Rewiring Wales

Building a stronger economy is an essential first step writes, Rhys David, in this background paper prepared in June 2020 for the Wales Independence Commission.


Introduction. 3

Faulty Circuits. 5

Lagging Behind. 6

The fiscal gap. 9

Introduction. 3

Faulty Circuits. 5

Lagging Behind. 6

The fiscal gap. 9

Levelling up. 10

A new model 15

Positive and Negative. 18

Wales and the West. 18

Business scale. 20

Welsh strengths and weaknesses. 26

The luck of the Irish. 32

Hard questions. 38

A more business-oriented economy. 39

Building New Connections. 43

Small business support. 45

Private sector resources. 48

Procurement and the Foundational Economy. 49

Smart FDI 51

Reshoring. 53

Exports. 55

Business Intelligence. 56

Capacity. 57

Delivery. 58

Education. 62

Joining the Welsh dots. 66

Can Wales Do it?. 67

Summary and Recommendations. 69


This report sets out to examine why Wales has lagged other parts of the UK and Europe economically and what can be done to rectify this. It is a task that is likely to be more pressing following the damage being inflicted on business and society by the Covid-19 pandemic. Study after study has highlighted Welsh weaknesses – poor productivity, leading to lower levels of output and depressed wage levels, high levels of poverty, disappointing educational performance, and unsatisfactory health outcomes.

The British Government has declared a new willingness to address regional imbalances across the UK and a programme of levelling up measures, including investment in new infrastructure, is promised. This report argues that while this is to the good, a more transforming  vision for Wales should be articulated. Wales should not be seen as a perpetually poor relation within an economy dominated by London and the South East and the needs of its financial services industry, but more closely resembling the better balanced economies of other small nations.

Yet, to make moves in this direction it is necessary to understand how far Wales needs to travel. Despite the encouraging growth of new Welsh-owned businesses over recent years, Wales is still a branch plant economy with too few companies owned and controlled from Wales or fully integrated as equal partners in global supply chains. This is in sharp contrast with the Republic of Ireland which in just a few decades has transformed itself into a rich country, home to a host of overseas and especially US companies operating in advanced sectors, and to an impressive cohort of Irish-owned multinationals.

The principal recommendations made at the end of this report are that

  • The role of the civil service should be re-examined to separate economic policymaking and implementation.
  • A new agency or agencies should be established to promote small business growth, medium size business development, inward investment, productivity, and export activity.
  • The extension of state support for key sectors in the form of direct Government stakes should be considered
  • Greater involvement with the venture capital industry should be sought and a Welsh venture capital trust investing in Welsh start-ups established.
  • The foundation sector should be put at the centre of policymaking and incentives and penalties to secure greater public sector purchasing put in place.
  • Support should be given to businesses seeking to re-shore products currently made elsewhere, and further efforts made to ensure Welsh food producers contribute a bigger share of the nation’s food purchases.
  • The Welsh education system should be refocussed on meeting the needs of Wales, and financial and other measures implemented to persuade more students to study in Wales or return to Wales on completing their studies.

Faulty Circuits

In the final section of the report it is argued that a more business-minded approach is needed throughout Welsh society, not unlike that in Ireland, and that new institutions and a new role for Government is needed. Better business intelligence must be at the heart of this and the long-standing debate over the absence of a dedicated agency to deliver these changes needs to be resolved. An economic development body for Wales, similar to those in existence in Scotland, Ireland and most European countries, should be created. This new implementation strategy, taking execution out of the hands of the civil service, should be backed by a greater willingness to use public funds to help shape the Welsh economy so that it best meets Welsh needs and to ensure key sectors grow and thrive.

Wales, for as long as any one of us can remember, has had a weak economy, and to put it bluntly, does not pay its way, raising far less in tax revenue than it consumes – the fiscal gap.  Individual studies over time have identified the reasons for the economy’s chronic weaknesses as they are seen at the time and have concluded that one or other new technology or strategy will provide an answer.

Foreign direct investment, oil from the Celtic Sea, microtechnology, Japanese just-in-time work practices, technology centres, key sectors, and most recently the wider use of public procurement and the foundational economy have all been called to aid but lasting change capable of elevating Wales from near the bottom of most UK economic league tables – so as to balance its books – has remained a chimaera.

There are indeed successes in growing fields compensating to some extent for weaknesses in other areas. The Welsh Government’s 2017 Economic Action Plan (EAP) states grandly that Wales is home to some of the most innovative, dynamic and exciting economic activity anywhere in the world: world-class centres of aerospace engineering and nuclear energy in the north; cutting-edge metallics innovation, marine technology and automotive production in the south; award- winning food producers in rural Wales.

Cardiff University has carved out a strong position in medical research and the city is home to a growing fintech sector. An encouraging number of health-related companies have set up shop in Wales, too, including several that are playing a prominent part in the fight against Coronavirus. Swansea University has developed a range of partnerships with international businesses.  Newport has an important semi-conductor industry.

Our two most westerly ports, Milford Haven and Holyhead have established themselves modestly in the cruise ship sector, bringing tourists to enjoy the benefits of improved visitor facilities.  Wrexham and Deeside have become modern manufacturing centres well integrated into the UK and international economy.

Welsh Government admits, however, to the extent of the problems: Wales has to face the challenges of deindustrialisation; economic inactivity; unstable and insecure employment; productivity that lags behind the rest of the UK; accelerating technological change; slow diffusion of innovation; costly sickness and in-work illness rates and the challenge of an ageing population. To these can now be added recovery from the Covid-19 pandemic.

The underlying causes have been regularly identified: the loss of many of its brightest individuals, who choose to study in England and never return, part of a broader brain drain affecting England’s regions, too, into London and the south east;  the regular absorption into larger businesses elsewhere of successful Welsh start-ups and medium size companies, hindering the development of a balanced, and locally owned and managed business economy; the continued underfunding of Welsh infrastructure and other projects because of a Treasury bias towards more heavily populated regions.

Globalisation has had a damaging effect on the least skilled everywhere, enabling their jobs to be exported, or cheaper labour to be imported. It has brought benefits, but these have gone disproportionately to the better-off, perhaps the most important reason for the election of populist leaders in the US and elsewhere and the Brexit vote in the UK.

In Wales it is necessary to look no further than Swansea to see its impact. The entrance into the city from the east used to pass motor industry, engineering and aluminium plants offering skilled and well-paid engineering jobs. Now it is lower-skilled shelf-picking for Amazon, (admittedly adjoining large scale new university facilities). Call centres, valuable as they are as sources of employment, have replaced – with lower wage levels – more satisfying and fulfilling jobs in manufacturing.

Lagging Behind

Against this background output per person in Wales has continued to lag the rest of the UK, which itself has a poor record in comparison with competitor nations, as a recent report from Cardiff Metropolitan University, pointed out.[1] This painted a worrying picture of Gross Value Added per unit of labour, making Wales the weakest of all UK regions and 18 points behind the average for the UK. (The strongest region, London was 40 points above the UK figure.)

The explanation lies in part in the 21st century structure of the Welsh Economy. Much of Welsh business is not just micro, but positively nano in size, where gains in productivity are particularly hard to find.[2] There are too few medium size firms and a decreasing number of large companies as foreign firms have left for lower cost locations. Much Foreign Direct Investment (FDI) has also been branch manufacturing with limited local senior management roles, and answerable to decision-making regional headquarters elsewhere in the UK (or the rest of Europe). Such was the case in the coal and steel era, too.

Table 1. Gross domestic product by UK constituent country and region 2018.

RegionsPopulationTotal GDP (£bn.)GDP per head (£)
North East2.6662.623,569
North West7.29207.428,449
Yorks. & Humberside5.47141.725,859
East Midlands4.8124.625,946
West Midlands5.9159.827,087
East of England6.2186.430,069
South East9.13311.334,083
South West5.59158.128,232
Northern Ireland1.8848.925,981

Source: ONS

FDI brings the biggest benefits when accompanied by management and other higher-level functions such as research and development activities and this has generally not happened in Wales. Even if firms with these characteristics move on, there is a much better chance they will leave behind individuals with the knowledge and expertise to start companies in similar or different fields than if the plant has simply been a branch factory.

Percolation through to Welsh businesses of productivity lessons – one of the original hopes pinned on the capture of such firms for the Welsh economy – has therefore, perhaps understandably, rarely happened. Improvements created elsewhere are unlikely to create or drive an innovative culture that will then spread beyond the recipient organisation.

Poorer regions, such as Wales, have a bias anyway towards lower productivity, creating a vicious circle that is hard to break. Individuals will understandably protect themselves in areas where jobs are most scarce, clinging on often for little reward in unviable retail or other businesses, taking market share and profitability from competitors.

Geography, too, is partly responsible for the gap with comparable public services in richer parts of Britain. Transport for Wales can never hope to match the productivity of the commuter train services to London with their much higher passenger numbers. There are other factors which add to the complexity of the problem, for example the balance of sectors within an economy and the shares respectively of the public and private sectors.[3]

Yet, the importance of securing increases in Welsh productivity cannot be under-estimated.  Projections show a decline in the numbers of young people entering the working population over the next few decade, so productivity will have to increase merely to maintain current levels of output.[4]

As if these structural weaknesses were not enough a deep recession seems likely after the Covid 19-induced partial cessation of production and consumption across the world in the first few months of 2020. Scary levels of employment loss have been suggested if companies find it impossible to resume operations after months with little revenue. The hit to incomes will impact consumer spending, adding to the problems facing business.

This is even before the challenges of reacting to global warming and moving to a low-carbon economy are considered. The world economy and that of virtually every country within it, including Wales, will be fundamentally changed. Government debt levels have rocketed increasing the burden of debt servicing if, and when, interest rates rise from current historically low levels. A share of this burden will be attributed to Wales, pushing yet further the gap between tax raised in Wales and spending.

It is tempting to say that these problems are inexorable. Welsh people (like their counterparts in most of the English regions), the argument runs, are fortunate to enjoy the benefits of funding from the taxation surplus generated in the south east (and until Brexit from EU finding). Higher tax receipts garnered in London and the South East of England. provide the money for public services, such as health and welfare benefits. These ensure that, despite lower income levels resulting in lower tax revenues, Welsh people enjoy the same level of public services as the rest of Britain.

The fiscal gap

Yet, the size of Wales’s deficit is not pre-ordained and is larger than a self-respecting nation should accept as inevitable.[5] In 2018-19, according to the Cardiff University fiscal analysis report, the gap between public spending revenues from Wales and public spending for Wales stood at £13.5bn, equal to 18 per cent of total Welsh gross domestic product or £4,300 per head.[6] Even before Covid-19 and its attendant costs, the resources likely to be made available in the future were not likely to be on the scale needed to transform the Welsh economy, the academics point out, leading possibly to a widening of the gap.[7]

An incipient understanding of this hard reality has resulted in the previously unthinkable beginning to be thought. If Wales is trapped in dependence as part of the union then why not a complete break? If Scotland can consider such a move, then why not Wales? A sharp shock, the marchers on Wales’s 2019 independence rallies were perhaps thinking, might hurt but also might lead over the longer term to a healthier independent nation. The question why not has also begun to be asked more widely, including in a recent article in ClickonWales by the main thinker behind plans for the South Wales Metro.[8] Others have seen in the differing responses from Cardiff and Westminster to the Covid-19 crisis evidence that Wales and England are moving apart anyway.

Constitutional debate is taking place in some quarters in Wales even if this has not been noticed yet across the border. Whatever choices are made, however, there is a mountain to climb if Wales is to reduce its current financial dependence. Taxation changes are perilous with unforeseeable consequences whether a choice is made to reduce or increase the burden on individuals and corporations.

The burden of tax in Britain already falls principally on the wealthy, the income tax threshold at which tax starts now standing at £12,500, hence excluding in poorer regions a greater proportion of the population, who will also find themselves less likely to be drawn into the National Insurance net. Though there can be arguments about whether the rich should be taxed more, the system is already progressive, the share increasing as incomes rise. Exacting higher taxes from the wealthy few in Wales would not raise large sums and could act as a disincentive.

Changes to corporation taxes to try to raise more funds are also problematic. The argument for a lower rate in Wales in a bid to drive up corporate activity and profitability has been advanced but the risk that businesses would relocate for this purpose alone, depressing overall revenues, suggests UK Governments would not sanction it. Increases would be counterproductive.

The reality is that unless more people in Wales are drawn into higher income bands, income tax cannot raise substantial extra funds in Wales and help to narrow the country’s dependence on resources from outside or make independence a comfortable prospect. Nor will the corporate sector generate significant extra funding unless it increases in size and profitability.

To close the gap between the revenues raised in Wales and the amount spent, the Welsh economy has to grow faster than that of the rest of the UK for a sustained period – generating higher wages and profits – something it has not achieved except for a brief period in the 1950s when male (though not female) full-time employment was high, and demand from the post-war rebuilding of the UK economy and the growth in vehicle ownership and white goods resulted in high levels of demand for coal, steel, and other products.

Levelling up

The commitment the recently-elected Westminster Government has made to levelling up the UK offers some hope that the structural needs of the regional and national economies outside London are going to be addressed with appropriate levels of funding through the new Shared Prosperity Fund – the replacement for EU regional programmes, including Objective One.

The current British model dates to the 1980s when Prime Minister Margaret Thatcher, admittedly in response to severe labour market inflexibilities of the time, and strongly influenced by her Trade Secretary and economic guru, Sir Keith Joseph, chose the free market ideas of the Chicago School monetarists as their principal guiding light. The succeeding decades saw Government gamble on the benefits of growth in the richer financial sector orientated parts of the UK trickling out to the regions.

The policy of the previous four decades, which had seen the use of a variety of sticks and carrots to encourage industry and services to locate in the regions outside London, was dropped. EU funding, much of it directed towards infrastructure improvement, was to undertake the heavy lifting required to raise prosperity levels in the poorer parts of the UK.

The assumption was that rising prices for land, housing, transport, and other services would lead to overspill elsewhere, as companies and individuals moved away in search of lower costs.  Instead, the overheating effects on London costs have been offset by increased spending on transport provision, greatly extending London’s labour market reach into neighbouring regions, and by large increases in compensatory rewards to professionals in financial and other higher value services.

The phasing out of a previously more active regional policy, a laissez-fair attitude towards the shift of manufacturing to low cost countries and a willingness to allow ownership of UK companies to be transferred to consolidating overseas multinationals has consequently widened the gap between regions.

The results for Wales have been another loss of jobs as serious in some ways as the fall in mining employment in previous decades. The departure from Wales of large scale, multinational companies, such as Alcan, Alcoa, BP, ICI, DuPont, Bosch, Exxon, Amoco, Ford, and RTZ  by late 2019 and down-sizing by others such as Sony and Panasonic, have changed the composition of the Welsh industrial base.

Unlike in other countries that have sought to retain domestic ownership, Wales and other regions has had no protection when multi-nationals have moved, in pursuit of lower costs or greater incentives. As a result, fewer people are now employed in companies with more than 1,000 staff and many more in smaller companies and micro companies employing just 1-5 people.

This has had a knock-on effect on the quality of jobs, the availability of training, the introduction of new ideas and technologies, the development of a supporting supplier base, career progression, and the availability of full-time and permanent employment, all of which can be offered more efficiently by larger companies even though numbers in work in Wales and in female employment  – much of it in part-time and/or precarious self-employment -have shown increases in recent years.

It also diminishes the revenue capable of being raised in Wales as smaller companies, because of lack of scale, will generally be less profitable than their counterparts. A separate side-effect is that in the absence of any defences and the inadequate provision of safeguards Welsh businesses are more liable to capture by bigger competitors and less able to engage in take-over activity themselves or mount export campaigns.

The UK Government’s apparent tilt back towards the policies long championed by Conservative grandee and former Cabinet minister Michael Heseltine, and by One Nation Conservatives in the post-war era, is all to the good, yet a danger also lies herein. The process promised is being seen mainly as a way of revitalising the north of England.  Wales, the South West, the East are rarely part of this new conversation, despite in some cases having equal or even greater needs. HS2 is intended to transform the Midlands and the north. it will be accompanied by other infrastructure spending on an upgraded east west rail link, one of the demands being made with increasing insistence and effectiveness by the region’s mayors.

A report last year, chaired by the former head of the civil service, Lord Kerslake, outlined a series of measures to deal with what it described as a problem that had persisted for the past 50 years. Suggestions included a new spatial plan for England, and Parliamentary committees and Cabinet positions which recognise and respond to the Powerhouse projects in the North, the Midlands, the South West and South East.[9] Twenty years after devolution new powerfully endowed regional institutions and voices are therefore emerging in England which could be allies but also rivals to Wales for levelling investment.

HS2, with its £100bn and rising price tag may come back under consideration, given the other priorities the Government will have and the vast sums that are having to be deployed in the fight against Coronavirus and in recovery. If it does proceed, however – and the Government confirmed in April 2020 that the first phase to Birmingham would – the boost it will provide across central England could be a negative for Wales, which could become less competitive as a location for investment as a result. The UK Government must be pressed hard to ensure the full consequential of such expenditure is made available in additional regional support finance to enable Wales to continue to invest in its own infrastructure networks, whether road rail or telecommunications.

It will be some months before the shape of the post Covid-19 recovery – a V-shape, straight down and back up again, or a U-shape  – possibly a bath shaped U with a prolonged bumping along the bottom as others fear – becomes clear. This will determine how much will be spent on the levelling up programme and over what length of time. Covid-19 recovery Budgets will be forthcoming from the Treasury this year. These will also determine how much will be made available in general funding to Wales.

Whatever shape the recovery takes, the stock of companies in Wales is likely to be affected adversely, with many weaker businesses not surviving. The encouraging growth in activity levels – the proportion of individuals drawn into the labour force – seems likely to be reversed, leading to a return to high levels of unemployment.

How well is Wales prepared to meet the challenge within the scope of the powers available to Welsh Government? In the twenty years since devolution, strategies have come and gone. Policymaking has often been piecemeal, inconsistent, and subject to change, the opposite of the stability which businesses require.

Execution, previously the responsibility of agencies – the Welsh Development Agency (WDA) for industrial development, and the Wales Tourist Board for tourism – has been brought in-house into the civil service, the tasks of promoting Wales abroad being passed to Wales Trade and Industry and of supporting economic development domestically to Business Wales. 

This break with the previous system – counter to the arrangements prevailing in many competitor territories, including Ireland and Scotland, where an agency approach has been retained – has been much criticised and the demise of the WDA much lamented by some critics.

Even more importantly, however, policy has continued to address symptoms rather than causes. A break with the past is clearly needed and an effort made to go further back to the root causes of economic weakness, and hence Wales’s seemingly unbridgeable fiscal gap.

The emphasis of the past decade has been on supporting sectors:  life sciences; financial services; creative industries; energy and environment; advanced materials and manufacturing; and information technology, overseen by sector panels consisting of representatives of the sectors chosen. The industries concerned – because they were in the sectors with the best prospects anyway – have generally prospered but were likely to have done so regardless

The Welsh Government recast its approach to economic policy three years ago. Sectors have not been ditched but its new 2017 Economic Action Plan envisaged a return to a more spatially-based policy –  the main thrust of UK regional development efforts for several decades after World War Two until the introduction of more free market policies in the 1980s.

Support is based around three national thematic sectors, plus foundation sectors, to be delivered in conjunction with a new economic contract to be negotiated with business. This is topped by a new division of Wales into three regions, led by chief regional officers.[10] 

Key strategic areas of the economy, broadly defined as tradeable services (such as fintech and online insurance), high value manufacturing (examples being compound semi-conductor manufacturing and composites), and enablers (digital, energy efficiency and renewables) will qualify for support within the new regional framework

Decarbonisation, automation, artificial intelligence, and other forms of digitalisation are transforming industries and individual firms, Welsh Government argues, and breaking down the traditional boundaries between different sectors of the economy. At the same time, the opportunities of the data revolution are increasingly driving new collaborations across sectors. The aim will therefore be to re-base support in a way that can help build the industries of the future.

To answer criticisms of the narrowness of the previous canvas “foundation sectors” – care, tourism, food, and retail – have been added into the “strategic areas” listed above. The laudable intention is to embrace parts of the economy where large numbers are employed and which are spread across Wales, including in some of the poorest rural areas.

Through support and partnerships in these areas, Welsh Government hopes the new structure will help small and often fragile enterprises embedded in local communities to increase their productivity, encourage skills progression, and develop more sustainable business models.

There is much to support in this new approach, but the complexity of the delivery arrangements seems to shout red tape. In return for investment and other services provided, businesses will be expected to commit to an economic contract stipulating that they will contribute to Welsh Government objectives. In return for funding they will be obliged to sign up to at least one of five calls to action – decarbonisation; innovation, entrepreneurship and headquarters; export and trade; high quality employment, skills development and fair work; R&D, and automation and digitisation.

The new structure is intermediated through three new regions – North Wales, Mid and South West Wales and South East Wales – headed by three chief regional officers. These regions bear no relation to any existing regional, or local government boundaries or to the new city regions. It is hard to see what holds together a region such as Mid and South West Wales which extends from Fishguard across to Swansea, up to Aberystwyth and on north through the Cambrian Mountains and the Severn Valley to the borders of Wrexham county borough.[11]

Faced with the complexities of this sort it is a fair bet that many businesses, including those with the best growth prospects, will give the initiatives a wide berth and continue to plough a separate furrow. It also fails to offer goals or indicate how the plan will be delivered. In a section entitled How will this work? new ideas are nearly all introduced with the words “We will…” but in only one such sentence is followed by the key word “deliver”, and it remains unclear exactly how execution and implementation will be achieved.

A new model

Yet, even if these bureaucratic issues can be overcome, only an optimist would now confidently predict Wales is on the path towards closing the gap with the more prosperous regions of the United Kingdom. So, is now the time to go further and suggest that Wales wants to be a different kind of nation from the prevailing British state, overwhelmingly dominated by London-based services (and especially financial services)? This is a specialisation that works well for London and the south east but clearly not for most of the rest of the country.

A different and broader perspective on Wales’ economy that illuminates the chronic problems – leading not just to a large but possibly growing Covid-19 induced fiscal deficit – needs to be articulated. A fuller debate on independence, or other new federal or con-federal arrangements has begun, especially after the immense shock – equivalent to war in many respects – that Covid-19 is delivering to society.

The fate of the idea in the current climate is hard to determine.  The public across Britain may see safety in being part of the wider British state because it has the resources to weather such a storm as well as the research needed to provide vaccines or a cure. Equally, many in Wales might conclude that if one of the poorest countries in the EU, Greece, can emerge with one of the lowest death rates, big is not necessarily beautiful.

Whichever is the case a commitment to creating a different Wales, even within the United Kingdom, should be one that will have resonance with large sections of the population. A report for the Scottish Government published in 2018 called for just such an approach, though outside the UK. [12] It pronounced the UK economic model to be wrong  for Scotland, claiming policies that led to a concentration of economic activity in London and the South East, low wages, and a large gap between rich and poor could only depress growth and opportunity elsewhere.

It argued instead for a new direction built around good governance, long term cross-partisan strategy, innovation, international investment, exploitation of resources and export-orientation. The arguments are the same for Wales but the mechanisms for achieving them need overhaul or replacement.

As developed since the “Big Bang” opening of the City of London to international ownership in 1987 Britain’s largely foreign-owned financial sector has exhibited a much greater interest in raising funds for global companies and governments, and in acting as the world’s principal foreign exchange clearing house than in supporting the domestic economy.[13]

The needs of Wales or any other British region have not figured prominently on the agenda at City meetings, and incentives to make this happen do not exist. By contrast, the smaller nations which Wales might aspire to have as its model have not only grown to overtake Wales in wealth since World War Two but are happier as well.

Wales should make clear it is not prospering as it would wish in a UK service-dominated economy in which a disproportionate share of national wealth is generated by an internationally-orientated financial services sector, substantially based in one region, and dependent on vast and ongoing infrastructure spending to bring its workers in from up to an hour or more away in suburbs around London. Within or without the UK, Wales should stake a claim to be different, economically, and socially more equal, and be more insistent in its demand for resources to secure this.

Chronic weaknesses suggest Wales needs a new route out and must use whatever means or policies it can, to develop the more advanced and better-balanced economies that, for example, Ireland and the smaller Scandinavian countries, have created. The group of small nations and regions offering models to which Wales might aspire enjoys a much healthier balance between manufacturing, agriculture, services, and educational activities. They are also much more successful exporting economies, more fully integrated into world supply chains than most of Welsh business. Much smaller gaps exist between the rich and the poor in populations that are much wealthier than Wales. They benefit, too, from strong social cohesion.

They have grown to overtake Wales in wealth since World War Two but are also among the happiest of nations. The recent World Happiness Report, using GDP, income, life expectancy, social support, and freedom from corruption as measures, put Finland (population 5.4m) in top place for the third year running, and it was joined by other smaller countries Denmark 5.7m, Switzerland 8.6m, Iceland 0.34m, and Norway 5.7m in the next four places.[14]

Moderate social democratic systems and policies as practised in Scandinavia, including higher tax and social security spending, are much better aligned, too, with historic Welsh sensitivities than the current centrifugal left and right policies that are the main offerings in Britain.

Positive and Negative

Wales is often compared with the North East England and Northern Ireland, other relatively poor regions of the UK.[15] Yet this habitual linkage is in danger of offering Wales too comfortable a set of comparisons. Wales will sometimes do worse than its fellow-laggards and sometimes better but there is almost a sense of re-assurance that by and large all three remain locked together in their basement status with none capable of advancing to greater prosperity vis à vis the rest of the UK.

In many ways the other two regions have as many differences from Wales as similarities and do not offer what could be a more revealing comparison of Welsh performance. Northern Ireland has a smaller population (roughly half that of Wales), is separated by sea from the rest of the United Kingdom and has a history and politics shaped by sectarian division. It also has a different industrial history, not shaped by coal or steel but by shipbuilding, engineering and textiles, especially linen.

The North East shares much of Wales’s industrial heritage as an important coal and steelmaking centre but has also had other staples, such as shipbuilding and boiler making, both absent from Wales. Following investment several decades ago by Japanese carmaker Nissan, the English region has a significant car components and assembly sector. It is geographically different (largely flat) and, to some extent, climatically different (drier and colder) and has neither the heavily indented coastline nor the mountainous nature of Wales. It is further from the south east of England, close to northern Europe across the North Sea and has an even greater share of its population concentrated in two cities and one town along a narrow stretch of coastline.

Wales and the West

There is another much closer region, and in competition with Wales, with which it is rarely compared. The South West (population 5.5m.) shares a west facing attitude, a long, in places rocky and indented coastline, and a similar climate.[16] There are other likenesses that suggest the two regions ought to be broadly comparable or at least more often compared. They are home to large number of retired people and others who have migrated in to lead the quieter life that less densely populated areas can offer. Much of Britain’s military infrastructure is in these two parts of the UK: Army training on Salisbury Plain and in the Brecon Beacons, and large defence manufacturers in Bristol, Somerset, and Gloucestershire and in south-east Wales.

The aviation industry is important to both economies.  They are home to engineering and food processing and have significant agricultural sectors with an emphasis on dairy and sheep farming, and are heavily dependent, especially in their more westerly parts on tourism.

They have also had areas – West Wales and the Valleys, and Cornwall – that have qualified for EU Objective One support to redress ongoing poverty. Both have infrastructure deficiencies, areas of the South West – parts of North Somerset and Cornwall – being as devoid of rail connections as some areas of Wales. Motorways in both regions extend only so far and miss western extremities. Rail electrification from London stops short in both, too.

There are also substantial differences. The South West has a population more than two-thirds greater than Wales The West does not share Wales’s coal and steel industrial legacy (except to a limited extent in Somerset and the Forest of Dean), and has not had to deal to the same extent with the problem of replacing traditional employment mainstays, apart from mining in Cornwall, or, in the case of Plymouth, reduced naval operations.

It also has big population centres in Plymouth, Exeter, Bath, Gloucester, Cheltenham, Bournemouth, Poole, Swindon, and Bristol, plus smaller but still medium-sized market towns, such as Taunton, Devizes, and Salisbury. As such, it enjoys some scale benefits that are not available to Wales, which possesses just four cities and towns of any magnitude. The easternmost parts of the South West also have the advantage of being contiguous with the richer south-east and enjoying shorter travel times to London, forming a part of its wider economy as a result.

Bristol has also long housed a bigger financial and professional services sector than Cardiff, which to some extent also serves the south Wales market, as well as more significant IT and high technology sectors. The West of England’s capital, too, by virtue of its advantageous crossroads position on the motorway and rail network (and bigger population than Cardiff) has established itself as the main transport and distribution hub for south west Britain, securing a lead it will now be hard for its Welsh rival to rein in.

Its airport, which until a few decades ago had roughly similar passenger numbers, has begun, as a result of low-cost airlines basing their regional operations there, to dwarf its Welsh rival, climbing to 8m passengers a year, more than four times Cardiff Airport’s total. Many of those using the airport travel across the Severn Bridge to take advantage of a much wider range of destinations.

Nevertheless, the similarities between the two areas are enough for it to be important to try to understand why one side of the Severn has prospered while the other has lagged. Why did one achieve a gross domestic product of £28,231, sixth among UK economic planning regions, whereas Wales was in 10th place ahead of only the North East on £23,866?[17]

Table 1. UK Regional GDP 2018

 Total GDP £bnGDP per head £Population m.Rank
-North East62.623,5692.711
-North West207.428,4497.35
-Yorks. & Humb.141.725,8595.59
-East Midlands124.625,9464.88
-West Midlands159.827,0875.95
-East of England186.430,0696.23
-South East311.334,0839.12
-South West158.128,2315.66
Northern Ireland48.925,9811.97

Source: ONS

Business scale

The annual top company listings for Wales and South West England from publisher, Business Insider, provides some clues. The tables and commentary that follow do not make comfortable reading for Welsh people proud of the country’s place in industrial history, but they demonstrate just how far Wales has retreated in economic importance, and as such are an indicator of the task ahead if Wales is to grow in line with other more prosperous regions as an advanced industrial economy offering a high standard of living to its inhabitants.

There are some caveats. The Business Insider rankings use a formula that combines turnover and profit to rank companies. As a result, some companies that are going through less profitable times appear lower down the list than their turnover would imply.  Dwr Cymru and Deeside food retailer Iceland both fail to appear in the Insider’s top 50 because profits in the year under review were low, even though turnover alone would place them in the top 10.[18]

Insider also only lists companies where these figures are broken out for the region concerned. Others that offer consolidated figures are absent – notably in Wales Indian-owned Tata Steel, Toyota’s engine plant and Franco-German-Spanish partnership, Airbus (which is listed through its UK headquarters in Bristol). There will also be omissions from the South West list for similar reasons, so the figures present an incomplete but nevertheless broadly equivalent picture of both economies.

As Table 2 shows, however, a wide disparity exists between the size of companies in the two regions. The South West’s biggest company is a tobacco and related products multinational, Imperial Brands. It had a worldwide turnover of more than £30bn in its most recent financial year (albeit not in a sector which enjoys general approval). Wales’s standard-bearers, Iceland and its only FTSE 100 company, Admiral Insurance, posted much more modest turnover – £3.01bn and £2.53bn, respectively. The South West is also home to no fewer than three more £5bn plus companies, five with a turnover of between £2bn and £5bn and 13 between £1bn and £2bn.

