WALES OB1 - GDP 2003
Most of Wales now the poorest area in UKMay 19 2006




Martin Shipton, Western Mail


THE majority of Wales is now officially the poorest region of the UK, according to statistics released yesterday by the European Union.

West Wales and the Valleys - the Objective One area covering the whole of Wales except Cardiff, Vale of Glamorgan, Newport, Monmouthshire, Powys, Flintshire and Wrexham - dropped below Cornwall for the first time in the latest regional Gross Domestic Product (GDP) figures, which relate to 2003.

The region, which has qualified for a second seven-year period of top-level European aid, is also poorer than the former East European Communist country of Slovenia and Cyprus, another recent EU entrant.

West Wales and the Valleys' GDP per head is 65.2% of the UK average and 75.8% of the EU average, which covers all 25 states including the 10 new members. The other Welsh region - East Wales - had a GDP per head 102.5% of the UK average and 119.1% of the EU average.

Plaid Cymru Leader Ieuan Wyn Jones said, "Labour's economic plan is in a mess. Wales was offered a lifeline through European funding which Labour refused to use properly. These figures are yet another example of the failure of the Labour Assembly Government's economic policy.



"Five hundred jobs have been lost this week alone in Blaenau Gwent and Anglesey - Objective One areas which were already desperate for jobs. New Labour is simply not addressing the problems of wealth disparity in the regions of Wales and is failing dismally to raise prosperity in the Objective One areas.


"Rhodri Morgan's government is content for regions of Wales to be lagging behind the rest of the UK, its operation of Objective One has been a shambles from the start and these figures confirm that their polices are not working."


Welsh Conservative economic development spokesman Alun Cairns said, "These figures clearly demonstrate that under Labour there is a widening wealth gap between Wales, the rest of the UK and the rest of Europe.


"It is hard to believe that with the former eastern Bloc countries having joined the EU, West Wales and the Valleys is still below 75% of average wealth. We always expected that when these countries joined the EU Wales would become one of the more prosperous areas of Europe."


The Assembly Government had a more upbeat interpretation of the figures. A spokesman said, "With GDP per head in West Wales and the Valleys in 2003 now at 75.8% of the EU average, the latest three-year average for WWV is up on the previous three years, reversing the declining trend seen during the 1990s.


"However, it should be noted that the latest Eurostat figures relate to 2003, and therefore do not reflect the continued development of the Welsh economy over the past three years.


" More recent data for West Wales and the Valleys show, for example, that average full-time earnings in 2005 were up 11% compared to 2003, higher than the increase for Wales and the UK as a whole.


"The latest rise in gross disposable household income per head in WWV also outstripped the rise in the rest of Wales and the UK. In addition, figures released this week show that the unemployment rate in Wales continues well below the UK average."


The richest five UK regions (% EU average GDP)


Inner London - 277.6%


Berkshire, Buckinghamshire and Oxfordshire - 165.1%


North Eastern Scotland - 150.3%


Gloucestershire, Wiltshire and North Somerset - 133.5%


Bedfordshire and Hertfordshire - 131.6%


The poorest five UK regions


West Wales and the Valleys - 75.8%


Cornwall - 75.8%


Highlands and Islands - 83.2%


Tees Valley and Durham - 84.0%


Merseyside - 85.3%


For the purposes of these statistics, the UK is split into 36 regions.

Cities - The State we're in - 24 March 2006
Cities - The State we're in
Regeneration & Renewal - 24 March 2006

The State of the English Cities report paints a detailed portrait of our conurbations over the last 15 years. Ben Walker reports.


If Professor Michael Parkinson's snapshot of English city life were a painting, it would be rendered in bold hues by a precise brush on a broad canvas.

The State of the English Cities report took two years to produce, seven authors and nine advisers. The two volumes of statistics and studies on English city life contain 12 chapters, which chart in detail the English urban story. It cost the Office of the Deputy Prime Minister #500,000, and communities minister David Miliband called it "monumental".

Its message is heart-warming: problems persist, but the big cities are no longer the economic pariahs they once were. "Everyone thinks the industrial cities have improved," says Parkinson."But we've shown it."

Demographics

There is a statistic in The State of the English Cities that might look innocuous to the untrained eye. Between 1997 and 2003, 6,000 more people settled in the city of Manchester than left it.

Six thousand souls is a modest influx. But put in context, it represents a turnaround of industrial proportions: the city haemorrhaged 26,600 people in the previous study period, 1991-1997. Manchester is an inner-city authority, and virtually all its suburbs lie outside the city boundary: these incomers were not professionals settling in Manchester's Cheshire suburbs for the quiet life, but people moving to the bustling city proper.

By contrast, four of the five other large cities which were once capitals of metropolitan counties - the 'met cities' of Birmingham, Liverpool, Newcastle and Sheffield - lost population in both study periods. Only Leeds, a vast local authority that, unlike Manchester, includes outlying and semi-rural neighbourhoods, gained people between 1991 and 1997. And even there, a net 1,100 left between 1997 and 2003. Manchester is the only met to have gained population since 1997.

