The Welsh Labour governments could have rallied a whole nation behind the Welsh working class in struggle against austerity but instead, over 22 years of devolved government, have implemented essentially just a different variant of neo-liberal policies. DAVE REID reviews a new book revealing the truth about ‘the Welsh Way’.
The Welsh Way: Essays on Neoliberalism and Devolution
Edited by Daniel Evans, Kieron Smith and Huw Williams
Published by Parthian Books, 2021, £10
Ever since the first devolved Welsh assembly in 1999 the idea has been promoted by many on the left that Welsh Labour, and the Welsh governments led by it, were in some way different and more left wing than the UK Labour Party and UK Labour government.
This idea was most clearly expressed in 2002 by first minister Rhodri Morgan who declared that there was “clear red water” separating Welsh Labour from Blairite UK Labour – that Welsh Labour was pursuing more socialistic polices than the Blairites. He claimed he was implementing “21st century socialism – a Welsh recipe”. The ‘Welsh Way’.
Many times trade union leaders and the UK Labour left have pointed to the Welsh Labour governments as an example of ‘another way’ for a Labour government to operate. Even Jeremy Corbyn regularly extolled the achievements of the Welsh Labour government under the current first minister Mark Drakeford, deepening the illusion that in some way Wales was not as afflicted with austerity and privatisation as England. John McDonnell said of the recent co-operation agreement agreed between Welsh Labour and Plaid Cymru: “Labour’s Mark Drakeford secures a radical programme for Wales that contains many of the policies set out in Labour’s 2019 election Manifesto, charting clear red water between Welsh Labour and the Tories”.
The Welsh Way, a collection of essays on the operation of neo-liberalism in Wales, is a welcome antidote to all these illusions, what it calls “a dose of the truth”. It is full of material documenting how Welsh Labour, whatever its intentions, has succumbed to the pressures of neo-liberalism. It provides trade union and community activists with a very useful handbook of the pro-capitalist policies pursued by Welsh Labour governments in many areas of public policy: from housing to education to agriculture.
Neo-liberalism refers to the ideology that has dominated global society for the last 40 years, ‘liberalising’ all markets including the labour market, and suppressing obstacles to the freedom of capital to exploit profitable opportunities, including pushing back trade union organisation and state ownership. World markets have been opened up through the World Trade Organisation (WTO) to promote a race to the bottom in workers’ wages and conditions. In public services this has been manifested under Tory and Labour governments by privatisation, outsourcing and cuts to services and the wages of workers who provide these services. On a global basis it has resulted in the biggest ever shift of income and wealth from the working class to the capitalists and a huge growth in inequality.
From the outset of devolution in 1999 the majority of the Welsh Labour leadership has claimed to be ploughing its own furrow, implicitly against neo-liberalism. Blairite Alun Michael, who had been parachuted into the first minister’s office by Tony Blair, was ousted within a matter of weeks and replaced with very Welsh Labour Rhodri Morgan. The Morgan governments, it is true, did initially follow a more social democratic agenda than Blair, reducing the use of private finance initiatives (PFI), and not implementing independent, business-orientated foundation hospitals and academy schools. It had the advantage of relatively bigger budgets to introduce some limited reforms before greater austerity hit in 2010.
But, as Socialist Party Wales consistently argued, these reforms were marginal – the fundamental direction of travel was no different to the UK as a whole towards privatisation and cuts in public services. We argued that the ‘clear red water’ was very murky indeed and that Welsh Labour was more akin to a small boat occasionally steering towards the left but being pulled by the big ship more and more towards pro-capitalist polices.
The limited reforms introduced were mainly under the pressure of the working class in Wales who had at hand a lever to use in the form of Plaid Cymru, who hold essentially the same political position on social policy as Welsh Labour but were competing with them for the votes of the Welsh working class and occasionally articulated the opposition of working people to cuts and privatisation. (In practice of course when Plaid Cymru gained power in local government and in the 2007-2011 One Wales coalition government under Morgan and then Carwyn Jones it pursued virtually the same policies as Welsh Labour). Temporary split-offs from Welsh Labour like Blaenau Gwent People’s Voice and Forward Wales/Cymru Ymlaen also provided outlets for Welsh workers to vote against cuts and privatisation and acted in a small way to restrain some neo-liberal policies.