In Wales Admiral and Iceland are followed in size by GE Aircraft Engine Services as the only other £2bn plus company and by Redrow (£1.9bn ) but the drop is then precipitate to two companies with a turnover of between £500m and £1bn (Calsonic and Dow Silicones). A further 24 Welsh businesses within the top 300 report turnover between £200m and £500m, making them substantial but still by international standards modest. In the South West list 12 companies in just the Top 100 have a turnover of between £500m and £1bn and 27 are in the next tier from £200m – £500m

Table 2. Top 20 Companies: Wales and South West

 Wales£m Turn-over£m ProfitSouth West of England£m Turn-over£m Profit
1Admiral2528476.2Imperial Brands30,5241823
3GE Aircraft Services2383138.3Dyson James4.401750
4Wales & West Gas42599.5Sensata Technologies2773428.5
5Moneysupermarket.com329.796.1Intel Corp5257180.6
6Calsonic Kansei805.718.9Western Power Distr.1685733.2
7First Hydro266.4872.2Meggitt2080216.1
8Kingspan351.839.7Merlin Entertainment1688285
9Watkin Jones301.943.3EDF Energy Nuclear2446158
10Ipsen Biopharm267.852.5Pennon1478260.3
11Orthoclinical Diagnostics245.954.9Screwfix[19]1683170.1
12Dow Silicones518.213.6Spirax Sarco1153288.8
13SPTS Technologies204.769.7AES Overseas905.4319
14Principality Building Society233.240.7Cobham186371
15Vauxhall Finance184.936.6WH Smith1262134
16Convatec167.143.1Allstar Bus. Solutions185270.1
17Day’s Property Holdings210.17.1Zurich Assurance1013190
18Huws Gray182.725.3Mitie222136.4
20Kronospan360.88.8Arval UK113260.6

Source: Business Insider/Rhys David

Table 3. Turnover at different points in the list

Position In ListWales£m Turn-over£m ProfitSouth West of England£m Turn-over£m Profit
50MVH95.67.1West UC186.558.1
100EKF Diagnostics41.64.3Wainhomes82.017.1
150Mayr Melnhof Packaging56.91.1Interfish53.614.5
200Dauson Environmntal25.82.0Good Energy116.92.3
250BECT Building Contractors27.60.8Teleperformance49.53.1
300Carl Kammering17.81.5DCM (Cornwall)57.61.6

Source: Business Insider/Rhys David

Many of the names in the South West top 20 are global or British brands enjoying widespread recognition – the likes of Nationwide Building Society, Dyson, W.H. Smith, McCarthy & Stone, Screwfix Direct, and US-owned Intel. Further down the list other big companies – Honda, C&J Clark, McCarthy & Stone, and others – with a direct link to the consumer are to be found.

Few in the Welsh list have the same visibility, certainly outside Wales: Admiral in little more than 20 years has built a successful UK and European business; and grocery retailer, Iceland (with a turnover of £3bn), and washroom and hygiene services provider PHS £262m) are omnipresent across much of Britain.

The two Welsh-based builders, Redrow and Watkin Jones operate across England and Wales; Welsh-based companies, such as Castell Howell and Wynnstay have built up operations beyond Wales; there has been UK-wide success in comparison websites (GoCompare, and;  JoJoMamanBebe flies the flag in general retail.[20] Beyond these, however, examples are hard to find.

Iceland excepted, there is no Welsh Greggs (from the North East), Morrisons, (Yorkshire), Next (East Midlands) or Stagecoach (Scotland) to name only a few regionally based UK companies with a big national footprint. This absence of Welsh brands with a big market presence is, as a report by academics for the IWA in 2015 noted, quite striking.[21]

The disparity in the size and scope of Welsh and South West businesses is also reflected in public listings (Table 4). Only 16 companies in Wales are listed, five on the main London Stock Exchange and a further eleven on the junior market, Aim, the smallest number for some time.

Only two companies, Brickability in Bridgend, and Diurnal, the Cardiff pharmaceuticals group, have joined Aim in the past year, replacing Amerisur Resources, the Cardiff-based oil exploration company acquired by Latin American company Geopark, and Dee Valley Water, taken over by Severn Trent Water.

Imperial Brands with a market capitalisation at the time of writing of around £20bn has a higher value than all Welsh quoted companies together, and Admiral – market capitalisation around £8bn – exceeds the combined total of all other Welsh listed firms.  

Table 4. Listed Companies South West and Wales

South West(Top 100 companies only)Wales(All companies)
Imperial BrandsWincantonAdmiralWatkin Jones
PennonHargreaves LansdownRedrowWynnstay
Screwfix Direct*McCarthy & StoneMoney-supermarketIQE
Spirax-SarcoMears Finsbury Food
WHSmithRedde Northgate EKF Diagnostics
MitieAmigo Diurnal
RotorkAvon Rubber Brickability
First Great Western*Bristol Water  
RenishawEcclesiast. Insurance  
 Alliance Pharma  
 Curtis Banks  
 Gooch & Housego  
 Cambria Automobiles  

Source: Business Insider/Rhys David

There are other important differences. The representation of companies in modern sectors and especially those close to consumers is much stronger in the South West list than in Wales (Table 5). Retail is represented by shoe company C&J Clark, clothiers Superdry, Steinhoff (the firm behind Poundland, Harveys Furniture, Benson for Beds, Pep & Co, and Sleepmasters), and fashion accessories group Mulberry, and food and drink by Neal’s Yard, Yeo Valley, Wyke  Farms and vintners Matthew Clark Bibendum among others.

The region is the base, too, for leading investment platform, Hargreaves Lansdown, and investment advisers St. James’s Place; for other financial services businesses involved in motor leasing (Arval owned by BNP Paribas and Allstar, a subsidiary of Fleetcor of the US); insurance multinational Zurich Assurance, and various investment companies and financial operators not included in the list such as US share registrars, Computershare.

The prominence these service sectors enjoy across the region is important. They support a local ecology of jobs and professions, from designers, marketeers, logistics and distribution specialists, and information technology companies to shopfitters. Higher level financial services, such as investment management, offer high wage employment to talented and skilled graduate employees, able to analyse company performance worldwide and to construct and market portfolios to customers.

Table 5. Wales and the South West’s Top 50 business activities

SectorWalesSouth West
Engineering, SteelCalsonic Kansei, Celsa, Liberty Steel, Ifor Williams Trailers, CequentDyson James[22], Spirax Sarco, Rotork, Renishaw, Honda
Other ManufacturingKingspan, Dow Silicones, Kronospan, GS Yuasa, Notemachine, Advanced Elastomer Systems, Wepa, Panasonic, IG Design, Nice-Pak, Premier Forest Group, Seda.C& J Clark, Norbord, Etex, Corialis
Transport, Distribution First Great Western, Wincanton, Redde Northgate
Defence, AviationGE Aircraft Engine Services, British Airways. General Dynamics, British Airways Engineering[23]Meggitt, Cobham, Safran Landing Systems, Devonport Royal Dockyard, GE Aviation Systems
TechnologySPTS Technologies, IQE, Newport Wafer FabSensata, Intel
Health, Pharma, Life SciencesIpsen Biopharm, Orthoclinical Diagnostics, Convatec, QiopticPantheon UK, Accord-UK.
ConstructionRedrow, Watkin Jones, G. Walters (Holdings)
Utilities, Oil & GasWales & West Gas Networks, First Hydro, Dragon LNG, South Hook LNG Terminal.Western Power Distribution, EDF Energy Nuclear Generation, Pennon, Wessex Water, Magnox
Financial ServicesAdmiral,, Principality Building Society, Vauxhall Finance, GoCompare,Nationwide, Allstar Business Solutions, Zurich Assurance, Arval, Hargreaves Lansdown, Amigo, ALD Automotive, Openwork
Investment, PropertyBailey Family Investments, Gwent Holdings, Shaw Healthcare, MVHAES Overseas, Mears, McCarthy & Stone, Norton, Richmond
Outsourcing Mitie, Aspire Defence
Food & Drink, TobaccoFinsbury FoodImperial Brands, Nutricia, Wrigley
Leisure, MediaSwansea City FC, TravelbagMerlin Entertainments
Retail, Wholesale  Day’s Property Holdings, Huws Gray, Wynnstay, Sinclair Motor Holdings, Brotech, Ralawise,Screwifx, WHSmith, Lush Cosmetics, Key West

Source: Business Insider/Rhys David

The same will be true of headquartered companies. Both listed and privately held companies in the South West will generate a demand for the professional services of lawyers, accountants, management consultants, marketing and personnel specialists, and in the case of manufacturing, for transport, logistics and many other services as well, all of which help sustain a thriving, mixed local economy.

With this strong business framework in existence the South West of England has unsurprisingly become the location of choice for the headquarters in south west Britain as a whole of utility companies, including Magnox, Western Power Distribution, Ovo, EDF Energy Solutions, as well as hosting three regional water companies, Wessex Water, Pennon and Bristol Water.

It also has strengths in advanced modern manufacturing, especially aviation and defence, through Airbus, French-owned Safran, Italian-owned Agusta-Westland, Babcock (operator of the Royal Dockyard in Devonport), Meggitt and Cobham, and in engineering (Renishaw) with accompanying senior management roles in most cases. Because of its strong position as a military supplier the region also benefits from strong flows of Government research and development funding. The South West of England also houses the Government Communications Headquarters (GCHQ), a big employer of skilled analysts and support staff in IT and elsewhere. Such a presence helps to attract other well-qualified people to the area and to engender private sector spin-offs.

Welsh strengths and weaknesses

Wales has a growing strength in some of these modern sectors. The digital economy, for example, is calculated by the Welsh Government to employ about 44,000 people. Technology stars include IQE, the products of which are vital to mobile phones, Newport Wafer Fab, and Israeli-owned semi-conductor manufacturer SPTS Technologies.  There is a growing expertise in niche areas such as data security.

The increasingly important health sector is also represented through international companies such as GE Healthcare, Thermo Fisher Scientific, and Siemens, domestic champions such as EKF Diagnostics and a growing number of small start-ups and university spinouts. US-owned OrthoClinical Diagnostics has been building antibody tests for Covid-19.

Much of the sector, however, performs basic manufacturing, and offers less than might be hoped in the way of locally centred senior management or research and development. The world’s big pharmaceutical companies since the departure of Parke-Davis and Johnson & Johnson are no longer represented in Wales, and the increasing trend is for these big companies to want to be close to world-class research facilities – the Oxford-London-Cambridge arc in the case of the UK, and similar clusters of expertise elsewhere in Europe.

The Fintech sector has grown, too, notably investment manager, Wealthify, (now majority owned by the Aviva insurance group) challenger bank, Starling, Delio, Amplyfi, and others, to complement the main Welsh financial services companies, Admiral, Principality Building Society and Hodge. There are also substantial financial back office operations – insurance group Legal & General and Lloyds Bank Group especially in Cardiff and Newport. Employment in the main financial services centre in Wales – Cardiff – is dwarfed, however, by the totals in Edinburgh, Manchester, or Bristol.

Across a whole range of modern sectors, therefore, Wales faces a considerable task in increasing its representation and in scaling up its businesses. Representation in modern sectors is at best patchy and often unaccompanied by the higher-level ancillary services that come with international or regional headquarters functions and hence less rooted.

Wales has made some progress in recent years in developing such more “grounded” companies – an important ambition of Welsh Government, and financial and other support is now available through Banc, (the Development Bank of Wales), the big banking groups, accountancy firms and consultants to help such companies with growth, succession planning and other issues. (Table 6)[24]

However, only one third of Wales’s top 100 companies can be considered as grounded (and remain constantly vulnerable to acquisition by bigger groups elsewhere), compared with more than half of those in the South West list. Wales also has fewer overseas investors from France, Germany, or the US than the South West but two more from Japan.

Table 6. Top 100 Ownership

WalesNo.South WestNo.
Welsh-grounded34South West Grounded53
Rest of UK10Rest of UK6
United States18United States20
Austria, Belgium, Bermuda, Canada, Denmark, Israel, Jersey, Hong Kong, India, Netherlands, Reunion, Qatar, Singapore, Spain, UAE1 eachIreland Finland1 each

Source: Business Insider/Rhys David

Few Welsh companies, too, are large-scale employers, in sharp contrast with the picture fifty years ago in 1970 when the coal industry still employed more than 50,000, steel more than 70,000, and many individual mining and steel sites offered work to thousands. There are still substantial concentrations in a few manufacturing companies – Airbus, Tata, Finsbury Food, Calsonic, Celsa and GE Engine Aircraft Services – but many of the previous biggest employers have left.

The Welsh company with the greatest number of employees is Iceland but most of its workforce is based in England in the company’s retail outlets. Other   concentrations of employment are found in the service sector in Swansea cleaning group, Solo, Cardiff-based UK care home provider, Shaw, hospitality group Brains and in call centres.

More than a quarter of all Welsh workers, however, are employed in the public sector, in the National Health Service, local government and Government agencies such as DVLA, the Business Statistics Office, and HM Revenue and Customs. By their very nature they will not be seeking to increase employment. Computer technology and artificial intelligence will put downward pressure, too, on the number of jobs such institutions will offer in the future, combined with Government efforts to secure ongoing efficiencies. and cut costs.

Table 7. Wales Big Employers

Top 300 RankCompanySectorNo. of EmployeesLocation
1AdmiralFinancial Services10,199Cardiff
261Glas CymruUtility3,837Merthyr Tydfil
284PHS GroupRetail, Services3,428Caerphilly
184Solo Service GroupRetail, Services3,345Swansea
45Shaw HealthcareProperty3,272Cardiff
274Pioneer UK MidcoHealth3,121Cardiff
38Finsbury FoodFood2,988Cardiff
293Safran SeatsManufacturing2,060Torfaen
4Wales & West Gas NetworksUtility1,406Newport
295Masco UK WindowManufacturing1,367Rhondda
28CelsaEngineering, Steel1,249Cardiff
292J.H. LeekeRetail1,201Rhondda
14Principality Building SocietyFinancial Services1,151Cardiff
3GE Engine Aircraft ServicesDefence, Aviation1,138Cardiff
63Celtic ManorRetail1,040Newport
77HBL HoldingsLeisure1,021Conwy

Source: Business Insider/Rhys David

Table 8. Welsh Top Companies Employment by Number of Employees

Employees by number1-5051-100101-500501-10001001-1000010000n/a
Number in companies Top 10031142301112
Top 100-300 1,001 -50002001-30003001-5,0005001-10,000+10,000 

Source: Business Insider/Rhys David

Though comparisons are not made here with companies in the South West, it is almost certainly the case that the export propensity and overseas earnings of Welsh businesses is significantly lower as Tables 9 and 10 show. Wales’s exports to the EU look impressive and on paper Wales has a higher proportion of its trade with the EU than the rest of Britain. The figures are flattered, however, by a small number of high value products such as the export of wings from Airbus’s Flintshire plant to France. Indeed, he bulk of Welsh exports are provided by a small number of big companies such as Airbus, Toyota, and soon-to-depart Ford supplying intermediate goods.

Table 9. Wales Top Exporters

CompanyExport Sales 2019 £m.Export Sales 2018 £m.
GE Aircraft Engine Services2087.692063.77
Ortho-Clinical Diagnostics231.1191.0
Dow Silicones421.7462.8
GS Yuasa149.4127.4
Newport Wafer Fab120.0
Liberty Steel190.8134.9
Premier Forest Group65.656.3
Panasonic 206.4
Ifor Williams Trailers74.02
First Hydro66.5952.7
Harris Pye54.7759.97
Safran Seats172.7161.1
Pioneer Midco350.24

Source: Business Insider/Rhys David

The destinations of Welsh exports (Table 10) suggest some modest successes. Half of Wales’s export sales to the Irish Republic, however, come from petroleum products, presumably oil landed at Milford Haven, refined there, and shipped onwards without contributing significantly to Welsh GDP or employment. Altogether a total of 25 companies had export earnings more than £50m but 187 of the Top 300 companies were not engaging in any export activity.

Four products – transport equipment (aircraft wings and seats and vehicle engines predominantly), petroleum, power generating machinery and equipment, and steel – represent more than half of Wales’s exports. Medicinal and pharmaceutical products increased by an encouraging 21 per cent between 2018 and 2019 feature in the top ten but food products, another area where a strong Welsh involvement might be expected, do not.

The unpalatable truth is that many of Wales’s exports come from sectors that look vulnerable to retrenchment at least, particularly after the pandemic. The impact of Covid-19 on the aviation industry, with demand for flights not expected to return to previous levels until 2023 at the earliest, will affect aircraft orders, as too might departure from the EU, and the Welsh steel industry’s future looks precarious if funding from Government is not forthcoming.[25]

Table 10. Wales’s main export markets

CountrySales bn 2019Sales bn 2018 bnCountrySales bn 2019 bnSales bn 2018 bn

Source: Welsh Government/HMRC

Table 11. Wales’s main export categories

Product sector2018 £m2019 £m
Transport Equipment4,1664,207
Petroleum, Petroleum Products2,2262,377
Iron & Steel1,9172,228
Power Generating Machinery978923
Electric Machinery, Apparatus760804
Medicinal & Pharmaceutical Products628760
Road Vehicles,594585
Scientific Apparatus424492
Miscellaneous Manufactured Articles477435
Chemical Materials & Products386427

Source: Welsh Government/HMRC

The switch to electric vehicles – the top two selling cars in the UK in March were electric – does not bode well for Wales’s substantial involvement in engines and engine components, or for Aston Martin’s car manufacturing operations in St. Athans. Wales is locked into a part of the automotive sector with declining domestic and export opportunities and needs to gain a stake as a participant in one or other of the stages in electric vehicle manufacture or in battery making.[26]

The purpose of these comparisons with the South West and of this analysis of Welsh business scale and constituents is not intended to downplay or disparage the often-heroic efforts of Welsh businesspeople. Different territories have different histories. Bristol has played an important role in the development of the British economy since the 16th century when the city was the second wealthiest (and biggest) after London. It has a history of importing goods such as tobacco, wine and foodstuffs that goes back several centuries and its present pre-eminence in the south west arises out of this legacy. Nevertheless, by examining our neighbouring economy, the length of the road Wales must travel to replicate its success becomes clearer.

Yet, while Wales was much later than Bristol and the South West in becoming a developed economy it still failed to build on the strong global position it had in the late nineteenth and early twentieth century as the then world’s energy capital and an exporter to markets across the world. This era did not produce downstream industries or service sectors alongside the dominant coal and steel sectors, or even a modest number of public limited companies. This legacy has remained an influence.

The failure was partly the result of much of the capital, ownership and investment in Welsh resources and the means and drive to exploit them – with a few notable exceptions such as David Davies of Llandinam’s Ocean Coal Company – being largely derived from outside Wales. Even today Wales’s biggest company, Admiral, has been built in little more than two decades by non-Welsh investors and it is arguable this inherited dependence on external actors that has shaped Wales’s present economic structure remains. The absence of a larger coterie of entrepreneurs, or at any rate entrepreneurs who would start and maintain their businesses in Wales has, however, been unfortunate.

The luck of the Irish

Yet, if comparisons with the South West are unflattering to Wales, those with another near neighbour, Ireland, that Wales might aspire to be more like are even more invidious. It is not an unrealistic ambition to want to go further than match the South West but to create a new Wales that will replicate the successes of other smaller advanced industrial nations and regions.

Wales should want to command a much more prominent place on the world stage, as well as offering its people enhanced lives, economically, politically, and culturally. Just how far we are from this is sadly evident from a brief survey of comparable numbers relating to Ireland.

In only 30 years a previously chronically poor Ireland has transformed itself into one of the richest countries in the world (though the crude figures for Irish GDP must be qualified with strong provisos).[27] Success has come through the abandonment of previous self-reliance policies and high levels of public sector employment and the adoption of an open economy approach designed to attract multinationals and promote competition.

This is not to say the Irish economy has not had and continues to have significant weaknesses, including a tendency to boom and bust, and high levels of public and private indebtedness. Before the financial crash of 2008 an emergency package of loans by the EU, and the IMF, (with the UK also contributing) was needed to stave off the collapse of Ireland’s banks which had over-extended as a result of loans to the property sector.[28]

Investment in education has been key to Ireland’s success, creating a skilled and often language-qualified workforce for incoming companies. Other Irish policies – notably its generous business tax regime – have been at the expense of its EU partners. Since joining the EU it has been allowed to become the world’s leading tax haven  and as a result has succeeded beyond all expectations in attracting mainly US, high level pharmaceutical, medical device, chemical, computer hardware and software technology, and other groups seeking to shelter their tax from both the US and other countries in which they are based or operate. 

The policy over the past decade has been challenged first by Brazil, which blacklisted Ireland, and has also produced pushback from the EU and the US. Washington has changed its own tax laws in response to the loss of tax revenues from some of the country’s biggest and most profitable technology and pharmaceutical companies. Ireland has, however, already reaped the benefits. The investing companies have been locked into its economy, their investments including in many cases higher value manufacturing and service activities and not just production from the start.

The first three spots in Ireland’s list of top companies are occupied by US technology companies Apple, Google, and Johnson Controls. Other American companies in the top ten are Medtronic, Facebook, Eaton Corporation, Thermo King, and Allergan. Further down the list come a roll call of leading US technology, financial and pharmaceutical businesses – Ingersoll-Rand, Dell, Merck, Oracle, Pfizer, Sandisk, Experian, Boston Scientific, Adobe, Abbott Laboratories, Intel, AirBnb and Amazon. New and existing investors are being drawn through an Advanced Technology Building programme designed to bring jobs to the remoter parts of the country.

Admittedly, some of the investing companies, have a limited impact on the real Irish economy, the operations acting mainly as a means of collecting and transferring revenues from subsidiaries in other parts of Europe. Others, particularly the pharmaceutical companies have chosen, however, to put in place significant research and development activities.

The country’s very successful foreign direct investment policies of the past five or six decades have thus succeeded in attracting high-skilled and high wage employment for its relatively young population and in the process slowed down emigration to the UK, the US, Australia and other countries that are home to the large Irish diaspora.

This aggressive use of taxation policy countenanced until recently by a compliant EU has enabled Ireland to build up a huge $1.54 trillion stock of foreign direct investment and become the world’s leading destination for high value overseas investment, around 80 per cent deriving from the US. According to OECD estimates foreign multinationals provide 47 per cent of employment in Irish manufacturing and 28 per cent of employment in Irish services.

By turnover 14 of Ireland’s top 20 companies are US multinationals, employing a quarter of the private sector workforce and paying 80 per cent of corporation tax. The Irish inward investment agency IDA Ireland estimated in 2017 that multinationals, the vast majority from the US, contributed €28.3bn to the Irish Exchequer in taxes.

Nevertheless, it is not the only leg on which the Irish economy stands. Irish-owned businesses are well spread throughout the list of the 100 biggest companies. Ireland, as Table 12 shows, has spawned its own multinationals, some stemming from the  building industry – long a specialisation of the Irish – and others in the agribusiness sector where Ireland has become a world-scale food processor and exporter, with extensive processing facilities turning local produce into food in several other countries, including Wales and the rest of Britain.

The impressive roster of domestically owned Irish companies, many of them quoted on stock exchanges in London, New York and Dublin have been mainly the result of entrepreneurial initiatives by Irish individuals, and in a few cases deliberate action by the Irish Government.

Table 12. Ireland’s Top Companies

RankCompanyTurnover Euro Bn.SectorRankCompanyTurnover Euro Bn.Sector
15Smurfit Kappa8.9Manufacturing49Paddy Power Betfair2.2Retail
16Ardagh Glass8.1Manufacturing50Ornua2.1Food
19Eirgrid Utility56Applegreen1.9Retailing
25Total Produce5.0Food67C & C1.6Beverages

Source: Irish Times Ireland’s Top 1000 Companies

Some sectors have developed, too, outside traditional Irish specialisms. The country is the world’s leading lessor of aircraft managing 22 per cent of the fleet of aircraft worldwide, and forty per cent of all those leased (and not owned by the airline companies themselves). Fourteen of the top five lessors in the world are based in Ireland. Ireland’s favourable tax regulations have again helped to drive this growth. Most aircraft lessors can reduce or cancel out their Irish taxable profits by use of allowable tax deductions and structuring. The cost of an aircraft can be written-off against tax at a rate of 12.5 per cent over 8 years.[29]

The leading Irish companies have grown to international scale by looking outside the confines of their country’s 5m population and by using neighbouring UK as an extension of their home market. The biggest Irish company, CRH (formerly Cement & Roadstone Holdings) has a major presence in Britain through its Tarmac subsidiary, to which it has recently added Welsh civil engineering contractor, Alun Griffiths in 2019.

It has gone much further, too, in its 50 years of existence, becoming the largest supplier of building materials to the construction industry in the US, and operating in Europe and Asia. Dublin-based retailer Penneys (part of British plc Associated British Foods) is the headquarters operation for the successful fashion chain, Primark, with branches in the UK, the US, and other parts of the world.

Ryanair has become basically a British airline domiciled in Ireland, carrying more passengers than British Airways, Air France-KLM, or Lufthansa to become Europe’s biggest airline.Two of the biggest Irish agri-foods businesses – Dunbia and Glanbia – process much of Wales’s agricultural output, the former (a Northern Ireland company)having bought Wales’s biggest sheep processor, Oriel Jones a’i Fab, in Llanybydder.

Irish energy company Petrogas, through its Applegeen subsidiary, now operates petrol stations across the UK through its 55 per cent stake in the Welcome Break chain of motorway service stations, as well as having its own branded outlets on main roads. British motorists filling up at Applegreen’s stations, including Welcome Break, are now contributing to Ireland’s overseas earnings. It has now expanded across the Atlantic to the US.[30]

In short, Ireland has strong manufacturing businesses, a dynamic food and agribusiness sector, sophisticated health, pharmaceutical, and technology businesses as well as important retailing, transport, and construction businesses – just the sort of profile Wales needs.

Table 13. Employment in Ireland by Key Sector

SectorNos. EmployedSectorNos. Employed
Aircraft leasing1,200ICT37,000
Alcoholic Beverages92,000Medical Technologies25,000
Financial Services35,000Software24,000

Table 14.  Business Representation by Sector: Ireland Top 1000

SectorNo. of CompaniesSectorNo. of Companies
Business Technology119Agribusiness65
Health99Consumer Technology61

Source: Irish Times Ireland’s Top 1000 Companies

Ireland’s exports, too, are hugely impressive. Set against Welsh exports of £17.7bn in 2019 an increase of 3 per cent on the previous year, Ireland two years earlier exported € worth of goods and services, equivalent to roughly £190bn, from its main sectors, pharmaceuticals, chemicals, computer hardware and software, food products, beverages and brewing and medical devices. Ireland manages to export more than ten times as much as Wales – an alarming disparity given its population is only 60 per cent larger.

To understand how far Ireland has come it is worth noting that in 1962 Ireland imported goods worth £273.6m. against exports of £174m, with live animals (£47m.) and food (£42m) accounting for 40 per cent of the outgoing total. in 2017 Ireland posted its widest ever trade surplus of €45bn, both exports and imports coming in at the highest level on record. The biggest trade surpluses were recorded with the United States, Belgium, Switzerland, the Netherlands, and Germany.

Ireland has used its time in the EU to reduce its dependence on the UK as an export and import partner. The US was its leading market in 2017, taking around one quarter of its exports, followed by Britain with 11.8 per cent, only marginally ahead of Belgium (11 per cent) and Germany 8.2 per cent. The UK accounted for just under a quarter of Irish imports in the same year, only slightly ahead of the US with just over 20 per cent, France (12.5 per cent) and Germany (8.9 per cent). Britain’s departure from the EU will as a result harm Ireland much less than would have been the case 20 years ago.

Ireland’s success in transforming itself into the 32nd biggest country ranked by GDP in 2019[31] (despite its small population) has been the result of considerable political skill, economic forethought, and some good fortune. Irish companies have become adept at using the UK as part of a wider domestic market to escape the constraints of the Republic’s small population in a way few firms in Wales have. From growing a successful business in Britain, they have then gone on to expand across Europe (and the US and Asia) an achievement that that has escaped British manufacturers in similar fields – not just Welsh – in 50 years membership of the EU.

A cadre of competent Irish businesspeople has been created, some of whom have then gone on to run some of the biggest UK and European companies – Willie Walsh of British Airways and Niall Fitzgerald of Unilever being two examples. Less tangible has been the greater confidence shown by Irish individuals vis à vis the British and their role in many sectors of British life, including business, media, and the arts.

Hard questions

Even within the context of a UK economy badly in need of levelling up, therefore, some regions – the South West, for example – have done much better than Wales in adapting and modernising. Ireland, as an independent country is an even more impressive – indeed stark – example. It has been free to make economic policy choices that meet its own needs as an outlying western European country and has had considerable success, even though wealth is not spread evenly across the country but concentrated in the four cities of Dublin, Cork, Limerick and Waterford.

There are some hard questions to answer here even before the issues are considered relating to independence or greater autonomy within the UK as a solution to Wales’s economic development. Why do firms retrench from Wales but rarely cut operations elsewhere in favour of Wales? Why have so few firms wanted to headquarter in Wales?

There were high hopes 30 years ago that Cardiff Bay could play this role and attract UK and international corporate offices but the waterfront development in former dockland areas has instead become largely a leisure, restaurant, and residential destination alongside the Senedd and Wales Millennium Centre. The vast sums invested in Cardiff Bay have failed even to make any impact barely more than one hundred yards across Bute Street, the area centred around Mount Stuart Square only limply redeveloped so far and looking much as it did 60 or 70 years ago – rundown and dilapidated – when the local shipping industry largely petered out.

If firms are happy to locate to Gloucester, Cheltenham, and Bristol, why have the extra 30-40 miles proved such an impediment? Why have so few consumer businesses, including retailers, failed to emerge into the daylight in Wales? Peacock, the fashion retailer, flew the flag for several years but is now part of Edinburgh Woollen Mills, leaving Iceland on Deeside and JoJoMamanBebe in Newport as the most prominent UK retailers based in Wales, plus department store group, Leeke.

Why are Welsh firms, apart from a few multinationals so reluctant to seek out export markets? Why have Welsh food manufacturers failed to achieve scale, unlike their counterparts in Ireland or many English regions? Why has even Welsh agriculture dairy and meat produce ended up being processed in Wales by non-Welsh operators, or over the border, with few Welsh firms of scale taking up the challenge?

Rachel’s Dairy (now renamed Rachel’s to de-emphasise its organic credentials and housed within a French dairy multinational) has been in a game of corporate pass-the-parcel for the past 20 years while its once smaller rival Yeo Valley has become a supermarket shelf staple and remains family-owned. Equally, why are there no listed tourism businesses in Wales or even small hotel chains? Why are Welsh holiday cottages marketed by English-based businesses?  These are just some of the building blocks on which a stronger Welsh economy could have been erected.

A more business-oriented economy

Over the longer term, Wales’s prosperity will require a more business-oriented economy, attuned to creating greater wealth. A stronger Welsh economy would include a greater number of big, Welsh-owned companies, more medium-sized companies, and more small companies especially those with the potential to become bigger and join the ranks of £100m plus turnover groups. It also needs more overseas and UK businesses willing to commit to a what might be termed a full-scale operation in Wales, managing products and services for the whole of the UK or even European  market, rather than simply using Wales as a manufacturing or lower grade service base controlled from elsewhere.

On one calculation, Wales, with 5 per cent of the UK population Wales has only 3 per cent of its SMES. To have proportionately the same as the rest of the UK Wales would need another 60,000 businesses. According to the House of Commons Library, in 2019 Wales with 3.1m people had 222,000 businesses, England (56m) 5.19m, South West England (5.6m) 562,000 and Scotland (5.4m) 334,000.