"The rate of population growth in the last four years has been even greater," says Manchester City Council leader Richard Leese. "There's been a number of factors: regeneration projects like Hulme, and our work on the 24-hour city, which means getting people to live in the city, rather than just partying there. We've had people with a lot of entrepreneurial spirit here: Tom Bloxham of Urban Splash is a well-known figure, but there's others too, like property developer Carol Ainscow, who are perhaps less well known. There's been a couple of dozen of edgy and interesting people around who were willing to work with us."

Elsewhere in metropolitan England, the picture is less clear cut - but still encouraging. There was a net influx of 400,000 into London between 1997 and 2003: the city's growth is taken for granted today, but it was dying during the 1980s. "The most impressive feature of population change over the past two decades has been London's upward trajectory from decline to ... accounting for a third of national growth," the report says.

London's boom in the late 1990s did nothing to help stem the population loss in Newcastle and Liverpool, the industrial maritime cities on the edge of England, which found themselves almost out of reach of the capital's recovery. As annual population growth in the capital peaked at nearly 1.2 per cent in 1999, that in Newcastle and Liverpool bottomed out. Newcastle lost 19,600 people between 1997 and 2003; Liverpool lost 17,300. Yet even in these most difficult of territories, there is room for optimism. As London's growth cooled off, the rate of population decline in Liverpool and Newcastle between 2001 and 2003 slowed almost to a halt. In Sheffield and Birmingham, cities also unfamiliar with population growth, the decline was overturned. "All six mets experienced upturn during the end of the second period," the report says. "Compared with the opposite experience of London, this reflects the northward shift of the 'national' economic recovery from the South-East since the 1990s."

Economics

The boom in the capital has been immense and prolonged. Years before Labour came to power and 'Brown's Boom', London was already swinging again.

There was a net influx of 210,000 people between 1991 and 1997, and under Labour the Great Wen got greater still faster - a net 402,800 people arrived between 1997 and 2003. An extended honeymoon for the new Labour government may have set the cultural context for the spirit of renewal, but technical jobs and entrepreneurial vigour provided the necessary economic foundations.

The number of self-employed people in London grew by 14 per cent between 1991 and 2001 - a dramatic contrast to the mets, where growth was less than two per cent. Employment in London grew by 17 per cent between 1991 and 2003, compared with just ten per cent in the mets.

In the high pay, high value world of financial services, the growth was more balanced. Leeds, not London, was the best performing met, with 61.3 per growth in financial jobs between 1991 and 2003.

Financial employment in Reading, in England's increasingly siliconate Thames Valley, grew by 91.1 per cent - faster than anywhere else in the land. Even Liverpool - "so often grouped with Newcastle as the weakest of the mets", says the report - eclipsed its Tyneside sister to increase its financial services sector by 62.9 per cent. Indeed, the sector's growth in Newcastle, at 7.5 per cent, was lower than in distinctly unmetropolitan Portsmouth.

Meanwhile, in London financial services growth was a solid 41.6 per cent, adding to an already world-leading concentration of high-value financial jobs. The loss rate of manufacturing jobs in London was among the fastest in metropolitan England, but a wealth of service-based jobs appeared to replace them. Wages in London, already among the highest in Europe, grew by 33 per cent between 1998 and 2004, and by 2001 London had the highest proportion of graduates in its working age population (nearly 30 per cent) of any conurbation in the study besides the university city of Cambridge.

Meanwhile, London's pre-eminence in high-value creative industries such as design, publishing and fashion, in which ideas rather than goods are the chief export, earned the UK the moniker Cool Britannia. But in reality, the cool was a London thing. Creative industries employment grew by up to 3.6 per cent in the wider London conurbation, but didn't rise above 1.5 per cent in the northern mets - and in some, such as Newcastle, Birmingham and Sheffield, creative jobs were shed.

The report shows a correlation between the number of creative jobs in a city, and the level of productivity. "During the 1980s, London's productivity wasn't as good as some of the industrial cities," says Parkinson, "but it has shot up." Among the reasons for London's outstanding competitiveness, the report lists high skills, its chart-topping rate of business start-ups, and one more factor in which London leads the nation: diversity.

Social cohesion

The journalist Rod Liddle observed in 2002 that it's London versus the rest. "Effete, pretentious, overpaid, and lacking a sense of community are the familiar insults," he says. "On almost every individual issue, Londoners think differently to the rest of the nation: gay rights, immigration, the monarchy, transport, capital punishment, the single European currency, and blood sports."

The statistics from the report seem to support Liddle's observation.

London is one of the most racially cosmopolitan cities in the world, but a lower proportion of its residents admit to being a "very" or "a little" racially prejudiced than in the more homogenous northern mets. In the urban north, more than a third of people concede they are racist to some extent, and a majority feel that racial prejudice will get worse in the next five years. In London, most think it will reduce or remain the same.

Segregation levels in the North have undoubtedly contributed to problems with prejudice, the report says. The segregation index shows how many people would have to move in order for there to be no segregation between white and non-white groups: in Blackburn, Bradford, Burnley and Rochdale, it is more than 65 per cent.

On the whole, segregation is in decline. But the Commission for Racial Equality warns against complacency: "Segregation is not just residential. It's about talking to Britons of different backgrounds and traditions. A mixed neighbourhood doesn't necessarily mean a mixed community."

