What’s in store for Wales in 2022?

By Siân Jones

Last week, SEC Newgate hosted an online panel discussion reviewing the key political and economic developments in Wales over the past year and looking ahead to what’s in store for 2022. The panel comprised Huw Irranca-Davies MS, Labour Member of the Senedd for Ogmore, Ian Price, Director of CBI Wales, Valerie Livingston, political commentator and Wales Director for Newsdirect, and me, with SEC Newgate’s own Dafydd Rees chairing.

The early part of the discussion focussed on the recently announced co-operation deal between Welsh Labour and Plaid Cymru; a wide-ranging agreement covering almost 50 areas of policy and including some highly ambitious proposals, such as free school meals for all primary age children and extending the free childcare offer to two-year olds.

However, the co-operation deal had not yet registered on businesses’ radars – perhaps because, in all of its 12 or so pages, there were only two references to the economy. When asked about whether plans to curb the numbers of second homes would impact investment, Ian Price noted that the rise of home working during the pandemic had opened up an opportunity for business leaders – possibly from abroad – to live in Wales, not just to own second homes there. That was something that would be a boon to the economy, given the shortage of higher-rate taxpayers currently residing in Wales.

The proposals for a national construction company, Ynnos, in the coalition agreement have attracted some positive attention from business. However, the devil will be in the detail; particularly with regards to what the precise relationship between indigenous Welsh businesses and Ynnos will be.

The outlook for the Welsh economy is more positive than had been feared. Far from the widespread job losses that had been anticipated when the furlough scheme came to an end, the job market in Wales is buoyant, with unemployment rates lower than many other parts of the UK. Instead, the debate has focussed on fair work and staff retention, and although Welsh businesses are sitting on debt, widespread insolvencies have yet to materialise.

What has been a benefit to Welsh businesses during the pandemic, is that financial support has been provided by both the UK and Welsh Governments. Huw Irranca-Davies noted that the Welsh Government has been successful at filling in gaps in the support provided by the UK Government, with a particular focus on keeping people in work.

The panel then turned its attention to constitutional matters. Valerie Livingston observed that although the pandemic had helped demonstrate to the public what devolved government can achieve, it had also shown up a number of frailties in the current democratic system, not least the relationship between the UK and Welsh Governments, which she described as ‘terrible’.

It was noted that the UK and Welsh Governments appear to have very different ideas about what devolution means in practice, with the UK Government frequently choosing to bypass the Welsh Government in favour of devolving funding to local authorities. Businesses are frustrated by the lack of goodwill and effective engagement between the two administrations, although it was noted that relationships were better at official level than at political level, with Welsh Government enjoying an especially good relationship with the Department for International Trade.

The size of the Senedd is another issue that is likely to be hotly debated over the next twelve months. The Senedd’s 60 current MSs are struggling to deal with their workload, and the small size of legislative committees means that resources are insufficient for proposals to be properly analysed and examined. Politicians – and the public – therefore face a choice between the politically challenging measure of funding more politicians. versus the pressing need for proper parliamentary scrutiny.

The co-operation deal between Labour and Plaid, with the Senedd’s sole Liberal Democrat, Jane Dodds, also likely to be backing Government on key issues, leaves the Welsh Conservatives as the Senedd’s sole Opposition party. Whilst the Conservatives put in a respectable performance in May’s Senedd elections, they did not make the electoral breakthrough they hoped for. The panel felt that the Conservatives need to avoid a devo-sceptic strategy if they are to succeed in Wales; they need to embrace devolution and look to develop a distinctive Welsh Conservative identity, as Welsh Labour has done so successfully.

Finally, the panel discussed the future of green energy in Wales. The Welsh business community was keen to get behind this, not least because, as Ian Price noted, three of the UK’s largest emitters are based in Wales. However, more joined up thinking was needed in order to turn warm words into action – particularly around removing planning obstacles for renewable energy projects such as the Blue Eden tidal energy project in Swansea. Again, Huw Irranca-Davies noted the importance of better co-operation and relationships with the UK Government in helping to break down these barriers.

Overall, it was a lively and wide-ranging discussion, and it’s clear there will be much to debate next year as the Welsh Government seeks to get to grips with these many challenges. But how much legislative and governmental time is available to deal with these longer-term issues will depend very much on the Omicron variant and whether Mark Drakeford will seek to implement additional restrictions, either before or after Christmas.