The number of SMEs has continued to grow year on year, but growth needs to be accelerated and stronger representation sought in higher value goods and services.[32] The number of companies that fail and the number that replace them – is low, another sign of a not very dynamic economy, suggesting the existence of “zombie” companies holding back the rest.

Churn rate is important. Established companies run out of ideas or prefer to do things the way they have always been done, while new businesses often see changes to make. Think of Woolworth on the High Street. Discount shopping has mushroomed in recent years – Wilkinson, Home Bargains, Poundland, B&M – yet the originator of this concept has disappeared. Covid-19 will hasten the departure of many weak companies in Wales and elsewhere. New Welsh companies in sectors that will benefit from changes in business and consumer behaviour are needed.

More and stronger companies would not only increase employment but also generate the income and profits that would enable Wales to reduce its dependence on fiscal transfers to pay for the whole range of services that central Government and Welsh Government provide.  A bigger private sector is therefore needed, consisting of more and larger domestically owned and controlled businesses that will be more productive and profitable than the existing base.

It is also important that those companies can move up the value chain, developing new and innovative, IT-enabled products and services, thereby generating greater turnover and profit, and more, and more skilled, employment. Because such companies will make more profit, they will pay commensurately greater amounts of tax. They will pay higher wages, and employees will pay more tax, too, as well as having higher disposable income to spend on goods and services.

Unless Wales is happy to be a “feeder” economy,  where  businesses are taken over when they grow beyond the small company phase, they need to be given the encouragement and resources to become larger and to avoid simply being  acquired by bigger external companies wishing to grow by consolidation. This itself is a main reason for the now well-recognised missing middle. [33] We all know what happens to football’s feeder clubs that exist by selling their best players: they stay in League Division One or Two and never compete in Europe.

The natural progression from small to medium-sized is being abruptly cut off, resulting in a dearth of medium-sized firms. Support offered by Welsh institutions can even bring this about. Cardiff-based Pinnacle Document Solutions, a leader in its field, was recently acquired by London company, Ethos. It represented a successful exit for the Development Bank of Wales, which had invested in the company, but meant the loss of a Welsh-based business, even if a stronger united group based outside Wales has been created to the benefit of the UK economy as a whole.

Yet, many Welsh people do have the talent and skill to develop significant businesses, though in many cases this has been done outside Wales. Current examples are the successful outdoor goods shop, Mountain Warehouse, challenger financial institution, Starling Bank, and the food delivery company, Just Eat. Specsavers, too, has a substantial Welsh connection. In Wales companies such as JoJoMamanBebe, Mrs. Bucket, Go Compare, Castell Howell and Oil4Wales also show the ability, commitment, and determination to create strong Welsh companies, and these can be exemplars.

Can lack of finance, poor road and rail infrastructure, a mountainous terrain that separates north and south go on being blamed for Welsh failure to develop as far as is needed in this direction when efforts have consistently been made to address these and other issues? Are we doomed to go on addressing the symptoms and never the underlying causes?

Wales has some catching up to do but is there any reason we cannot make better progress than in the past few decades?  What steps might now be taken to improve the performance of the Welsh Economy and its business sector?

Building New Connections

Wales is not prospering under the present arrangements as a devolved region within the UK. It has failed to develop the industry and service sectors that will enable it to match the growth of more prosperous regions and nations.

So, the questions are these. Is there any reason to believe the Welsh economy will grow any faster than it has in the past or that it will improve in future at a faster rate than the rest of the UK? Will the Welsh Government’s 2017 Economic Action Plan (EAP) or the UK Government’s Shared Prosperity Fund, the replacement for EU funding,  bring about the faster growth in new business formation, inward investment, export growth, productivity and output that is needed to catch up? Or, is the Welsh economy persistently going to underperform those of its competitor economies, whether by reason of geography or any other immutable factor?

The Covid-19 pandemic has further weakened the Welsh economy, and the pace of the recovery across society and across the different regions of the UK will not become clear for many months yet. As happened after the financial crisis of 2008, however, it may be the weakest regions that will find it hardest and take longest to recover.

The issues facing Wales have many causes, but one is particularly important. The UK economy has tilted heavily towards services, and London and the South East have secured the bulk of the country’s higher level financial and professional services employment, as well as a large share of high technology research and development. The magnetic pull of these sectors has drawn graduates from all over Britain to start and build their careers in London, exacerbating the negative effect for Wales of the significant drift across the border to university courses. Policy at UK and EU levels has sought to mitigate rather than change these circumstances.

Nor is this the only way in which the relationship Wales and other regions have with the South-East of England is economically damaging. The Treasury protocol that insists that capital spending is directed where the greatest returns are made magnifies this effect.  It ensures infrastructure developments – HS2, Crossrail, London Airport expansion and the like – take place disproportionally in wealthier and more populous regions, reinforcing the attraction to companies and individuals of work in London.[34] 

Central Government is wedded to the principle of ‘rewarding success’ rather than ‘addressing failure’.  However, it is the job of the market to do the former, and one of the roles of government to address the latter.  Government policy has contributed to a ‘positive’ feedback loop – exacerbating these market disparities rather than reducing them.

Even well-meaning attempts to locate compensating public sector jobs in Wales can have negative effects, inhibiting rather than promoting growth. The jobs allocated – for example, the DVLA at Swansea, Business Statistics Office at Newport, and Companies House in Cardiff – increase the private-public imbalance. Since their remit concerns the UK and not just Wales top management decisions are often taken elsewhere, usually in London where senior staff remain to sustain close contact with Government and other Whitehall departments.

Public sector jobs paid at standardised rates across the UK may increase wage levels in poorer areas, but this will make jobs in the private sector where wages may be lower than elsewhere less attractive. Crowding-out will occur where well-qualified individuals choose to work in the public sector – cost centres – rather than in the private sector – profit centres.[35] Potential entrepreneurs are diverted into other career paths and inward investment becomes less attractive. It also has the effect of eroding the potential corporation tax structure.

Such jobs are also subject to shrinkage pressures, either because new technologies, such as computer technology enhancements and artificial intelligence, reduce labour requirements, or in pursuit of expenditure cuts. Because of greater dependence on such jobs, the private sector in Wales must grow faster to make up for the absence of growth in the public sector even to keep up with the GDP growth elsewhere.

Which measures are required, therefore, to counterbalance these disadvantages and remedy the underperformance of the Welsh economy? What shape should the institutions that will deliver these enhancements take? How can Wales begin to match the achievements of other countries such as Ireland that have transformed their prospects over recent years. With only some 5 per cent of the UK population the interests of Wales will never be a primary consideration for the London government, nor is it reasonable to expect that this should be the case. The policy approaches need, therefore, to be Made in Wales and implemented effectively in Wales.

However, these issues are resolved, and whether moves towards independence are regarded as the answer or not, some principles need to be enunciated. Before a start can be successfully made on the social, environmental, and other economic changes Wales needs, a bigger, better balanced and more export oriented private sector economy must be built and not just start-ups, however innovative these might be. Even if successful, a policy based on start-ups will take years to bring tangible results to the lives of ordinary people across Wales.

There must be a larger number of small, medium size and big companies, and a bigger proportion headquartered in Wales, or constituted as the regional headquarters of non-Welsh companies originating in the rest of the UK and overseas. Only then can a start be made on reducing the fiscal gap and its consequence, chronic dependence on centrally disbursed funds.

The structures put in place to deliver improvements must be robust, not subject to constant revision, and well resourced. The fresh thinking on the state’s role that has emerged since the pandemic should be seized on and Welsh Government must be prepared – using the best advice – to take a much more active role in shaping the Welsh economy, including if necessary through stakes in key businesses considered vital to the growth of a representative and balanced Welsh economy.[36]

Small business support

How can these aims be achieved when the efforts of the past 20 years and further back have met with mixed success? Support for Welsh-based small and medium size enterprises (SMEs) at various stages of development is delivered through the Development Bank for Wales – Banc to use its short form – created in 2017 with wider powers than its predecessor, Finance Wales.[37] It also provides links with other private sector sources of finance, including banks, crowd funders and business angels. Companies with larger requirements, including potential inward investors from other parts of the UK and the rest of the world, are directed to Business Wales.

Useful as its services are, and experienced and professional as many of its managers are, Banc is set up mainly to react to ideas from those seeking finance rather than as an initiator. The £5m ceiling on the funds it can offer puts a severe limit on the size of operations it can support. It measures success at least in part in exits.  These frequently result in successful Welsh businesses being acquired by groups based outside Wales.

An enhanced institution (Bigger Banc) could be tasked with shaping the development of the SME sector so that it plays a more vital role across communities throughout Wales. It could bring Welsh companies together where greater scale would lead to improvements in efficiency and productivity, helping to find new investors where outside capital is required, and promoting new forms of ownership.

An impediment to the onward growth of Welsh companies has often been their acquisition by non-Welsh businesses and a subsequent loss of identity or even the extraction of brands and processes to locations elsewhere. Business owners often have very good reasons for selling – access to large amounts of capital may be needed to sustain growth, family members may be uninterested in taking over a previous generation’s business, existing management may not want to step in as purchasers. New mechanisms need to be found to ensure that if these issues do arise a Welsh solution can be explored. Similar measures are needed to ensure more substantial Welsh businesses are created from mergers within Wales.

It could, for example, be a requirement for any company that receives investment from public finance through Banc or other sources that the owners are obliged to offer their shareholdings to an Employees Share Ownership Trust (ESOT) when selling their shares. A new fund could facilitate the purchase by employees of companies based in Wales when the majority owner is looking to exit.  The fund should also offer advice and expertise.

In 2012 the then Conservative-Liberal coalition Government declared that it wanted to move employee ownership into the bloodstream of the UK economy, but this ambition seems subsequently to have been lost.[38] It quoted academic research which demonstrated that employee owned firms created jobs faster and were more resilient at a time of economic downturn and encouraged increased employee commitment and dedication.

More comprehensive forms of support for small firms than are currently on offer should be examined. Five years ago, a report by academics offered the Small Business Administration in the US as possible model for Wales. The creation in Wales of an organisation like the Small Business Administration (SBA) in the US was suggested in a report from Cardiff Metropolitan University, and this could be the basis for a new approach.[39]

Established more than 60 years ago it has offered coherence and consistency of support that has not been the case in Wales where new institutions and policies have come and gone. Its focus, the report notes, is the four Cs of Capital (finance), Counselling (business advice, networks and training support, Contracts (public procurement), and Championing.

SMEs in Wales interviewed for the report offered a support wish list which mirrored these activities – financial support to assist growth, increased support for exporting, training, and continued education, and help in developing practical soft skills and networking.

Recommendation One.  Banc should expand beyond its current remit, and a review be undertaken of the relevance to Welsh needs of institutions such as the US SBA.  Employee Share Ownership Trusts should be actively promoted with a view to making such a required part of any exit strategy for a firm in receipt of public sector funds.  The potential for an ESOT fund to facilitate this should be researched.

Private sector resources

Private capital could also play a bigger role in supporting Welsh business if the right connections could be established. Though there are finance houses working in Wales  – very often in the role of marriage broker linking Welsh companies with outside buyers  – businesses in Wales are rarely the recipients of the venture capital funds that go to support the growth and expansion of start-ups in the south of England and other prosperous regions.

There can be many reasons for this. Applicants in more prosperous regions are very often in new consumer-facing product areas that offer the Venture Capital Trusts (VCTs) the prospect of securing profitable exits, and few of these may be being found in Wales. Other businesses favoured by the VCT houses and other venture capital providers are in new IT-related and healthcare sectors with close links to top research-intensive universities.

Wales does have some businesses, in these sectors – especially healthcare – and it may simply be that the distance from the headquarters of the VCTs in London is a more important factor. A new Welsh venture capital trust that could draw in funds to support Welsh start-ups needs to be created, and efforts made to draw in funds from Welsh investors and others in Wales and beyond.[40]  It would need to have the expertise and network to know the VC world in London and elsewhere very well, and to know whom to approach for different opportunities as they arise. 

Recommendation Two. Links with London-based venture capital must be strengthened, and a new Welsh venture capital trust be created that could draw in funds from Wales and beyond to support Welsh start-ups should be created.

Welsh investors would most probably be the principal sources of funds (perhaps with some initial Welsh Government funding) and given the likelihood of lower returns than many VC investors would normally be seeking, an appeal to patriotism would also help. Size is one of the several reasons that smaller companies in Wales do not get the attention of London VCTs. It takes almost as much effort to analyse a small company as a big one, so the fees are a larger proportion of a smaller transaction. 

Part of this work could be done by Banc or a Welsh Government arm’s length entity responsible for preparing companies for market. There is scope here, however, for linking such a project with expatriate organisations such as Global Welsh, and other Welsh networks in the City of London and elsewhere. These will contain within their ranks many individuals with experience in investment and the risk funds for what they might be persuaded is a good cause.

Recommendation Three. Links should be established with Welsh expatriate organisations to tap members’ capital and expertise.

Procurement and the Foundational Economy

Could the Welsh SME economy be revivified through new more pro-active organisations as suggested above? Could such measures help to create the more balanced, prosperous, and fairer society that would be the goal?  It is a big challenge, but small steps, starting with procurement policy, can set in motion the process of creating a larger cohort of Welsh firms.

Much of the public sector’s spending – Government, local government, health, education, defence, and other services – escapes from Wales but with new rules and guidelines for procurement a greater proportion could be retained. The sector has been under pressure for a long time to improve its attempts to source locally and from SMEs, thereby supporting the foundational economy.[41] Progress has been made but in practice public bodies find this much more difficult than sourcing from large companies with multiple resources.  

A manifesto by economist and former university vice-chancellor Sir Adrian Webb points out, however, that the foundational economy perspective on economic development fits well with what can be achieved by a small nation with circumscribed powers such as Wales.[42] Though it presents challenges a new focus on the foundational economy – as already advocated widely across the spectrum in Wales, including by the current Labour Government – can work in tandem with other economic development initiatives to create additional growth opportunities.

Alongside a new focus on the foundational economy, and more intelligent procurement rules, there is a need for a mechanism to enable a new commitment such as this to function more effectively. The creation by Government of an entity to which public sector bodies wishing to participate could turn would help. This would do the ‘hard lifting’ of aggregating SME provision and help with the tender process on their behalf, making the process easier and more cost effective both for the public and the private sector. 

A framework also needs to be created through which details of companies offering services can be collated. It is important, too, that these should be delivered within a relatively local area (depending on what the service/product is) to ensure that unnecessary travel and transport is not involved. This would serve wider concerns about climate change and incentivise local producers, possibly also encouraging mergers and acquisitions and the creation of bigger and more viable companies.

Public bodies in Wales would need to be set challenging foundational economy targets with penalties such as those in operation for waste recycling. The latter has already seen impressive increases in the amount of waste being recycled and big declines in the amount going for landfill or export.

Recommendation Four: The foundation economy should be given a better-resourced place in the centre ground of Welsh economic policymaking with incentives put in place to promote much greater take-up by public and private sector purchasers. A wholesaler type body should be created to aggregate private sector provision and support tendering, together with a facility through which companies could make their offering more widely known.

In parallel, policy must be directed into Increasing the contribution Wales makes to feeding itself by investigating import substitution in areas such as vegetables where historic declines need to be reversed. Ireland has become one of the world’s biggest growers of mushrooms which it exports to the UK and other markets. This is a product – like many, many others – which could as easily be produced in Wales.

The Netherlands with no better climate than Wales produces 60 per cent of the world’s bulbs and commands a big share of the British flower and salad market. Its grip on this market in the UK is firm but it can be challenged. Can Wales not grow more tomatoes and lettuce under cover?

New food-growing technologies are being developed such as the use of underground food production facilities. Do we not have any old mine workings across Wales where this could be tried?[43]  Interest is growing in these Controlled Environment Agriculture (CEA) methods, which by their nature do not need to be location specific. Discussions need to start with Welsh food producers to examine which methods might be appropriate in Wales and the funding this would require.

A greater emphasis on Welsh producers feeding Welsh people and exporting to other countries should be attainable. A start could be made if supermarkets could be further encouraged to boost Welsh consumer purchasing decisions. The German supermarket giant, Aldi, which with its compatriot Lidl has taken a huge bite out of their UK competitors market share, emphasises local, including Welsh labelled, products. Though they may be reluctant to admit it, UK supermarkets seem to have been shamed into similar efforts so that the availability of Welsh goods has increased. Welsh food producers need to be of a scale, however, and able to provide a much wider offering to the supermarkets before they obtain shelf space.

In the post-Covid environment there is likely to be a window of opportunity when individuals are much more likely to want to support products, including food, that patently comes from nearer home. Better and bolder labelling, including an asterisk or highlighted text on supermarket bills to indicate local provenance, would help, as would tighter controls on misleading labelling that implies foreign goods have a local source. [44]  

Recommendation Five. In the aftermath of the Covid-19 crisis a window for a much greater emphasis on local production and procurement will open and this must be seized. A Welsh Government focus on how to finance and implement growth in sectors such as CEA should be developed.

Smart FDI

Better support for small businesses can be the start but can only provide a partial solution to the weakness of the Welsh economy. Such initiatives will produce few of the large or even medium size companies such as are found in much greater profusion in other regions.

Other initiatives are required to strengthen the Welsh company base, including a renewed drive to bring in companies from outside Wales. The attraction of Foreign Direct Investment (FDI) was a cornerstone of post-war Welsh economic policy, particularly during the lifetime of the WDA. As such, it helped to bridge the gap in employment left by the contraction of steel and the near disappearance of coal mining by the early 1990s

Wales at the time was offering employee-intensive businesses in the motor, engineering, chemical, and pharmaceutical industries a large pool of lower-skilled workers that could adapt easily to factory production and shift working. Because of low wages Wales was a competitive location for labour before the fall of the Berlin Wall and the subsequent integration of the East European economies into the Western World, and later the EU. 

A second wave of competition has followed with the emergence of China as the world’s workshop, and many of the industrial processes and products previously carried out in Wales have now moved to the East. The African Continent will offer the next big pool of labour for employee hungry businesses, such as textiles, of the future. Because of technological advances most industries – steel being a notable example – also require less labour than previously for equivalent or even greater levels of output.

Wales urgently needs a new smart wave of inward investment. FDI in future, though it may still play a crucial role, will not bring in new businesses on the scale of the past and is likely to consist of much smaller operations than the large plants attracted in the second half of the 20th century, now largely resettled in lower-cost locations. Successful regions in future will consist of businesses special to the region but integrated into global supply chains. Wales needs more of these businesses.[45]

Acquisition of businesses that are integrated into the supply chains of modern processes involves interrogating not just traditional sources but also those areas that have successfully developed new products or processes. Expanding economies such as Israel, Singapore and Taiwan could be looking for a western European base and Wales will need to be making its advantages known. The capacity to unearth such businesses needs to be in place.

The reasons why businesses have come to Wales with modern products, such as Bosch, which invested heavily in the 1990s in an alternator plant near Llantrisant only to leave two decades later, must, however, be uncovered. Cheaper sources of production will often be cited but may not be the only reason and in any case fail to explain the greater success of some regions in retaining their investors. Peripherality can only be one of the factors otherwise Ireland could not have developed such a successful economy.

The most successful new investment of recent times in Wales has been not a manufacturing group but insurance provider, Admiral. As well as employing large numbers of people across a range of skills in Cardiff, Swansea, and Newport it has also been the seedbed for other start-ups by former employees offering a model that needs to be replicated.

Similar individuals with sound commercial ideas will need to be found, and pie-in-the-sky projects that the availability of public funds always attracts avoided. High net worth individuals willing to invest in existing Welsh businesses to help them grow without having to cede control must need be sought out, too.

The list of alumni from Asia and other parts of the world who have studied the sciences or graduated with MBAs and other business degrees at Welsh universities is long. Some will have gone on to found successful businesses and could be encouraged to consider Wales as a base for European operations

Recommendation Six. A new inward investment focus is needed on businesses capable of offering high quality jobs, even if initially in small numbers, in technology, health and sophisticated consumer-facing products. Potential investors in new technology nations need to be cultivated and contact deepened with alumni of Welsh universities overseas.


The length of time it will take for the world economy to recover from Covid-19, and the impact it will have on Wales will only become clear over the next few years but policymakers need to be alive to opportunities. An important focus of inward investment should be finding businesses that will manufacture products which for one reason or another will be better manufactured in the UK than overseas.

Perhaps some beneficial side-effects, especially for the environment, will emerge when life returns to normal post virus. Significant falls have taken place in air pollution in the affected areas where previously high levels may have been a contributory factor in the high number of deaths, compared with less industrialised countries and regions.

Many businesses and educational establishments have learnt during the Covid-19 crisis to operate remotely, but such measures cannot apply to manufacturing, a sector of greater importance to Wales than the richer regions of the UK. There will be manufacturing opportunities in reshoring which could be exploited. For environmental reasons long supply chains involving polluting air and sea transport may fall increasingly into disfavour. Companies serving the British market from within the EU may decide to restart operations.[46]

Britain has found itself severely embarrassed by the necessity to chase around the world to provide its health care sector with supplies of essential equipment and medicines. Health is only one sector that may in future be considered as appropriate for repatriation to ensure national survivability in the event of a resurgence of pandemics such as Covid-19.

Many people who have had to work from home may not want to return to daily commuting and will in future arrange to use PCs and laptops at home for at least part of their working week. If home working replaces the office in some scenarios it may make it easier for individuals to stay in Wales to work, while providing services to the rest of the UK.

Though Wales may lose some population as a result of higher unemployment, there could be a surge in the number of people wishing to settle away from crowded cities, in Wales, Devon and Cornwall, the Lake District and other supposed rural idylls. This could bring talented individuals with new business ideas to Wales. Inquiries to estate agents suggest many are already considering such moves and policy should be developed to manage this effect to the benefit, rather than the detriment, of all parts Wales, including its most fragile areas.

There are likely to be other post-Covid-19 opportunities. Many business travellers may want to rely on videoconferencing rather than face-to-face meetings (though the attraction of international hotels will always be a pull for businesspeople and conference attendees). Long-haul holidays to Asia, South America and other distant parts may seem less attractive, if airlines and especially the low-cost variety are victims of the oncoming recession.

This could create openings for Wales, if it can provide the quality of service and experience now demanded and move away from reliance on serving the lower cost end of the market, a long-held ambition. Air fares, already vulnerable to demands for climate change action, will rise. Innovative services to meet any new needs that arise are likely to be a focus for entrepreneurs and attractive to funders, and should be so to enterprising individuals in Wales, too.

Recommendation Seven. Wales should search for businesses that might be relocated back in Britain for strategic security, environmental or other reasons. Opportunities in other fields including tourism should be exploited.


We need to recognise that the exporting propensity of Welsh businesses is low. On the surface Welsh exports to Ireland look a modestly successful £1.57bn. But drill down into the figures and it appears no less than two-thirds of this is accounted for by petroleum, and related materials – presumably oil refined in Pembrokeshire and shipped onward, contributing minimum added value or jobs to the Welsh economy. Net of this product Welsh exports to Ireland are little more than £500m a year.

Welsh exports are not the result of the combined efforts of hundreds of Welsh companies successfully seeking out overseas markets but depend on a handful of big multinational corporations such as Airbus, Dow, Toyota, and Ford and hence are vulnerable to corporate decisions made elsewhere (and to decampment). Ford’s closure of its Bridgend operations is an example. Output at Airbus’s Deeside plant will be affected by a decline in air travel and consequent cancellation of orders for the parent’s products. Jobs are already being lost.

 An expanded team of export advisers and easy to join trade missions will be required to assist Welsh small and medium-sized companies boost sales overseas (and to other parts of the United Kingdom) and to encourage companies that have not exported to get involved. A Wales website where it would be possible to order a variety of things from Wales and have them delivered collectively is one possibility, the Welsh Government working with Welsh transport and distribution companies to set up the logistics and warehousing facilities and payment software.

A greater involvement in export or even the wider British market would bring wider benefits than increased sales. Companies that export are more productive and more efficient because of exposure to higher standards in competitive markets

Companies such as authentically Welsh and Deliver Delicious are already acting as one stop suppliers of Welsh delicatessen and other products and bringing together different food products and suppliers but a bigger effort is required across other sectors. Parallel with this a fresh look is needed at Welsh port facilities and investment encouraged so that Wales can benefit from a likely trade orientation towards westerly facing markets following departure from the EU, and from UK Government freeport plans.

Recommendation Eight. The export propensity of Welsh firms needs to be encouraged and stimulated to increase revenues and help increase the productivity and scale of Welsh business. The potential of Welsh ports to secure an increased share of the UK’s trade needs to be explored.

Business Intelligence

None of this will work unless the capacity to acquire and utilise better business intelligence is developed. The first requirement is to know more about Welsh business needs. In other successful economies, such as Scotland and Ireland, the universities are mobilised to a much greater extent than in Wales to advise on the needs of existing sectors of the economy, and where future growth prospects lie. An example is the role played in Scotland by the Fraser of Allander Institute at the University of Strathclyde.

Established in 1975 it helps to inform decision-making in Scotland. It works with the business community to improve productivity and performance and with the Scottish Government to establish priorities and action plans. It runs the Holyrood Government’s £225,000 Economic Futures initiative on behalf of Scottish universities and is also tasked with improving Scottish statistics.

A recent commission by the Holyrood Government in 2019 was a report by Professor Sir Anton Muscatelli of Glasgow University on how Scotland’s universities could lead economic growth through industrial partnership and how Scotland could learn from other innovative European countries. [47]

Business in Wales has complained that even in the shaping of policy it has not always been consulted and it appears to lack a go-to institution for the kind of support Scottish firms can get.[48] Wales is awash with statistics illustrating its economic performance but there are deficiencies in the supply of information on business. Economic Intelligence Wales (EIW), a partnership established in 2018 between Banc, Cardiff Business School and the Office for National Statistics, is a welcome addition to  business research capability but is very much data-driven and focused on access to finance for small businesses.

An institution like the Fraser of Allander Institute in Glasgow, operating across a much broader canvas, could play a valuable role in advising Welsh economic development officials on economic and business issues. In the interim greater use could be made of the Scottish and other similar institutions alongside EIW and Welsh academic sources.

Ways of funding such an institution and the relationship it might have with existing business schools in Wales would need to be considered. Its independence would need to be guaranteed, ruling out full scale funding by Welsh Government. Support from the Welsh business community or charitable institutions would therefore need to be sought but over time such an institution would be self-sustaining through income generated.

Recommendation Nine. Policymakers need to be equipped with better business intelligence on the needs of the Welsh economy. Welsh Government and business should back the creation of a new university centre for the study of Welsh business and business needs.


These are ambitious proposals which strongly imply the necessity of structural changes in the way economic development policy is delivered under present largely civil service mechanisms. It will be argued that many of the ideas suggested are being done under present arrangements, but the question, given the continued weaknesses of the Welsh economy, is how effectively.

The civil service, despite use of outside consultancy, is perceived by many to be too cautious in its approach, and to be inhibited by silo mentality, each department often interpreting its mission separately from and not in consultation with others. Secondly, there is deemed by many to be an absence of settled delivery mechanisms not subject to change, which work across different Government sectors, including education and training.

Lack of co-terminosity between departments that should be linked, and the overlap of regional structures – city regions, counties, local authority partnership, regional economic offices – further exemplify a lack of integration and cohesion. Perhaps the severest criticism is that the Welsh civil service remains a “money pipe”, distributing resources from London and over the course of 20 years failing to develop the capacity to generate lasting and successful new ideas for the economy. 

Various studies have claimed that the Welsh civil service – with its much shorter history than that of Scotland – is still too influenced by Whitehall and reluctant to embark on policy-making that strays too far from conventional thinking. Past mistakes – the failure of the Technium project, the still much contested absorption  of the Welsh Development Agency, Education and Learning Wales, and the Wales Tourist Board into the civil service – are also considered by commentators to be imposing a burden on the Welsh civil service and ministerial psyche and inducing an action-paralysing fear of taking risks.

This is to some extent understandable. Civil servants should be there to create a framework within which business can flourish.  Creating businesses is not their background or expertise, and because they are rightly incentivised to avoid risk, there is no benefit for them when businesses are successful.  Welsh civil servants are bound, too, to feel a dual sense of loyalty.  They are part of the UK Civil Service and their thinking and career prospects are inevitably bound up with policy approaches that do not necessarily originate in Wales. It would be unsurprising if this did not colour their advice to Ministers.

A fresh look at the role of the Welsh civil service and the demands made on it needs to be undertaken and new more appropriate mechanisms put in place for some of the implementation tasks in economic development and tourism that it carries out.

Recommendation Ten. The role of the civil service needs to be re-considered so that it can best fulfil a mission of developing specific Welsh policies. Departments need to work much more closely together.


There is a growing consensus outside Welsh Government that new institutions free from day-to-day civil service control are required. A much more pro-active risk-taking approach is needed to economic development which will best be delivered by a properly briefed and resourced independent agency.

Back in 2012 the House of Commons Welsh Affairs Committee in a report on inward investment lamented the abolition of the Welsh Development Agency which it said had reduced Wales’s visibility in the global marketplace. It pointed out that paradoxically even five years after its abolition the WDA remained one of the most recognised development bodies internationally. It called for a dedicated promotion agency to be re-established and argued that such a body should be equipped with a mix of skills, with an emphasis on private sector experience. 

Unfortunately, although the debate has rumbled on over the absence in Wales since the early 2000s of a separate development agency, unlike in many other comparable countries, there have been no signs of a willingness by Welsh Government to alter current arrangements.  Indeed, at political and official level there is strong opposition, motivated, it would appear, by a fear of losing control.

The slow progress of recent years, however, makes hard to gainsay the case for change in the complex current structure under which implementation of policies is administered as a Government departmental project. A separation should be introduced into policy making and execution. Cathays Park would set the goals but leave their attainment to professionals appointed and incentivised within a new dedicated agency (or agencies, if a separate body for financing and developing small businesses based around Banc was considered appropriate) tasked with driving economic development.

Such a change would put politicians and civil servants currently fearful of losing control in a stronger position.  At present they are jointly held accountable for successes and failures. An independent agency would operate to targets set by Welsh Government but not be under its day-to-day management and control. It would need to be given clear directions but would then handle implementation and be liable for the results. Failure would have consequences for the agency’s leaders, if the fault lay in execution, and at the ballot box for the politicians, if the policies had lacked merit.

A new enterprise agency, interposed between Government and business, would take on FDI attraction, export promotion, site provision and other relevant initiatives designed to strengthen the business sector, currently managed through civil service bodies. It would work with Welsh diaspora movements and help create markets for Welsh firms abroad. 

The Irish inward investment agency, IDA, offers an example of how successful such an organisation can be. Admittedly helped by Ireland’s low (and, even then, widely avoided) 12.5 per cent corporation tax rate, the IDA has managed to attract 210,000 jobs in client companies and a further eight in supporting industries for every 10 introduced into the country. Over recent years employee numbers have been increasing at the rate of 10,000 a year.[49] The IDA’s enormous success has resulted in all  five top world software companies, 14 of the 15 top medical technology, 18 of the top 25 financial services, all of the top 10 pharmaceutical, and eight of the top ten industrial automation companies having a base there.[50]

Ireland’s economic clout has also made it possible to create out of its pension funds the Irish Strategic Investment Fund ( which invests on a long-term basis to support economic activity and employment on the island, with the appropriate slogan, Thinking in Decades. It has strong connections with public and private sectors and seeks to drive innovation across multiple industry players.