On other social attitudes too, Londoners are different. Some 45 per cent feel attachment with Europe, compared with 30 per cent in the urban north.

And while Liddle noted that many provincial English feel the capital lacks a sense of community, the report suggests otherwise: Londoners are more likely to trust their fellow human than people from any other part of England. Some 43 per cent told researchers they felt "most people can be trusted", compared with only 35 per cent in the urban north, where levels of trust are at their worst.

Policies

The gap in employment rate between deprived areas and Great Britain as a whole narrowed between 2000 and 2004, partly as a result of more tailored skills schemes and employment initiatives. The New Deal, by which the Government subsidises employers to take on hard-to-employ groups, "has been effective in removing barriers to work", says the report - although it adds that Gordon Brown's tax credits have, despite frustration among the public with their bungled administration, had a greater impact.

Nevertheless, analysis of areas that really felt the chill of economic restructuring, such as the coalfields, show wild variations in the level of economic recovery. There is an important lesson for government in the report: initiatives to draw more people into the jobs market "can only do so much" in areas where the demand for labour is weak.

City governance is seen by Parkinson as key to city revival. Governance at the regional and city regional level has become "increasingly complex" over the last few decades, the report says, and government offices, regional development agencies and regional assemblies often have "different regional perspectives". Only in London, with its mayor, has city-wide governance become a reality.

"Leadership matters, and people admire what has happened in London," he says. "A mayor is not the only way of doing it, but we do need to look at other cities' powers and resources." Parkinson recommends policymaking focused on city-regions, rather than regions or local authorities, and urges more financial devolution for conurbations.

Parkinson is hopeful that some such policies will reach the statute books.

"This is one of the best moments to release (the report)," he says. "Change is more likely now that it was 20 years ago." The State of the English Cities, it seems, might be the seminal urban portrait to spark a new political movement.

- The State of the English Cities is available via www.regen.net/doc.

ESRC DEVOLUTION REVIEW 10 MARCH 2006
An influential think-tank of academics has criticised devolution by claiming it has left Scotland lagging behind England and has put strain on the United Kingdom.
The government-backed Economic and Social Research Council (ESRC) said that after almost seven years the "jury is still out" on whether devolution has boosted the economy.
The group has monitored the constitutional settlement since 2000, led by an Edinburgh University professor. It claims Scottish decision-makers are wedded to traditional policies on key public services compared with their more innovative counterparts in England.
The views will be aired today at a conference in London attended by some of the country's top constitutional experts. Lord Falconer, lord chancellor, will give a keynote speech in which he will defend the decision to create a Scottish Parliament and Welsh Assembly.
However, the conference will hear that although Scots "like self-government", and despite important policy developments such as free long-term care for the elderly, there is "a perverse tendency still to judge the success of devolved policies against targets set by Westminster for England".
The comments are due to come from Professor Charlie Jeffery, director of the ESRC's devolution programme and professor of politics at Edinburgh University. He will argue that economic growth in Scotland post-1999 has been largely fuelled by public sector spending and that private-sector employment and overall economic growth have been weaker in Scotland, and Wales, than parts of England since devolution began.
"It is not yet apparent whe-ther the move towards self-government has, as expected, led to robust economic growth," he will say.
Professor Jeffery will also note: "One of the key findings of the entire (research) project has been that we do not have a capacity to think UK-wide anymore and that signals trouble."
The conference will hear that the absence of disputes be-tween Holyrood and Westminster is "unlikely to persist for long" and that "astonishingly" there have been no meetings of the joint ministerial committee, set up to resolve them, since October 2002, despite a requirement to meet every year.
It will also hear that disputes between centres of power are a "necessary and proper part of the function of a devolved system of government".
On the issue of shared values north and south of the border post-devolution, the conference will be told that there has been "remarkable congruence", except that "Scots are far more attached to comprehensive education and believe that we do not give enough support to unemployed people".
While England has become a "laboratory for policy innovation", Scotland chooses to "stick to more traditional policy agendas in health and education".
According to the professor: "It is England that has diverged on health service indicators like waiting lists and hospital league tables, the introduction of private finance in public service provision and the so-called 'choice agenda' which underlies policy on league tables and diversity of pro-viders in education."
Statistics will be unveiled at the conference that will show one possible result of devolution is to widen economic disparities between the various parts of the UK.
The ESRC is the UK's largest funding agency for research and postgraduate training on social and economic issues.
An influential think-tank of academics has criticised devolution by claiming it has left Scotland lagging behind England and has put strain on the United Kingdom.
The government-backed Economic and Social Research Council (ESRC) said that after almost seven years the "jury is still out" on whether devolution has boosted the economy.
The group has monitored the constitutional settlement since 2000, led by an Edinburgh University professor. It claims Scottish decision-makers are wedded to traditional policies on key public services compared with their more innovative counterparts in England.
The views will be aired today at a conference in London attended by some of the country's top constitutional experts. Lord Falconer, lord chancellor, will give a keynote speech in which he will defend the decision to create a Scottish Parliament and Welsh Assembly.
However, the conference will hear that although Scots "like self-government", and despite important policy developments such as free long-term care for the elderly, there is "a perverse tendency still to judge the success of devolved policies against targets set by Westminster for England".
The comments are due to come from Professor Charlie Jeffery, director of the ESRC's devolution programme and professor of politics at Edinburgh University. He will argue that economic growth in Scotland post-1999 has been largely fuelled by public sector spending and that private-sector employment and overall economic growth have been weaker in Scotland, and Wales, than parts of England since devolution began.
"It is not yet apparent whe-ther the move towards self-government has, as expected, led to robust economic growth," he will say.
Professor Jeffery will also note: "One of the key findings of the entire (research) project has been that we do not have a capacity to think UK-wide anymore and that signals trouble."
The conference will hear that the absence of disputes be-tween Holyrood and Westminster is "unlikely to persist for long" and that "astonishingly" there have been no meetings of the joint ministerial committee, set up to resolve them, since October 2002, despite a requirement to meet every year.
It will also hear that disputes between centres of power are a "necessary and proper part of the function of a devolved system of government".
On the issue of shared values north and south of the border post-devolution, the conference will be told that there has been "remarkable congruence", except that "Scots are far more attached to comprehensive education and believe that we do not give enough support to unemployed people".
While England has become a "laboratory for policy innovation", Scotland chooses to "stick to more traditional policy agendas in health and education".
According to the professor: "It is England that has diverged on health service indicators like waiting lists and hospital league tables, the introduction of private finance in public service provision and the so-called 'choice agenda' which underlies policy on league tables and diversity of pro-viders in education."
Statistics will be unveiled at the conference that will show one possible result of devolution is to widen economic disparities between the various parts of the UK.
The ESRC is the UK's largest funding agency for research and postgraduate training on social and economic issues.

