially as Leader of the Parliament's Labour Group, I have argued strongly for the principle of 'social and economic cohesion' - a principle which must underpin Europe's entire development if all regions are to benefit from the Single European Market and, eventually, a Single European Currency.

In seeking election to the Welsh Assembly, I believe that the experience I have gained at a European level can be used to good effect within the new Assembly. For the Assembly to succeed it must be a dynamic and outward-looking institution. It must be sure of its place within the United Kingdom and it must be confident of its role within Europe.

The challenge for Wales:
During the next few years Wales faces an enormous challenge. Thanks to the legacy of Conservative government, Wales stands out as one of the poorest parts of the United Kingdom, second only to Northern Ireland in terms of its Gross Domestic Product. Low wages, poor skills, widespread social deprivation, low rates of economic activity and continuing pockets of high unemployment are all indicative of an economy with structural weaknesses and fundamental imbalances.

It must be the central challenge of the Assembly to transform the Welsh economy so that we can create the prosperity to sustain our communities. No one should believe that such far-reaching change can be achieved overnight, nor should we delude ourselves that it is simply a matter of transferring public expenditure from one area to another. The future prosperity of Wales is dependent upon along-term economic strategy. A strategy explicitly designed to generate self-confidence, encourage entrepreneurship and create a vibrant optimism capable of challenging tired orthodoxies while reinforcing the shared values which still hold together many of our communities.

Economic growth:
Not so long ago, many economists argued that economic growth depended almost exclusively on macro-economic instruments such as taxation and exchange rates being successfully deployed at a national level. Today, the emphasis is on the micro-economic level. Economic success is now seen as being closely linked to education and training, the development of small and medium-sized enterprises and permanent innovation. This is the new regional policy, and it is precisely in these areas that the Welsh Assembly can have a very real influence. If we have sufficient determination, and if we can create a national agreement around such an approach, make no mistake, the Assembly can radically change the Welsh economy.

The regional economies of Europe:
If we need encouragement that this can be done, we can look to other parts of Europe for good examples. All of the successful regional economies in Europe have a strong co-operative ethos, which is actively promoted by democratic regional assemblies. From Baden-Württemberg to Catalonia, from Flanders to Lombardy, the structure of government may be different, but the overriding message is the same - devolution can be a catalyst for economic success.

The importance of EU structural assistance:
If we are to successfully map out such a future we have to deploy effectively the financial resources at our disposal. The £7 billion Welsh Office block grant is obviously crucial, but also important are the resources from the European Union. To date, Wales has derived significant benefits from the EU's Structural Funds. For the period 1994-1999 alone Wales is receiving £560 million of Structural Fund support which, because of matching funding, is leading to over £1 billion in economic investment. This is creating or sustaining over 45,000 jobs in both rural and industrial Wales.

On the one hand, the likely enlargement of the EU to include countries in Central and Eastern Europe, coupled with the widespread desire not to increase the EU budget, means that there are severe pressures on current levels of EU funding in Wales. But on the other hand, the real need for EU support in Wales is greater than ever. For example, GDP figures in much of rural Wales and the South Wales Valleys are very low indeed and it is possible that the western part of Wales could qualify for the maximum level of EU regional funding through so-called Objective 1.

Policy priorities:
However, with or without Objective 1 status, I believe that Wales will be in receipt of significant EU monies during the next funding period. If this will be the case, then the question will be how best can we use those European resources. I believe our priorities for such expenditure should reflect the following overall policy priorities for the economic regeneration of the Welsh economy:

- we should maximise support for indigenous business development. Small and medium-sized enterprises (SMEs) have enormous potential for job creation and, therefore, there needs to be a concerted effort to stimulate business start-ups, while giving particular encouragement to those with real growth potential. At the same time we have to foster a wider entrepreneurial culture which is rooted in our schools and permeates the whole of society. SMEs need to be especially encouraged in rural Wales, where hope of inward investment is slim, and in the South Wales Valleys, where there are opportunities to supply larger companies along the M4 corridor. However, the idea of growth from within goes much further and community enterprise, in all its diverse forms, should be given the support it deserves. Growth 'made in Wales' could well be the cutting edge of Wales' future prosperity.

- while new inward investment may not be as important in the future as it has been in the recent past, active encouragement should be given to inward investment in the Valleys and further west along the M4 corridor.

- for both local businesses and inward investors, research and development, and the broader concept of 'Innovation' are vital. Here the EU has provided valuable support through its Regional Technology Plan, and the 'Priorities for Action', which are aimed at improving the competitive strength of the Welsh economy, need to be followed through.

- the Assembly must tackle the appallingly low skills base in Wales. Education and training must become the watchwords of our economic programme, with training for women being seen as a priority. Equally, taking up the themes of the recent Luxembourg Jobs Summit, adaptability and extensive life-long learning opportunities should be seen as essential prerequisites for on-going economic success.

- the Assembly will have to develop the service sector in Wales to close the gap between Wales and the rest of the United Kingdom. We also have to ensure that the manufacturing sector in Wales continues to grow.

- the crisis in rural Wales has to be tackled. A new rural policy has to be developed and we must argue for the Common Agricultural Policy to be reformed in a way that enables greater support to be given to those farmers who need such support.

The above points are not an exclusive blueprint, but they do, I believe, provide a coherent and powerful starting point for Wales' economic transformation.

From the outset, the Assembly must create a genuine economic consensus in Wales about precisely how we are to tackle our economic weaknesses and develop our economic strengths. It will be up to the Assembly to give a lead, but that lead must be about drawing people together so that it is the people of Wales themselves who create a strong economy and a prosperous society. I am sure that the Assembly will meet this historic challenge and, in so doing, take Wales forward into the next Millennium with a new and unprecedented confidence.

Contact address:
Wayne David, MEP
South Wales Central European Office
42 Charles Street
Cardiff CF1 4RN
United Kingdom
Tel: +44-(0)1222-342848
Fax: +44-(0)1222-342981

See also the 'Bibliographic snapshot' on p33 for sources of information on Wales and the European Union.