The ISIF offers an example of how successful an institution of this sort can be, investing outside Ireland and earning rents from abroad. It currently has €4.1bn committed and has brought the Irish Exchequer returns of €0.6bn since 2014 as well as supporting 30,000 jobs. Its Causeway Capital venture capital subsidiary offers sums of between €2.5M and €10m. Last year it came to the rescue of UK restaurant chain, Patisserie Valerie, acquiring the stricken group from the administrators and it has investments in other UK businesses.[51]

It also has stakes in other Irish venture capital funds supporting the country’s small and medium size companies. Its stated aim is to accelerate growth through direct equity investment and hands-on management support. The returns from investments of this kind in successful businesses elsewhere go to the bottom line in national accounts, supplementing national income and reducing the need for borrowings.

For an agency operating even on a fraction of the scale achieved over decades by IDA to be put in place in Wales, numbers of appropriate professionals would need to be hired, briefed, and incentivised. The best results, too, are likely to be obtained if those charged with bringing in new business are incentivised in line with results.  Targets could be set for example for the growth in the number of public limited companies or in exports.

In tourism, where another independent agency is needed, Wales still attracts far fewer visitors than either Ireland or Scotland, proportionate to its size, despite its manifold attractions and closer proximity to London and other UK tourist centres, and to international airports in London, Birmingham and Manchester. Contracts to develop Welsh tourism could be put out to tender with incentive-driven targets set for the number of overseas visitors, cruise ship calls, increased levels of UK spending, and improvement in facilities.

Recommendation Eleven. New agencies outside civil service structures should be established by an incoming Government to take over the promotion of economic development in Wales. They should be properly resourced and financed and their staff incentivised to produce results.

In the model outlined here, the Welsh Government would stand back from implementing economic development policy, but its resources would be deployed to ensure it has a role in shaping the evolution of the Welsh business sector. Nor would this exceptional in Britain or elsewhere. At UK level deeper Government involvement in managing the business environment is already being proposed because of the Covid-19 crisis where companies have accepted finance to support their activities and ensure survival post Covid-19.

Government funds to help businesses through the crisis, commentators have suggested, may have to be converted into equity in some cases, giving the state a role in the management of key businesses in future.[52] Limitations could also be put on directors’ emoluments, dividends, and other decisions. Hints that this may be the direction of policy have come from the Government.

This can give sanction to a more direct role for the state in Wales to help create  the framework within which the economy can grow more strongly, and to become more involved in its shaping, intervening when market forces are seen not to be delivering results that are in Wales’s long-term interests. These include those instances where a Welsh solution could prevent businesses deemed important for the development of the Welsh economy from being lost through take-over or merger or where management control would move elsewhere.

Recommendation Twelve. While standing back from day to day management  of the economic development in favour of a hands-off agency or agencies, the state in Wales should play a more central  in determining the direction in which the Welsh economy develops, including where appropriate more direct financial involvement in companies, using strategic shares and other financial mechanisms.


The advisers and executives needed to work with companies in the ways suggested and to ensure implementation also need to be found. They are unlikely to be found in the numbers required within Wales. These individuals would need to be well-paid, including through well-managed and strictly enforced incentives to leave successful careers elsewhere. They would need to be recruited outside Wales as well as within

Substantial investment must go into increasing the availability and take-up of management education. Perhaps the key finding in the Cardiff Metropolitan University report into lagging productivity mentioned earlier was that the quality of management in SMEs was a contributing factor. Lack of training was identified as long ago as the 1970s when a solitary individual tried to rectify it with the creation of the Wales International Management Centre. Five decades later it appears the problem is still widespread.

There are courses in Wales to train those running the nation’s businesses, such as the 20Twenty Business Growth and Leadership Programme at Cardiff Met, but these need to be greatly expanded and efforts made to ensure a much higher proportion of Welsh business managers participate and benefit.

The problem extends into public sector where there is a need for better training for civil service and other similar bodies. A bigger cohort of well-trained managers for both central and local government, health and education is needed, and consideration should be given to the establishment of a college, perhaps based in one of the Welsh universities. Lampeter, away from big city distractions, might be thought an ideal location for blue-sky thinking and debate.  Integration of career path and training would as a helpful by-product and lessen tension and suspicions with which the two sides of government view each other.

Recommendation Thirteen. The need to improve the management capabilities of business and public sector leaders should be addressed with the creation of new courses and institutions.

The pipeline leading to the creation in this way of a much more successful Welsh economy also needs to be reviewed and overhauled from its roots much earlier in the education system. Welsh Governments in the past have tried understandably to invoke the idea of Wales as a small, smart country but the reality is different.

Reluctant as we may be to admit it, however, our children leave school with lower qualifications than their counterparts in the richer regions of the UK, we have continuing high levels of young people not in education, employment or training (Neets), our universities are at best mid table and at worst in the bottom half of the regular league rankings. We lack, unlike Scotland (St. Andrews and Edinburgh) and the North East (Durham), what might be termed an elite university capable of attracting students with the best examination results.

Moreover, we export large numbers of our most able students to universities in England and elsewhere. Indeed, a Government-backed programme – Seren Network – encourages students to apply for Oxford and Cambridge and other leading English universities, even though most of its beneficiaries will subsequently take up jobs outside Wales. The English regions and Wales are all net exporters of graduates, only a minority of whom return to work or set up businesses in their home areas. As such, Wales is actively helping to promote the growth of the main recipient of these students – London and the South East – to its own detriment.

Those who leave Wales also develop a less positive view of their native country. A recent study into the attitudes of Welsh students studying in Wales and England found a marked difference in opinion whether Wales would be a good place to set up in business.[53] Those studying in England were largely of the view that it would be difficult to do so and showed little knowledge of the help they might receive. By contrast those studying in Wales were much more positive, probably as a result of being exposed to regular information about support for entrepreneurial activities and observing the successes of some of their recently graduated contemporaries who had started up in business.

No-one would wish to deny Welsh young people the opportunity to study at the best universities in England, the US or on the Continent. Indeed, the oldest British universities have been the destination for many Welsh students for centuries. This will continue to be the case. Measures need to be considered, however,  that will act as an incentive to young people to stay in Wales to study and the highest levels of student support should be directed to Welsh young people choosing to study in Wales. Corresponding efforts should be made to draw opportunities that might be available to the attention of Welsh students who might want to return to Wales.

The effective privatisation of the university sector has resulted in its transformation in Wales into an export-earner educating large numbers of students from not just the rest of the UK but from China, India, and other Asian countries. Wales is probably the largest “exporter” of higher educational services in Europe if England is regarded as an export market, and it may well be the highest importer of such services as well. 

We should not be over dependent on the former, and we should seek to reduce the latter. Dependence on non-Welsh students creates a vulnerability as the cap the Whitehall Government is to put on English students studying in Wales demonstrates. Nevertheless, the fee-paying model gives the Welsh Government an effective means to encourage talented people to remain and return to Wales when the cost of doing so is cheaper than at later stages in their career. There should be significant use of the student loan scheme financial arrangements to ensure that it is advantageous for Welsh students at Welsh universities to remain in Wales after finishing their degrees.  This could also extend to returning Welsh students who have taken courses at universities outside Wales.  The ability to encourage Welsh students to study at Welsh universities through this means should be examined.

Wales needs a pipeline, propelling students into Welsh business where they will meet companies and advisers who are motivated to improve the economy. If graduates stay in Wales, their student debt should be written off over a period commensurate with the length of their degree. The same could apply to students returning to Wales.

Study in Wales, putting Wales on a similar basis to Scotland where most students do not travel across the border for courses available in their home country, could also be encouraged through the provision of finance for accommodation and living expenses for students with Welsh addresses. There may be regulatory hurdles, but it should be possible to devise a financial framework encouraging study in Wales. Student loan finance provides a means to do so. Shorter two-year degrees, spread over 40-46 weeks a year, should also be considered. This would reduce the costs to students, enable them to enter the labour market earlier, and help to alleviate the decline known to be about to happen in the size of this cohort over the next decade as a result of demographic changes.

Such an approach can only be adopted if the courses in Wales are appropriate to the economy’s needs and attractive to students. A full-scale audit of all university and further education courses on offer across the Welsh higher and further education sectors, including apprenticeships, to ensure the needs of the economy are given priority is should be conducted.

Valuable as their role has been in bringing income to Wales through recruiting large numbers of overseas students since the overall cap on numbers was lifted, the primary function of a state-funded sector such as higher education must be to make sure the training that is going to be most relevant to the work force of the future is offered. This must have a central place alongside the liberal education that one of the first literate countries in Europe would want to provide.[54]

Higher education should have a major role in economic and social change in post-Covid Wales, as Rob Humphreys pointed out in a recent article for ClickonWales.[55] HE has a good story to tell in for example its research links with anchor companies, graduate start-ups and integrating employability into the curriculum, but the nexus between private sector and HE needs to be deepened, and HE brought front and centre in policies that promote the foundational economy, he observes. Higher level apprenticeships, and lifelong learning should be brought in from the margins, too.

Recommendation Fourteen. An incoming Government should review the entire Welsh higher education sector to ensure its priority is meeting the needs of the Welsh economy and society. It should set in motion measures to ensure more Welsh students stay in Wales for their degrees and their subsequent careers and that those going elsewhere are encouraged to return.

Joining the Welsh dots

The above focuses very largely on measures that will lead to a more business orientated and hence more prosperous Wales, but it remains important to remember that the creation of a stronger Welsh nation is at the heart of this. Nationhood has been strengthened by the late 20th century burst of institution building – and especially the Senedd – but Wales remains fractured by its lack of inter-connectedness.

Wales has never had a natural capital like London, Edinburgh, Paris, or Berlin, to which all the country’s roads have led. For the best part of 1,000 years Cardiff was a county town, an administrative and retail Mecca for Glamorgan and to some extent Gwent but not the north or west. Yet it is the best capital we have got and antagonism towards it is destructive.  The importance of big cities in economies everywhere is now established and is not going to wane.

Infrastructure policy must ensure smooth transport links throughout Wales to and from towns and cities where most current and future jobs are located.[56] But, as well as seeking to link up towns and cities all over Wales with their neighbours, policy should have as one of its objectives making it possible for people everywhere to communicate more easily with their capital.

Past practice and policy have tried to ensure road and rail infrastructure delivered Welsh people, and goods, across the border to England.  This needs to be counter balanced in future by greater attention to internal and especially north south links. Wales will also need not to be left behind in the roll-out of 5G telecommunications infrastructure which will be a vital tool for businesses and individuals seeking to spend more of their working time at home.

There are other issues that have not been tackled here. It has long been an ambition in Wales to attract more companies using or involved in the development of green technologies and this can also be a valuable route for Wales to take out of the current Covid-19 crisis as well as for the future. The renewables industry has over recent years become much more competitive with oil, where the returns for investors over succeeding decades look much less healthy as the world decarbonises. 

The Social Market foundation has called on the UK Government to train those likely to be left jobless by the coming recession to work in the low carbon economy, claiming the sector as a whole could offer new jobs to one half the 1.4m people likely to be left unemployed.[57] Wales should make sure it is part of any such moves.

Recommendation Fifteen. Transport infrastructure policy as well as eliminating local obstacles to travel should incorporate a commitment to creating greater cohesion and ease of travel between all parts of Wales. Wales must be able to match other regions and nations in the quality and competitiveness of its telecommunications infrastructure.

Can Wales Do it?

This paper has attempted to elucidate the underlying problems of the Welsh economy and to offer some suggestions as to how to address them, whether within the Union or outside it. Various studies of the Welsh fiscal deficit and the cost of independence have tried to suggest ways in which Wales could get closer to paying its way. Lower defence spending, a generous settlement for Wales’s inherited national debt obligation, resource taxes on exported water and energy might help.

There are also other revenue-raising possibilities (in an independent Wales), such as pylon and pipeline taxes on resources transiting across Wales, or a switch from taxation of cars to a road usage levy. Electronically gathered, like the Dartford Crossing fee and the London congestion tax, this would harvest rent from trucks and other vehicles making regular usage of Welsh roads without contributing to their upkeep, including vehicles travelling along the A55 and M4/A40 to and from Ireland to England and the Continent.

The policies and mechanisms outlined above can be instituted within the existing constitutional dispensation, providing politicians and civil servants are willing to look at new ways of operating, and are prepared to look at new mechanisms for stimulating economic development and shaping the economy.

A stronger and  better-balanced Welsh economy, moving in a different direction from dependence on a financial services-dominated South East of England, can generate increasing confidence in doing things differently and a discernible and credible path to independence, if that should be the ultimate wish of the people of Wales.

Wales, and especially its leaders, must, however, undergo a transformation to a much more business-oriented mindset. Herein lies the challenge and the opportunity. The current approach produces a contest between those whose prism is social justice and group rights and those whose basic approach is to maintain a small state and focus on the individual.

There is a third way which would be more appropriate for Wales, which looks at how to improve economic and social justice, based on such measures as are needed to create a stronger economy. The dilemma, however, is whether there is the capacity within Wales to achieve this and if not how, and how quickly, it can be developed.

Summary and Recommendations

People in Wales ought not to be happy about the current state of their nation. We are dependent on others – the richer regions of the UK – for our welfare, and the promises of devolution appear not to have been forthcoming. Admittedly, there have been huge challenges, but in the run-up to the 1997 referendum vote it was argued that if Welsh people were put in charge of their economy, weaknesses, which even then had existed for 50 years or more, could start to be solved.

Though progress since has been considerable and the Welsh Government has been a front-runner in some of the social legislation it has passed Wales still lags behind most other parts of the UK economically, behind an increasingly prosperous Ireland, and risks being overtaken by some of the fast-developing most recent EU entrants. Yet there lurks deep in the Welsh psyche the fear of “leaving nurse in case of something worse” which has perhaps suppressed the willingness to look at radical alternatives.

If solutions were easily accessed, they would have been found many years ago, given the long-standing efforts and the resources that have been deployed in a bid to find them. We have a welter of reports on the problems of the economy dating back over the years since devolution, including the productivity and output gaps with the rest of the UK, and in a recent report from Cardiff University on the size and composition of the Welsh fiscal gap. This offers a sobering view of the extent of our dependence – the failure to raise enough in taxes to pay for all the service received.

This report has sought to set out the background against which decisions about the Welsh economy and Wales’s future need to be made. It sets out firstly the context in which Wales now finds itself within an economy heavily dominated by the needs of the financial services industry of the South East of England. It seeks to show that the business structure of two other territories with which comparisons are made, the South West of England and the Republic of Ireland are much stronger, and the latter particularly, better equipped to survive as modern high-technology economies.

Finally, it offers some suggestions for radical policy directions an incoming Welsh Government might take in 2021. It suggests that dealing with the problems Wales suffers from will require the creation of new institutions to handle economic development, a greater readiness on the part of the Welsh Government to shape the economy, including through the use of state funds, and just as importantly a change in mindset to a much more business-oriented way of thinking.

Some of the ideas will be dismissed as too radical. Nevertheless, what is outlined here aims to better inform the debate Wales needs to have and perhaps offer a mirror to the Welsh condition that we have been reluctant to gaze into. Wales needs a stronger economy whatever future direction it takes politically and constitutionally.

Recommendation One.  Banc should expand beyond its current remit, and a review be undertaken of the relevance to Welsh needs of institutions such as the US SBA.  Employee Share Ownership Trusts should be actively promoted with a view to making them a required part of any exit strategy for a firm in receipt of public sector funds.  The potential for an ESOT fund to facilitate this for all companies should be researched.

Recommendation Two. Links with London-based venture capital must be strengthened and a new Welsh venture capital trust that could draw in funds from Wales and beyond to support Welsh start-ups should be created.

Recommendation Three. Links should be established with Welsh expatriate organisations to tap members’ capital and expertise.

Recommendation Four: The foundation economy should be given a better-resourced place in the centre ground of Welsh economic policymaking with incentives put in place to promote much greater take-up by public and private sector purchasers. A wholesaler type body should be created to aggregate private sector provision and support tendering, together with a facility through which companies could make their offering more widely known.

Recommendation Five. In the aftermath of the Covid-19 crisis a window for a much greater emphasis on local production and procurement will open and this must be seized. A Welsh Government focus on how to finance and implement growth in sectors such as CEA should be developed.

Recommendation Six. A new inward investment focus is needed on businesses capable of offering high quality jobs, even if initially in small numbers, in technology, health and sophisticated consumer-facing products. Potential investors in new technology nations need to be cultivated and contact deepened with alumni of Welsh universities overseas.

Recommendation Seven. Wales should search for businesses that might be relocated back in Britain for strategic security, environmental or other reasons. Opportunities in other fields including tourism should be exploited.

Recommendation Eight. The export propensity of Welsh firms needs to be encouraged and stimulated to increase revenues and help increase the productivity and scale of Welsh business. The potential of Welsh ports to secure an increased share of the UK’s trade needs to be explored.

Recommendation Nine. Policymakers need to be equipped with better business intelligence on the needs of the Welsh economy. Welsh Government and business should back the creation of a new university centre for the study of Welsh business and business needs.

Recommendation Ten. The role of the civil service needs to be re-considered so that it can best fulfil a mission of developing specific Welsh policies. Departments need to work much more closely together.

Recommendation Eleven. New agencies outside civil service structures should be established by an incoming Government to take over the promotion of economic development in Wales. They should be properly resourced and financed and their staff incentivised to produce results.

Recommendation Twelve. While standing back from day to day management  of the economic development in favour of a hands-off agency or agencies, the state in Wales should play a more central  in determining the direction in which the Welsh economy develops, including where appropriate more direct financial involvement in companies, using strategic shares and other financial mechanisms.

Recommendation Thirteen. The need to improve the management capabilities of business and public sector leaders should be addressed with the creation of new courses and institutions.

Recommendation Fourteen. An incoming Government should review the entire Welsh higher education sector to ensure its priority is meeting the needs of the Welsh economy and society. It should set in motion measures to ensure more Welsh students stay in Wales for their degrees and their subsequent careers and that those going elsewhere are encouraged to return.

Recommendation Fifteen. Transport infrastructure policy as well as eliminating local obstacles to travel should incorporate a commitment to creating greater cohesion and ease of travel between all parts of Wales. Wales must be able to match other regions and nations in the quality and competitiveness of its telecommunications infrastructure.

© Rhys David

)ct0ber 19th 2020

[1] Managing Productivity in Welsh Firms: Final Report 2020. Hodge Research Project, Cardiff Metropolitan University.

[2] A Strategy for the Welsh Economy. Williams K. et. al. IWA 2015

[3] For a discussion of productivity issues generally see

[4] The Cardiff Met report highlights issues Welsh firms should be addressing if the whole gamut of problems surrounding productivity are to be addressed. These include better measuring, strategic planning, and incentivisation to promote innovation. Management capacity and skills, however, are key barriers that will need to be overcome.

[5] Wales’ Fiscal Future: A Path to Sustainability? Wales Fiscal Analysis, Cardiff University, 2020

[6] The Welsh dependence on transfers has been analysed before, notably in a 2001 report for the Institute of Welsh Affairs by Professor Ross Mackay of Bangor University. At that time, however, the emphasis was on securing a more just distribution of funds to Wales (compared with Scotland), amid hopes stronger powers in Cardiff with the arrival of the National Assembly would strengthen the Welsh economy and raise income levels. The Search for Balance: Taxing and Spending across the United Kingdom. IWA 2001.

[7] There are gaps between regions and centre in other countries – Co. Donegal in Ireland is much poorer than Greater Dublin – but the UK has some of the widest disparities. Wales has, however, slipped from being ahead of Northern Ireland in GDP until comparatively recently to being stubbornly behind.

[8] What sort of Wales do we want? Mark Barry, IWA March 2020

[9] Fairer and Stronger.  The Second Report of the UK2070 Commission.

[10] Prosperity for All: Economic Action Plan. Welsh Government 2017.

[11] A fourth region covering Mid Wales may be added.

[12] Scotland – the new case for optimism. A strategy fort inter-generational economic renaissance. The report of the Sustainable Growth Commission. May 2018.

[13] To this list of externally orientated specialities could be added London’s pre-eminence as a legal centre, offering advice on activities as diverse as international mergers and acquisitions and the tax affairs and divorces of global multi-millionaires.

[14] It is fair to point out that the UK was the highest placed large population country at 13th, ahead of Germany 17th, the US 18th, Japan 62nd and China 94th.

[15] Scotland used to be in this lagging group but, helped in part by oil and strong financial services, educational and tourism sectors, has managed over the past two decades to elevate its position and now ranks among the more prosperous parts of the UK.

[16] The South West of England is defined as the counties of Devon, Cornwall, Dorset, Somerset, Wiltshire, Gloucestershire, and Bristol.

[17] Northern Ireland, despite its many problems has improved its relative ranking over recent years.

[18] A further complication is different year ends, so companies in both listings are compared with others reporting earlier or later in the same or succeeding years. The Western Mail/WalesOnline has produced a different ranking of the top 300 Welsh businesses based on turnover alone for more than two decades. Iceland is ranked at number two in the most recent listing behind Admiral. Dwr Cymru was in fifth place.

[19] Part of Kingfisher Group, also owner of B&Q

[20] The company’s headquarters are in Newport. Buying, design and marketing are in Battersea, London.

[21] An Economic Strategy for Wales. p17. Williams K., et al. IWA, Cardiff.  2015

[22] Dyson moved its headquarters to Singapore in 2019 but retains 4,500 jobs in the UK, a significant proportion of which are in research and development.

[23] General Dynamics and British Airways Engineering are not included in the Insider Wales Top 300.

[24] Grounded means here a company owned or largely owned and headquartered in Wales offering a range of employment opportunities and motivated to remain and develop as part of the Welsh economy.

[25] An independent Wales would, of course, be able to include England in its export figures but these would have to be balanced against imports coming the other way.

[26] Electric car pioneer, Elon Musk, is reported to be looking for a site for a second so-called giga-factory in Europe to complement his Tesla company’s investment in Berlin. Wales could offer itself as a candidate.

[27] Irish GDP is skewed by multinational revenues that in many cases have little direct impact on the economy. The Irish Government in 2017 introduced a new measure, Modified Gross National Income, which reduces real Gross Domestic Product by one third. This still leaves Ireland with output levels roughly equivalent to Germany.

[28] Irish banks’ international bond holdings had exploded from €16bn in 2003 to €100bn in 2007 mirroring a similar increase in property lending.


[30] The direction of travel in Wales is different. First was a small Wales-based motorway services group owning Magor and a handful of sites in England but was acquired by Moto, Britain’s biggest operator, (itself later sold in a venture capital deal).

[31] GDP per capita 5th of 187 (IMF) 6th of 175 (World Bank)


[33] My piece on the missing middle in Agenda

[34] Wales, like other regions waiting for the UK Government’s promised levelling-up, is also disadvantaged by an exchange rate effectively set to meet the demands and interests of the financially driven service economy of the south-east of England. Areas such as Wales with a relatively higher share of manufacturing in overall GDP lose the opportunity to price goods more effectively in markets outside the UK. (In the Euro area the currency is similarly over-valued to the benefit of Germany and to the disadvantage of southern member states, a source of growing discontent in recent years.)

[35] This and other points noted here are well made by Madoc Batcup in a private paper, Creating a new Cymru. 2018.

[36] In the EU where opposition to state aid is an article of faith Germany is taking equity stakes in Lufthansa in return for financial support. The same is happening elsewhere.

[37] Critics have claimed the policy has had insufficient input from business itself. The Federation of Small Businesses Wales has argued that debates around business policy often default to the tactical rather than strategic. New structures and new institutions are needed.

[38] Sharing Success: The Nuttall Review of Employee Ownership. 2012

[39] Federation of Small Businesses. Changing the Conversation: Opportunities and Practicalities involved in Establishing a Small Business Administration for Wales. Centre for Enterprise, Cardiff School of Management, Cardiff Metropolitan University 2015.

[40] Vd. also for a fuller discussion.

[41] The foundational is generally taken to comprise the production, distribution, and consumption of the necessities of everyday life, food shelter, local financial services, local transport, and local infrastructure.

[42] Towards Inclusive Growth: Economic, Social and Political – a manifesto for a small nation.

[43] If, as is being suggested, demand for meat is reaching a peak in developed and developing nations because of health scares and environmental and climate concern, vegetable production is going to grow in importance. If not produced locally the food will have to be shipped and trucked in.

[44] The Irish have used a scheme that highlights local produce on till receipts.

[45] Henry Wai-chung Yeung. National University of Singapore. Regional Worlds: From Related Variety in Regional Diversification to Strategic Coupling in Global Production Networks. Regional Studies Association. May 2020

[46] An ambition to increase market share in Britain, its biggest European market, when tariffs increase on EU-produced vehicles is reported to be behind Nissan’s decision to keep open its plant in Sunderland and close its Barcelona factory. The company has previously only achieved modest sales on the Continent.

[47] Driving Innovation in Scotland: A National Mission. Prof. Anton Muscatelli, Glasgow University.

[48] The next Welsh Parliament needs to prioritise business and the economy. Ben Cottam, ClickonWales

[49] IDA has international offices seeking investment and promoting Ireland in London, Paris, Frankfurt, Sydney, Beijing, Shanghai, Shenzhen, Seoul, Singapore, Johannesburg, Sao Paulo, Istanbul, Moscow, the UAE, plus a further eight across North America, including two in California.

[50] Ireland even has a programme of nine energy efficient Advanced Technology Buildings that looks very much like Wales’s Techniums. Located in areas that have not shared in the inward investment boom three have already been taken by US pharma giants. Where possible the ATBs are located close to towns with a technology institute, so a qualified workforce is available.

[51] Whether in the light of the severe downturn brought about by Covid-19 in the hospitality trade this proves to be a sound, or a mistimed, move remains to be seen. The chain has been acquired cheaply, however.

[52] Government was not always so reluctant to support vital sectors. in 1971 the Government’s decision to step in to nationalise aero-engine maker Rolls-Royce from bankruptcy was regarded as wholly appropriate.

[53] Author, Dan Roberts

[54] Welsh Government also needs, particularly because of the pressures on finances from Covid-19, to ensure the well-being of our universities at a time when they are facing severe financial pressures…

[55] We need to reinvent HE for a post-Covid Wales.

[56] The French emploi franc scheme which offers subsidies to employers who take on workers from designated districts where opportunities are fewer may be relevant.

[57] Unfortunately, Wales lacks champions in the energy sector, as current assets are almost entirely owned externally. The last vestiges of formerly nationalised South Wales Electricity (later Swalec and later still Scotland-based SSE) now seem set to disappear as new energy supplier, Ovo, the latest owner and itself partly owned by Mitsubishi, retrenches back to Bristol, with jobs in Cardiff among those to be cut.

Addressing the Welsh Fiscal Gap

The economic arguments for Welsh independence are examined by Rhys David

Chapter Five of the report Towards an Independent Wales, published in September 2020 by the Wales Independence Commission.

Could Wales afford independence? Particularly among young people there has been growing interest in the past year or two, and among the wider population of Wales growing numbers are identifying as “indy-curious” – yet to make their minds up but not automatically opposed.

Of course, there are few countries genuinely wanting independent status that could not make it work one way or another, but the key question is whether Welsh people would be better or worse off compared with the status quo. So, could Wales make a go of it? This is one of the questions examined in the report of the Wales Independence Commission published in September 2020.

Analyses by Wales Fiscal Analysis and the ONS shed light on the current fiscal position of Wales under the current constitutional arrangements where Wales is a region that many consider to be subordinated to the interests of London and the south east of England with its strong emphasis on the provision of financial services. In 2018-19 it was estimated that Wales had a deficit of roughly 18 per cent of GDP or £4,300 per person. In total this amounted broadly to a transfer of £13,5bn over and above taxation raised in Wales to meet Welsh needs. It is, therefore, the headline size of the task.

Such a transfer is not unique, however, to Wales. Only three of Britain’s twelve planning regions – London, the South East and East of England – do not require subsidy and are net contributors to the Exchequer. However, the gap between what is raised in revenue in Wales and what is spent on public services is higher than in all but one region. The average is a much more modest £620 per head. So, is our best bet just to plough on and hope we can narrow the gap and reduce this amount over time?

Indeed, do we not need this security to deal with the damaging consequences of the Coronavirus pandemic, the effects of which are likely to be felt strongly in territories such as Wales? Moreover, Wales is deficient in those sectors which have a greater share of the digital and other industries that are likely to  benefit as a result of changes due to the pandemic, and more dependent on others, such as tourism, that will be hardest hit. The consequences and costs of the Coronavirus will unfold over many years to come. Would not Wales be better off in a union with the rest of Britain as it adjusts to harsh new realities across the economy and society?

For all that it has bright spots, the Welsh economy has chronic structural weaknesses that have proved hard to overcome for a long time. They include industry structure, external ownership and management, low productivity, a missing middle of medium-sized companies, vulnerability to take-over, a low export propensity, and educational and skills shortcomings. All have combined with poor road, rail, and telecommunications infrastructure to leave Wales among the poorest UK regions and stymied attempts to raise its relative position.

Better, it might be argued, to take the money and rely on a subsidy that enables Welsh people to enjoy household incomes and living standards broadly the same as those of the rest of the UK. Un-supplemented revenues raised in Wales would be enough to pay for the public services offered in Portugal – a much poorer country. Instead, we have roughly the same services as Ireland, a richer country on most measures. Many will argue this is a trade-off too valuable to lose.

Yet, is this the way we want to go on? Do the present arrangements offer a serious prospect of improving our economic and social well-being and reducing the Welsh fiscal gap over time? Could our dependence even be a consequence of continued reliance on subsidy?

The unvarnished truth is that Wales has been sliding backwards in relation to the richer regions of the United Kingdom, and especially London and the South East, for the past fifty years. All pretence that the gap could be closed or even significantly narrowed has now been buried in suggested new formulations of how prosperity should be measured.

This is too seductive. ‘Wellbeing’ and other similar measurement concepts designed to look at society’s health and wealth, other than through the prism of more recognised gauges of wealth, are important. They should not be put up, however, as a way of avoiding problems of poor economic performance and entrenched poverty across a broad section of the population.

Population growth offers one telling proxy for Wales’s relative decline. After a sharp decrease in the 1920s because of outward migration, numbers stood at 2.59m in 1931 and rose only by 3,000 in the next 20 years. By contrast Scotland’s population grew by 253,415 to 5,095m in 1951, while England recorded an increase of 3.7m to 41,147m. What has happened since, however, is equally interesting. England’s population has risen by 37 per cent to 56.29m, Wales’s by 23 per cent to 3.2m and Scotland’s by an even more modest 7 per cent to 5.46m.

Wales is now down to 4.9 per cent of Britain’s population, from 5.3 per cent after the war. Scotland has fallen from 10.4 per cent to 8.4 per cent. Meanwhile, England is three percentage points higher at 87 per cent. If the population of Wales had climbed at the same rate as that of England there would now be 3.56m people living in the country – half a million more. Each of these missing individuals represents a loss, or a potential loss, of employees, output, and creativity.

Would a break with the status quo make sense, therefore, and could it set Wales on a new trajectory that does not presage, as our present does, continued marginalisation within these isles? Could the cold turkey of coming off subsidy be a stimulus to the creation of a new Wales, one confidently able, albeit after a period of adjustment, to join the comity of nations? Other nations with similar numbers prosper, Indeed, a population of 5m, or roughly half as much again as Wales, seems a near optimum – as in Denmark, Ireland, and New Zealand.

