I held a short debate in the Senedd titled, “It’s the economy stupid!”: how can devolution make it work for workers and Wales?

Whilst Wales may not have control over  major macroeconomic levers, there is an opportunity to think differently about what we can do, from procurement and the power of the public purse to approaches such as community wealth building.

You can watch the full speech above or read the transcript below:

“I’m bringing forward this short debate at a time when we know that the economy right across the UK faces many challenges—a perfect storm fanned by the flames of economic austerity, a global pandemic and the ensuing cost-of-living crisis. The facts and the stats certainly speak for themselves, but Wales and workers were feeling the pinch of a toxic combination of slow growth, high inequality and the steady erosion of workplace rights long before the cost-of-living crisis struck. Unfettered capitalism letting the markets manage themselves and the rolling back of workers’ rights is not the vehicle for achieving dignity at work and greater prosperity for our people and places. We need an economic system that empowers people, not exploits them. We need to use every lever available to us to unlock the economic potential of our communities and our country.

 

The reality is that the major macroeconomic levers are outwith the power of the Welsh Government and this place, and the fiscal truth is that we need greater financial firepower to make and maintain sustainable and substantial investments in our communities. So, I could have used this debate to call for fairer funding for Wales or the devolution of the Crown Estate, which could be a game-changer and begin transformational change. But, as the saying goes, politics is the art of the possible, and I’ll focus today on what we can do with the devolved levers we do have to help make our economy work better for workers and for Wales, from planning to procurement and taking the next steps when it comes to our social partnership approach, training for the jobs not just of today but tomorrow, teaching not just new skills but providing the opportunity to reskill throughout your working life, and for experience to be better passed on from one generation to the next with the potential for a phased path to retirement, alongside supporting the workers of the future. Technological change is transforming workplaces, and those with the fewest skills are most at risk from things like artificial intelligence. So, we need to work with the trade unions to ensure that both the green and technological transitions happen with the workforce not to them. After all, there can be no environmental justice without economic and social justice too.

 

Whilst recognising the need for protections and processes within the planning system, there must be more that we can do to better use planning to enable economic development that has social, economic and environmental value. Whether that is a streamlined system for projects that fulfil certain criteria or strengthen expectations and accountability around social value and community benefits, we need a greater return on private investment in places and for the people that live in them. And what else can we do with the tax-raising powers we do have in Wales? Some non-domestic rates to newer possibilities, can they better offer a means to incentivise and drive local economies?

 

It is understandable to want to attract inward investment to Wales, but it’s best done in a way that is anchored in our communities. Too many times we have witnessed major names coming here in receipt of public money, only to up sticks, sometimes within the decade. And whilst we naturally want to create as many decent jobs as possible, it must be about the quality of those jobs, not simply the quantity. Public money should not go to companies who do not align their own principles with the Welsh Government’s position on fair work. The economic contract has evolved, but in my view, it could and should go much further. Any organisation receiving public funds should, as a minimum, be committed to paying at least the real living wage, offer all of their workers contracted hours should they want them, and allow access to trade unions and promote trade union membership.

 

Dirprwy Lywydd, there is much I could cover on this topic this afternoon, but as this is a short debate, I’m going to focus the remainder of my contribution on the role of public procurement, because I know the economy Secretary is a big fan of procurement, like myself, and also on the power of the public sector to effect broad economic change and the potential of a community wealth-building approach to economic development and regeneration in Wales.

 

The Social Partnership and Public Procurement (Wales) Act 2023 was the first piece of primary legislation on procurement in Wales, and I should probably declare an interest at this point, as the Member who took through that legislation. But when the procurement part of that law is enacted, it will mean that public bodies will be required to carry out socially responsible procurement, putting environmental, social, economic and cultural well-being at the heart of Wales’s annual procurement spend. That presents a huge shift from how procurement has been traditionally viewed, through the lens of bureaucracy and the financial bottom-line, to procurement as a means to achieve shared prosperity. Public sector-led procurement has the opportunity to shape and influence so many of the activities that our public services deliver, and ensure that public spending reaps maximum local, economic, social and environmental benefit.

 

We know that public finances are under severe pressure, but arguably, in times of economic challenge and fiscal restraint, the power of procurement becomes even more important. We need to make sure that every pound spent on public service provision and procuring goods and services reaps maximum value and benefit. The public sector is central, not just as simply providing the services that we all depend upon, but as a key economic driver. It’s where we get the most leverage around fair work and delivering provision in a way that brings broader benefits. Welsh Government’s programme for government commits to exploring where services and contracts can sustainably and affordably be brought back into a strengthened public sector.