plans for English devolution as a way of helping cities boom
Going for growth

The government wants to revive its plans for English devolution as a way of helping cities boom, says Anna Bawden

Friday February 24, 2006


Anna Bawden: 'The government unlikely to be so courageous as to introduce city regions for every large city.' Photograph: Graham Turner

Voters in the north-east may have rejected an elected assembly in November 2004, but that hasn't stopped moves to revisit the idea of English devolution.
Of course the question of local-regional-national governance structures is not new; proposed reforms in police and health, for example, both envisage a smaller number of larger organisations.

But a flurry of recent reports and an inquiry by a parliamentary committee calls for a major rethink of regional political structures.

Already the Office of the Deputy Prime Minister select committee is examining the whole future of regional government. Phyllis Starkey, who chairs the committee, says the inquiry will examine not only the need for and effectiveness of the plethora of structures for delivering the regional agenda, but also whether the alternative to elected regional assemblies might not be "city regions".

As recent reports by the Institute for Public Policy Research and the universities of Salford and Manchester for the Office of the Deputy Prime Minister show, New Labour thinking seems to be turning towards city regions - a core city and its surrounding urban or rural areas.

The inescapable conclusion from reading both reports is that regional assemblies, regional development agencies, and learning and skills councils have not delivered the economic growth expected of them.

Yet cities are vital to the UK's future economic prospects. City regions seem to be the favoured option to remedy these ills.

Certainly, the local government and communities minister, David Miliband, might have been less inclined to embark on a whirlwind tour of major cities last autumn if he had not felt there was room for improvement.

The business case for city regions

The deputy prime minister's office professes no decisions have been taken, but if city regions were not going to be introduced, why bother asking councils to submit their business cases for the concept?

Where there is less certainty is which lucky cities will get the powers that becoming a city region will convey. Although governance arrangements and responsibilities are far from clear, some kind of transfer of powers seems inevitable, if city regions are not simply to become an additional layer of bureaucracy.

Both reports advocate giving considerable powers to city regions: namely regeneration, housing, planning, skills, business supply links, transport, enterprise and innovation and cultural services.

But without moving to some sort of elected mayor model, as the IPPR advocates, will city regions be any more democratic than current structures?

And unless they are given some sort of statutory footing, it is hard to see they would have the clout to make more of an impact than existing bodies have.

If city regions do get such far reaching powers, with the funding streams to go with it, would there really be the need for so many commissioning regional bodies?

Ultimately, the government is unlikely to be so courageous as to introduce city regions for every large city. The future of the RDAs and the LSCs seems safe for now.

Instead, as with so many Whitehall initiatives, some groups of councils are likely to be awarded "pathfinder" city region status. This is likely to be restricted to Manchester, Leeds and/or Birmingham, at least initially. The government certainly needs to tread carefully: the problem with having too many city regions, pathfinder or other, is what happens to the other cities.

London has additional clout mainly because it is deemed unique and therefore requires particular powers. Too many city regions would undermine that status and create problems of equal treatment. Why should Exeter or Plymouth have fewer powers than Leicester or York, say?

But Mr Miliband should take care that city regions do not go the way of local area agreements, with little active support outside the deputy prime minister's office. Otherwise the economic stimulus they are supposed to provide is likely to be conspicuous by its absence.

? For more analysis of city regions, see the next issue of the Guardian's Public magazine, out on March 1.