As the Coronavirus crisis has shown, these countries may not have the means to develop new vaccines, though Denmark and Ireland do have internationally important pharmaceutical industries. Yet in terms of managing the spread of the virus they have done better than such scientific powerhouses as Britain and the United States. In this crisis, strong and consistent political leadership, and good on the ground public health systems, have been as important in managing the outbreak as world-leading epidemiologists, virologists, medical researchers, statisticians, and disease modellers. Possibly more so.

In other areas, too, small nations can be nimble, and can try different approaches. In an age when territorial aggrandisement is no longer the threat it once was, the defence advantages of being part of a bigger unit are less important. Indeed, the costs of trying to stay at the top table of military powers can be crippling, as the old Soviet Union found.

Trade, too, is now largely under multinational rules, making it more difficult for small nations to be bullied by their bigger neighbours when disputes occur. As the economist John Kay has pointed out:

“…there are few economies of scale in statehood. Size is as much a disadvantage as an advantage when it comes to carrying out the principal functions of modern government: justice, health, education, internal security.”[1]

Yet a hard question for proponents of independence to counter is that in the past twenty years, Wales has had more control than ever previously over its economy, transport, health and education systems and has hardly made a good fist of it. Would a step further into the unknown be sensible? Where will the capacity to make the transformational improvements come from?

Yet, it can be argued that it is precisely because we are trapped within an economy overwhelmingly shaped in the interests of the City of London that Wales has failed to make economic progress. Fiscal analyses of the position of Wales as a region of the UK, it is argued, reflects importantly the result of its past and current status within the British state: a ‘region’ subject to economic policies formulated to serve the interests of the City of London and the South East of England. If nine of the twelve countries and regions of the UK are persistently in deficit, is the fiscal and economic model perhaps broken? It has not, and does not, deliver prosperity to Wales, and offers no expectation of doing so in the future.

A better model

During the past twenty years the Labour Welsh Government’s frequently updated plans for boosting the economy have failed to produce the step changes needed in performance. Initiative weariness is being manifested. Leading economists and others have started to ask the independence question: might a new constitutional settlement with the rest of Great Britain deliver the desired results?

In an article in early 2020 Professor Mark Barry of Cardiff University rejected the idea that Wales might be too poor or too small to be independent. If it were true, he said, Wales would be unique globally, the only place where an independent country of 3m people could not exist. The question was could our economy and wellbeing be best served by Westminster/Whitehall or by something more radical and more common across the world.[2]

Yet, how the economy of a successful, independent Wales might function remains hard to delineate. Some clues might be taken from the report of the Sustainable Growth Commission chaired by former member of the Scottish Parliament, Andrew Wilson, which reported to the SNP Government in Edinburgh in 2018. It argued that Scotland has an economic potential that far outstrips its current longer-term performance, and that the ambition for the country should be to perform to the level of the best of the small advanced economies.

The report argues that a centralised ‘big country’ model which concentrates too much economic activity in London and the south-east region is holding Scotland and the other regions and nations of the UK below their potential. A similar point is made in a separate report by the UK2070 Commission under the chairmanship of Lord Kerslake, a former head of the Civil Service. It observed that 50 years of effort trying to rebalance the UK economy and create a fairer and stronger nation had failed, leaving Britain one of the most unequal and divided countries in Europe. It urged: “We need to adopt a strategy that allows London to sustain its global role whilst at the same time targeting some systematic firepower at raising the economic performance of regional Britain.”[3] And it pressed for a change to Treasury rules that made it harder to justify expenditure in less populous areas, thereby favouring London and the South East.

Of course, this is the levelling up process to which the Conservative Prime Minister Boris Johnson is committed. So far it amounts to not much more than increased spending on roads, rail, schools, hospitals, and housing. There is little evidence of deep thinking on how the industrial and employment structure of regions outside London might be reshaped to reduce dependence on low-skilled and often impermanent jobs.

The Scots know what they would like to do differently, with all the powers of an independent state at their disposal. In most respects this represents a programme that a Welsh state would probably also want to follow, though the starting point would be further back in terms of existing economic strengths and institutional structures.

If the Sustainable Growth Commission’s findings were implemented, the Scots would work up a model that used the three similarly sized economies of Denmark, Finland, and New Zealand. This, they note, is based on quality of governance, long term cross partisan strategy, a focus on innovation, competitiveness for international investment, exploitation of the country’s resource endowment, export-orientation, immigration friendliness, maintenance of a highly skilled workforce and the use of the taxation system as a tool for economic development. For Wales, read Scotland.

The Welsh balance-sheet

Even so, it remains hard not to be brought back down to earth by the short, medium- or even long-term cost implications of opting for independence. Or, by the realisation that greater divergence rather than convergence with the rest of the UK economy may also be the result of maintaining the status quo, despite the Government’s promised commitment to regional re-balancing.

Fortunately, reliable information is now available on the Welsh balance sheet through a report in early 2020 by the Wales Fiscal Analysis team at Cardiff University.[4]As a result the options can be considered more realistically than was the case previously. The UK Government’s Office for Budget Responsibility has also this year produced its first Welsh taxes forecast. As such, we now have for the first-time detail on Welsh revenue and expenditure and the direction of travel. The stark truth: revenue raised in Wales is not set to show greater buoyancy but is set to decline further as a proportion of the total UK tax take.

However, before going further it is necessary to point out that calculations in these reports are pre-Covid. All predictions regarding the economy of Wales, Britain, Europe, and the rest of the world are guesswork. We can only surmise what shape recovery will take or what industries and regions will suffer most or least, or what the tax take and revenue spending of the UK or Wales, and the consequent fiscal gaps or surpluses will be.

Nonetheless, in March 2020 it was possible for the Cardiff report to state that at £13.5bn in 2018-19, the deficit between revenues raised in Wales and public spending in Wales was the second highest in the twelve UK planning regions after Northern Ireland. Public expenditure levels (outside certain areas such as infrastructure) are not, however, out of kilter with other regions. The Welsh deficit is primarily due to the lower tax revenues. In this respect Wales differs from Scotland where higher public spending accounts for the tax to spending deficit.

This lower Welsh tax take is mainly the consequence of lower wages. The UK income tax system is highly progressive, with by far the biggest share being contributed by higher income earners. Indeed, of the 440,000 additional tax rate payers in the UK, 300,000 are in London and southeast England, compared with only 6,000 in Wales. Analysis by the Office of Budget Responsibility reveals that only 44 per cent of the Welsh population paid any income tax in 2016-17, compared with 47 per cent of the UK population (a bigger proportion of whom will have been paying higher rates).

With just under 5 per cent of the UK population Wales has only 1.4 per cent of additional rate taxpayers earning more than £150,000 a year. Low wage levels also exclude large numbers in Wales from paying national insurance contributions. Welsh residents pay only 2.7 per cent of UK income tax revenues. If tax and national insurance contributions in Wales matched the UK per person average an additional £5.3bn would be raised.

Yet, although high levels of Government spending in Wales on social protection are maintaining living standards roughly equivalent to the rest of the UK, they are not contributing to the extent required to the rebuilding of the Welsh economic base. Infrastructure spending, essential to increasing the productivity and profitability of Welsh businesses, falls well short of spending in London and the South East where it is directed under current Treasury rules, because of the greater returns it will bring.

Thus, transport spending per head in Wales is less than half that in London, which has seen a succession of multi-billion pound rail projects over recent decades. This contrasts strongly with the struggle Wales has had to secure the funding for a potentially game-changing revamping of rail services into Cardiff. The current approach is to reward success in the south east of England rather than remedy under-performance elsewhere, a point also made in the UK2070 report.

Paying our way

How to increase Wales’s ability to pay its way, whether inside or outside GB is the challenge. If GDP per person in Wales were to increase from its present level of 74 per cent of the UK average to 80 per cent by 2029-30 the deficit would, the authors of Wales’ Fiscal Future estimated, halve to around 9.4 per cent of GDP. Substantial growth in Welsh output, spurred by rapid productivity improvements, must occur for this to happen, but progress on this scale and beyond has proved elusive to date.

Militating against this too is the larger than average share of the Welsh population of people over 65 and therefore not economically active, and a smaller under-16 cohort entering the labour market. Emigration from rural areas and to universities in England never to return and earn the higher wages – and pay higher taxes that their degree would facilitate – add to the problem.

Various reports have suggested that to catch up Wales – irrespective of independence considerations – must adopt radical new policies and adopt a researched strategic approach. This must involve investing heavily in education, research and development, and infrastructure. Rebuilding would place a greater emphasis on local sourcing, the attraction of inward investment from growing sectors, and the maintenance and development of a stronger cadre of Welsh-owned and managed businesses. The attraction of entrepreneurial individuals and the retention or return of Welsh students whose skills are currently lost after graduation in English universities would also be required.

The hope that lies behind the case for status quo – union in a continuing United Kingdom with, or without Scotland – is that the policies outlined in the most recent iteration of Welsh Government economic policies – Prosperity for All, An Economic Action Plan – will work in combination with UK-sponsored ‘levelling up’. Government funding will switch away from the South East, and road, rail and broadband infrastructure spending will be concentrated not just in the north of England and other English regions but will be made available to Wales, too.

In this scenario Britain will have other eggs than financial services in its basket and will be making more of the products on which it depends in basic fields from foodstuffs to new areas in high technology and artificial intelligence. Many of the pioneering companies in these fields will decide to build in Wales (and similarly deprived English regions). Matching these developments Welsh schools will perform high up in the OECD Pisa league tables, and Welsh students will be trained in Welsh colleges and universities in the skills that successful economies of the future will depend on. Britain will have acquired once again the much more balanced economy that existed until several decades on after World War Two.

For all the good intentions of recent decades and the recent rhetoric of the UK Government, just how likely is this? The authors of Wales Fiscal Future are sceptical. As they say:

“A key challenge for those who want Wales to remain a part of the UK revolves around the likelihood of Wales’s current economic, fiscal and social problems being alleviated under current constitutional arrangements. Given the relative trends in the Welsh economy since 1999, there is room for doubt whether such a relative improvement in Wales’s economic performance is possible, let alone likely.”[5]

It would mean reversing more than 40 years of a largely laissez-fair approach to regional policy that has seen financial services become the dominant sector supporting the UK economy and allowing other sectors to grow more quickly in future. Moreover, it would be necessary to imagine a Cardiff Bay Government being able to exert considerable leverage on Westminster to secure the transformational expenditure and diversion of resources to Wales that will be needed.

A different sort of union

It is for this reason that independence has been advocated as a breakthrough option. Our Fiscal Future makes clear that wide-ranging changes to both taxation and spending would be required from day one. Without fiscal transfers there would be a big bill to be paid in Wales for social security spending if current levels of service were to be maintained.

These costs will increase significantly over the next decade as a result of the damaging consequences for employment and society generally of the Covid-19 crisis.

Wales would at the same time have to negotiate with the rest of the UK, in effect the Westminster Government, a settlement of the expenditure that would continue to be incurred to service Wales’s proportion of inherited UK debt. Other costs, for example on border protection, for belonging to international institutions, paying for overseas healthcare or for culture and recreation services, including the BBC, are attributed proportionately to Wales at present and would either have to continue to be provided centrally and paid for, or replaced with separate Welsh-funded services, depending on the choices made.

The arrangements made with the rest of Britain for defence – whether a continuation of the present system of unified armed services or establishing a separate Welsh force – would also have to be determined and costed. Because many of these items of expenditure would have to be maintained, the savings from leaving the UK might not make much of a dent in the deficit.

One important element in the current deficit may, however, no longer apply. Pension spending represents by far the largest part of UK government spending for Wales and the future financing of state pensions would need to be resolved before state separation. Currently the UK government pays the pension of British citizens who have fulfilled their requirements to receive a state pension, regardless of whether they choose to retire within the UK.

This would be the subject of negotiation between both governments but a continuation of the current practice making payments an obligation of the UK state could initially reduce Wales’s deficit by £6 billion a year or around 8 per cent of GDP, although this would gradually taper off as new Welsh pensioners started claiming from the Welsh state.

Borrowing to replace the transfers now financing current account spending on benefits and other social protection would be an option. Because of the current world economic crisis, funds could indeed be obtained cheaply. Interest rates would still likely be higher than the UK is expected to pay, as lenders would factor in the default risks attached to lending to a new and potentially less creditworthy state.

In practice, a new Welsh Government would almost certainly need to put in place fiscal consolidation measures – tax increases and/or spending cuts – with the aim of bringing down debt as a proportion of Gross Domestic Product. The authors of Wales’ Fiscal Future argue that closure of the deficit by 1.5 per cent a year would result in the debt to GDP ratio peaking at 73 per cent in 2030-2031. A 3 per cent a year improvement would see the ratio reach 44 per cent by 2026-2027.

The shock to the system could be alleviated if Westminster could be persuaded to continue to make transfer payments tapering down over a period of say 20-25 years. The argument would be that an independent Wales capable of standing on its own feet would emerge, lifting a burden from the rest of Britain, and thus in its interests. Other regions of the UK would, however, have to be convinced and it could be a hard sell.

Whether or not this could be negotiated, what are the prospects of revenues raised internally, matching over time existing subventions from the centre? Wales’ Fiscal Future points to some areas where possible additional Welsh tax revenue might be raised, including from water and electricity supplies to other parts of the UK. However, given the competitive nature of the markets in which these utilities operate, it concludes the amounts would not be material. Desalination, in the case of water, and inter-connector supplies from France in the case of electricity would put a ceiling on the price Wales could demand.

A reformed tax system might offer amore promising approach.. An independent Wales would reconfigure the tax system to reflect the needs of the country. Some variations are already in place. Temporary changes made in the light of Covid-19 to the devolved Land Transaction Tax (LTT) raised the threshold in Wales from £180,000 to £250,000, and second homes were not granted this relaxation of the rules.

In England, the equivalent Stamp Duty Land Tax (SDLT) threshold was increased from £125,000 to £500,000 and this applied to all homes including second homes. The resulting change in LTT in Wales applies to ~90 per cent of all transactions but will not stimulate further the second home market. In England it has been estimated that the average saving from the SDLT change will be £646 in north east England, versus £15,000 in London. Once again, a tax policy, in this case for England only, formulated on a ‘one size fits all’ basis, skewed heavily in favour of London and south east England and in favour of purchasers of second homes.

As matters stand, the composition of the tax take in Wales differs in important ways from UK. Britain’s income tax system is highly progressive. The highest earners make the biggest contribution, and this is even more marked in Wales where 46 per cent of the population pays no income tax, five percentage points higher than the equivalent proportion in UK. Higher rate tax is paid by 4.9 per cent of Welsh taxpayers, compared with 8.7 per cent in UK.

National Insurance revenues, another form of income tax levied on employees, are in line with the rest of the country but receipts from corporation tax are lower. Value Added Tax at 22.9 per cent of the total has, recently become the principal revenue raiser in Wales, overtaking income tax, the biggest UK source of revenues accounting for 23.7 per cent of the total.

Higher taxes on high earners could, however, lead to their leakage across the border to England. Higher VAT rates would target spending not income but would affect consumption and in practice add to the tax burden on poorer people not currently paying income tax. Higher tax rates on corporates could cause capital flight. Lower taxes, while potentially reducing revenue, could, however, lead to the attraction of companies (as Ireland has successfully demonstrated).

However, lower taxes might still require the acquiescence of the Treasury in England if retaliatory action was to be avoided. Modest Welsh demands for powers to levy Air Passenger Duty to help Cardiff Airport have been firmly resisted on the grounds that it might harm Bristol, even though its passenger numbers are four times bigger, and has big expansion plans.

Some critics see the projections in Wales’ Fiscal Future as too pessimistic. Swansea economist Dr John Ball argues that the corporation tax take attributed to Wales is too low. He also disputes the size of the expenditure allocations, which include, he argues, a share of funding for some schemes that benefit only England.[6]

While inevitable negotiations on tax variance with the rest of the UK would be tough, care would also be needed to ensure at least in the short to medium term that UK-facing public sector offices – the DVLA in Swansea, HMRC and Companies House in Cardiff and the Office for National Statistics in Newport  for example – were not stripped away, as English regions might demand. Westminster might be persuaded to allow such agencies to operate outside English borders but only if the services they offered were competitive with rival bidders, and perhaps only if broadly similar systems and services applied in Wales.

Welsh taxes

These dilemmas have led to suggestions of other novel forms of taxation. Wales is a transit route for many of the goods travelling between Britain and Ireland yet provides the roads and other infrastructure for this service at no cost in tax to the user in the case of foreign vehicles. An independent Wales could replace fuel duty with a road pricing scheme. Electronically gathered, like the Dartford Crossing fee and the London congestion tax, this would harvest rent from trucks and other vehicles making regular usage of Welsh roads, including visitors to tourist destinations and vehicles travelling along the A55 and M4/A40 to and from Ireland to England and the Continent. Such a levy would have to be set at a level that did not divert goods traffic to Liverpool and other ports and holidaymakers to other destinations.

A modest tourist tax could also be levied for use locally as happens in many US states and elsewhere. A pipeline tax on gas crossing from Milford Haven and a pylon tax on electricity leaving Wales are other possibilities though neither of these would raise substantial revenue.

Plaid Cymru’s leader, Adam Price, has suggested more purposeful use of existing Welsh-managed taxes might be implemented. One suggestion, a Land Value Tax would usefully target a non-mobile asset that, unlike individuals and their businesses, could not up sticks in protest. This could, he argues, generate £6bn on current values at a 3 per cent rate, making possible reductions or replacement of devolved taxes such as business rates and council taxes, and of income taxes (where the Welsh Government already has some limited variation powers).

A study into such a tax has indeed been prepared for the Welsh Government. Reporting early in 2020, it estimated that the total value of residential land in Wales was £113.4 billion, and the total value of land underlying properties which currently pay non-domestic rates was £27.6 billion. A uniform national LVT rate of 1.41 per cent on residential land would be sufficient to raise the same revenues as are currently raised by council tax. A uniform national LVT rate of 3.9 per cent charged on the properties that currently pay non-domestic rates would be sufficient to replace that tax. Higher or lower rates, adjusted to local circumstances, could bring in extra resources or reduce the burden where deemed appropriate.

A UK Common Market

Other issues facing the Scots, and extensively rehearsed during the Scottish referendum campaign in 2014, would be replicated in any new referendum north of the border, and in Wales, which in any case is unlikely to progress towards independence or even a ballot before the Scots. Arguments over currency, trade barriers, monetary policy, and historic debt featured strongly then and would do so again if the SNP Government in Edinburgh were to win a second referendum during the next decade.

In a post-Brexit world the degree of integration of the two countries into the UK economy – the most important export market being England – suggests both (and Wales especially) would find it impossible not to be part of a UK Single Market, rather than standing alone. (Whether or not it would be a Britain and Northern Ireland market will depend on the constitutional and/or trading status of Northern Ireland remaining the same as relations between the UK and the EU bed down post-Brexit.)

Within such a market an independent Wales would not be able to enter separate trade deals with other blocs or nations, and would any way lack the capacity to do so, possibly for many years. It would instead have to adopt arrangements negotiated for the whole market. Wales would be expected to demand representation within negotiating parties but might in practice be in no stronger a position to influence outcomes than it is now.

It is possible to consider the notion of Wales leaving the rest of the UK common trading area and joining the European Union (as the current Scottish Government wishes to do) at some point in the future. However, this could only occur many decades ahead after Wales had engineered a transformation in its trading profile, replacing its closely interwoven trade links with England with similar close links with Benelux, Germany, France, and other EU countries.

Wales has a slightly bigger share of exports heading for the EU than the UK generally, but probably a similar import profile. However, the bulk of these exports are concentrated in a few products and sectors, notably aircraft wings and other aviation components, vehicle engines and refined oil products. Most Welsh businesses are not engaged in exporting. It would be unrealistic, therefore, to suggest Wales, as Scotland envisages, might seek entry to the EU post-independence, if England chose not to do so.

An export growth strategy designed to increase the value of exports, and diversify sources of export income, as the Irish have done, is one of the main recommendations in the Scottish report and would be even more necessary in the case of Wales – which does not have the huge export-orientated whisky sector or even a declining oil asset as a foundation stone of its overseas sales – to reduce dependence on the English market.

There is a parallel here with Ireland, which, as its economy stood at the time, could only follow the lead of the UK when the decision to join the EU was taken by the Conservative government in Britain in 1974. Such was Ireland’s dependence on the UK at that stage it would have been impossible for it to join separately, or stay outside once Britain had decided to enter. Over the past 40 years this situation has changed considerably. Ireland has built up an enviable export trade with the EU and the rest of the world in food, pharmaceuticals, industrial equipment, computers, mineral ores, and other products, and can regard Britain’s departure from the bloc with equanimity and comfortably remain a member independently.

The long drawn out negotiations over the land border between the Irish Republic and Northern Ireland, resulting in a very unclear arrangement which may not long survive implementation, offer a further caution. The arrangements for trade between Wales in the EU and England outside would be equally if not more difficult to formalise.

Again, links with England make it more difficult to argue the case for a separate Welsh currency. Though countries as small or even smaller than Wales have proved capable of managing a currency of their own, a Welsh currency would impose transaction costs on businesses that would make Welsh operations less competitive than those on the other side of the border with England. However, there are advantages in having a separate currency, not least the ability to revalue as appropriate to reflect changes in competitiveness, but these longer-term benefits would have to be forsaken if immediate damage to Welsh firms was to be avoided.

There are similarities here, too, with Ireland. Before both countries entered the European Communities (as it then was) Ireland was part of the sterling area with the same coins and notes but bearing Irish symbols.

On Irish entry into the Exchange Rate Mechanism in 1979, the Irish punt decoupled from the £ sterling and a separate central bank was created. This allowed the punt to move up and down against sterling, sometimes being more valuable and sometimes less, reflecting the month-by-month competitiveness of the Irish economy vis à vis the UK. (The punt ceased to exist when Ireland joined the Euro.)

These limitations expose a further problem. If a post-independence Wales were to share a common currency with the remainder of the UK it would have to negotiate the right to share in decisions on monetary and interest rate policy. Leverage, however, would rest very heavily with rest of the UK.

So, while independence can be promoted as a way out of Wales’s chronic weaknesses economically and socially, there are limitations on the extent of that status. Links with England, in what would remain a union to a lesser or greater extent, would need to be factored in.

A middle way

In the immediate future a two-stage process might be the way ahead. Rebuilding the economy has been a Sisyphean task for the past four generations. It must continue to be a priority of the Welsh Government which should insist it stands at the heart of the UK Government agenda.

Once recovery from the Covid-19 pandemic has taken place and other issues can be brought forward, UK Government must be held to its promises to level up the UK economy in a meaningful way. Even more importantly, the current Welsh Government, and its successor in 2021, needs to ensure that its voice is heard as loudly as that of the Midlands and North of England, now under the leadership of increasingly vocal mayors.

Against Treasury restrictions, the Welsh Government must endeavour to increase its capacity to borrow for capital spending. It must also have more leeway to shape Welsh business to meet domestic needs without any impact on the Treasury block grant Wales receives. These measures will add to the Welsh deficit and to Government debt. However, they will have the effect of reversing rather than ameliorating current economic weaknesses, as the present funding arrangements seek to do. In other words an ambitious investment programme to ‘pump prime’ the Welsh economy is required: an approach which was abandoned by UK governments when the UK joined the EU.

The key demand must be that additional finance is deployed through borrowing and more importantly through the proposed UK Shared Prosperity Fund. This will need to go beyond the EU funding that is being lost, so that Wales and other regions can protect against climate change and develop the industries needed for this purpose. Wales will want to improve its transport and technological infrastructure, strengthen its local economies, and participate fully in modern business sectors.

Wales must become less dependent on FDI, and branch factories. The needs of its population dictate the necessity of more technologically advanced businesses, more locally owned businesses, more headquarters businesses, better education for work in business, and more effectively trained managers. It wants to be making greater use of its natural resources to develop a strong food and agriculture sector, its creative industries, its financial and professional services, its biosciences, tourism, and leisure activities. More research into the business needs of the Welsh economy is a priority.

In short, Wales needs an economy that is much more like Denmark or Ireland to make independence seem a realistic prospect for the people of Wales. The challenge is to demonstrate the kind of economy and society that Wales would seek to create and ensure it is one that Welsh people would be comfortable to opt for. A significant strengthening of the economy in the short and medium term will improve the lot of Welsh people and, further ahead, put Wales in a position where an independence option can be put forward that would seem less of a risky leap of faith.

Sceptics will still have a field day and in fairness the record to date is not encouraging. Yet, there is a simple question that can be posed. If Ireland had not decided 100 years ago to break with Britain, would it now be among the richest parts of these isles, up there with London and the south East? Or would it be poor old Ireland, down there with Wales as one of the weakest of the twelve UK economic planning regions?


  1. The role of the Welsh civil service should be re-examined to separate economic policymaking and implementation.
  • A new agency or agencies should be established to promote small business growth, medium size business development, inward investment, productivity, and export activity.
  • A new inward investment focus is needed on businesses capable of offering high quality jobs, even if initially in small numbers, in technology, health and sophisticated consumer-facing products. Potential investors in new technology nations need to be cultivated and contact deepened with alumni of Welsh universities overseas.
  • The export propensity of Welsh firms needs to be encouraged and stimulated to increase revenues and help increase the productivity and scale of Welsh business. Wales should search for businesses that might be relocated back in Britain for strategic security, environmental or other reasons
  • The role of the Welsh Development Bank should be expanded to ensure that state support for key sectors can take the form of direct Welsh Government stakes.
  • Greater involvement with the venture capital industry should be sought and a Welsh venture capital trust investing in Welsh start-ups established.
  • The foundation economy should be put at the centre of policymaking and incentives and penalties to secure greater public sector purchasing put in place. A wholesaler type body should be created to aggregate private sector provision and support tendering, together with a facility through which companies could make their offering more widely known.
  • In the aftermath of the Covid-19 crisis a window for a much greater emphasis on local production and procurement will open and this must be seized. Support should be given to businesses seeking to re-shore products currently made elsewhere, and further efforts made to ensure Welsh food producers contribute a bigger share of the nation’s food purchases.
  • An incoming Government should review the entire Welsh higher education sector to ensure its priority is meeting the needs of the Welsh economy and society. It should set in motion measures to ensure more Welsh students stay in Wales for their degrees and their subsequent careers and that those going elsewhere are encouraged to return.
  • Policymakers need to be equipped with better business intelligence on the needs of the Welsh economy. Welsh Government and business should back the creation of a new university centre for the study of Welsh business and business needs.

Rhys David was a member of the Independence Commission 2020.

Copies of the full report priced £9.99 can be obtained from the publishers, Y Lolfa, or from bookshops and Amazon. ISBN 978-1-80099-000-5

October 22nd, 2020

[1] John Kay, ‘Size isn’t all that matters for global economies’, Financial Times, 26 November 2003.

[2] Mark Barry, ‘What sort of Wales do we want?’, Nation.Cymru, 8 March 2020.

[3] UK2070 Commission, Fairer and Stronger. Rebalancing the UK Economy, May 2019.

[4] Guto Ifan, Cian Sion, and Ed Poole, Wales’ Fiscal Future: A Path to Sustainability? Wales Governance Centre, Cardiff University, March 2020.

[5] Wales’ Fiscal Future, op.cit, p. 35.

[6] John Ball, The Economics of an Independent Wales’, ClickonWales, 23 January 2020.

The Rich Man in his Castle, the Poor Man at his Gate

To give to street dwellers or not to give? Rhys David reflects on a modern dilemma.

I spoke to Wayne, a homeless man in his 40s, possibly 30s in Cardiff the other day, his time on the streets having made his age impossible to guess accurately. I had just left a local Kaffeehaus where I had enjoyed their Wiener – soused herring and cream cheese on rye bread with red onion – and a Cafetiere, all for £11.

My meal had followed a visit to a piano recital by a brilliant left-handed pianist, Nicholas McCarthy, who had overcome the handicap of being born with only one arm to become a concert performer travelling the world to play his repertoire of Bach, Scriabin, Bellini, and, his piece de resistance, his own transcription for one hand of a well-known sonata by Rachmaninov.

It was humbling enough to think about how much he had achieved and how difficult life must be when even cutting up food or opening a door when you are carrying something, but Wayne was different again.

He cut a pitiful picture standing in the rain just outside the arcade I had been in, opposite the international fashion shops in one of Cardiff’s main streets, and close to where a new branch of The Ivy restaurant will open soon. He was dressed shabbily and carrying a threadbare blanket, and crying audibly as he begged, “Help Me”. This was not the usual bobble-capped, sad young man, sitting in a doorway with his dog.

I must admit to being usually unsympathetic to beggars, many of whom may have a drug habit to support, but I have been known to pass on bananas, cereal or other chocolate bars rather than money. Wayne, however, looked so needy I felt I had to come up with cash in his case, and I reached not very generously for a £1 coin. Amid his effusive “Thank you, Sir’s” I asked him, “How on earth did you get into this situation?”

“Do you know the Sony plant in Bridgend,” he asked. I assented. “I lost my job and my house when I was made redundant, my partner was pregnant, and we split up.” I did not ask too many further details as it seemed a story I had read before in press coverage of the homeless and it seemed believable. He went on to say he had been begging since the night before, had not eaten since yesterday (it was now 3pm) and was trying to save £17.50 to stay in a hostel where he could get a bath, a meal and a bed. His day’s total so far was about £6.

I queried whether it really was the case that he would have to pay for a hostel bed, and he assured me it was just so in three hostels he mentioned in Cardiff, including the Salvation Army. They would turn him away, he insisted, if he was unable to pay. Wayne was fluent, clean and did not smell of drink or have any of the obvious signs of drug-taking so I found myself reaching again into my pocket and this time fetching out a £10 note, which should, I calculated, take him close to his target for the day.

I told him he must see a doctor, but he said he was just regarded as another paranoid schizophrenic. He had started hearing voices since being on the streets, partly because of the rough treatment he received from unsympathetic and especially drunken louts. “I’ve lost half my teeth from being beaten up (he indeed had) and been weed on,” he told me. I also told him to ditch his rag blanket. It was his only possession in the world, I was ashamed to learn.

I pride myself on being nobody’s fool and would normally say to myself in such situations that it was much better to give to the relevant charity (as I do), though not in the quantities I perhaps should. Somehow, I could not help believing Wayne and feeling deeply sorry for him.

Was I being conned? Did Wayne live in a modest but reasonable property somewhere, get up each morning, grab his blanket and head off for the city centre, returning at night with his takings? Was he really telling the truth when he told me he had to collect money simply to be given a bed in a hostel, with a lot of other homeless persons? Did he not, as he told me, have a single relative in Bridgend? He was of an age to have aunts and uncles still, and presumably cousins? Would they all slam the door on him? School friends, former work colleagues?

Were his little girl’s curls, on which he swore that he was not on drugs, real? Was he avoiding hostels because of debts to drug dealers, as is sometimes said to be the case? Have I unwittingly put profits into a drug dealer’s hands and prevented Wayne from being forced though his own impecuniosity to quit and accept treatment? If someone destitute – as Wayne clearly was – presents him or herself to the local council will they not be helped regardless?

