Afraid of Independence? We are in an election campaign where supporters of Welsh independence seem to be avoiding the subject, while Unionists are actively encouraging us to be afraid of independence. The Unionists are deploying a form of “project fear”, a powerful tactic which inhibits meaningful long term thought about changing and improving our country. It is not easy to resist a lazy conservative culture where vested interests are determined to keep everything as it is, and prevent us from thinking “outside the box”.
The unionist establishment always attempt to box us in, using for example this report from the Wales Office which frames the discussion by comparing, in an unbalanced way, income only collected in Wales, against expenditure spent all over the UK and beyond, on our behalf, with minimal control by us Welsh residents. The “boxed in” politicians will unthinkingly interpret this as ca £7,000 deficit for each of us, but this is the attitude of perfunctory supervisors, uninterested in thinking about what matters and what doesn’t, what’s possible and what isn’t, in our ever-changing world.
Independence is a much bigger idea than that, and the context is also far wider, the worldwide power, wealth, social and environmental imbalances are clearly now unsustainable, the world has to change, including the UK, and this could bring opportunities and better outcomes for Wales, if we think and work hard enough.
This subject should not be avoided, regardless of the short-term priorities of our politicians, and while a full plan for independence is not currently in place, the discussion is still important as we consider the possible forward direction of our country. A few brief policies are outlined below which hopefully suggest a practical way of helping us answer basic challenges and understanding the bigger picture of independence.
Short term policies for an Independent Wales
- Compensation for accepting incoming retirees: The cost of paying pensions and hospital costs for older retired immigrants is significant. Pensions are exportable, and independent countries e.g. Ireland and Spain, deal with healthcare costs for immigrants from the UK by arranging “S1” payments with the UK Government. This is complicated, but given our demographic position, an independent Wales would expect a significant contribution towards this.
- Improved fiscal efficiency of locating government functions within Wales: Paying England based civil servants to govern us leads not only to less favourable decisions for Wales, but also loses tax income from the salaries paid. This applies to many functions which are carried out “on behalf of Wales”, including aspects of defence.
- Policies favouring local businesses: The private sector would also become more fiscally efficient through ensuring that more commercial activity is conducted by Wales-based firms that pay taxes locally. However, UK policies make it difficult to encourage this, and as a result, businesses headquartered outside Wales continue to dominate our economy without contributing sufficiently to our tax base.
- Terms of trade: UK frameworks do not allow Wales to receive appropriate income for energy transfers e.g. in the way Ireland and France do for electricity. This also applies to water, and other resources including the land owned by the Crown Estate. We are not able to negotiate for ourselves, so our terms of trade are terrible.
Longer Term policies for an Independent Wales
- Borrowing for investment: The current UK arrangement has starved Wales of investment in both public and private sectors for decades, including Research and Development, and the Welsh Government is effectively denied the opportunity to borrow efficiently itself to invest, limiting the options to develop of key infrastructure which could encourage growth and improve the fiscal and trade balances. The lack of public investment also undermines private investment. An independent country has many more options for borrowing for investment, especially if it has its own currency.
- Economic development: Wales currently has access to very few levers which can influence the development of our economy, for example we are prevented from providing subsidies which could be seen as an unfair advantage to our companies against competition elsewhere in the UK, this limits Wales’ options to focus on developing sectors which are important to us. We are effectively “banned from winning”. Independent countries have far more realistic options for encouraging economic development.
The Discussion Continues
The above hopefully provides a glimpse of what should be possible in the future, a few highlights of what we should be able to discuss in the interest of fairness for our country, and how to prepare for independence. There is much more, of course, to take on, and we should be aware that these issues are not automatically resolved for independent countries, but at least they have a better opportunity to address them. If this seems daunting or risky, remember that Wales has advantages too: while England and most of Europe will have strategic issues to do with the security of energy, water and food, an independent Wales would be in a relatively strong position with a significant internal supply of all of these resources, so those risks would be lower.
What Wales needs is good planning, good data about how our economy works, and the political will to think for ourselves, make efficient decisions which suit us, rather than accept decisions made on our behalf by others. Our new politicians will need to have confidence and determination to play a part in a changing world. There are some improvements which can be done in the meantime, such as developing a foundational economy, but ultimately, we will all have to think more openly about independence.
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