As one of the most talented individuals of the 2016 intake into the National Assembly for Wales, it was clear that Lee Waters was not going to be an orthodox assembly member during his first term.
Quickly promoted to Deputy Minister for Economy and Transport when Mark Drakeford became First Minister last year, he took little time in pushing the boundaries in terms of what he believes would help develop the Welsh economy and became quickly known as someone who was not afraid to speak his mind.
Therefore, it may not have been too much of a shock to those of us who have known Lee for a number of years that, in a speech in Cardiff last week, he said that the Welsh Government had pretended to know what it was doing for 20 years, that efforts to improve the economy under devolution had not worked and it was time for a different approach.
As reported in this newspaper, Lee said that “Nobody knows what they're doing on the economy…Everybody is making it up as we go along - and let's just be honest about that. We've thrown all the orthodox tools we can think of at growing the economy in the conventional way, and we've achieved static GDP over 20 years”.
I am sure that the CBI would argue that ‘conventional’ solutions such as building the M4 Relief road were never given the opportunity to succeed but I would absolutely agree with Lee in saying that there has been little innovation in economic policymaking over this period. In fact, where there were interventions such as the development of Entrepreneurship Action Plan (the World’s first regional enterprise strategy), they were usually abandoned despite showing stellar success in its outcomes.
And when Wales could have utilised European funding for turboboosting R&D and innovation across the nation, it instead resorted to the old “build it and they will come” property play by wasting hundreds of millions of pounds on white elephants such as Techniums.
But I would argue with him over his claim that the Welsh economy has remained static and perhaps despite the efforts of government, Welsh businesses have continued to grow and thrive and contribute to economic growth.
Yes, if we look at the actual economic data, it is true we are still bottom of the prosperity league with a GVA/head of £19,899 which is approximately 73 per cent of that of the UK although data supplied by the Office for National Statistics actually shows that Wales has grown its economy and closed the gap with the rest of the UK since 1999.
In fact, with 74 per cent growth over the period 1999-2017, we have the fifth fastest growing regional economy in the UK. This is slightly behind the average UK growth (75 per cent) but ahead of other growth regions such as South West England, the Midlands, South East England and the East of England.
The main problem is that London – which accounts for nearly a quarter of the UK economy – has grown by 91 per cent over the same period and this clearly skews the relative regional performance of any other part of the UK. Indeed, the gap in GVA per head between Wales and London has more than doubled from £14,132 in 1999 to £28,958 in 2017.
Another point to consider is that this growth in the Welsh economy since devolution does not tell the whole story given that the UK economy was essentially rebooted a decade ago when the global recession changed everything. Therefore, if we look at how Wales has performed since 2009, then a very different picture emerges with Wales (27 per cent growth) being the third fastest growing part of the UK in terms of GVA/head, only slightly behind the West Midlands (29 per cent growth) and London (28 per cent growth) and significantly outperforming Scotland, South West England and the South East of England.
More importantly, over this period, it has closed the gap in GVA/head with over half of the UK’s nations and regions although the gap with London increased by £6,524.
Was the Welsh Government directly responsible for closing this gap or was it a result of the UK Government’s fiscal policy of corporation tax cuts which encouraged large businesses – especially in the manufacturing sector - to invest into the UK?
Given the habit of politicians on both sides of the Severn bridge to claim credit for any job created, it would take a more detailed analysis to ascertain which exact policies have led to economic growth although I doubt that will happen soon just in case Lee was right in what he said!
Yes, the Welsh economy hasn’t performed as badly as some say but it certainly could have performed far better if there had been a far more focused approach to entrepreneurship, innovation, infrastructure and skills over the last twenty years.
And whilst some may say that Lee Waters’ intervention was a political banana skin that has embarrassed the previous efforts of many of his colleagues, it is about time we had some honesty and plain speaking about where we want to develop as a nation over the next twenty years as I really do believe, as I always have, that we have a massive potential amongst our business community to become one of the best performing economies in the UK.
And whether you agree with Lee or not, no government alone has all of the solutions to the challenges facing our economy and if we are to finally close the prosperity gap, then it is critical that other key actors such as entrepreneurs, corporates, local authorities and universities also play their part so that together, we can achieve the economic growth we all know our nation is capable of.