I passed Wayne again later by which time he had bought a cup of coffee. I did not blame him for indulging in that little luxury (for him), even though I was intending my funds to secure him a hostel place. He greeted me again with copious Thank You’s, all embarrassingly accompanied by the poor man’s respectful “Sir”. He was looking more cheerful now and I remembered that not having eaten myself before going to my pre-lunch concert I had been into Poundland and bought a £1 nine bar Twix pack, only one of which I had had myself. I took the remaining eight out and gave them to him to have with his coffee.

Perhaps I was naïve, and the authorities know all about Wayne (a small variation on his real name). Whatever the case the £12 that my encounter unexpectedly cost meant nothing to me in the grand scheme of things but was perhaps a welcome sign of kindness in a harsh world to someone else. Anyway, I had another rich man’s event to attend, with buffet, at the Royal Welsh College of Music and Drama. Only two thirds of the buffet were eaten, but perhaps it was not wasted as I saw some students being invited to help themselves as we made our way out ……

Rhys David

October 16th, 2019

Tell Mum Not to Worry: The Letters in full

Well received on publication in 2014 to coincide with the one hundredth anniversary of the start of World War One, Tell Mum not to Worry: A Welsh Soldier’s War in the Near East was based on the letters of Dewi David, a sapper in the Royal Engineers who spent four years from the ages of 17-21 on campaigns which led him to first Gallipoli, then Egypt, the Suez Canal, Sinai and Palestine, culminating in the capture of Jerusalem by British forces under General Allenby in December1917 and the eventual surrender of Ottoman forces. His experiences and the story of the campaigns by British Empire forces in the Near East are told in the book above (ISBN 9 780993 098208). Deffro: Cardiff 2014).

The Dewi David Letters written to his parents and sister are now available to be seen by scholars and other interested parties in the Imperial War Museum, London. Fifty in all and totalling more than 120,000 words they can also be found in published transcript in Tell Mum Not to Worry: The Letters (ISBN 978-0-9930982-1-5). The letters can also be by contacting the author Rhys David on Linked-In.


Bulgaria is rich but very poor. How can that be?

Opportunities fight with challenges as the EU’s poorest country seeks to close the gap in wealth and standards with its richer western neighbours, says Rhys David

Rila Monastery, a treasury of sacred images


As Wagner’s majestic music from Tristan und Isolde and, several days later, Parsifal, washes over you, a seat in Sofia’s beautiful, bijou opera house is a good place to reflect on the EU’s most recent member country.


Bulgaria is a small to medium-sized, under-populated country of roughly 70,000 sq. miles, with just 7m people. Yet, it is full of surprises. Its Wagner festival is not the Met, Covent Garden or La Scala but few similar-sized countries would be able to cast such an event almost entirely from within the country’s own musical resources. Few performers, too, would want, as several did here, to sing important roles in both operas – a total of 11 hours on stage across only a few days.


Bulgaria, poor as it is, manages also to produce musical talents not just for its own opera houses but, like other eastern European countries, for many of the more renowned houses around the world. It is a tradition that goes back a long way, embracing such names as the basses, Boris Christoff and Nikolai Ghiaurov.


Its schools and universities, too, seem to have no trouble in producing near-fluent English speakers many of whom have never visited an English-speaking country. In Bulgaria those choosing to study languages are taught their other subjects as well through the medium of their chosen foreign language. This helps the best to develop an impressive grasp of vocabulary and idiom.


Since opening to the world with the fall of Communism in 1989 and entry into the EU in 2007, Bulgaria has experienced unprecedented new levels of prosperity. Its economy has been growing in recent years at more than 3 – 4 per cent a year and will match that performance again this year. Services now account for nearly 60 per cent of the economy, with much of that due to an annual 8m a year visitor tourism sector. Manufacturing accounts for 24 per cent – still considerably higher than the western European average but now more focused on modern light industries than in the past. Agriculture at 5 per cent is also higher than in more advanced EU member states and less mechanized but includes a strong export-orientated wine sector.


In the increasingly vital tourism sector, the country been seeking to capitalize on its outstanding cultural and archaeological heritage. Investment has taken place in new high standard tourism facilities, including hotels, and in the development of important sites. Just in the last few decades important new discoveries of Roman antiquities have been made in the capital Sofia, the ancient Roman Serdica. These include an 3rd-4th century amphitheatre, preserved under the city’s 5-star Arena di Serdica Hotel outside the former city gates, and Roman ruins preserved in an underground display under the modern city centre. The visitor can walk along slabs polished by generations of shoes in the Roman era, including no doubt by the Roman emperor, Constantine the Great, believed to have had a special affection for the city.  


Seat of the monarchs for seven decades after the  liberation of the city from the Ottoman Turks with Russian help in 1878, Sofia also has a not very distinguished-looking royal palace, and, in several monumental blocks that formerly housed Communist ministries, banks and party headquarters, a reminder of grimmer days past. (There is a Museum of Totalitarian Art for those interested in Communist-era paintings, sculptures and monuments.)


Its churches, which largely survived the Communist era, remain one of its glories, however. Saint Alexander Nevski with its highly decorated interior was named after the Russian patron saint to honour the role played by Bulgaria’s Slavic cousins in securing freedom. The 6th century Sophia Basilica, a contemporary of Hagia Sophia in Constantinople is one of the most important examples of early Christian architecture in south eastern Europe. The 4th century St. George rotunda church, the oldest preserved building in the city, has frescoes dating back to the 10th century. More than 80 per cent of the population profess to be Orthodox believers in a country which embraced Christianity in the 9th century and translated the Bible into Bulgarian, a close relation of Russian shortly after.


There are other towns and cities with an equal claim to demonstrate the varied history of a country that has seen not just ancient conquerors but power in the hands of Bulgar, and, for two centuries from the 10th and 11th century, Byzantine overlords as well. In Plovdiv a Roman theatre, one of the best preserved in Europe was uncovered in a landslide in the 1970s and restored well enough for a range of events to be held there, just as in Roman times. Nearby, in the centre of Plovdiv, excavations uncovered a stadium, a part of which has been exposed, most of its vast length unfortunately having to remain under the main shopping street.


Plovdiv, formerly Greek and Roman Philippopolis, once the capital city of Philip the Second, father of Alexander the Great, lays claim to be the oldest continuously inhabited city in Europe, its origins going back even further to Trojan times, and hence older than Rome or Athens. Its old quarter houses an important group of streets lined by merchant properties from the early 19th century in Bulgarian National Revival style, the most visited of which is the Balabanov house, originally built for a wealthy textile merchant, Hadji Panayot Lampsha. This year the city of roughly 350,00 people has been celebrating as 2019 European Capital of Culture.


There are world heritage sites, too, on Bulgaria’s Black Sea coast, where Soviet bloc aristocracy (and more recently bargain-hunting western Europeans have flocked for sun sea and sand. Varna on the Black Sea coast offers more ancient remains, including nearby  Odessos, home to a huge Roman bath complex, and,  a little further away, Nessebur, ancient Messambria, another Thracian, Greek  and then Roman town, which later became an important trading centre with strong links to Constantinople, and now a Unesco World Heritage site.


There are two other jewels, however, contributing to the remarkable array of treasures on offer in Bulgaria, somewhat surprisingly third after Greece and Italy in the number of cultural and archaeological sites contained within it. The Thracian plain, south of the Balkan Mountains that run east west across Bulgaria, roughly parallel with the Danube as it flows towards the Black Sea, was home to warlike tribes who were allied to the Trojans during their famous war with the Achaeans.


The Thracians, who lived in this area from around 1000 BC, were highly skilled craftsmen, producing exquisite jewellery, workshop and household items, and military equipment. Their work is on display at the national archaeological museum in Sofia and in a smaller but still very impressive museum on site in Kazanluk. Much of this gold has been discovered in the unique conical burial mounds that cover the Thracian plain, or Valley of the Thracian Kings, a replica of one of which with stunning internal decoration on its walls and cupola ceiling can be seen near Kazanluk.


There are other towns which have played an important part in Bulgarian history, such as the old capital, Veliko Tarnovo, situated on a bend in the river and protected by surrounding hills, and 140 monasteries, the spectacular Rila and Bachkovo settlements among them, and like many of the others  offering accommodation to visitors.


It would be hard not to wish this country of friendly and enthusiastic people well as they integrate further into the EU but difficult, too, not to feel some apprehension. The population has fallen from a figure of 9m under Communism. It could hardly be otherwise when so many of the young and most able have left for Germany, Italy, Britain and other countries in search of well-paid employment and to escape youth unemployment of 12 per cent. The birth rate, too, is too low to be self-sustaining.


Average incomes are around Euro5000 a year, though higher in Sofia where newer sectors such as information technology have seen growth. Old people who used to be able to afford a holiday – the country was a big Communist-era holiday destination for citizens of the former Soviet Union countries – now say they are no longer able to do so and whereas in western Europe the older generation is helping its youth with the high cost of housing and other expenses, in Bulgaria younger people – or those in good jobs at any rate – are supporting their parents, many of whom also rely on remittances from overseas Bulgarians.


Economic growth is helping and is expected to be faster than the EU over the next few years. Indeed, Bulgaria has gone from living standards of around one third of the EU average to more than half. The economy will need to grow at a much faster rate, however, to close the gap and is being hampered by the loss of its most talented people in the engineers, doctors, IT professionals and other graduates who have headed West.


The politics they have left behind is another impediment. The current strongman Prime Minister, Boyko Borisov, is a former Mayor of Sofia who has been a firefighter, police academy professor, professional footballer, national team karate coach and bodyguard to former Communist dictator, Todor Zhivkov, and former king, Simeon II. The government of GERB, the centre right party he founded has been criticised in EU capitals in the West for allowing bad practices to flourish. The concern is over the close ties that exist between government officials, and local businesses that have resulted in contracts being given to a handful of privileged companies.  When officials can exert their influence through excessive regulation, or over who gets jobs, school places or other privileges and permissions, a climate is created into which bribery, corruption and organised crime can enter. Such interference, too, puts sand in the wheels, slowing down development and hence economic growth while ed tape and excessive bureaucracy are negotiated and permits and other favours are bargained for.


In the meantime, Bulgarians are having to live with a disconcerting jolt away from the familiar pattern of previous centuries not least the break with their former liberator (and subsequent Communist overlord) and fellow Orthodox Slavs in Russia.


Derelict buildings, especially in the depopulated countryside are common, and are only slowly being replaced by Western investment. One of the biggest new investments is a huge sanitaryware plant outside Plovdiv built by US group Ideal-Standard. Putting to one side the ubiquitous Lidl supermarket group, there are few other signs of large scale new investors capable of filling the gap left by previously protected domestic concerns. Russia can still exert its influence over the country, however, through its strong position in the energy sector. It is an important operator of refineries on the Black Sea coast and its oil company Lukoil has a large share of the domestic fuel market.


The successes have been in sectors such as IT that have concentrated in Sofia, offering higher wage levels that have given the capital’s citizens higher wage levels than the Euro5000 average in the country. The result has been, like emigration, to draw away young people from the country at large.


Tourism, too, has been a success but is subject to its own ups and downs. The country draws in large numbers from neighbouring countries and has an increasingly wealthy western clientele using its large, international hotels. This year, however, has seen declines so far from Russia (largely as a result of price competition from neighbouring Turkey) and some EU countries, though not the UK.

Shops selling souvenirs have proliferated at tourist sites and in parts of Sofia where the intention has clearly been to attract higher end businesses. The shopkeepers, however, report a slow year even for Bulgarian speciality products such as those based on the country’s centuries- old rose cultivation sector.


EU funding since membership has contributed substantially to rates of growth and is evident in some of the new roads that now link major centres in the country and beyond. Varna is on the designated trans-European E-route linking it (in theory) all the way to Coruna, and Sofia is connected by its E routes to Lisbon, Riga and Thessaloniki. There is the challenge of reduced funding from the EU to be faced as well. Bulgaria received Euro10bn under the EU’s 2014-2020 funding package, but this level of support is set to decline as the EU seeks to adapt to more difficult conditions elsewhere in the bloc and to the loss of UK contributions.


Polls have shown consistent support for the EU, coupled, however, with disappointment at the impact it has had on the domestic economy. Therein lies the country’s dilemma: polls have shown a principal reason for the EU’s good standing in the public estimation is the freedom it has given Bulgarians to move abroad in search of a better future. It is the loss of those who might be best equipped to contribute to its transformation economically and politically that is likely to hold it back.


August 2nd, 2019

Rhys David is chair of Nova Cambria, the Welsh policy institute








Why is Wales not a Cricket Nation like Scotland and Ireland?

When a new cricket competition – the European T20 cricket league – is held from 30 August 30th to 22 September 22nd this year, one nation with a long tradition of playing the game will be absent. Current European rugby champions, football’s European Cup semi-finalists last time the event was held in in 2016, birthplace of the 2019 Tour de France winner, the highest-paid footballer in the world and of the captain of the last two Lions tours, the proud sporting country of Wales will be on the side-lines.

 Cricket in Wales, it would seem, is Glamorgan, or exists to be an “event” that brings people into Cardiff to watch England Test matches or international series, and the club. The Welsh Government seem determined to keep it that way.  

 The new competition will be similar in style to other well-known T20 leagues around the world, featuring city-based franchise teams (two each from Scotland, Ireland and the Netherlands). The tournament will involve 33 matches across all three countries, featuring a Group Stage followed by semi-finals and a final. Each franchise must have a minimum of nine domestic players, and up to a maximum of seven overseas players within their squads. Of the 11 players taking the field in each match, six players must be domestic cricketers.

The tournament, which International Cricket council (ICC), has helped to develop will be delivered under an initial 10-year agreement with event and funding partners GS Holding and Woods Entertainment, and will be broadcast in cricket markets globally.

So why have Welsh cricketers – whose numbers match or even exceed those of the other three countries – not been invited to join this event and make it a four-way tournament? To understand this, some context is needed. Cricket in Wales comes under the jurisdiction of the England & Wales Cricket Board, (acronym ECB not EWCB), which took over responsibility for the game from the Marylebone Cricket Club (MCC) in 1997.

 Within Wales amateur cricket is organised into a North Wales Premier Cricket League and a South Wales Cricket League, both of which consist of 12 teams that play each other every season. Several of these teams have featured prominently over the years in the Village Cricket Cup, competing against 300 teams from across the British Isles to play in the final at the home of cricket, Lord’s. Past Welsh winners include St. Fagans, Gowerton, Sully Centurions, Marchwiel, and Ynystawe.

 Professional cricket in England and Wales is represented by the 18-team County Championship. Glamorgan has been the sole Welsh member since joining in since 1921, winning the competition on three occasions 1948, 1967, and 1997. Over this period of nearly 100 years more than a dozen Glamorgan cricketers have represented England. One of these Tony Lewis captained the England team on eight occasions, leading the MCC party that toured India, Pakistan and Sri Lanka in 1972-73.

 The best-known Glamorgan Test players, apart from Lewis, are Maurice Turnbull, Gilbert Parkhouse, Allan Watkins, Jeff Jones, Greg Thomas, Hugh Morris, Simon Jones, Robert Croft, and Steve Watkin. Wilfred Wooller, the Glamorgan captain in the 1940s and 1950s, was never capped but was an England selector for many years.

 It is essentially this status in English cricket that Glamorgan and the Welsh Government are determined to maintain, and which makes them refuse to support the idea of a Welsh team. Glamorgan has consistently opposed the idea of a Welsh team on the grounds that it could compromise its finances and its position within the English County Championship. Cricket Wales has also opposed independent status arguing it is preferable to play a major role within the ECB. Glamorgan chief executive, Hugh Morris, has argued that a Wales national team does not make any sense “financially” whatsoever.

 In addition, both Cardiff City Council and the Welsh Government argue inclusion within the ECB is a very useful peg on which to build Cardiff’s reputation as a sporting hub capable of attracting large number of high-spending UK and overseas visitors to England matches. These include games in the Ashes series against Australia, and against other full Test sides, in one day internationals, or special events such as the recent Cricket World Cup. 

 Such events do not come cost-free, however, as the right to stage them must be bid for and won in competition with the main English venues. Making Glamorgan’s home at Sophia Gardens in Cardiff fit for international cricket has also proved expensive, not least for the council taxpayers of the city, some of whose loans to the club have had to be written off. A similar strategy has, of course, seen costly efforts put behind attracting other international sporting events, such as European Champions League football, to the Principality Stadium.

 The hold that this thinking has on the Welsh Government was made clear in a response to a question in the Senedd from Plaid Cymru AM, Bethan Sayed, in July by Eluned Morgan, Minister for International Relations and the Welsh Language, in whose brief cricket as an “event” project sits.

 Noting that any decision to establish a Welsh cricket team (or we can assume by extension to take part in events such as the European T20 league) is a matter for the governing body of Cricket Wales, she said: “Any discussion around this issue would need to be framed by what is best for cricket in Wales on both a participation and an elite level. For Wales to have representative teams of its own, it would have to break with the ECB and become affiliated to the ICC instead. This would have significant funding implications as Glamorgan Cricket Club and Cricket Wales receive funding each year from the ECB. If Wales was ratified as an associate member of the ICC, it may (my italics) expect to receive a significantly smaller grant.

 “The reduction of funding would undoubtedly (my italics again) have a significant negative impact on both the professional and recreational game in Wales. Both Cricket Wales and Glamorgan County Cricket Club are of the view that the establishment of a Welsh cricket team would not be of long-term benefit for the growth of the game in Wales.”

 So, there we are then, except that Cricket Scotland and Cricket Ireland, both of which have grown the game over recent years from a smaller base than existed in Wales appear to take a different view. Here is Malcolm Cannon, Chief Executive of Cricket Scotland: “Cricket Scotland is always looking for more fixtures against high-quality opposition to develop the talent in our national team. The proposal for a six-team European tournament featuring teams from Ireland and Netherlands provides an excellent basis for Scottish cricket to prosper. 

 “Off the back of our highest ever global T20 ranking of 11th, the tournament comes at a fantastic time for Scottish cricket. The chance to play alongside some of the best in the business will provide a great opportunity for our players to learn and develop their own skillset as we strive to achieve full membership (i.e. Test-playing status) and climb the ICC team rankings. 

 “The league also comes at an important time of year for Scotland, with the proposed timeframe presenting an opportunity to play quality competitive cricket ahead of the ICC T20 World Cup Global Qualifier in UAE in October. We are excited to bring the global phenomenon of T20 franchise cricket to Scotland, with our vision to have two city-based teams in Glasgow and Edinburgh.

 “Not only will the tournament help develop our players and coaches, we hope the tournament will increase public perceptions of the sport as well as engage communities around our franchise teams, with the opportunity to watch top cricketers from across the globe. …Cricket Scotland very much looks forward to watching Scottish cricket evolve over the next 10 years.”

 Compare and contrast this with Hugh Morris, who has responded in the past to suggestions of a Welsh cricket team operating within the ICC Cricket Board with the somewhat alarmist warning that such a development could threaten Glamorgan’s continued existence even.  “We would lose our stadium. We would lose our players. I have not seen a business plan to see how it can work. We are very much wedded to the England and Wales Cricket Board in terms of finances”, he said.

 He went on to declare he could not see how Glamorgan and Wales could be natural bedfellows. Wales, he argued, would be playing in an ICC league with other countries, and at the same time as Glamorgan.

 So, what is best for Wales? Staying close to nurse (the ECB) for fear of something worse (the ICC) or taking the bold move of declaring cricket independence? Cricket has been expanding internationally and the number of first-class international sides has grown. Twelve countries have full membership of the ICC – England, Australia, South Africa, India, Pakistan, Bangladesh, West Indies, New Zealand, Sri Lanka, Afghanistan, Ireland, and Zimbabwe. Ireland now plays full Test matches, famously out-playing England in the first two innings of their recent match before falling short on the final day.

 In addition, there are 93 associates in countries where cricket is firmly established but not yet ready for full membership. These include Scotland and the Netherlands, both of which regularly host international sides, though generally only for One Day International matches (ODI). Zimbabwe, for example, is touring the Netherlands and Ireland this year and Scotland has played ODIs at home against Sri Lanka and Afghanistan and has fixtures in August against Papua New Guinea and Oman in India.

 Before the present arrangements were in place Ireland famously defeated the West Indies side in its pomp at Sion Mills in 1969 and now play in the European Cricket Championship. Ireland and Scotland moved out of the ambit of “English” cricket, where like Wales they had previously existed, in 1993 and 1994 respectively to create separate associations for the development of the game in their countries, Before playing England in July this year, Ireland had already graduated to full Test match status with a fixture against Pakistan and is hence on a journey to appearing regularly at the highest level of cricket.

 In Wales we can only look back and reflect that cricket has been played since at least the first recorded match in Pembrokeshire in 1763 (several years ahead of Scotland). There are 230 amateur clubs in Wales compared with 140 in Scotland, (which like Wales has its own league) and an estimated 14,000 Welsh-based players. Yet, the highest level of representation Wales achieves is as “Wales Minor Counties” in the English Minor Counties, Western Division, a sort of second division to the County Championship.

 Interestingly, Wales has had international cricket sides at various points throughout the past 100 years and they have had some notable successes. Wales played England three times in 50-over matches between 2002-2004 and even managed to win the first encounter to the amazement of all. A Welsh side also appeared 16 times in the 1920s playing among others New Zealand (drawing) West Indies (winning) and South Africa (losing). A Welsh team also featured in the ICC Trophy in 1979, and in a Triple Crown championship with Scotland and Ireland between 1993 and 2001.

 Several attempts have been made over recent years to argue the case for a Wales cricket team, including not surprisingly by Plaid Cymru. In a Senedd debate in 2013 both Conservatives and Labour members lent their support to the idea of a revived Welsh side, and the case was also made again in 2015 by Bethan Sayed. In 2017, First Minister, Carwyn Jones, called for the re-introduction of a Welsh One Day team.

 The question is complicated to some extent, it must be admitted, by Glamorgan’s position as one of the eighteen first class county sides but would Glamorgan really have to leave or be forced to quit the county championship, as some fear?  There are currently non-represented English counties – Devon, Lincolnshire, Cumbria, Cheshire, Berkshire perhaps – which might welcome the chance to take the county’s place in the County Championship if Welsh cricket was separated from the English set-up.

 This sounds very much like special pleading, however. Wales has an international football side, and this has not prevented Cardiff City, Swansea City, Newport County and Wrexham from playing in the English football professional system so why need Glamorgan lose its place in the county championship?

 Again, would Glamorgan necessarily be weakened by the emergence of a Welsh side competing independently? Several decades ago, Glamorgan consisted mainly of Welsh players plus a few overseas stiffeners. Today the side is almost entirely composed of cricketers from outside Wales and a handful of Welsh players, so a Welsh team would hardly be drawing on the same resources. Nor need matches be played in Cardiff in competition with Glamorgan.  Swansea has a long tradition of support for cricket and lost out, much to its chagrin, to Cardiff when Glamorgan decided to concentrate most fixtures at Sophia Gardens. Swansea could be the new home of Welsh cricket. Matches could also be played in other venues around Wales, as was previously the Glamorgan practice.)

 Surely, with a genuinely Welsh side playing in Wales in fixtures against other nations interest in the game in Wales and participation (by men and women) could only grow? This could ultimately benefit Glamorgan and perhaps generate a larger cohort of players locally who might go on to play professionally for the county.

 A Welsh side would also give Welsh-qualified Glamorgan players – and there are still a few despite the internationalisation of the county side in recent years – the opportunity to play international cricket for a Wales team. Though they qualify to play for England at present it is only every few years that a Glamorgan player manages to break into the side and no Welsh player is currently in that position. The very best players might still choose to do so. After all, England’s One-Day captain, Eoin Morgan is an Irish national with a Welsh surname.

 And let’s face it Glamorgan has not been pulling up trees in the English cricket system since it last won the championship more than 20 years ago, finishing bottom of Division Two last year (i.e. eighteenth out of eighteen in English first class cricket) with just two wins all season. Perhaps too much time and effort has been put into creating a stadium fit for Test matches and ODIs to the detriment of cricket in Wales generally. (Thankfully, Glamorgan are doing a lot better this year and if current form is maintained could challenge for promotion to Division One.)

 England might stop playing Test matches or ODIs in Cardiff if there were a separate Wales side. But is the role of super-host the best we can hope for when Scotland and Ireland, both with smaller cricket-playing populations, build their game and international reputation? At least some of the revenue that would be turned away if Wales left the England and Wales Cricket Board to set up its own board (and lost the right to host England matches) could be recouped through Welsh international matches.

 The recent World Cup which brought together the ten best one day cricket countries, has shown how much pride can be derived by the smaller countries from appearing in tournaments such as these, and occasionally outplaying the more senior sides – Afghanistan came close to winning their match against India. Scottish, Irish and Dutch cricket are also going to gain a lot of media coverage – and income from attendance and sponsorship – from their tournament.

 Surely it would be good to see Wales attempting over time to appear in events such as the World Cup or to put forward teams for a league competition, as well as regularly playing versions of the game against comparable countries in Europe and some of the aspiring African and Asian nations? This could serve as an encouragement to young people to take up the game and help to raise performance standards throughout the sport in Wales.

 Who knows, one day we might like Ireland give England a run for their money?

 Rhys David is Chairman of Nova Cambria

July 27th, 2019










Reshaping transport provision: Time to end Wait and See

The plan by First Group to quit its UK bus operations could release one of the building blocks needed to create a more integrated transport network across Wale.

There is a tendency in Wales in economic matters to wait to see what happens, an expectation that external agents will always determine what happens and that the limit of Wales’s influence is to try to ameliorate any ill-effects. Yet, what is needed very often is a much more pro-active approach whereby the initiative is taken in Wales to shape what happens, in the best interests of those involved.

Just such a case has occurred with the announcement by First Group that it is considering selling its UK bus operations to concentrate instead on the US market. Now, it just happens that First Group for better or worse runs the buses in Wales’s second city, Swansea, having inherited the operations of the former South Wales Transport and United Welsh, the two previous operators of the bulk of services in the area.

Aberdeen-based First (also operators of the Great Western Railway franchise) has made its intentions to quit the UK bus market following pressure from an activist investor, unhappy after a series of bad rail investment decisions hit profits. In West Wales First Cymru runs local bus services not just in Swansea, its operations extending across to Neath, Port Talbot, Bridgend and Maesteg in the East and Haverfordwest, Tenby and Carmarthen in the west, plus express services to Cardiff.

Various bidders will no doubt emerge for First’s operation, including those in Swansea, but it is doubtful if any of them will come from private sector companies within Wales. So, as Plaid Cymru leader, Adam Price pertinently asked in questions to First Minister Mark Drakeford in the Senedd early on June 4th, does this not provide an ideal opportunity to extend within Wales the principle of public ownership of transport services? This could create another building block towards the creation of an integrate transport system in Wales, which could bring together control and management of rail, road and other public transport services. After all, the Welsh Government has taken a step in this direction with the acquisition of Cardiff Airport.

Firstly, however, it is worth offering some background. Britain’s bus services were deregulated under the 1985 Transport Act, with the promise of bringing lower fares, new and better services through greater competition, and, in consequence, increased usage. Previously, scheduled bus services had been run by National Bus, (which had brought together a patchwork of state-owned, semi state-owned and private companies), municipal bus companies and a small number of private operators.

At the time of deregulation more than threequarters of bus turnover was in the hands of the public sector but to raise revenue for other purposes many local authorities took the opportunity over succeeding years to sell off their bus operations to private sector companies, principally Arriva, Stagecoach , First Group, Go-Ahead and National Express. Only 12 municipal operations remain, including Cardiff Bus (UK’s third biggest) and Newport Bus. Three other local authorities run buses in Wales, Caerphilly, Monmouthshire and Pembrokeshire but only on a very limited number of routes where no alternative provision is available.

The Government held back from deregulating bus services in London. Instead, it vested overall transport powers in Transport for London, which directly runs London Underground, London Overground and Docklands Light Railway, and franchises bus services to ten private operators, including German state-owned Arriva (Deutsche Bahn), Dutch state-owned Abellio, and French state-owned RATP. It is also responsible for Crossrail and London’s roads.

Deregulation has failed to deliver its promises and the London model, whereby services come under the office of the Mayor and the London Assembly, has proved much more effective. The 30 year plus period of private operation outside London has created private monopolies rather than genuine competition.  The Competition Commission noted in a report the emergence of “geographic market segregation” whereby the big five operators (Arriva, First Group, Go-Ahead, National Express and Stagecoach) leave each other to operate in their chosen territories, undisturbed by competition. [1]

The companies are free to cut services as and when they choose in this unregulated environment and have increasingly been doing so as subsidies from local authorities for uneconomic routes are withdrawn, leaving many parts of the UK, including Wales, with limited or no provision. Services have, nevertheless, been mostly profitable for the operators and fares have increased since1995 by more than 150 per cent against a rise in the cost of living of not much more than half that figure.

 The Welsh Government recognised  in the case of Cardiff Airport that it was important the facility was in the hands of an operator with a strong public service mission and First Minister Mark Drakeford in his reply to Adam Price indicated there was no current intention to sell the airport back to the private sector.

There is an equally strong case for an early approach to be made now by Welsh Government to establish whether First Group would be prepared, preferably in advance of the wider sale of the subsidiary, to divest First Cymru to a Welsh Government-owned not for profit entity.

The price First Group might demand is not clear and will depend on the profitability of the Welsh operations and the value of the assets (the bus fleet, engineering workshops and depots). First Group might also not want to break up its business before or at sale time, though the transfer of assets between transport companies is an established practice. Though It may not be the best yardstick as it was a much smaller company, ComfortDelgro acquired south Wales bus operator, NAT, which now runs services in Cardiff, Newport and the Vale of Glamorgan, for £14m in 2017.

The mechanisms by which such a transfer to the public sector could be achieved and the structures required will need to be explored but the opportunity has been created for Transport for Wales to be given the wider responsibilities that its title implies. As set up, its remit as a not-for-profit company is to provide support and expertise to the Welsh government on Welsh transport projects. Unlike Transport for London it does not own or manage such projects on a day to day basis. Its role is merely to plan, commission and arms-length manage. It employs only a relatively small staff.

It has a very limited bus remit, its main workload being in the rail sector where it was responsible for procuring the most recent Wales and Borders rail franchise (won by Keolis Amey of France/Quebec. It is also charged with bringing forward the South Wales and North Wales Metros. A current task is to investigate the causes of the decline in bus patronage in Wales, with the aim of proposing a range of solutions and exploring what has worked elsewhere. [2]

Transport for Wales would need to be reconstituted to take on an executive role but a new body with statutory powers could represent a first step towards creating a provider that could work much more effectively to integrate transport in Wales across buses, rail, airports, seaports and roads. Alternatively, as an intermediate step, the Swansea Bay City Region could be given the task of running bus services, putting it on a similar footing to the English cities that have accepted devolution deals, and which now have transport responsibilities in their portfolios.

The example of Cardiff Bus and Newport Bus, both of which run modern fleets could be adduced as evidence of how good public service provision can work and produce returns for the taxpayer rather than profits for the shareholder. Public pressure for moves towards clean air technology is also much more likely to be effective when directed towards operators within the public sector than to those operating as private companies. Since acquiring NAT, ComfortDelgro has chosen to recycle some of its older London buses for use as school transports in Cardiff. Wales, is of course, already familiar with cast-offs from rail companies and the London Underground on its rail network.
There is also a wider economic case. Large sums of money are spent by the Welsh Government subsidising public transport in Wales through the concessionary fares offered to bus pass holders. Bus companies also qualify for a UK Government fuel rebate to help keep services viable. Except in Cardiff and Newport, a proportion of Government bus pass funding is finding its way into the profits of companies based in England, Scotland, France, Germany, the Netherlands and Singapore. It would be much better if this money was recycled in Wales in the creation of better overall transport provision.

