Wales' 'Dirty Little Secret' - the Lack of an Economic Devolution Dividend; Chartered Surveyor Robert Chapman Offers a Personal Reflection on Wales' Economic Performance and the Elusive 'Devolution Dividend'

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RECENTLY, in commenting on the relative economic performance of UK countries since devolution, Professor John McLaren of Glasgow University, who led the Centre for Public Policy Research report, concluded that while Scotland's economic performance was moving closer to the UK as a whole, Northern Ireland and Wales continued to lag behind, with evidence that Wales had fallen back relative to the UK.

So how is Wales performing against the economic dividend? Professor Kevin Morgan of Cardiff University is unequivocal about the outcome of devolution so far, stating that "it is time to recognise devolution's dirty little secret - there is no necessary economic dividend to political devolution". While acknowledging that Westminster still holds the main economic levers and that everyone is subject to global events, he pointedly remarks that people in Wales were entitled to have expected more from the devolved government.

I agree. Let's reflect on Morgan's view by considering a number of themes before arriving at a conclusion. Creating a positive business environment: If the Institute of Welsh Affair's first National Economy Conference in February 2010 was used as a proxy for the answer to whether an economic dividend had been delivered in the first decade of devolution, then the answer would be a loud "no".

It wasn't just the torrent of depressing statistics but the unanimous conviction that the Government had failed to deliver a coherent strategy. This was highlighted 12 months earlier by Professor Brian Morgan's incisive critique about economic dynamism being frustrated by the ministerial logjam, or "bureaucratic centralism". A coherent economic strategy must be the absolute priority.

The IWA's response to the Welsh Government's Economic Renewal consultation in 2010 was an indictment of the Assembly Government's attempt over the last decade to deliver an economic dividend. The IWA made very clear recommendations on how to improve the economy, especially the need for the private sector to play a far greater role in the delivery of economic development.

This would mean a move away from the Government's ambivalence about the role of the private sector which is preventing the effective application of business expertise. The culture of the civil service is one of "no risk, no ripples", attaching greater importance to "process and not outcome". Such a culture is inimical to the Welsh economy. The IWA report concluded that the "creation of one or more bodies, combined with outsourcing of certain delivery functions to private sector-led organisations, is central to the effective implementation of economic development strategies".

In deliberations about the economic dividend, it must not be forgotten that a key policy divergence - the clear red water impulse - was the decision to abolish the economic development quangos in what amounted to a growing politicisation of economic strategy in Wales. The "bonfire of the quangos" rendered Wales the most statecentric of all UK devolved areas: a contributory factor to the lack of an economic dividend. Transparency and accountability in trying to achieve the economic dividend: Rhodri Morgan, the former First Minister for Wales, justified the bonfire of the quangos by saying that "it will give us far more firepower... and less a distinction between policy and implementing it". The decision to abolish was taken behind closed doors: the secrecy involved more appropriate to a John le Carr novel. Paradoxically, the apparent "democratic deficit" has come back to haunt the Welsh Government.

The two principal rationales for the mergers were increased accountability and greater efficiency.

On behalf of the IWA, Stevie Upton's research into the relationship between spend and performance revealed a lack of transparency and reduced accountability: "no annual reports, no reporting of spend by detailed programme, no external evaluation of the effectiveness of individual programmes". …