ECONOMY & THE REGIONS...
If Dunfermline wasn't a kick in the teeth for the chancellor, it certainly should have been

Putting southern consumers before northern producers has stored up trouble for all

Larry Elliott, economics editor
Monday February 13, 2006
The Guardian


The Lib Dem victory in the Dunfermline and West Fife byelection was a real kick in the teeth for Gordon Brown. The chancellor lives in the constituency, which is next door to his own, and spent a good deal of time pounding the pavement in territory he considered his own fiefdom.
Brown's wounded pride apart, the result would have few implications for the government provided it was, as Labour's spin would have it, just a local protest against a proposed increase in tolls on the Forth Road Bridge. It would be a heck of a lot more worrying if it reflected wider concerns among voters about the state of the economy - as it may.


Article continues

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Ever since 1997, the economy has been Labour's trump card. It has been a period of stability with only small fluctuations in interest rates, inflation, unemployment and growth. There has not been even the whiff of the sort of financial crisis which torpedoed Labour governments in the past. For this, Brown has deserved and received credit.
What has become clear over recent months, however, is that the structure of the economy has been left untouched by this period of tranquillity. Just consider the news from last week. Manufacturing output was no higher at the end of 2005 than it was in the spring of 1997: eight and a half years of Labour has seen the UK's industrial base shrink as a share of the economy to less than 16%. The loss of 700 jobs at a printer manufacturers in the Dunfermline and West Fife constituency was indicative of a trend which has seen employment in industry fall by more than one million since Tony Blair moved into Downing Street.

Wheeling and dealing
The hollowing out of British manufacturing has ramifications, not least in the trade figures. It's hard to credit that governments used to be obsessive about the balance of payments when today there is barely a flicker of concern in the City that the UK's deficit on goods hit ?65bn last year, more than 5% of GDP. Services and financial wheeling and dealing mean that the current account is a lot smaller than that, around 2% of GDP, but the notion that an economy running a trade deficit of that size is in rude good health is, frankly, risible.

A shrivelled manufacturing base also has an impact on Britain's productivity performance. Why? Because it is easier to boost output per person in a car plant than it is in a barber's shop or a dentist's surgery. A haircut or a filling takes the same amount of time as it did 10 or 20 years ago; the output of the public sector (although difficult to measure with any degree of accuracy) has almost certainly not been keeping pace with the resources pumped into it.

What that means is that the UK is a long way from being the knowledge economy of the government's dreams. It has pockets - in London and along the M4 and M11 corridors, but in reality there has been no economy-wide shift of people out of manufacturing and into the high-powered bits of the service sector.

A study last week by the Local Futures Group* found that of the 50 districts in Britain with the highest productivity, only four are outside London, the south-east or the east of England. (One of these, incidentally, is Edinburgh, which may explain the furore over tolls on the Forth Bridge, since many of the highly-skilled professionals who work in the Scottish capital commute from north of the river). The districts at the bottom of the productivity league table tend to be in Scotland, Wales, the south-west and the West Midlands. None is in the south-east, London, or east of England.

Howard Davies, director of the London School of Economics, says that the view of the economy is distorted if seen through the prism of London and he's absolutely right. London is a special case: as a centre for finance, culture and education it is a magnet for those involved in the knowledge economy.

Away from the capital (and, indeed, in pockets within it), the reality of modern Britain is lots of people doing fairly mundane jobs for low-ish wages in the service sector. The LFG report found that more than 75% of those employed in the City of London and 49% of those in Tower Hamlets (the site of the City's outpost of Canary Wharf) work in knowledge-driven sectors. In Merthyr Tydfil and the Wear Valley, both badly affected by de-industrialisation, it is less than 10%.

The surprise is not that voters in seats such as Dunfermline and West Fife have turned on the government, but that it has taken them so long. The parts of Britain devastated by the Conservatives in the 1980s and early 1990s have seen the gap with the rich south-east widen since 1997. There seems little prospect of this changing. In terms of the knowledge economy, success breeds success and that means that the bright young things of Merthyr and the Wear Valley hoof it down to the industrial parks on the outskirts of Oxford and Cambridge rather than stick around at home.

Cheap goods for the rich
Clearly, this is not a new problem. Only briefly in the 19th century has the south played second fiddle to the north, but the problem of regional imbalances is certainly not being helped by macro-economic policy. The strength of sterling has been a feature of Labour's period in office (helping to banish all those fears of another 1967 or 1976) but that has meant cheap imports for the rich consumers of the south and dear exports for the producers of the north.

Politically, the government has been able to live with this. But it would not find life so comfortable should the economy get stuck in a rut of low growth and rising unemployment. There are signs that this may be happening.

In the years since the turn of the millennium, UK growth has been stronger than that in the eurozone for three reasons - immigration boosted the working population, consumers were willing to borrow against the rising value of their homes and the government invested heavily in the public sector. But at least two of those three sources of growth have now been switched off: consumers have tightened their belts in the face of a flattening out of house-price inflation and a squeeze on real incomes, and the government can no longer afford to continue spending at the rate it has been over the past five or six years.

The corporate sector is awash with cash, but is using it to plug holes in pension schemes rather than for investment, and Britain's export performance, by virtue of its weak manufacturing base and an overvalued currency, has been far weaker than that of Germany, Japan and the United States. Since the four sources of growth are consumption, government spending on goods and services, investment and exports, it is hardly surprising that there is some speculation among economists about where the growth is going to come from.