But as the articles in The Welsh Way demonstrate, despite making a big show of distinction from Blairism, Welsh Labour’s policies were essentially following the same path. The proof of the pudding is in the eating: have Welsh Labour governments protected the Welsh working class from the worst effects of neo-liberalism?
The neo-liberal agenda
Clearly not. After 22 years of devolved governments just a few of the statistics described in the book condemn Welsh Labour out of hand. One quarter of the population lives in poverty – one third of children; 30,000 households apply for homelessness assistance; the highest prison incarceration rate in western Europe; 12,000 fewer social housing homes than at the start of devolution; a loss of 28,000 local authority jobs between 2009-2018; 193 youth centres closed; one sixth of libraries shut.
Of course after a decade of austerity and neo-liberal policies inflicted on the whole of the UK by Tory governments, and the Tory-Liberal Democrat coalition, they bear the major share of responsibility for these shameful statistics. But Welsh Labour policies have also contributed to the neo-liberal agenda, and directly to the rise in poverty, and Welsh Labour governments have done nothing to shield Wales from the cuts. The book consists of 25 articles on different areas of Welsh public life and the Welsh Labour governments stand condemned in all of them.
This reviewer has been following the increasingly right-wing policies of Labour governments in Wales for two decades through each of the devolved governments but even so read with growing anger accounts of some of the policies that Welsh Labour has slipped through, usually covered in radical-sounding phraseology like ‘inclusion’ and ‘partnership’. Most activists would not be aware for example that the 2014 Housing Act removed the requirement for local authorities to give automatic priority need status for homeless prison leavers – virtually guaranteeing a huge growth in homeless people living on the streets.
An important feature of neo-liberal policies in public services is the combination of sharp cuts in funding with privatisation and an obsession with targets that distort the provision of services and their ‘rationalisation’. More and more services are outsourced and wages cut in zero-hour contracts across Wales while the Welsh government boasts of progressive policies.
A feature the Welsh Labour governments has been to make a grand radical-sounding proclamation but then deliver an austerity-blighted policy. The book gives the example of health and social care which Mark Drakeford declared was moving away from a market driven model to “progressive universalism” in which service users are seen as partners not consumers, but in practice over-worked social workers have ended up as gatekeepers to diminishing services. In the wider labour movement politicians, academics and journalists repeat the phrases and the proclaimed aspirations of the policy, but not the reality of diminishing services.
As the introduction explains, there were some genuine reforms introduced in the early years of devolution (when an economic upturn allowed higher public spending) especially in education. Standard Assessment Tests (SATS) of school-students and league tables were abolished, academy schools were not introduced, and progressive Foundation phase education for early years was introduced by Jane Davidson, the first education minister.
But even these mild progressive advances were soon undermined by later Blairite neo-liberal policies of testing and competition. Successive education ministers chipped away. The Foundation phase was undermined by mandatory testing, new league tables and a more oppressive inspection regime introduced, as the Welsh government chases teach-to-test PISA international student assessment ratings. The curriculum became more focused on the needs of business. Further education colleges were hived off and ‘incorporated’.
A Welsh housing fail
Housing is also a devolved area and The Welsh Way has some very useful material on housing policy in Wales. Like the rest of the UK, council housing in Wales has been reduced and private tenancies increased rapidly with much higher rents and insecurity. Since devolution the proportion of privately-rented housing has doubled while both social housing and owner occupation has declined. The number of social homes has actually declined by 12,000.
The Welsh privately-rented sector has been subsidised by UK state spending in the form of housing benefits that go straight into the pockets of private landlords and by the Help To Buy scheme. But the Welsh government too has financially assisted the landlords rather than the tenants. In the Covid pandemic the Welsh government’s Tenant Saver Loan Scheme was ostensibly paid to protect tenants who could no longer afford to pay rent during the lockdown, but in reality it was a landlord protection scheme. Rents were paid directly from the government into the bank accounts of the landlords but the tenants will have to pay the interest on the loan while repaying the government.
Just £200 million a year is spent on social housing which has led to the reduction of social homes under Welsh Labour rule. Between 1974 and 1981 on average 4,000 council homes were built every year in Wales. Between 2001 and 2015 less than a thousand social homes were built a year on average. In nine of the last 20 years no social homes at all were built by local authorities in Wales.