The expertise question will no doubt arise, but it has already been demonstrated by the comparative success of Cardiff Airport since it was acquired from its absentee Spanish ownership that public sector control can work in commercial areas. (Local authority-owned Manchester Airport is the prime example of this, turning the northern city into a commercial and financial powerhouse). And unless Wales tries and risks failing, it will never acquire skills of this sort.

If Wales fails to acquire First Cymru in one form or another, the business might well be acquired by Abellio, Arriva, or RATP. Would it really make more sense for Welsh bus operations to be owned by the Dutch, German or French governments than by the Welsh government?

Rhys David is chair of Nova Cambria, the Welsh think-tank

June 1st, 2019

[1] Where competition has occurred, it has usually involved a new entrant seeking to undercut on existing routes rather than developing new ones. This has resulted usually in the incumbent having to cut less profitable services to protect revenue and profitability. In Cardiff Singapore-owned New Adventure Travel, (NAT) has been challenging the municipal operator. Cardiff Bus has recently reported losses and has been forced to re-order its services and schedules.

[2] Keolis Amey Cymru trades under what is in effect a fig leaf name -Transport for Wales Rail Services – which is the branding that has now replaced Arriva Trains Wales on Wales and Border Services. This carries the suggestion of a stronger public sector involvement than is the case.


US Lessons for Britain, for better and worse

Consideration of the US ought not to be all about Trump. There are some respects in which they do less well than us, but others surprisingly where we could still learn some lessons, writes Rhys David

How much more would you like to pay? That’s the message on the screen when the salesperson in a US coffee shop or restaurant, or a small shop owner, pivots the till point credit card reader around to face the buyer after swiping. The technology is new, but it represents a sideways development rather than an advance, adding an inefficiency into US transactions that has been largely eliminated in the UK, and much of the rest of Europe, through the widespread adoption of contactless payment.

The new devices – about the size of a small tablet computer – overcome the embarrassment on both sides of asking the purchaser whether they want to add a gratuity. Instead, the till does the job, asking the customer whether they want to add another 15 per cent (the starting point), 20 per cent or even 25 per cent. There is the option of making your own choice – 30 per cent perhaps or 10 per cent, or, perish the thought, no tip at all. (Anyone who has watched Larry David (no relation) arguing with the maître d’ and getting his car blocked in the car park in comedy series Curb Your Enthusiasm after refusing to supplement the tip that had already been added will know this step is taken at your own peril.)

As the tip must be added after the amount has been rung up, it means contactless is much less widespread for small transactions, such as the purchase of a coffee or a newspaper, than in Britain. To authorize the extra amount that the customer has added it has become necessary to move away even from chip and pin (the predecessor of contactless in Europe). Instead, after you have added your tip on the till, you need to add a digital signature to authorise the extra amount being collected using a finger on screen or special pen.

There are other ways, too, in which the US – birthplace of so much modern technology – seems behind the times. Amtrak trains are large, comfortable, staffed by cheery conductors in crisp uniforms – and slow and infrequent. The 215 miles from Boston to New York takes four hours, admittedly having to cross several spectacular and presumably slow-speed long bridges over estuaries on the way.

The 220 miles on to Washington takes a further three hours, in both cases rendering air travel a preferable option for the time conscious. By contrast the 250 miles from London to Newcastle can be accomplished in 12 minutes under three hours and the 170 miles to Leeds in two hours twenty minutes, and British railways are not even very fast by world standards. My journey from Boston to New York took nearly five hours because of that familiar railway issue – signaling problems. Nor are the trains very frequent. The Boston-New York service runs at two-hour intervals, two trains leaving within five minutes of each other, one slow and the other slower, followed by a two-hour gap.

This journey between populous cities – Boston is 4.5m, New York is 8.2m and Washington is 7.4m, with other big cities en route – would clearly be highly suit able for the equivalent of Europe’s or Japan’s high speed trains, reducing the journey to New York from the two other cities to 90 minutes or so, less than the time it would often take to travel to the nearest airport, check in and wait for a possibly delayed take-off. The vigorous opposition of the airlines to any competition brought about by private sector seed funding, as would be needed in the case of new railway infrastructure, has made this politically impossible in the free market US. It is not a fight Donald J. Trump is going to take up.

One battle he has engaged in, however, is trade, seeking to punish China for what he sees as unfair practices, rewriting agreements with Mexico and Canada, and lamenting the large trade balance in Europe’s favour. This does ignore the extent of US ownership of European assets and the scale of US-owned manufacturing in other countries, including in Europe. These operations generate substantial income for the US from repatriated profits. The US is also the world’s biggest provider of financial and other services and its technology companies – Google, Apple, Facebook and Amazon – dominate in their fields.

Nevertheless, the extent to which US manufacturing has retreated can come as a shock. In places like Saco, once a centre of textile machinery manufacture, the once US industry has left only vast mills converted to apartments and offices in its wake, and has lingered on for only a couple of decades further south in the Carolinas and Georgia where much of it moved post-war. Most recently it has been the turn of the US-owned motor industry to suffer a similar fate.

The US industry’s output is still huge, as is to be expected in a market of nearly 18 million units a year, but sales of cars by foreign manufacturers, from Europe, Japan and South Korea, from their US plants and imported vehicles now exceed by roughly 2m. units those built by the US big three – GM, Ford and Fiat-Chrysler America. The average US content of even these suppliers’ vehicles is only 38 per cent. Ford has thrown in the towel as far as supplying passenger saloons is concerned, deciding that in the US market it will concentrate on trucks and SUVs.

Whether a switch to electric vehicles will bring a return of US manufacturing through the arrival of new carmakers such as Tesla, and the possible emergence of other new entrants into motor  manufacturing, such as the technology companies, Apple and Amazon,  is unclear but the traditional US carmakers appear to be behind their international competitors, Toyota, Nissan, Hyundai and BMW among others,  in developing battery alternatives.

Yet, as the restrictions placed on Chinese phone technology group, Huawei, shows, when it comes to action designed to protect US business interests, US administrations can and will act with a decisiveness for good or ill, that other governments would shrink from.  The US may yet see an upturn in manufacturing, whether driven by reshoring – the repatriation of activities previously dispatched overseas that has already begun – or trade barriers. The American public will ultimately decide whether the extra costs this is likely to impose on it are acceptable.

If some weaknesses in processes and some chinks in US commercial invincibility – particularly in older industries – can now be discerned, there are many respects in which in ordinary life the US does get it right.  This is why it remains such an attractive country. The friendliness and levels of service provided  by customer-facing businesses remains impressive, extending even into fields such as car hire, where the European experience – overstretched booking clerks, less than satisfactory vehicles, phantom damage appearing later as large additions extracted without consultation from debit and credit cards – provide a much better experience for the visitor.

In New England, and perhaps in other areas too, the problems faced in Britain by the residents of many rural areas – closure of shops and other facilities, making necessary a visit to a supermarket many miles away for even necessities – appear to be under better control. Remoteness in some parts is admittedly responsible for keeping the chain stores at bay, and rendering home delivery too expensive, but their absence has allowed the ubiquitous village store to appear to thrive. Unlike the British Spar, Premier, local Co-op or independent, these stores manage to offer a range of services to the community and to be focal points for meeting up and exchanging news and information.

The village store is where you might go not just for a loaf of bread, a pint of milk, or breakfast cereal but to actually buy and eat your breakfast, cooked on the spot, or to get a fishing licence, wood for the fire, a mid morning (or afternoon) cup of coffee self-served from one of several insulated jugs on a conveniently set up table, and many grocery varieties, some hardware, plus a limited range of clothing, gifts and novelties. Interestingly, unlike most British convenience stores, huge displays of beers, spirits and wines from around the world are missing, drink appearing to play a much smaller part in American life than it now does in Britain.

This surprisingly is true of another institution – racing where the contrast with the UK could not be starker. At Belmont Park, home of the Belmont Stake, one of the races in the US Triple Crown, entry into the park is a mere $5 and this entitles the holder to visit every public part of the ground, including the grandstands and to bag a place next to the finishing line. Or, you can stay in the huge park grounds and watch the racing on the big screens dotted around. Absent are the champagne tents, the Guinness tents, the gin tents, the fish and chip bars, pulled pork pagodas, the burger vans, and the other inducements to drink and eat to excess of the UK racecourse. Present are hundreds of families with young children enjoying a picnic.

There are other things they do well in the US, too. Under the wing of the federal National Parks Service the register of National Historic Landmarks (NHL) brings together thousands of buildings, sites, structures, objects and districts deemed worthy of preservation because of their significance in the development of the US, including presidential homesteads and business leaders’ Victorian-era houses. Sagamore Hill on Long Island, for example, gives a fascinating insight into the life of the first Roosevelt  – Theodore – who assumed the presidency after William McKinley was assassinated in 1901, Roosevelt is now mainly remembered for his big game hunting exploits and his house is indeed full of such trophies, displayed as animal heads on walls, elephant feet as footstool, rhino horns as inkwells, and bearskins as rugs.

However, the museum in the grounds in Long Island also shows another side to Roosevelt, who only went on his hunting safaris so he would not get in the way of his successor. He later disapproved of William Howard Taft’s actions in the White House and stood as a dissident Republican against him in the 1912 election, winning enough support to let in Democrat, Woodrow Wilson. In office Roosevelt was a reforming president challenging corrupt politicians and businessmen and breaking up the monopolies that dominated industries such as oil and banking. He also started the US national parks.

American historic properties under NHL  management appear sober and serious, telling a story in a straightforward way without feeling the need to push relentlessly the various dimensions of the inclusivity agenda, which has become part and parcel of  the approach generally adopted by the UK’s heritage custodians, notably the National Trust and English Heritage, whether it is the need to entertain the young or project guilt for whatever historical sins have become the latest anathema.

For all its reputation as the land of free enterprise and enemy of public sector meddling, in some respects the US can now seem in certain respects much less in thrall to commercialism than Britain. Surprising, occasionally frustrating, but always interesting – this is what makes the US a great place to visit from time to time. It offers an insight – without having delved into its politics too deeply – into the directions in which western society is moving, many of which we might not want to follow, but perhaps some others we might.

This article written following a visit to the states of New Hampshire, Maine, Massachusetts and New York in May 2019.

June 3rd, 2019

Rhys David is chair of Nova Cambria

Our Bashful Businesses. Why too shy to buy?

Rhys David

Prince Charles visits Rachel’s’ Organic Dairy in 2017, a successful Ceredigion business founded in 1982, but taken over by Americans in 1999.

Why do so many Welsh businesses get taken over? Just when you think a Welsh company has established itself in an interesting new niche or is proving successful and innovative, along comes a bigger company, almost invariably from outside Wales, to swallow it up.

Just a few weeks ago Broomfield Alexander, the Welsh accountancy practice, joined rival firm Baldwins, itself part of a wider, London-based business services group, Cogital. The hundred year Cardiff-based practice will continue to operate as before, advising businesses in Wales but as part of a bigger organisation. It could lead to new business and more jobs for Wales. Control, however, will have passed outside.

Service sector companies – like Broomfield Alexander – which were previously seen as much less likely to be absorbed than their manufacturing counterparts, have been disappearing into non-Welsh ownership for some time. Remember Cardiff solicitors Leo Abse & Cohen? Since 2015 they have been part of Australian group Slater+Gordon. Or, Wrexham-based recruitment specialists, Gap. They are now owned by Japanese staffing company, Trust Tech.

There have been many other recent examples, from roadbuilding contractors Alun Griffiths (now part of Tarmac, itself a subsidiary of Irish aggregates giant CRH) to bus operator N.A.T., which the oddly-named Singapore group, Comfort Delgro (also a London red bus operator) acquired in 2018. Ownership of the rock that Wales is made of can be traded, too. In April this year Aim-listed Sigma-Roc took a 40 per cent stake in Narberth quarry owner, G.D. Harries & Son, with a view to ultimate full control.

Does it matter? One can hardly blame owners, who may have devoted their working lives to building a business, making considerable sacrifices on the way and risking their own funds, family life and security, from accepting offers, particularly if, in the case of privately-held businesses, there are no obvious successors within the family or the management. It is after all their property and with appropriate limitations they should be able to dispose of it as they see fit. Perhaps we should view it as a tribute to Welsh entrepreneurs, of whom there are now far more than there used to be, that they appear on the radar of businesses elsewhere, not just when they are in need of rescue but when they seem to have developed products or found niches that acquirers find interesting and wish to add to their own portfolio.

Yet, the nagging feeling remains that something important is being sacrificed in this apparently one-way traffic and that what is being lost could be helping to develop a more rounded, more prosperous and more competitive Welsh economy. The consequences are wider than that, too.

A whole ecosystem surrounds successful companies, creating jobs and other opportunities beyond the core business. This is put at risk when firms disappear inside bigger rivals. Companies headquartered in Wales need suppliers, from cleaners and caterers, marketing and public relations advisers, personnel specialists, builders, plumbers and electricians to IT specialists, accountants, auditors, solicitors and a range of other consultants. Many of these relationships will remain intact but inasmuch as a strong motivation for take-overs is rationalisation and efficiencies it is inevitable some of these services will henceforward be organised from the central location and will involve the introduction of external providers, often headquartered in the big English cities.

It would, of course, matter less if Welsh businesses were active in acquiring businesses across the border and further afield. One or two, such as Wynnstay and Leekes, have been, but the majority are not. Our long and porous border is more non-return valve than two-way pipeline.

It is, it must be conceded, not just a Welsh problem. A similar case could be made about the drift into overseas ownership of businesses that most people would imagine were quintessentially British, from Lucozade to Lea & Perrins. What has been happening in Wales is in many ways the British experience writ small, and part of a process – consolidation across business sectors – that has been happening since the beginning of capitalism, but which has accelerated enormously in recent years under the impact of globalisation and its enabling handmaid, technology.

The food industry offers one example of this process at its extreme so it is perhaps worth examining the drivers there, especially as food is one of the areas in which Wales would like to believe it has a strong future. At the primary growing level, output is increasingly coming under the control of giant groups such as the big grain producers and traders, Cargill and Archer Daniels in the US and Europe’s Louis Dreyfus; a big chunk of the global food processing that follows is handled by a small number of multinationals such as Nestle, Unilever, General Mills, Nissin and Danone; and it is increasingly sold by national supermarket oligopolies led in their different territories by Tesco, Walmart, Carrefour and Aldi.

All these groups like talking with similarly-sized organisations. The supermarkets want to deal with giant processors as big as themselves for most of their requirements so unless producers in Wales and elsewhere are part of bigger food manufacturing groups they will be confined to the “local produce” racks at the end of an aisle deep inside the store. This is why Rachel’s Dairy, Brecon Carreg and other Welsh waters, (Ty Nant, Princes Gate) and meat processors, such as Oriel Jones a’i Fab among others, have ended up in big corporate hands and why it is so difficult to build scale and remain independent. (It is possible to stay local as the example of West Country-based Yeo Valley Farms, a rival yogurt supplier to Rachel’s Dairy, shows, but it requires a lot of determination and support.)

This effect is apparent even with apparently huge brands if their owners see no other way of taking them outside their domestic market. HP Sauce, a British institution, but largely unknown outside the UK, is now owned by Kraft-Heinz, the world’s fifth biggest food and beverage company, and HP production has been incorporated into a much bigger plant in the Netherlands, as attempts are made to take it to a wider world consume base.

This illustrates another dilemma, especially where it is the brand rather than the business itself which is the acquirer’s target. If provenance is not important (as it is in some cases, such as Scotch whisky) economies of scale will usually demand a shift to other bigger, more central locations as part of a rationalisation process. And for reasons of distribution, as we frequently see within the EU, this will usually mean the countries of central Europe or eastern Europe, or close to huge container ports, such as Rotterdam and Hamburg, and to Continent-wide road and rail networks. Peripheral areas will invariably lose out, as we may yet see when the key decisions in the projected Tata Steel-Thyssen-Krupp steel merger are made.

The trend towards scale operations is occurring not just in the food industry, however. Companies big, medium-sized and small, across manufacturing and services now search for businesses engaged in similar activities, and which appear to have developed a successful strategy or interesting new products and innovations. This is often done as an alternative to carrying out expensive internal development work. The pharmaceutical industry has taken this further than most, slimming down product portfolios, closing or moving operations and seeking out university spin-outs and other start-ups for new drug discoveries rather than risk spending large amounts of time and money on research that may prove fruitless.

With its modest population and small industrial base Wales is hard-pressed to influence these developments but does this mean it will have to remain a passive bystander, buffeted by whatever trends occur across global business? Can its small businesses never hope to become medium-sized and its bigger businesses never make it on to the world stage? It will be tough but some countries – Ireland and Denmark are examples – have managed to create strong niches for themselves in global business alongside the global brands, despite having relatively small populations of around 5m. They are also now much wealthier than Wales. We need to understand how they have achieved this success, while Wales has remained a largely dependent economy, constantly requiring external investment and support to change and develop.

The scale difference is apparent from the turnover figures of the top companies in the three countries. Ireland’s CRH, founded in 1970 and now established in international markets, had a turnover last year of €27bn., and Development Capital Corporation, founded 1976 stands at €13.9bn. Denmark’s AP Moeller-Maersk weighed in at €192bn and second-placed NovoNordisk at €117.9bn. Wales’s s two biggest domestic companies, Iceland and Admiral, reached only £3bn and £2.96bn respectively. (In April this year the Euro stood at about 1.16 to sterling.)

A start has perhaps been made in Wales and this offers some hopes for the future. The Welsh economy has transformed over recent decades, as the multinationals that moved in during the post-coal era have retreated to their home countries or moved operations to eastern Europe or Asia. With encouragement from Welsh Government, local government, business representative organisations, universities, award schemes, and the Welsh media, and especially the Western Mail, a new ecology of small and medium-sized companies has sprung up. More Welsh people have decided to go into self-employment for one reason or another and many have done well and created jobs for others. Recognition has come, too, from politicians including Plaid Cymru leader, Adam Price, of building the Welsh economy around grounded companies – those that have been formed in Wales and have good reason to continue to be based here.

We need, however, a much better understanding of the processes at work that might bring greater success, leading ultimately to an economy that will much more closely resemble the successful Irish and Danish, and other successful small nation European models. As well as ensuring firms in Wales can secure access to the funding they require and putting in place appropriate financial institutions, other even more deep-seated issues need to be addressed. Does our school system, for example, prepare young people well enough for life in a what has become a largely post-industrial economy? Are our universities working closely enough with Welsh industry on future products and services? Can we do more to retain Welsh young people within the Welsh university system or to attract Welsh graduates back to Wales?

Are the new businesses we are creating operating in areas that are likely to be relevant to future? In other words, are enough of them going to add value rather than merely fulfil a service or manufacturing need that could be overtaken by artificial intelligence in the decades ahead or be swept away by bigger businesses elsewhere? Just as importantly, does an historical animosity towards capital linger and hold us back? Are we comfortable as a society with individual success and wealth? Do we use rugby as a proxy for success elsewhere, believing that if all goes well at the Principality Stadium, we do not need to try as hard in other areas?

The Scots recognise the importance of becoming a thoroughly modern economy and leveraging their universities to this task. In March the Scottish Government asked Professor Sir Anton Muscatelli of Glasgow University to report on how Scotland’s universities can lead economic growth through industrial partnership and advise how Scotland can learn from other innovative European countries. The research will be short and sharp, reporting in the autumn this year to government, the universities and public agencies. (Compare and contrast the time taken to decide whether or not to build a new road around Newport.)

On his appointment Sir Anton said, “Already across the country exciting partnerships with major industry, SMEs, spin-outs and social enterprises are underway, with many success stories to be celebrated. I hope that the outcomes from this report will offer the chance to build on these successes, learn from international best practice and put Scotland on the road to becoming the best place in the world for industry to partner with universities.” Wales should be doing the same, not waiting until 2025 and inviting a team from Scotland to come down to give us lessons in what they have achieved.

Maybe we will need to have a longer spell as a feeder economy, creating businesses that will grow and then attract outside attention. Perhaps it is going to take decades before enough small companies in Wales grow to become medium-sized businesses capable of looking beyond Welsh borders to expand. If this is the case, we need to find ways in which the funds released from Welsh businesses that are sold get invested back in Wales in even more innovative products, creating wealth for more people going forward. We need to ensure that at least some of the businesses that are developed become the agents of consolidation in their sector not the consolidated.

But perhaps most of all we need the capacity within our universities to carry out relevant research and the willingness to commission it. The economic departments of our Welsh universities, unless I am much mistaken, can tell you all you want to know about a range of topics from the macro-economic policy of developing economies to multiple deprivation in Rhyl West. They teach business students from around the world who can then return to help their own economies prosper. There is a serious gap, however, in knowledge about the Welsh business sector, its size, its constituents, its characteristics, its requirements, its prospects, its strengths, its weaknesses, where investment is going and where it is needed.

As well as having world-class universities Scotland benefits from having a dedicated institute studying the Scottish economy – the Fraser of Allander Institute. We may not have had in Welsh ownership a House of Fraser to provide the core funding for such an institution – and it is most unlikely the current HoF owner, Mike Ashley would fund such a body today, given the parlous state of department store finances. Are there, however, no Welsh-based or Welsh-born or other charitable donors who would be willing to do so? Should the Welsh Government take the lead? Properly structured it could provide the key to telling us how to structure the development of a profitable Welsh economy for the rest of this century and beyond. It could repay the investment handsomely.

  • Rhys David is Chair of Nova Cambria.

A Cardiff Cymro at War: Welsh and British Identity in the Near East Theatre of World War One

Wales was a melting pot at the start of World War One and some soldiers will have had a foot in the prevailing Welsh and English cultures of Wales.

For the first 17 years of his life, leading up to World War One, Dewi David’s Sunday routine in the Cardiff suburb of Splott will have been the same: chapel with his parents and Sunday School at Eglwys Jerusalem Methodistiaid Calfinaidd in Walker Road, followed probably by a visit for tea or supper to one of his family’s many relatives in the area.[1]

In 1917, however, Dewi’s Christmas was spent in another Jerusalem as one of the Welsh soldiers who entered the Holy City two weeks before. The Turks had been forced to surrender their four centuries-old control of Palestine in the face of advancing British Empire forces under the command of General Sir Edmund (later Lord) Allenby. By this time Dewi had been in other ancient settlements familiar in stories to a chapel-attending Welsh young person – Matarieh (where Mary rested on the flight to Egypt), Khan Yunus (where Delilah was born), Gaza (where Samson brought the temple down), Beersheba (where Abraham and Isaac spent time), Hebron (where Sarah died), and Bethlehem (where Christ was born). Sitting in chapel in his early teens he could hardly have dreamt that he would be camped before Christmas 1917 near Calvary and would spend the day itself on the Mount of Olives in a German religious settlement hastily abandoned by retreating German units that had been supporting Ottoman forces.[2]

Our image of Wales in World War One has largely been formed by the heroism of the 38th (Welsh) Division in France and their sufferings in the assault in July 1916 on Mametz Wood near the town of Albert on the Somme. We also know about the horrors of the trenches, particularly once wet weather and consequent mud had set in.[3] Dewi, however, was among thousands of Welshmen who served in other theatres, notably the Middle East (or Near East as the territories closest to Europe were then called). They served in the only other Welsh-designated division, the 53rd, or in other divisions or support units such as the Royal Army Medical Corps.

The 53rd, a Territorial unit that pre-dated its earlier-numbered confrère, was from August 1915 part of the British army that tried to seize the Gallipoli peninsula during the Dardanelles Campaign, a conflict that cost more than 100,000 British, French, Australian, New Zealand, Canadian, and Turkish, German and other lives. The Division went on to defend the Suez Canal against attack by the Central Powers from both east and west,[4] moving later into an offensive phase that took it, fighting its way, across the Sinai Desert, past the stronghold of Gaza and through the Judaean Hills to Jerusalem.  Its capture at a difficult time in the war in France was memorably and evocatively described in Parliament by Prime Minister David Lloyd George as a “Christmas present to the British people”.

Gallipoli, where action was first seen, was trench warfare as brutal as that encountered in France and Belgium but in even more difficult, precipitous terrain where the enemy occupied the heights and could rain down fire on the men below.[5] The 53rd’s later campaigns in 1916 and 1917 were, by contrast, highly mobile desert warfare, accompanied by searing heat, never-ending sand and constant flies, and made worse by severe shortages of food and water. No less difficult scrambles through the Judaean hills followed as the army advanced in the latter half of 1917 deep into Ottoman territory. Many, like Dewi, who joined up as a volunteer on his 17th birthday, St. David’s Day 1915, would spend the entire war away from home, not returning until April 1919.

In October 1918, at Megiddo, the ancient Armageddon of the Bible, on a plain that had been the scene over the course of millennia of mighty battles between great empires, the Turks and their Central Powers allies were defeated, shortly before the November armistice in Europe. They were forced out of the war and made to quit their Ottoman territories outside the motherland in a campaign that made Allenby a national hero in Britain and gave him his title, Viscount Allenby of Megiddo. In Wales it was celebrated as a victory in which Welsh units had played a powerful role.[6]

Two issues particularly have interested historians of Welsh involvement in World War One. How great a degree of enthusiasm did Welsh people exhibit for the war, how did this differ across the social and linguistic divides and how did this square with the pacifist tradition that had developed with the growth of Non-Conformity across Wales in the two previous centuries?  Secondly, how Welsh were the Welsh-named units that fought in the various theatres and how Welsh did they feel? Which Welsh customs and characteristics did they take with them into war? Did men from different parts of the United Kingdom (and beyond) meld together to form part of a wider British identity?

On the attitude of Welsh people to World War One different lines of evidence have been enlisted to justify often modern beliefs and prejudices. Robin Barlow has argued persuasively that a range of reactions can be discerned in the Welsh response to the war and the call to arms, reflecting significant differences in a then fast-changing society.[7] Attitudes also evolved as the war proceeded, after it had become obvious the quick adventure many had expected was a fantasy. Contrary to previous assertions, Barlow has demonstrated that there was a slightly lower propensity to enlist in Wales than in either England or Scotland. Rural and industrial areas felt differently, as did Welsh and non-Welsh-speaking areas, the former in both cases showing less enthusiasm for the cause.

One of the special factors in Wales was undoubtedly the magnetic appeal of Lloyd George, without whom any Welsh reluctance might have been greater. No doubter himself of the rectitude of a war against German militarism, the one-time Criccieth solicitor skilfully mobilised large swathes of Welsh opinion on the side of the little nations of the world – in this case Belgium, Serbia and Montenegro – who could be presented as being bullied by the bigger boys, the Germany of the unbalanced Kaiser Willem II and Franz Josef’s Austro-Hungarian Empire. For Welsh people, although umbilically attached to a benevolent neighbour to their east, the comparison was meaningful.

Already quasi-canonised in Wales for his work as Chancellor of the Exchequer in introducing welfare benefits and for his earlier stand as a young solicitor against malign church practices in Welsh parishes, Lloyd George helped to make pacificism unpatriotic, to the extent that even prominent intellectuals were quick in 1914 to take up the war cause. The Welsh scholar, Sir John Morris-Jones, entered the fray, attacking in bellicose terms “Germany’s new religion, the nationalistic creed of Nietzsche”,[8] and collecting with fellow Welsh academic, Professor Lewis Jones, tales of Welsh heroism and derring-do for an anthology on Wales’s martial past.[9]

Gentry ladies, many of whom had sons who served and were to die in the war also rallied around. Profits from the 2/6d sale of the Morris-Jones’s book were donated to the National Fund for Welsh Troops, which sought to provide additional comforts for Welsh regiments at home and abroad. Joining Mrs Lloyd George on the fund committee were, among others, Lady Ninian Crichton-Stuart, Lady Glanusk, Lady Edwards, Lady Beatrice Ormsby-Gore, Lady Herbert, and the Hon. Violet Douglas-Pennant.[10] Even in the avowedly radical south Wales coalfields, Charles Stanton, a firebrand syndicalist and miners’ agent, became a dedicated supporter of the war as did the even better-remembered former miners’ leader and M.P., William Abraham (Mabon).

Statistics can tell us much about the keenness of different socio-economic groups and ethnicities to join up, and we can also glean much from contemporary utterances by politicians and other opinion-formers, such as churchmen and union leaders, and from newspapers and speeches. We need the testimony of individual soldiers, however, to know more clearly what they thought and felt. This is where 50 surviving letters that Dewi sent home can help.[11] Starting with short, cautious missives confirming he was in good health and spirits, they grew in length under the weight of his experiences to offer in response to his father’s and sister’s letters a wide range of views, on Wales and Welshness, his native city of Cardiff, conscientious objectors, suffragism and other contemporary issues, as well as the usual soldier’s complaints – poor supplies of food and water,  inexplicable orders, out-of-touch commanders and favoured treatment of men in other theatres.

As a soldier Dewi was not typical of any one group but crosses several social divides. His family being native Welsh-speakers and chapel-going (his father, Thomas, was a Jerusalem deacon), he came from a tradition that might have been expected to be somewhat more sceptical about the war. He was, however, an urban dweller, living in a significantly “English” Welsh city – Cardiff – which had grown as rapidly as anywhere on earth in the preceding 25 years, drawing in people from all over the United Kingdom.[12] These, it can be inferred, were more likely than the homogeneous rural Welsh to have been fired up to support an Empire war and it was their lead that Dewi seems to have followed.

Unusually, the Davids were almost autochthonous to the region. His parents were from the still largely Cymric Pentyrch and Gwaelod-y-Garth, then outside the city but now incorporated, and spoke the distinctive Glamorgan Welsh dialect. Their neighbours in recently-built Moorland Road, were almost entirely incomers, employed in the largely artisanal jobs that had been created by the city’s coal/steel/shipping economy – railway porter, coal trimmer, engineer, carpenter, boilermaker’s labourer, engine driver, tailor, flannel merchant, general shop assistant, chef, labourer, goods clerk. Many of them would have had no deep roots in the area and little of the cultural attachment to Wales that he and Welsh soldiers from deeper in Wales would have had.

Dewi had joined because his slightly older friends had also enlisted but virtually all of these were what might also be termed Cardiff English, the sons of individuals drawn into the city in the previous two or three decades. Their names were Mills, Pippen, Somers, Ropke, Hansford, London, Hardcastle and Milner, and not Williams, Davies, Evans and Jones. After elementary education several of these young men had gone on to Cardiff’s first “grammar” school, the Municipal Secondary School (the M.S.S.) in Howard Gardens[13].  And, like several of his friends Dewi had joined the General Post Office (GPO) as a messenger boy at 15[14]. As such, these Cardiff individuals will have had much in common with the wider nature of the 53rd Welsh, which included men from Herefordshire, Cheshire and elsewhere, as well as Wales, and would fight in the Near East alongside divisions from London, East Anglia and other parts of Britain as well as Australians, New Zealanders, Newfoundlanders and Indians.

Dewi’s letters, 120,000 words in total and now part of the Imperial War Museum’s national collection in London, offer evidence of the duality engendered by this foot in both camps, Welsh-Welsh and English-Welsh, proud of Wales and his Welshness but growing up in an environment in which the dominance of English ideas and attitudes was even more prevalent than today. In Cardiff, as in many other cities that had grown with the industrial revolution of the previous century, pro-Empire, Anglo-centric views of the world prevailed and will have been shared by most of the population. [15] The Army, where he will have met men from other parts of Britain for the first time, would be a melting-pot that would only intensify this common sentiment, creating bonds that overrode national identities within the United Kingdom.

