Wales to be hit harder

Peter Rowlands on the impact of Brexit on Wales and the challenge for new Labour leader

A recent survey for Wales Online highlighted the various ways in which Wales was likely to suffer from Brexit over and above the effects on the UK generally. These included: exports to the EU from Wales being higher at 61% than those from the UK at 49%; sectors at risk – including aerospace, vehicles and steel with Wales, along with Northern England, the Midlands and Northern Ireland – likely to suffer more than the rest of the UK; the closure of Airbus, which employs 6,500 workers in Flintshire; the threat to lamb exports to the EU being hit by tariffs; the loss of EU funding referred to above.

In the 2016 referendum Wales voted Leave (52.5%), unlike Scotland (38.0%) and Northern Ireland (44.2%), which both voted Remain. The Wales figure is only marginally less than that for England, (53.4%), although a more accurate comparison, in terms of the economy and society, is probably with just the three Northern English regions and the West Midlands (an average of 57.2%).

The disparity in these votes can be mainly explained by the much greater support for independence in Scotland and Northern Ireland than in Wales, based on the necessity for a small country of remaining in the EU. Plaid Cymru takes essentially the same view, which probably explains the lower Leave vote in Wales than in the four English regions noted and the majority Remain vote in the two strongest counties for Plaid Cymru, out of only five Remain counties in Wales.

However, there was a strong Leave vote in the old coal valleys of South Wales, particularly in localities to the East where there was little Plaid Cymru influence. This area is strongly Labour, but also, along with West Wales and Cornwall, had the highest rate of EU aid in the UK. Professor Scully of Cardiff University has researched this in some detail. He found widespread scepticism about the effects of EU aid, with some seen as expenditure on ‘vanity projects’ that did little to revive the local economy. Opposition to immigration was strong, despite there being little evidence of any in this area, and much of the reverse.

Unlike Scotland and Northern Ireland, the Welsh Government was put in a weak position with regard to safeguards against the effects of Brexit, because of the Leave majority vote. This was partly why it came to an agreement on Brexit with Westminster without Scotland in April last year. Under this all powers previously devolved will remain devolved, except for certain powers held temporarily, whereas the original intention was for Westminster to retain powers over farming and fishing.

Funding for Wales is via the so called ‘Barnett Formula’ established in 1978, which many have thought is not fair to Wales, certainly in relation to Scotland; and although a needs-based formula was agreed in 2016, and there have been assurances that Welsh agriculture will not suffer, Barnett remains an inadequate means of funding which both Labour and Plaid Cymru want to see replaced. It provides no certainty about future funding, while replacing EU funding is even less certain.

The Welsh Government have issued a White Paper, ‘Securing Wales’ Future’, which advocates a ‘soft Brexit’ based on possible EFTA membership and continued free movement of labour, and the necessity of replacement funding for the EU funding that will be lost. They have also issued another paper, ‘Preparing Wales for a No Deal Brexit’.

Whatever the final outcome of the Brexit saga, it is fairly evident that for those who accept that its economic effects are likely to be adverse, these are likely to be worse in Wales than in most other parts of the UK. This will be a major challenge for Labour and new left-wing leader Mark Drakeford in the run up to the next Welsh Assembly elections in 2021. The greatest opportunity is that offered to Plaid Cymru and new leader Adam Price, although this depends in part on what happens in Scotland over a new independence referendum there. It will probably have some positive effect for Plaid Cymru, but probably not enough to achieve a majority in government or for independence, but in these volatile political times who knows what may happen.

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