UNINSPIRING economic policies pursued by the Welsh Assembly Government will make Wales more dependent on handouts from Whitehall in future, according to a book published tomorrow.
Other claims made by two academics from Cardiff University are that:
Cuts of £300m, largely from the economic development budget, were imposed by the Assembly Government last year because of the inadequacy of the Assembly's current funding formula;
The Assembly Government has handled the Objective One European aid project badly, creating an unwieldy bureaucracy and using as many as 1,700 people to administer it, and
Devolution in Wales attracted few top-calibre politicians and even fewer top-calibre civil servants because the Assembly was given too few powers at the outset.
Professor Phil Cooke and Nick Clifton of the Centre for Advanced Studies at Cardiff University were commissioned to write a paper called The Welsh Assembly and Economic Governance in Wales. It appears in a book called Territory, Identity and Space, published tomorrow by Routledge.
Cooke and Clifton argue that contrary to the Assembly Government's strategy to increase employment by developing the so-called Knowledge Economy, new jobs have mostly been created in the public sector.
They write, "There was a loss of 44,000 private, manufacturing jobs between November 1998 and the same month in 2002. This was quantitatively more than compensated for by a simultaneous rise of 67,000 public administration jobs, overwhelmingly in health and education.
"However, these replaced higher value adding, higher productivity, export earning jobs for lower productivity jobs increasingly reliant on financial transfers from Whitehall. Under devolution, due to an absence of envisioning policy making to tackle changed economic realities, Wales looks to be becoming more dependent not less on London for the underwriting of its economic future."
The academics go on to argue that while Gordon Brown's policy of pumping significant amounts of public spending into health and education as a means of staving off recession may have worked well on a UK-wide basis, it has "created absorption problems in Wales where the Barnett formula (which gives the Assembly a share of Treasury funding based on Wales' population rather than need) squeezes expenditure out of the system if it cannot be contained within the block grant cap of some £13bn.
Hence in 2004 cuts of £300m were necessitated, mainly in the economic development budget, to make room for, especially, substantial increases in much-needed healthcare expenditure."
Criticising the handling of the Objective One programme, Cooke and Clifton write, "Not experienced in managing transfers of the £1.2bn scale plus match funding that this designation released, the Assembly Government cast around for methods of spending and managing expenditure. Here the precautionary principle overwhelmed any pretence at a more visionary alternative ... an unofficial estimate was made by a former EU senior official who had returned to advise the Assembly on this financial absorption and allocation nightmare, that 1,700 people had been recruited to manage the approval system and support it administratively."
The academics also assert that Scotland has been more successful than Wales in developing niche markets in biosciences, medical science and e-science.
An Assembly Government spokesman said, "These particular assertions bear no relation to the effectiveness of Welsh economic policy since 1999. It is not immediately clear what evidence has been used to arrive at these conclusions, but the real evidence shows a Welsh economy repeatedly outperforming the rest of the UK, particularly in relation to the growth in employment, exports and research and development.
"In addition, the new governance arrangements being put in place following the mergers of the WDA, Wales Tourist Board and Elwa with the Assembly Government will further increase our ability to create policies designed to meet Welsh needs. These governance arrangements reflect a policy wholly made in Wales."
Page 2 - At Blair's side