And the Welsh government has accelerated the process of transferring council homes to largely unaccountable housing associations who are expanding more and more into private renting. At the outset of devolution nearly all social housing was council housing. But now 65% of social housing is owned by housing associations.
The book describes how in 2002 with much of the council housing stock requiring significant repairs due to years of neglect, the Welsh government encouraged housing stock transfer from councils to housing associations, following the policy of the UK New Labour government under the then housing and local government minister, John Prescott. Half of Welsh local authorities washed their hands of any responsibility for council homes and transferred their stock to housing associations. Repairs were paid increasingly by the housing associations borrowing from private finance companies and passing the cost on to tenants in the form of higher rents. The Welsh government has even formalised annually increasing rents at 1% above the rate of inflation. Social rents have risen in real terms while benefits have been cut. In the last five years social rents have increased by 8% in real terms pushing 40,000 more people into poverty.
As the article explains, “with 49% of social renters living in poverty, this means that in practice the Welsh governments’ pursuit of ‘innovative’ funding models and market solutions have shifted the burden of funding onto some of the poorest people”. In effect existing tenants are paying for a lot of the low level of social home building that there is rather than the Welsh government, while private landlords in effect receive public funding.
And the minimal landlord registration scheme does virtually nothing to protect private tenants. When the big private landlord companies protested the Welsh government retreated from implementing the provisions of its own laws. Many of the provisions of the 2016 Renting Homes Act have still not been enacted.
The housing crisis has had a wide-ranging effect on Welsh society. In the cities young people are caught in a permanent poverty trap as huge amounts of their wages are swallowed up by sky-high rents. And in rural areas young people are forced out of their local areas as houses are bought up as second homes and holiday homes which further undermines Welsh-speaking communities. In 2020 38% of house sales in Gwynedd were for second homes. The Welsh government is taking small steps to try and limit second homes purchases but nothing is being done to provide homes at affordable rents that would allow young people to stay in their communities if they so wish.
NHS: not safe in their hands
One of the gaps in the book is a detailed explanation of the neo-liberal attacks carried out by Welsh Labour on the NHS. Initially the Welsh Labour government moved away from privatisation and PFI funding for NHS facilities. But it implemented very similar policies to the Tories in England in closing hospitals and beds and centralising services. Successive governments made no attempt to fight for more funding but essentially cut the NHS Wales coat to fit the Tory funding cloth – doing the Tories’ dirty work for them in Wales under the cover of radical-sounding phrases like ‘modernisation’.
Welsh Labour’s hospital closure programme resulted in Wales losing 30% of hospital beds and entering the pandemic with the lowest ratio of intensive care beds to population of any country in western Europe. The huge pressure on the NHS in the pandemic is largely down to the massive cuts in hospital provision carried out by Mark Drakeford and Welsh Labour. According to the Royal College of Emergency Medicine Wales 709 patients in Wales, in 2021 alone, died as a direct result of crowding and long stays, and the number of consultants in A&Es are at 50% of the level needed to provide a safe service. The ambulance service is dysfunctional and official advice now in Wales is for heart attack and stroke victims to find their own way to hospital rather than wait for an ambulance.
Increasingly NHS services have been provided privately. The Welsh government has boosted the private sector, paying large amounts to private health hospitals and outsourcing services. And the eschewing of PFI has ended too. Instead Welsh Labour has unveiled Mutual Investment Models (MIMs), which are essentially the same as the discredited PFI. For example, the much-needed new cancer hospital in Cardiff which was originally estimated to cost £180 million to build will now cost £562 million paid to private investment companies over 25 years. Over £300 million will be taken from NHS services to flow into the pockets of private finance and construction conglomerates.
The reality of ‘social partnership’
The book describes how increasingly the Welsh governments turned to neo-liberal or Blairite measures. Under Carwyn Jones, the first minister from 2009 to 2017, Confederation of British Industry (CBI) advisers were brought into the top echelons of the government. Hundreds of millions have been shelled out to companies like Amazon, Kancoat, Virgin Atlantic, Aston Martin and TVR to entice them to set up in Wales. Many like Bosch and Ford found it all too easy to shut up shop and walk away having received millions in subsidies. The Welsh government has just wasted £4 million preparing a site for Ineos, owned by the anti-union billionaire Jim Ratcliffe, to build a plant to manufacture its new Grenadier cars, only for him to walk away and set up the factory in France.