Most likely, it will eventually come from the Bank of England in the form of lower interest rates and/or a weaker currency. Unless the economy does perk up, Brown will have another embarrassment on his hands. In 2003, one of the (many good) reasons he said Britain could not join the euro was that there was no economic convergence. Now there is, but at the eurozone's own low level.

larry.elliott@guardian.co.uk

*State of the Nation 2006; the local futures group; www.localfutures.com

IPPR DEVOLUTION/SPENDING PRESS RELEASE DEC; 2005
England closes spending gap with Scotland and Wales on health and education
08 December 2005

England has increased its expenditure in health and education at a faster rate than the rest of the UK since devolution according to ippr north - the northern office of the Institute for Public Policy Research - and the Economic and Social Research Council (ESRC).

A report published today (Thursday) on the impact of devolution on public policy spending reveals that England has eroded the traditional spending advantage Scotland, Wales and Northern Ireland have enjoyed in health and education. For the first time the study provides detailed analysis on the choices made by Scotland, Wales, Northern Ireland and England and finds key differences in spending priorities.

Devolution in Practice 2006: public policy differences within the UK shows:

Between 1999/00 and 2004/05, spending on education and training has grown by:

• 56% in England - from #695 per head to #1,086 per head
• 47% in Wales - from #755 per head to #1,107 per head
• 43% in Northern Ireland - from #1,004 per head to #1,435 per head
• 38% in Scotland - from #852 per head to #1,179 per head

Between 1999/00 and 2004/05, spending on health has grown by:

• 65% in England - from #818 per head to #1,350 per head
• 57% in Scotland - from #997 per head to #1,563 per head
• 57% in Northern Ireland - from #940 per head to #1,476 per head
• 55% in Wales - from #917 per head to #1,421 per head

The research finds the devolved administrations have chosen to give greater increases in expenditure to areas such as culture and agriculture in comparison to England.

The report argues that any divergence of spending priorities must be careful not to lead to unacceptable differences in standards in key policy areas. Public attitude surveys show that while people support stronger powers for devolved administrations they also strongly favour common standards of public services across the UK.

Katie Schmuecker, ippr north researcher and co-editor of the book said: “Despite assumptions that Scotland and Wales have introduced high spending policies in health and education, like tuition fees or teacher’s salaries, England has seen the greatest growth in spending in these areas. If this exacerbates differences in standards of public services it would pose a big challenge for decision-makers across the UK as the public want to see common standards in key public services”

Professor Charlie Jeffery, ESRC Devolution Programme Director added: “The public have a rather contradictory attitude to devolution. The majority want to see common standards of public services across the UK on the one hand, but on the other they also want further devolution. A logical consequence of more devolution is likely to be variations in service delivery, so there seems to be a contradiction. However our research finds that this desire for common standards is likely to act as a strong force for convergent policies in key areas across the UK.”

For further information contact:

Katie Schmuecker, Researcher ippr north on 0191 211 2581 / 07709 428065 or
John Adams, Research Director ippr north on 0191 211 2645 / 07747 619665 or
Charlie Jeffery, ESRC Devolution Programme Director on 0131 6504266 / 07970 619716

Notes to Editors

1. Graphs and detailed figures, along with a two page brief of the key findings of Devolution in Practice 2006: Public policy differences within the UK are available on request.

2. All figures are in cash terms.

3. Between 1999/00 and 2004/05 expenditure on recreation, culture and religion has increased by

11 per cent in England
31 per cent in Scotland
22 per cent in Northern Ireland
32 per cent in Wales

Between 1999/00 and 2004/05 expenditure on agriculture, fisheries and forestry has increased by

18 per cent in England
30 per cent in Scotland
61 per cent in Northern Ireland
36 per cent in Wales
4. The book covers the following areas:

Public attitudes and institutions - Charlie Jeffery (ESRC Devolution Programme)
Divergent priorities and pressure for convergence - Katie Schmuecker and John Adams (ippr north)
Education - David Raffe (University of Edinburgh)
Early years education and childcare - Daniel Wincott (University of Birmingham)
Health - Scott Greer (University of Michigan)
Social Housing - Robert Smith (University of Cardiff)
Economic Development - John Adams and Peter Robinson (ippr north/ippr)
Child poverty - Liane Lohde

5. Devolution in Practice 2006: Public policy differences within the UK edited by John Adams and Katie Schmuecker free to journalists from ippr north. The publication is the result of a joint project undertaken by ippr north and the ESRC Devolution and Constitutional Change Programme between April 2004 and September 2005. It follows on from a successful venture in 2002 when ippr published Devolution in Practice: Public policy differences within the UK

6. Devolution and Constitutional Change is one of the research programmes funded by the UK's Economic and Social Research Council (ESRC). It is a major #4.7 million investment in social science research set up by the ESRC in 2000 to explore the impact of the devolution dynamic and to feed the research into policy debates. More information on the activities of the ESRC Devolution Research Programme is available from www.devolution.ac.uk

IPPR DEVOLUTION STUDY DEC: 2005
Editors accuse Assembly Government of lacking openness Dec 8 2005

Martin Shipton, Western Mail


THE editors of the IPPR book criticise the Assembly Government for a lack of openness in failing to release full details of its spending.