 

We need a clear trajectory or time frame for how this aspiration could be achieved, to reach a point in Wales where the public sector is the primary provider of public services. That is as it should be, and actually, it’s not ideological, it is moral, but it’s also economic common sense. Again, the social partnership and public procurement Act sets out actions that contracting authorities must take in relation to the outsourcing of services, and there is a new provision around a public workforce clause. But I firmly believe that we need a significant shift to insourcing, and by working in partnership with employers and trade unions, a sensible starting point would be a collective agreement to no further outsourcing, because the reality of outsourcing is that it will nearly always be about profit, not about people. And paying and treating people better is positive for productivity, good for growth, and enables investment in our town and community centres, by providing economic security, stability and improved spending power in those often smaller independent businesses that are the linchpin of local life.

 

The health of public services is intrinsically linked to the wealth of our nation. A strong public sector and the role, for example, that health institutions play as local employers mean that they have potential as engines of economic growth. If we keep on walking the same economic path, we will keep on ending up at the same destination. Traditional economic development practice and developer-led regeneration are failing to address the economic, social and environmental challenges of our age. Community wealth building is an emerging people-centred approach to local economic development that redirects wealth back into the local economy, and places control and benefits into the hands of local people. It can focus on fair employment and just labour markets, making financial power work for local places, plural ownership of the economy, socially productive use of land and property, and progressive procurement of goods and services.

 

Community wealth building often has so-called anchor institutions at its core, organisations that have an important presence and a place, usually through a combination of being large employers, the largest purchasers of goods and services in the area, controlling large areas of land and having relatively fixed assets. Examples include things like local authorities, health boards, universities, trade unions, large local businesses and, perhaps, the combined activities of the community and voluntary sector and housing associations. They can create anchor networks to maximise the power of the public purse and growth that is equitable. Many of the structures we have already legislated for here in Wales could potentially offer a means to facilitate a new approach to regional and local economic development and the regeneration of our towns and community centres, building on our Transforming Towns and ‘town centre first’ approach, but creating meaningful mechanisms and networks of people who truly shape the places they live and work in.

 

These anchor institutions could be the major cultural assets that we are rightly proud of here in Wales, and I need look no further than on my own doorstep in Delyn for the prime example of Theatr Clwyd. The theatre is currently undertaking a £50 million redevelopment, thanks in no small part to our Welsh Government. In 2016, their turnover was £4.6 million and they employed 60 company members with an economic impact in north-east Wales calculated at £7.2 million. Current turnover is £7.6 million, with 153 company members, and by the time the development is completed next year, they will have close to 250 core employees, with the economic impact likely to grow to over £20 million a year in north-east Wales. They have also taken over county music services, the only producing house in the UK to deliver music education, and put the local supply chain as a top priority. In addition, the development in Mold also intends to become carbon neutral with air-source heating, solar panels and rainwater harvesting being installed.

 

I spoke at a conference on community wealth building a few years ago in Preston, and what struck me then was how many of the principles of this approach align with the Welsh approach of partnership, recognising that collective working is not only more effective, but means that more of us have a say and a stake in the matters that impact us and, importantly, on seeking successful and sustainable solutions for change. It’s time to take that next step and put those principles not just into practice, but bring about practical outcomes.

 

Dirprwy Lywydd, I want to end today where I began, and that is with the trade union movement. I declare an interest as a very proud trade union member. In fact, I often say that I was made in the trade union movement. Trade unions are a force for good for workplaces and for Wales as a whole. Whilst we have legislated in Wales for social partnership, I’m sure you’ll agree that that has to be the starting point, not the finish line. We can go beyond the letter of the law, involving worker voice in shaping broader policy, improving public services and boosting businesses and local economies. The UK Government’s new deal for workers implemented in full will not only be the biggest proactive change in a generation when it comes to employment rights, it will provide a renewed and strengthened platform for our social partnership approach in Wales.

 

But it’s also not how we approach economic investment and development that needs to change; I think the way we talk about the economy does too. We often hear talk about growth, but growth for who? And when we talk about the economy, we need to talk more about work. After all, work is the foundation of our economy, our communities and our country. So, despite the challenging context, there still remains a real opportunity to work together so that devolution really makes the economy work for workers and Wales. Diolch.”