As the book points out, the social partnership laws introduced by the Welsh government do not protect workers. Anti-union blacklisting construction companies still get lucrative building contracts from the Welsh government, despite the government proclaiming its ethical procurement policy. As one of the articles points out, in Wales the “state is subordinate to international capital and unions to the state”.
The social partnership laws have been extolled by some on the left in England. But after experiencing how they are used by the Welsh government when it suits and dropped when they don’t, there is not the same enthusiasm by Welsh workers. During the covid lockdown education unions were attacked by Welsh government ministers and officials for putting up a very mild objection to a rapid return to school and college that put their members’ lives in danger. And then many union leaders were co-opted by the government in arguing for the government return-to-work protocols. No wonder that a third of the Wales TUC Congress last year voted for a motion proposed by Socialist Party members opposing social partnership despite it being extolled to the membership daily by the Welsh trade union leadership.
Public transport
Another weakness of the book is a limited mention of Welsh Labour governments transport policies. They have had considerable powers to roll back privatisation and secure cheap, integrated public transport which would have benefited working people in Wales and taken important steps to reduce carbon emissions.
But Welsh Labour has seemingly been content to allow the railways to remain in private hands. While the Scottish government secured the ability in 2016 to take train operating companies back into public ownership the Welsh government did not even argue for the same legislative powers.
But it was more than happy to use the powers that it does exercise to take the extra step in 2017 of privatising the tracks and stations on local routes in Wales. Mick Cash, the Labour-supporting RMT general secretary at the time, was moved to condemn the Welsh government: “RMT is appalled and angry that a Labour administration in Wales would even consider a proposal that mirrors the failed Public Private Partnership on London Underground which collapsed in total chaos. The plan would also pave the way for smashing up and privatising the publicly owned Network Rail area by area”.
In 2020, as the pandemic lockdown drained the profitability of the Wales and Borders franchise, the new franchisee, Keolis Amey, walked away from it and Transport For Wales was forced to take over the running of the services. But Keolis Amey retained the profitable infrastructure contracts and control of the tracks and stations. The Welsh government had nationalised the losses but allowed its private ‘partner’ to keep the profits. And worse still it intends to hand back the train operations to a private company when this franchise expires.
No legal constraints prevent the Welsh government taking over the private bus companies that have cut services while raising fares and cutting the real wages of their workforces. But despite the opportunity to take these vital services out of the hands of anti-union, rip-off corporations that currently run them they seem determined to let these companies keep control. Why not take back these privatised services into the public ownership of Transport For Wales and use the subsidies these private corporations take to ensure cheap fares and pay decent wages in a national service integrated with rail?
No strategy to fight austerity
Having demonstrated the devastating social effects of Welsh Labour government policies on public services the alternatives proposed in The Welsh Way are however disappointingly timid. In the chapter on housing for example, Steffan Evans calls for housing benefit to be re-directed to spending on social housing, abolition of Help To Buy, for the raising of the Land Transaction Tax (Stamp Duty in England), and taxing second homes including landlords’ property. Why not call for rent control, secure private tenancies, councils requisitioning empty homes, and a crash council house building programme? Why only build council houses by using housing benefit funds and not fighting for the return of government housing funding? Lower rents through rent control would be a necessary precondition. And rather than returning to the old top-down model of council house provision a democratisation of council housing is needed that would allow the democratic control of public housing by tenants and housing workers.
Not calling for an ambitious programme of house building highlights another weakness of the articles because none of the authors offer a strategy to fight austerity imposed on Wales by Tory Westminster governments. The application of Tory cuts on public services by Welsh governments is the primary mechanism to impose neo-liberal policies on Wales. So it is essential to explain how a Welsh government could defy austerity but nowhere in the book is this done.