John Adams and Katie Schmuecker say that while the Cardiff Bay administration publishes detailed spending plans for the coming years, it does not publish "outturn figures consistently and across all departments".

They add, "This is both surprising and disappointing, as a key argument in favour of devolution has been an open and more accountable form of politics. There is also a question here for central government, as most federal governments in most federal countries would produce consistent data across all regions and territories within the nation state, as reliable and comparable data is vital for evidence based policy making."

Figures used in the book were taken from UK-wide statistical tables published by Whitehall.

Ms Schmuecker told the Western Mail, "In some areas, like transport for example, spending is split between the Assembly Government and Whitehall. In such cases, definitive spending figures are much more difficult to pin down. This is a matter that should be given urgent attention, so future comparisons between the four countries can be made on a like-for-like basis."




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Responding to the IPPR's criticism, an Assembly Government spokesman said, "Our budget has been published in full and consulted on widely in draft form, which of course is not the case in all other parts of the UK."


Last year, at the time of Gordon Brown's Spending Review, the Treasury produced a table indicating the proportion of spending in different policy areas carried out by Whitehall departments and by the devolved administrations.


In the case of Wales, there were only two policy areas where the Assembly had been responsible for 100% of spending - local government and forestry.


In other Whitehall departmental areas, the proportions spent by the Assembly were education and skills 93.5%, health 99.5%, culture, media and sport 89.1%, environment and rural affairs 80.4%, transport 63.8%, trade and industry 18.6%, Home Office 1.5%, work and pensions 6.4%, legal departments 0%, chancellor's departments 0.9% and the Cabinet Office 2%.


The Scottish Parliament and Northern Ireland Assembly, when sitting, in most cases have significantly more spending powers than the Welsh Assembly. They also, of course, have primary lawmaking powers in their devolved areas.


The authors state, "This devolution of powers is not accompanied by agreed principles of service, minimum standards of provision or floor targets. So, while it may seem unlikely, there would be little in theory that could prevent the Scottish Parliament from abolishing the NHS and the principle of treatment free at the point of care and moving to a different health system should it so wish

WELSH ASSEMBLY GOVERNMENT BILL DEC 2005
FULL HTTP TEXT : AT : "http://www.publications.parliament.uk/pa/cm200506/cmbills/100/06100.i-v.html" Revised Powers, Timescale, Potentail Referendum etc.

EIS OCT 2005 - REGIONAL POLICY & THE EURO
Out in the cold - Regional risk for euro sceptics
With right wing politicians in Italy calling for the return of the lira, the euro is moving back up the EU’s political agenda. Given that the ten new EU Member States are on course to switch over to the single currency in the next five years, attention is now beginning to focus back on the three EU Member States – Denmark, Sweden and the UK – that are not part of the eurozone and appear to have little intention of joining in the near future.

In Britain, although the Government officially remains in favour of the single currency in principle, it resisted adopting the single currency, not least because, since 1997, it has made euro entry conditional on fulfilling its infamous five economic tests. And even then, it would require public approval in a referendum, which would be by no means guaranteed. The prospect of Chancellor Gordon Brown succeeding Tony Blair as Prime Minister has further diminished the likelihood of Britain joining the euro at any time soon.

This can perhaps be put down to what we call the ‘politics of asymmetry’, whereby debates on the euro in the three countries that have kept their own currencies are shaped by perceived political and economic differences between the priorities of the countries that have adopted the single currency and those that haven’t.

British policy makers, for example, are especially aware of an asymmetry of goals. They recognise that there is an imbalance between the detailed economic aims underpinning the single currency and the vague goals related to further European political integration. They know that the latter raise public fears that adopting the euro will lead ultimately to a federal superstate.

Politicians in the UK also perceive there to be an asymmetry of integration, with differences between the core eurozone countries and those on the EU’s periphery, such as the UK. There is a British unease over certain eurozone members who, led by France and Germany, want a strengthened framework that goes beyond just monetary policy to encompass broader fiscal areas. This would conflict with Tony Blair’s so called ‘red lines’ in policy areas such as taxation and social security matters.

The Government also detects a certain asymmetry of polity, even among the ‘euro outsiders’, with Denmark and Sweden, for instance, perceiving euro entry as undermining their generous welfare states, and the (more) neo-liberal economies, such as the UK, regarding too many common – and more generous – EU standards as intrusions into the exclusive policy domains of national governments.

Democratic asymmetry has seen discussion among Ministers – and in the mostly euro hostile press – focus on the differences between the existing British system, which has an independent Bank of England but still allows a larger place for elected politicians, and the EMU system, which has a more independent European Central Bank (ECB).

But where does this leave the UK? Interestingly, the picture is not quite as one might expect. However, staying outside the euro could have a serious impact on regional development and exacerbate existing regional disparities.