This Anglocentric, Empire-oriented view is reflected both in Dewi’s choice of language and the expressions he uses.  He writes exclusively in English, though he does pepper his writing with Welsh (and the odd French) expressions. Censorship may account in part for this but his English-only education in the MSS is probably more responsible. This was a time when Welsh was being lost and many Welsh speakers, perhaps particularly those who had moved to the big cities, (though not the Davids) were abandoning Welsh for their children as a hindrance to advance in an English-speaking world.[16] The age-old Welsh dread of the threat to the language – a fear expressed a few decades earlier in the last line of the Welsh national anthem – occupies his thoughts in one of his letters.[17] After describing how he had been mixing with good Welshmen in the 158th, he writes:

“You know full well that I’ll never lose yr hen iaith [the old language] – leave it to me, I hope I am a genuine Cymro – and, well that’s one of his chief duties, isn’t it? – “Fy Nuw, f’anwylyd, a’m iaith” [My God, my loved ones, my language].”  

Even for a Welshman, however, “England” is used in Dewi’s letters as a synonym for “Great Britain” and Ireland, a modern solecism that was probably then widespread (and perhaps offers a partial elucidation of the notorious Encyclopaedia definition). At no point does he use the word Britain, preferring instead the then widespread nickname, “Blighty”.

Thus, from Fayoum, in Egypt, he wrote to complain about exorbitant local traders:

“A quid here lasts about as long as five Bob in England.”[18]

and later, while on the trek through Sinai to Gaza, musing on his job polishing the equipment of the two horses he was looking after at the time, Cuthbert and Araminta, he writes:

“I am sure my manicurist would weep to see these hands after that sticky duty dubbing but I console myself by thinking that we are but cleaning harness for ‘England, Home and Beauty’ as they say in the Brasso advertisement.”

There are other examples, too. In a complicated reference to George Bernard Shaw’s satire, Mrs. Warren’s Profession, he observes how women in Egypt usually trail unwearyingly on foot behind a man on an ass:

“It wouldn’t do for Miss Warren to preach the new belief of the ‘women’s rights’ creed out here.  The men wouldn’t take it so calmly as in England.”[19]

Dewi’s reading at the time was the English-language classics, his requests to his parents being for books by Charles Dickens, Edgar Wallace, Mark Twain, Sir Walter Scott, and the now largely forgotten Ian Hay, and two contemporary periodicals, London Opinions and the Weekly Telegraph. His local and Welsh news came through the long since defunct Cardiff Times. On one occasion he does ask his parents to find him something suitable in Welsh but whether in response they sent him a work by the Welsh Dickens, Daniel Owen, is not known.

His own writing style was humorous and highly literate, and full of references to the Bible, nature, music, history and geography. Yet, for all his serious reading, in speech he grew to be more and more strongly influenced by his companions. As the war proceeded and his tour of duty lengthened, Dewi (and no doubt his brothers-in-arms) filled their conversation and writing with slang phrases such as ‘abso-blooming-lutely’, ‘s’welp me’, ‘kybosh’, ‘ole chulip’, ‘fakamajig’ and others, and routinely cut words, such as ‘them’, or ‘him’ back to a basic understandable ‘em’ and ‘im’. Dewi, too, gradually slips, like many of his contemporaries into the use of Eye Dialect as he becomes more of the old soldier and less the raw and nervous recruit.[20]

It has, indeed, been observed that by the end of the war the default language that many British soldiers spoke was Cockney.  Londoners were disproportionately represented in the forces, and their form of slick, urban conversation clearly appealed to the mood of the men and to the camaraderie which long periods of service together engendered and hence quickly spread, even to units such as the 53rd.

Dewi, a good grammar school education behind him, even if of only short duration, was able to add his own compelling metaphor and imagery. In apologising for his failure to find his sister a Christmas present in Jerusalem, he tells her “the miserable paltry specimens of the Birmingham jeweller’s art (overseas department, remember)” that he inspected were “a gross insult to the average man’s intelligence” and “would not have deceived even the dullest member of a West African missioner’s flock”; in recounting his pleasure after eating the contents of  a parcel he says he “felt as contented and benevolent as the fattest old alderman who ever sat down to the weightiest table at the Lord Mayor’s spread,” and he “wouldn’t have changed places with a diner at the Carlton”; in thanking them for some glasses he had received, that the “goggles” were “Bond St. fit” and hung on his “nasal promontory” a treat; and that some unwelcome remarks he had heard were “enuff to make a crocodile weep champagne”. For Dewi a camel is his “long-faced chum”, being sea-sick is “feeding the fishes”, a brush is his “trusty desert sweeping instrument”, conversation is “chin music” and between you and me is “ongtre-noose”.

Yet, while he quickly adopted Army parlance, Dewi found many of the men he met somewhat exotic on first encounter in 1915 and 1916. With gaps sometimes needing to be filled he spent very brief periods with a London Division, where he might have picked up some of his Cockney and with the 54th (East Anglian) Division, “very decent people”. He found some of his fellow Welshmen different to himself, too. He is sent “back up the line” in Palestine, he reports in one letter, to the 158th Brigade not his usual 159th and finds himself with a “north Wales crush”. “The Fusies, you know, ‘rwan’ like,” he tells his parents.[21] British soldiers named their surroundings after familiar places back home. The North Wales soldiers had followed Army practice in naming areas after similar and familiar places at home. “The Vale of Clwyd is close at hand and we are somewhere near Bettws-y-Coed,” he reports of the areas being occupied by the 158th in the hills.

He also tells his parents what he considers to be an entertaining story about a visit from a north Wales preacher at the YMCA while he was with the Royal Welch Fusiliers (RWF), which again emphasises the differences he observed.

“I went over to finish the letter and take advantage of their tables, but I failed to write a word. There was a service on, conducted by a Welsh chaplain from Aberdaron, look you. I quite enjoyed it, and he captivated the hearts of his congregation, especially those who had never heard a ‘pregethwr’ [preacher]. … He could hardly speak English properly … and the Cymraeg style he had was amusing …. It brought back memories to me of Sundays in the past when I listened to the ‘old school’. Tonight, he gives a humorous lecture at the same place and I’ll be there. So, you’re not the only ones who are privileged with those entertainments, although I’d sooner listen to yr hynod [noted] Kilsby Jones at Jerusalem any day to a lecture on the desert.”[22] The language used by this preacher is not clear, but one can guess it was perhaps a mixture of Welsh and English to meet the needs of his congregation.

Unlike fellow soldiers from more rural areas or smaller towns, Dewi will have met people from overseas in his first job as a 15-year-old messenger boy working out of the GPO in James Street in Cardiff’s docklands. His day will have been spent taking telegrams to boarding houses calling seamen to their ships or to men on board the many ships thronging the docks. This will have brought him into contact with the many Arabs from the Gulf who joined Cardiff-bound vessels at the Royal Navy coaling station in Aden, many of whom settled in Wales.  Whatever the impression he had formed through these no doubt fleeting encounters, abroad the attitudes that shine through his letters are those of the contemporary Briton, and not favourable.

The Greeks, camp followers who set up canteens to serve soldiers at their bases in Egypt, are represented as venal, never losing an opportunity to rook their powerless victims. He thanks his parents for a Postal Order:[23]

“You can’t imagine what it is like to have nixes. It will come in jolly handy for such luxuries as are obtainable from the canteen, although it goes against the grain, you bet, to fork out to Greek proprietors. Naturally, or purposely, they don’t forget to shove on the prices. I suspect the latter”.[24]

The Arabs, too, he believes, are only too willing to do them down in the bazaars, with their “rotten old piastres, worth tuppence ha’penny”. Moreover, he doubts their sincerity:

“The Moslems are very pious if taking a praying carpet out in the street and kneeling down bumping your forehead against the pavement has anything to do with it, but I doubt whether they’re always so devoted. They seem to like English fags because they always pester us for ‘Cigaretta baksheesh Engleezi’ which translated from the Ancient Greek means, ‘Give us a fag, gratis.” [25]

Nor does he approve of their treatment of women.

“The inhabitants of the outlying villages pass along the road by our camp to market in the town and it’s always the donkey or the woman who carries the load. The man, her husband, rides on another donk, doing and carrying nothing. Lazy blighters, what?”[26]

On occasion they could be a source of amusement as when he tries to cash a Money Order in a Post Office in Ismailia and encounters a bureaucratic Egyptian counter clerk, who nevertheless knows of Cardiff. He describes how he approached the official and handed over his document:

“’Hi matey, Where’s my five quid’.” He says, ‘Are you Sapper David.’ Says I, ‘Be’old ‘im in the flesh’.”[27]

He is sent back twice to get different signatures from the Provost Marshal’s office before he receives his money and has the following exchange:

‘’’Do you leeve in Cardeef’. ‘Yes’, I said, ‘near the biscuit factory on the mud.  Can I go now, or do you want to know whether I was born in Upper Zinc Street, or Lower Zinc Street? Come and have a drink with me, will you?’ He says: ‘I tank you no, I do not drink ze beera’ and all the clerks seemed to think it was a huge joke.”

Despite in this case finding someone who had heard of his home city, his advice to anyone coming to Egypt, is:

“Bring plenty of ‘tin’ [money], go to Shepheard’s Hotel and stick there.[28] You’ll only spoil a holiday coming up the line as far as we are to study the peculiar customs and manners of John Cherry Blossom.”[29]

These sentiments – of an 18-year old – would not be appreciated (or openly expressed) nowadays but were no doubt authentic of their times and of soldiers from across Britain.

Nor are the Turks, the main enemy any more highly regarded, though he praises them when back in the hills after the capture of Jerusalem for maintaining a humanitarian approach when it came to water supplies.

“Gosh! I’ve thanked the Koran many times for giving old Johnny 10 commandments, one of which forbids him to poison water – he sticks to it, too, fair does [do’s], which is a jolly lucky job for us. Water. Gosh! D’you know what happened yesterday. There was one biscuit tin of water, three men washed, two men bathed, (one was myself), and then I washed a shirt, towel and socks in it.”[30]

The French, as civilised fellow-Europeans and co-combatants are less harshly treated, though there is a hint he saw a certain dandiness in their character. On a rare break in Cairo he decided to visit a French barber, one of the many foreigners then living and trading in Cairo’s big European quarter.[31]

 “In goes this child to a swell ‘coiffeurs and shavers’ establishment, where there were about umpteen pier glasses [mirrors] hanging around the walls. Sat down and a Frenchman worked the oracle on me – a proper high-faluted style – Parisian style, you know.  ‘You want ze moustache to keep, m’sieur’, he said, serious as a judge, and, of course, not wishing to insult the poor feller, I kept as straight a face as poss and said polite-like, ‘Non, m’sieur, shave the blighter off, he get too much in the way, comprenez?.  … Lathered and shaved me OK, with never a pull or a scratch like my old Army pattern [razor] plays on me, and he was as dainty as a blessed girl, s’welp me Bob.” Then the blooming ceremony started, which fair startled me – first, he rubbed a block of ice over me dial [face], and then he sprayed about five scents over me and then shampooed me and sprayed some more till I didn’t know if I wasn’t in for an aquatic gala. For sure, I was some swell by the time I finished in that place, I tell you, cos he brushed my hair and put a blooming fine parting in it – straight as a die and looked the real goods. I don’t know how the deuce he managed it, cos blowed if I could ever get one there before. I was so pleased that I gave him 2 piastres for himself and told him on the QT that he was a blooming marvel, only he couldn’t comprunny simple language like that. Then he had a bloke there who brushed your togs and chapeau when you left. … Well that little lot cost me 6 piastres but it was worth it every inch. You can judge for yourself how swell it was – I was actually having a shave next chair to a major on the staff – absolutely (Lummy, where’s my swagger cane – Swish! Haw! Bar Jove!), and the manager bowed me out too and fairly beamed when I told him it was a trés bon little shanty of his.”[32]

Yet, while this Welsh-speaking Welshman could under peer pressure very easily become the archetypal World War One Tommy, acting, thinking, sounding and speaking like his fellow-soldiers from other parts of Britain, a feeling of being distinctively different and Welsh also permeates his letters. In Egypt he describes how he and a few of his Cardiff colleagues share a tent with a postman from Tonyrefail.

“who is my champion when we have good-natured arguments about Wales and Lloyd George and I may tell you that we are able to hold our own”.[33]

Dewi himself may well have differed from his colleagues in believing, like many Welsh people, that the Welsh Wizard was the key to victory. And, he evidently followed current developments in the war avidly.

“I have just read Dafydd’s speech at the Eisteddfod [in 1916] and really can’t find words to express myself. He is a marvel and I think the country need have no doubts as to his ability in the capacity of Secretary for War. Why a man with that spirit – the Welsh yspryd – could overcome any obstacle likely to crop up. I’d back him up against any sausage-eating Bethmann Earwig they like to put up.[34] You can tell he’s a Cymro alright by his speech and by Gum! I’m prouder than ever that I am also a Cymro and that the same blood runs in my veins. A Welshman in the field myself, I can only say “Cariwch ymlaen, Dafydd bach, cewch i mewn a ennill i ni”.[35]

Dewi was in no doubt either that Welsh soldiers – carrying on the traditions outlined in the anthology, Gwlad fy Nhadau, were among the most martial of Empire troops. When it came to battle, the Germans fighting with the Ottomans are, as they would have been to most British Empire soldiers, “vile Huns”, but in Dewi’s view they were no match for and indeed in mortal fear of the brave Welsh. Dewi, whose main role was as a Royal Engineers signaller, sending and receiving Morse code messages and laying out cables to forward positions and retrieving it, describes one action in Palestine on the march towards Jerusalem. This to his mind encapsulates the respective fighting qualities of the Welsh and their German and Turkish enemies.

“When the Welsh got to business they were greeted with shouts of ‘Come on you Welsh so and so’s, not Turks this time, you got Germans’. And, so it was, too, there was a plentiful sprinkling of those vermin in front of us but that only made those mad, reckless, splendid Welsh madder than ever and those Huns ran faster than old Johnny [the Turks]. Y’see they can’t skulk in concrete dug-outs here [as in France] – it’s all plain fair and above-board hill-scrapping and they don’t like that – not they. When they see the Welsh coming up over the hills like cats from stone to stone, with the sun playing on those shining little things [presumably their weapons], it’s either ‘Kamarad’, ‘Allah!’, ‘Allah!’, or a sprint towards Constantinople. I simply have to tell you this because the glorious old 53rd gave ‘em of their best and you know what that’s like – bless ‘em. Proud of ‘em? Why there’s nobody to touch ‘em.

“Anyhow, they’re wonderful, they’re marvels, they’re Welsh! If I had my way I’d give ‘em all a V.C. and a 1,000 piastre’s worth in the canteen. However, directly after the dirty work was done we were relieved and I have been terribly busy, engaged in that pleasant pastime of picking up all our cable. Blooming hard work and worst of all the blessed weather broke again and it simply poured down. When it pours here you can betcher life it does pour some, and there we were washed out of house and home – or rather bivvy – out on some blessed hills trying to pick up blooming cable thro seas of mud and lakes of rainwater.”[36]

There is more praise later for his unit after they had been sent down to the plains at Ludd after several months in the hills, only to be told after a two-day trek – “downhill all the way with all brakes on for hours at a stretch” – to turn around and return immediately. The men were left only to speculate on this reversal of fortune but Dewi sees it as evidence of their irreplaceability.

“What benefit can it possibly afford anyone, I would like to know, by heaping ridicule on the heads of us poor innocents. Anyhow, it just goes to prove there’s no other boys like our little rascals to scrap in those blamed hills – simply can’t do without the old “Fighting 53rd –  the flower of the British Army – second to none.”[37]

Some exaggerated pride is evident here but Allenby himself was full of praise for his Welsh troops. On their role in the decisive breakthrough at Gaza he wrote:

“When time was ripe, the Welsh Division brilliantly consummated the victory, storming the rocky slopes of Khuweilfeh, and stubbornly maintaining that position against repeated counter-strokes, fiercely pressed all through the first week of November [1917]. … On 9th December 1917 the 53rd and 60th Divisions joined hands to the south and west of Jerusalem. In co-operation, these two Divisions swept the enemy from Jerusalem’s precincts, and they share the honour and the joy of having been the immediate agents in setting free the Holy City after continuous bondage. In the battles which scattered her armies and drove out of the War the Turkish Empire, the achievements of the young and inexperienced troops – who formed the majority of the 53rd Division – rivalled the exploits of those veterans who had already set an example which won, and will for ever retain, the Empire’s admiration.”[38]

But while Welsh soldiers in the Near East, such as Dewi, reflected in most respects the attitudes and even the forms of speech of their fellow-combatants from other parts of Britain, were there other characteristics specific to Wales that survived four years away from home? On the Western Front the authors Siegfried Sassoon and Robert Graves, both officers in the Royal Welch Fusiliers, noted appreciatively the men’s love of singing. Graves observed that Welsh soldiers sang hymns, often in Welsh, whereas other regiments were more likely to sing popular music hall numbers of the day.

Though they will have sung Welsh hymns at the service Dewi attended, the more open, desert and hill country spaces in which the 53rd Division operated may have been less conducive to communal hymn-singing than the trenches of the Western Front, where death was an ever-present danger and spirituality probably closer to men’s thoughts. The hymns Dewi mentions are Victorian and not popular Welsh favourites – notably Rocked in the Cradle, Here We Suffer Grief and Pain, When He Cometh, and Art Thou Weary – and his references are chiefly intended to raise an ironic point about their experiences out East.

The Welsh love of singing – hymns and airs – could come more easily to the fore once a year, however, on St. David’s Day, his birthday. In 1916 in Egypt he reports that some of his colleagues had been for a ride and had brought back a plant that looked like a leek. In 1918 writing to his sister he tells her he has a lump in his throat from hearing the Divisional Band strike up Men of Harlech.

“Now it’s Deryn Pur, and here she comes, Rhys ap Thomas, I’m nearly blubbering.”[39]

He wishes he had been at home to join them at a concert for St. David’s Day but says their band had given them a treat ‘with a long programme of those beautiful airs, second to none’.

Even if there is little evidence that men in the East routinely sang hymns, music was still important and soldiers in the Near East probably had more opportunity to create entertainment for themselves than men in France and Belgium. Dewi himself recalls performing songs himself – notably the now largely forgotten but then well-known Tosti’s Farewell – at an American lady’s house in Cairo to which he and some of his fellow-soldiers had been invited. More importantly, the men of his unit formed themselves into the Palestine Pops, a cross-dressing Pierrot troupe, that specialised in musical numbers of the day and in sketches.

“The funny man comes from our company and he is a genuine card. …  As for the pierotte, she looks fine, painted up with rosy cheeks and pencilled eyebrows, and long dark tresses. She brings tears to our eyes (tears of mirth, however) when she sings the poignantly-emotional ballad, ‘If You Were the Only Boy’ etc. with her partner. The appealing way in which she stretches her arms out and presses her hand on her heart in the song is quite the last word in melodrama. She’s got the mezzo soprano falsetto voice absolutely taped off, too. Sometimes it cracks at the critical moment and either goes up or bumps down about two octaves. (In ordinary life this prima donna is a Sapper of R.E.s)”[40]

His favourites, however, were the Welsh Rarebits, a troupe of experienced musicians formed in late summer 1916, pre-dating the official World War Two Entertainments National Services Association (ENSA) by some 23 years. Divisional headquarters during the long trek across the Sinai Desert decided the 53rd should have an official concert party, perhaps recognising the extent of musical ability available and the efforts the men were already making to keep their own morale up.

Wally Bishop, member of a Cardiff musical family serving in the RAMC, was asked by his Commanding Officer in Egypt if he knew any other musicians who could help to form a band. He volunteered a pianist, a violinist, a piccolo player and suggested a choir be formed, too. The eleven founding members met under the shadow of a quince tree at Der el Belah and continued to entertain their fellow-soldiers for the rest of the campaign.[41] The première took place in Sinai’s Wadi Ghuzze, a wide dried-up river bed flanked on either side with steep hills. The 5,000 strong soldier audience sat in terraces, watching a stage lit by acetylene floodlights, their cigarettes pinpointing the darkness.[42]

Dewi explains to his sister:

“The Welsh Rarebits were the only demoiselles we’ve got, barring the charming Buddoo [Bedouin] damsels who are now millionairesses on the 15 tomatoes for 5 piastre touch, and of course it’s only natural that a fellow likes to be deceived and feels like straightening his tie and parting his hair before he goes to a concert. Best thing a fellow can do in the EEF where leave is almost as extinct as a rest, eh?”[43]

Given the ubiquity of the piano in Victorian and Edwardian households, and the absence of many of the forms of entertainment that are now available through mass media, it is perhaps not surprising that Bishop was able to put together a concert party that would prove so entertaining. In a distinctively Welsh touch the war’s end was celebrated with a concert by the 100 strong 53rd Division Welsh Male Voice Choir at a celebratory dinner at the Metropole Hotel in Alexandria in January 1919. The programme offered several great Welsh favourites: The Sailors’ Chorus by the poet, Mynyddog, set to music by Dr Joseph Parry, Myfanwy, Men of Harlech, and Martyrs of the Arena. Supporting acts included vocal, piano and violin solos by serving men.

Dewi, his letters reveal, came from a more Welsh background than many of those with whom he signed up, but was much closer to these fellow Cardiff citizens than to the rural Welsh soldiers from other less populated areas of Wales that he met, especially those belonging to the RWF regiments of the 158th Brigade. His attitudes were those of many young British men brought up on stories of “England’s” imperial mission. Like his fellow-soldiers, he had no problem with Empire, accepting without question the British place at the top of the international order and the superiority of Englishmen, Welshmen and Scotsmen over other races. As one midshipman on being posted to HMS Defence in 1914 observed: “I knew little or nothing about foreign policy beyond the fact that the Mediterranean belonged to us”.[44] Indeed, though conscription was never introduced in Ireland, tens of thousands of young Irishmen joined up with the same dedication to the cause. Many of their brothers too young in 1914 and 1915 to join up made their way, however, into the Republican ranks that took Britain on in 1916.

Dewi remained throughout his service a proud and patriotic Welshman – stressing the importance of this identity in letters to his parents. He was a fully engaged and unquestioning Briton as well, however, in a society that was less complex and more homogeneous than today.  For many men of military age like him, buying into the British view was completely natural, and once enlisted they were not willing to harbour doubts, nor were their parents. Indeed, Dewi reserves some of the few bitter comments he expresses in his letters for those who had not joined up as he did at the first opportunity, and for those with relatively soft jobs in the Army or outside.

Opinions were to change during the war as losses mounted and the impact on families grew. In the post-war world Wales became a centre for peace activities, playing a significant part in the establishment of the League of Nations. Plaid Cymru’s formation in 1925 would also create a platform for national sentiments and aspirations to be expressed in a different and more political form. A war to re-establish the status quo was going to leave behind a different world.

These were developments that would follow in the troubled twenties. It is only from the contemporary war letters, such as Dewi’s, however, that we can learn why young Welshmen enlisted, their views on their homeland and its place in the world, how they felt about service in the different theatres and about their fellow-soldiers and foes. Dewi David through his innocent and cheerful but copious correspondence offers insights into all these questions.

Rhys David

Cardiff.  December 2018

This article first appeared in the Transactions of the Honourable Society of Cymmrodorion, 2019.

Rhys David is a former journalist with the Financial Times where he held senior editorial positions. He is a Council Member of the Honourable Society of Cymmrodorion, an Honorary Fellow of the Institute of Welsh Affairs, a director of Nova Cambria and a Fellow of the RSA.


[1] Demolished in 1920, Jerusalem M.C. Church was one of three Welsh language chapels in Splott, serving a local Welsh-speaking community attracted to the area after 1888 when Merthyr Tydfil’s Dowlais Ironworks (later Guest, Keen & Co.) invested in a new coastal plant in Cardiff docks, the arrival point for the shipments of Spanish iron ore that had begun to replace exhausted local reserves inland. Many of its workers – a significant number of whom had Welsh as their first language – moved to Cardiff to live nearby.

[2] Sanatorium Kaiserin Augusta Viktoria, a guest house built by the architect Robert Leibnitz for Protestant German pilgrims, one of several religious sites constructed by the Germans and others in the Holy Land in the preceding century.

[3] Llewelyn Wyn Griffith and Jonathon Riley. Up to Mametz and Beyond. (Barnsley, Pen & Sword, 2010) passim.

[4] For an account of the war in this theatre, see Stuart Hadaway, Pyramids and Fleshpots, the Egyptian, Senussi and Eastern Mediterranean Campaigns 1914-1916. (Stroud, The History Press, 2014).

[5] John Masefield, Gallipoli (London, William Heinemann 1916). One of the earliest accounts of the horrors of this campaign was written by the Poet Laureate, shortly after the withdrawal of British and Empire forces.

[6] Welsh soldiers were first through the gates of Jerusalem, a source of pride to Welsh families, some of whom like Dewi’s parents saw Allenby’s entry captured on newsreel in local cinemas. Dewi’s father wrote to say they had viewed the footage at the Gaiety Theatre in Cardiff’s City Road but had failed to pick him out.

[7] Robin Barlow, Wales and World War One. (Llandysul, Gomer Press, 2014), chaps. 1 & 2.

[8] Writing in the Welsh-language publication, Beirniad in 1915.

[9] Sir John Morris-Jones: Gwlad fy Nhadau, Rhodd Cymru i’w Byddin [Land of My Fathers’, Wales Gift to its Army]. London, Hodder & Stoughton, 1915).

[10] Lord Ninian Crichton-Stuart, second son of the Marquess of Bute and Liberal M.P. for Cardiff, Cowbridge and Llantrisant, was killed aged 35 on October 2nd, 1915 at the Battle of Loos, provoking an outpouring of feeling in Wales. His statue by William Goscombe John, stands in Gorsedd Gardens, Cathays Park.  Ninian Park, former home of Cardiff City F.C. and Ninian Road are named after him.

[11] Extensive extracts from the letters are included in Rhys David, Tell Mum Not to Worry: A Welsh Soldier’s War in the Near East 1915-1919, (Cardiff, Deffro, 2014). ISBN 9 780993 098208. The letters in full are published in a companion volume Tell Mum Not to Worry: The Letters. (Cardiff, Deffro, 2014). ISBN 9 780993 098215.

[12] Cardiff’s population had grown from 6,342 in 1801 to 26,630 in 1851 but in the last census before the start of the war in 1911 had reached 209,804.

[13] Cardiff’s first “grammar” school, the MSS was founded to bridge the gap identified in learning between the pre-existing school system and the new University College of South Wales and Monmouthshire. Its buildings were destroyed by German bombing in World War Two and it was later rebuilt on another site as Howardian High School (now closed).

[14] In 1913 Dewi achieved the highest marks in the United Kingdom in the civil service examinations for entry into a career in the then Government department.

[15] In the preceding two decades the city named new streets in its Roath suburb after great British triumphs – Waterloo, Blenheim, Marlborough, Kimberley, Ladysmith, Mafeking, Harrismith, Trafalgar, Crecy, among them. Kitchener had already had a school named after him in Canton in the late 19th century. This martial pride continued after World War One with the naming of streets near Roath Park Lake after naval commanders, Cunningham, Jellicoe, and Beatty.

[16] The only Welsh letter Dewi is known to have written was to his Sunday School to thank them for a parcel they had sent. He asked a Bangor man to check his Welsh and was told much to his satisfaction that it was faultless.

[17] Letter. May 28th, 1918.

[18] Letters. April 13th, 1916. “Bob”, slang for shilling in pre-decimal currency.

[19] Letters. September 8th, 1916.

[20] “Betcher” is just one example of Eye Dialect where a conventional or colloquial pronunciation is transferred into written language. It is so called because it is seen on paper as well as heard. “Ses”, “not ‘arf”, “nuff” are other examples.

[21] Letters. May 28th, 1918. North Wales Welsh speakers use ‘rwan’ (abbreviation of yr awr hon”) for English ‘now’, whereas in south Wales ‘yn awr’ is preferred. Fusies are the Royal Welch Fusiliers.

[22] John Rhys Jones was a leading 19th century Congregationalist minister appointed to churches in England as well as Wales. He became known as Kilsby Jones after serving in the village of that name in Northamptonshire.

[23] As a 17-year old volunteer, (claiming at the recruiting office to be 19) Dewi had voted his Army pay to his mother at home but after several months depending solely on Army supplies and what he could buy with Postal Orders from his parents he rescinded this instruction.

[24] Letters. From Egypt, June 23rd, 1916.

[25] Letters. April 13th, 1916.

[26] Ibid.

[27] November 4th, 1916.

[28] Shepheard’s Hotel, established in 1841 by Englishman Samuel Shepheard, became Cairo’s leading hotel until destroyed by fire in 1952. It was the headquarters of the British Army in World War One and a meeting place for Allied officers, politicians and spies in World War Two.

[29] Letter. April 13th, 1916.

[30] Letter. June 8th, 1918.

[31] Many Britons who lived in the city will have patronised Welsh-named businesses that appear in advertisements in programmes: sporting goods retailers Roberts, Hughes, (which also boasted branches in Alexandria and Mansourah, and Davies, Bryan, (slogan, Everything for Kit Renewal) with branches in Cairo, Alexandria, Port Said and Khartoum.

[32] Letter. August 25th, 1917.

[33] Letter. November 4th, 1916.

[34] Dewi’s name for Theobald von Bethmann Hollweg, the German Chancellor.

[35] Letter. September 8th, 1916. At Aberystwyth Lloyd George had been mobbed by an adoring crowd as he got out of his car to attend the annual festival. In October the same year Lloyd George had been in Cardiff to unveil statues – among them Boudicca, Llywelyn, Owain Glyndwr, and Sir Thomas Picton – in the newly-built City Hall, re-establishing in patriotic Welsh minds the connection between Wales and past military glory.

[36] Letter. March 23rd, 1918.

[37] Letter. April 14th, 1918.

[38] C.H. Dudley Ward, History of the 53rd (Welsh) Division. T.F. 1914-1918. (Cardiff, Western Mail 1927).

[39] Letters. February 27th, 1918. (The letter will have been completed after March 1st.)

[40] October 10th, 1917

[41] Bishop describes in his autobiography, how the newly formed party agreed on the need to have a “female” member and bought women’s clothing – stays, shimmy, petticoat, stockings, gaiters, a low-cut dress in gold and black trimmings, and blonde wig. Another item, bloomers, apparently had to be explained to 22-year old Bishop by one of his married colleagues. Waldini, Front Line Theatre. Front Line Theatre, (Cardiff, Private Publication, 1947).

[42] Son of a piccolo player, Bishop (1894-1966) went on to make music his life. Employed as a cinema organist after the war, he lost his job with the advent of the Talkies and spent several years appearing with unemployed musicians as Waldini and his Gypsy band in Cardiff’s Roath Park. During World War Two he was invited by impresario, Jack Hylton, to entertain British and Commonwealth Forces at home and abroad.  After the war the group appeared during the summer months at holiday resorts throughout the UK, most notably Llandudno, and Ilfracombe in Devon. For the last two years of his life he toured with his all-girl band The Fabs, entertaining troops again.

Source: Wikipedia.

[43] June 28th, 1918.

[44]Hadaway, Pyramids and Fleshpots, p32.