Socialist Party Wales has called on the Welsh government to follow the Liverpool road of the 1980s – to propose no-cuts budgets and reforms that defy Westminster cuts to funding and to mobilise the working class in Wales to fight for what is necessary. The Marxist leadership of Liverpool council was able to rally the city to win important concessions from the ‘Iron Lady’ Margaret Thatcher. How much more powerful would be a movement organised by a Welsh government rallying a whole nation behind the Welsh working class, and appealing for support from the working class of England and Scotland?
But these conclusions are not drawn out in the book, which generally restricts itself to criticising Welsh Labour and provides few alternatives. Jacinda Ardern, the New Zealand Labour prime minister, is held up by Huw Williams as an example of the “bold, steadfast and principled beliefs” needed. But Ardern has pursued austerity and neo-liberal polices herself in New Zealand and formed a coalition government with the right-wing New Zealand First party.
Huw Williams also seizes on the Preston model, claiming that the Labour politicians leading Preston council have “changed politics fundamentally at a local level”. The Preston model, like the Welsh Way, have been seized on as an easy way to resist austerity and neo-liberalism. But, as has been argued in previous articles in Socialism Today (see The Preston Model: Behind the Red Gloss, in issue No.252, October 2021), Preston does not offer a new easy road for working people to avoid austerity and cuts to local services, because Preston council has never attempted to confront the fundamental question of cuts in funding to local services. Instead it has concentrated on using its procurement powers to encourage local businesses and community initiatives which, however commendable, do not “change politics fundamentally” at any level.
For a socialist Welsh government
It is a weakness of many articles in the book just to attack neo-liberalism, implying that there is a softer, more humane capitalist policy. Neo-liberalism is the ideology used by capitalist politicians in the modern era to roll back past reforms won by the working class. The policies pursued by Thatcher, the US president Ronald Reagan, and other capitalist world leaders, attacked head on trade unions and the social gains of the working class to restore profitability to big business. It arose out of a profound crisis that had developed in world capitalism that could only be resolved for the capitalists by attacking the working class. To oppose neo-liberal policies means to challenge head on the capitalist class in Britain and globally.
The idea that it would be possible to oppose neo-liberalism and austerity merely by more progressive policies within the confines of capitalism is naïve. Had Welsh Labour really pursued progressive universalism and, as Drakeford claims, “create a more equal Wales”, then it would have brought it immediately into conflict with UK governments (both New Labour and Tory), the money markets and the City. A programme of reforms would have to be linked to mobilising the working class in Wales and appealing for support from the English, Scottish and the international working class.
The refusal of Welsh Labour to defy austerity and neo-liberalism is rarely explained. In the introduction the editors put it down to Welsh Labour’s support for the union and antipathy to nationalism. They write “the Labour-led Welsh government refuses to push for the levers it needs, content instead to exist in a purgatory of helplessness… yet the party is unwilling to agitate for more powers as this would be ‘nationalistic’.”
But it is not the perception of ‘being nationalistic’ that stays Welsh Labour’s hand from fighting for more powers and resources. In fact Drakeford has used the fear of separatism to try and frighten a few pennies back from the UK government in the Levelling Up Fund which has cut over £300 million from Wales compared to EU funding. What holds them back is fundamentally an acceptance of the capitalist status quo and even of austerity. Welsh Labour leaders too have succumbed to the pro-capitalist ideology of New Labour and while they occasionally complain mildly about Westminster austerity fundamentally they accept the idea that this all that capitalism can afford.
Devolution has been of some benefit to the working class in Wales. It has allowed the struggle of working people in Wales to defend services to put more direct pressure on government. For example in 2020 the Welsh government was forced to step back from its 2014 plan to close the A&E at Royal Glamorgan hospital in Rhondda Cynon Taff by a big campaign in the area. It is unlikely that the same intense pressure could have been brought to bear on a more remote Westminster government.
But successful defensive struggles are just that – defensive. For working people in Wales to go on the offensive to regain what we have lost a political vehicle is needed. We need to create a new mass party for working people. With the heavier social weight of the working class in Wales it would be entirely possible for that party to win an absolute majority in the Senedd, even with the elements of proportional representation, and to form a government committed to fight for the resources needed to defend and grow public services.
Such a socialist government would demand the return of billions looted from our society by successive UK governments and the super-rich, but also begin the process of transforming society and reaching out for support from the working class in England and Scotland to inspire those polices in the rest of the UK and Europe.