Independence on the agenda again - Tomos Livingstone

A good column by Tomos Livingstone in yesterday's Western Mail:

Independence on the agenda again

Aug 9 2008 by Tomos Livingstone, Western Mail

INDEPENDENCE, a taboo subject in the recent past even for those Welsh politicians who supported the idea, has stepped subtly back into the limelight.

Developments in Scotland, where a popular SNP administration rules at Holyrood, and David Cameron’s flirtation with a rights-for-England agenda, mean Wales has to take what used to be called “the National Question” seriously again.

Independence might not command much support among the public – 10-15% depending on which opinion poll you choose – but Plaid Cymru now feels confident enough to launch its Independence Initiative, a group within the party aimed at debating the idea.

Whereas once Plaid toned down talk of independence for fear of scaring away voters, this week we had Helen Mary Jones in full battle cry with a piece for this newspaper setting out the case for going it alone. So it seems a good moment to report briefly on some of my own research into the subject: namely whether the sums can be made to add up.

It’s incredibly difficult to get a definitive answer but there are some interesting pointers as to what a Welsh state’s balance sheet might look like. According to Oxford Economics, Wales raised £17.8bn in taxes (income, national insurance, corporation tax etc) in the financial year 2005-06. That would pay for public spending levels of around £6,000 per head; in fact, in 2005-06 Welsh public spending (by Westminster and WAG) was £7,666 a head.

Aha, I hear you cry: proof that Wales can’t afford independence. But every Government borrows to balance the books, and an independent Welsh administration would be no different. To plug the spending gap, Wales would need to borrow between £1.7bn and £3bn each year, depending on which economist or academic you ask (I’ve tried a few), plus the proportion of UK debt it would presumably inherit by leaving the Union.

Sounds like a lot, but bear in mind Welsh GDP in 2005-06 totalled around £42bn, according to the Office for National Statistics. You could borrow £16bn and still be within Gordon Brown’s golden rules on debt, although whether that would be prudent, still less whether any bank would lend the cash, is another matter entirely.

Plenty of other things need to be taken into account: EU funds would presumably still come to Wales; an independent Wales may decide to vary its tax regime one way or the other, skewing the figures; and try working out where defence spending fits into all this and you’re in for a fruitless afternoon.

None of this is intended to make the definitive case one way or the other. If anyone has a clearer body of work on a theoretical independent Wales, please tell me. I think it might become a pretty useful document in the decade ahead.