Foreign direct investment (FDI) into the eurozone has risen since the start of EMU, at the UK’s expense. Having gained the lion’s share of FDI to Europe for years, Britain now receives proportionately less recently than other EU countries, even though it is still the main recipient overall. But if the UK’s 90% decline since 2000 gives an indication of what is to come, then there really is some cause for concern. From a high of ?80 billion in 2000, the amount of FDI has fallen dramatically to ?35 billion in 2001, to ?18 billion in 2002, to ?8 billion in 2003.
On top of that, the single currency may cause production to be increasingly concentrated in certain regions. A polarising effect on regions within the eurozone will inevitably impact on UK regions too. If Europe, accelerated by the eurozone, continues to evolve into more specialised regions, economic cycles and developments could become more divergent across the EU, creating challenges for regional policies. Increased specialisation is especially likely at regional rather than national level, as the centralisation of capital and labour in only a few areas enhances regional labour mobility and possibly leads to greater polarisation across regions. Given declining FDI, the euro outsiders seem particularly vulnerable and may be forced to find fresh national solutions to their problems of regional inequality.

Such problems of diversity across regions are well known in the UK, which has long suffered from a north-south divide, and there is strong evidence that the EMU system exacerbates this phenomenon, even among the countries outside the eurozone. Increased FDI in the eurozone may help euro-insiders to offset this problem, but for euro-outsiders like Britain, already experiencing a significant decline in FDI, this will have to be tackled primarily from existing domestic budgets. This will have serious implications for regional development within the UK.

The British fear a loss of influence in terms of EMU policy developments, and, thus, it is often this perception, rather than reality, that motivates the Government’s behaviour. The UK has sought a leadership role at the EU level by championing certain policy issues.

The Lisbon growth and jobs strategy may prove a key litmus test of the euro outsiders’ residual policy influence in the EU. Not only does it resonate in contemporary British politics, but it also relies on peer pressure and on countries learning from each other to achieve its objectives. This ties in with a British wish to avoid constitutional changes to domestic fiscal policy decision making. Moreover, the Government believes it can lead by example.

Staying outside the eurozone has proved a mixed experience. In the short term, as one of the strongest EU economies, the UK has benefited. But it is uncertain what any future, though currently unlikely, eurozone boom would imply. In any case, the British political and economic elites have, so far, been mostly successful in managing any diplomatic implications of being outside the single currency. They have equally worked hard in shaping reforms to monetary policy rules, and to impact on policy areas beyond the eurozone, such as the Lisbon strategy.

Although the longer term effects of being outside the eurozone are more difficult to judge, initial research on the loss of FDI and regional polarisation is worrying. Something at least that local government should be aware of when considering its institutional relations with the European Union as well as with British central government.

WELSH ECONOMY - NO TARGETS?
Ministers 'will say goodbye to economic targets for Wales' Sep 23 2005

The Assembly Government is preparing to scrap its economic targets in a new strategy document to be published shortly, it has been claimed.

The new document will be called Wave - an acronym for Wales A Vibrant Economy - and will supersede earlier incarnations called Better Wales and A Winning Wales.

Welsh Conservative economic development spokesman Alun Cairns said, 'I've been told they don't want to have any targets in this new report. I don't know whether its title is a target or an aspiration - it certainly isn't reality.

'Most of the targets in the earlier documents are due to be met by 2010. We're getting pretty close to that - in a few months time it will only be four years to go.

'In the early days of the Assembly there was a target of achieving 90% of the UK's GDP by 2010, although later on they tried to downgrade that target to an aspiration. Now, no doubt, the intention is to airbrush it out of history entirely.

'Even though they have tried to argue the 90% figure was never a target, the reality is that is exactly how Rhodri Morgan described it in the Assembly in 2001.

'Getting rid of targets will be an admission of failure. It is absurd to suggest in this new document that Wales is a vibrant economy when two thirds of the country is so badly off that according to the most recent statistics it would qualify for the highest level of EU aid.

'There are three main reasons why the business community has been critical of past economic strategies produced by the Assembly Government - the targets are unrealistic, there is a lack of strategy to achieve the targets, and a lack of resources to achieve the targets.

'I have been reliably informed that the new document, for all its spin, will actually be pretty bland, with little information about the specifics of where the Welsh economy will be in comparison with the rest of the UK and Europe.'

Mr Cairns claimed the Assembly Government had been deeply embarrassed by figures released earlier this year which showed how the relative GDP of the Objective One area of West Wales and the Valleys had actually dipped since the programme began in 2000. To qualify for the highest level of European aid, regions must have a GDP rating less than 75% of the EU average.

When the Welsh region was given Objective One status in the late 1990s, it qualified because it was below the 75% threshold when measured against the 15 EU member states at that time. Figures released earlier this year put the GDP of West Wales and the Valleys at less than 75% of the average across the enlarged EU of 25 member states, including the 10 mostly eastern European new entrants.

Some of the targets in A Winning Wales were on course to be met. In terms of increasing net employment in Wales, the target was for it to go up by 175,000 jobs between 2001 and 2010. An Assembly update last January said that by August 2004 the jobs figure had gone up by 84,000.

In the finance and business services sector, the target was to raise the number employed by 20,000. In August 2004 there had already been an increase of 19,000.

Other targets looked less likely to be met. It was hoped to raise the number of VAT-registered businesses as a proportion of population to the UK average by 2010. But by 2004 the Welsh figure had declined from 93% of the UK average to 91%.

Hopes that tourism spending in Wales would rise by 6% a year also proved to be over-ambitious, with the average increase to 2003 being 3.2%.

An Assembly Government spokesman would only say, 'It is more effective to actually read something first before commenting.'