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Port Talbot Shows Why Wales Needs a New Economic Strategy

The closure of Port Talbot steelworks is the culmination of decades of free market ideology that has devastated Wales. It's time for a new economy that puts public interest before private profit.

Credit: leighcol / Getty

The decision to axe thousands of jobs at Port Talbot steelworks is nothing short of industrial vandalism. It is a further hammer blow to an area already devastated by deindustrialisation. 

Sadly, Cymru has suffered this faith before. The former coal mining valleys continue to suffer higher than average levels of unemployment and lower real incomes, even 40 years on since the pits were closed. Once prosperous towns which were founded on well-paid unionised jobs continue to suffer from deprivation. The valleys lost a major employer which was never replaced. And now Port Talbot looks set to go the same way.

Outgoing Welsh Labour Leader, Mark Drakeford, championed, ‘the mainstream radical, Welsh socialist tradition’ when elected leader and more recently condemned the ‘forty-year assault’ of neoliberalism. He was the architect of the former First Minister Rhodri Morgan’s ‘clear red water’ approach where the Welsh Labour Government distanced themselves from New Labour’s increased use of the private sector in public service provision. Drakeford’s own tenure as First Minister, however, though hampered by the pandemic, has not seen the articulation of a clear socialist economic strategy.

With steelworkers being thrown on the scrapheap, such a strategy couldn’t be more urgent. Drakeford, has criticised the Government’s approach on Port Talbot but successive Conservative Prime Ministers have largely ignored his protests. Now, amid a Welsh Labour leadership election, questions must be put to candidates on how they would not only defend livelihoods in Port Talbot but also deliver an economic vision for Cymru as a whole. 

The current two leadership candidates’ manifesto pledges talk about prosperity, investment, protecting public services and a green economy. But these are short on outlining a long-term comprehensive, radical economic vision. Despite there being devolution in Cymru for the past quarter of a century — with increasingly significant powers to influence economic development — this has not turned around what is still seen as a post-industrial economy.

Cymru currently ranks 11th out of the 12 UK nations and regions for average income and for productivity, due to high unemployment and inactivity rates. And it has not moved forward so far under its devolved government. As one academic stated, the Welsh economy today is exactly where it was in 1998 in relative performance terms. 

It is clear that the leadership contenders should be championing a clear alternative for Cymru. 

Financial Firepower

The stranglehold of UK government over Cymru hinders our ability to transform the economy. There are the shortcomings in the Barnett formula calculation, the inadequacy of the financial settlement that has left Welsh Government with a falling budget, the loss of EU funds and a re-centralisation of power at Westminster.

Meanwhile within Cymru, there remains an absence of an overall vision for the future economy of the country. The Future Generations Commissioner — a role created by the Senedd to assess the impact of policy on future generations — has identified a lack of coherence and consistency in specific policies. And only last month, criticisms of the Welsh Government’s Child Poverty Strategy, including by the Children’s Commissioner, highlight this weakness.

The culture has become one of management of existing resources within the parameters of the political bodies that govern in Cymru. This runs counter to any modern left vision. Cymru needs greater financial firepower at the top and greater economic organising at its base.

The vision in the Cooperation Agreement (the deal between Welsh Labour and Plaid Cymru after the last Senedd elections) for a publicly owned energy company, a construction company and thousands of new low-carbon social homes has withered as Westminster funding dried up. 

 There are a host of demands that Welsh Government should be shouting for from the rooftops. Securing prudential borrowing powers, increasing the borrowing cap and winning an increased reserve.  A tangible goal could be reforming and democratising the process to give Cymru a say in what qualifies for Barnett funding. The treasury recently decided HS2 was an ‘England and Wales project’ despite no high-speed track serving Cymru.

A further achievement behind which there is already momentum would be securing the revenue from the Crown Estate in Cymru to build a new Welsh Sovereign Wealth Fund. This would give Welsh Government greater power to invest in big ticket initiatives to transform the economy for the long-term, whether that be major renewables generation projects or large-scale retrofitting of homes.

It too could give Welsh Government greater clout to deal with strategic employers like Tata. With polling showing strong support for public ownership of steel manufacturing, the ongoing subsidising of the plant by public funds should come with public say in decisions, which Welsh Government should be able to exercise. At the very least, it should lead to public shareholding.

The Foundational Economy

Recent years have witnessed a wealth of discussion on the foundational economy as an alternative to modern capitalism, but with a lack of definition from Welsh Government. Across the UK, progressive pockets of this work exist, from Preston Council’s public procurement model to Islington Council taking services back in-house and restoring the local authority to the status of a foundation employer.

But more than that, we need to see local communities developing their own economic activity that operates in their own interest.

We are witnessing more communities across Cymru which have started to network and co-operate and the prospect of a Welsh community movement called cymunedoli, or communitisation is gaining ground.

Interest in and action around this model is taking place across Cymru — from Blaenau Ffestiniog in the north to Pembrokeshire in the west and my constituency of Cynon Valley in south-east Cymru.

In Blaenau, it has seen individuals set up social enterprises now linked in the Cwmni Bro network, including with seed funding from Welsh Government. If a Welsh Labour leader adopted a programme not only of understanding the benefits of community wealth-building but establishing a fund to roll it out across Cymru, there could be enormous benefits.

A historic example of this was Tower Colliery, in Cynon Valley. It saw mineworkers risk their redundancy pay on an employee buyout in a rare example of employees who were producing the wealth also managing, owning and controlling the means of doing so, retaining the employment and the economic benefits within their community.

The vision of this model is simple it is about giving the ownership, control and benefits of our economy back into the hands of local people and communities and ensuring that we retain in Cymru the wealth which is created here.

So the twin tasks are clear. Secure the financial firepower for Welsh Government at the top to transform our economy and to engage and organise in our communities. There is an urgent need in Cymru to create a new and radical vision for our economy.

The moment is now here for those who would lead Welsh Labour — and would be Welsh First Minister — to set out how they will deliver that.

About the Author

Beth Winter is the MP for Cynon Valley.

Selwyn Williams is a former lecturer in Community Development at Bangor University and is the secretary of Cwmni Bro Ffestiniog, an organisation in Blaenau Ffestiniog working on a theory of community development called cymunedoli.