Debate in the Senedd on the Welsh economy

Speech delivered in the Senedd on Wednesday 21st September during a Plaid Cymru debate on the funding cuts and the Welsh economy.

Leanne Wood: I would like to focus on public procurement and its potential for stimulating local economies and helping to create jobs. The amount spent by the public sector in Wales is estimated to be £4.3 billion every year. In my view, and that of Plaid Cymru, that money should be working for the Welsh economy, and at the moment so much of it is not. Too much money leaks out of Wales and that is contributing to the ongoing weakness of the Welsh economy. A new mindset is required if we are to turn this around. I accept that some good progress has been made, but to take that next leap a new mindset is required.

In questions earlier, the excellent examples that can be seen in housing were mentioned. Efforts to include social clauses in contracts that enable the sourcing and training of labour locally have been a great success, providing a model of good practice that could be rolled out throughout the public sector. If a local firm gets a contract for work, the money earned by the workers in that firm is more likely to be spent locally, close to where they work, stimulating local business activity. Conversely, people who work far away from where they live are more likely to spend their money elsewhere. Of course, people who are not in work at all are unable to spend money locally, which is why areas with high levels of unemployment often have dying, or dead, town centres. Supermarket, internet and out-of-town shopping has taken a heavy toll on our town centres and there is a limit to what the Government can do to change people’s shopping habits. However, the Government can change its own shopping habits. Every pound that leaks out of Wales is a pound that is not working for Wales. By resolving to try to plug these gaps and keep Welsh expenditure in Wales, that money could contribute towards sustainable jobs growth. If I were to make an optimistic assumption that the Government does not intend to water down the previous Government’s carbon reduction ambitions, measures geared towards supporting public bodies to purchase their food and renewable energy from local sources wherever possible would provide numerous desirable outcomes.

What is stopping the local procurement of food and renewable energy? First, we have competition rules. They may be challenging, but those challenges have been overcome in the social housing sector and in other European Union countries. More work would need to be done to upskill people and to ensure the business capacity to provide food and renewable energy to the public sector. More would also need to be done to train those responsible for procuring on behalf of the public sector—an issue that will be expanded upon later.

Most of all, this would require the political will to set about utilising public sector expenditure to create jobs. Regrettably, without such will and commitment, the cuts will inevitably drive the movement the other way. Bigger, more centralised contracts may well be cheaper, but a failure to decentralise and make money work for the good of the Welsh economy risks us missing a great opportunity.

The creation of a home or internal market was suggested by Leopold Kohr in his 1971 book Is Wales Viable? Kohr’s thinking has been further developed in 'A Greenprint for the Valleys’. Although it offers solutions for the market failures in the Valleys, its principles can be applied anywhere, and I recommend that Members read both—I would, would I not? Commitment, effort and political will from the Government to plug these gaps and stop money leaking out of Wales, coupled with a commitment to decentralise, unbundle and make public contracts smaller, could provide a much-needed boost to the Welsh economy. Surely this is an opportunity that we cannot afford to miss.