How has Wales changed under Mark Drakeford’s leadership?

During his time as first minister of Wales, Mark Drakeford led responses to the challenges of Covid-19, Brexit and fractious relations between the Welsh and UK governments. While the nation’s economic failings are still a big problem, development has been guided by his focus on social justice.

Mark Drakeford became leader of Welsh Labour and first minister of Wales in 2018. Yet the premiership was not the beginning of his influence through the first minister role. Previously working as a special adviser to former first minister Rhodri Morgan, he helped to chart a somewhat more left-wing socialist approach for Wales than that taken by the then New Labour government in Westminster.

Drakeford’s background as an academic at both Swansea University and Cardiff University, as well as his work as a social worker, cast an important hallmark of social justice upon his work. This was seen in his leadership manifesto for ‘21^st century socialism’, which focused on rewarding employment rather than pure economic growth. The document specifically called out the ‘neoliberal’ economic model, which promotes market-oriented policies, as a cause of inequality.

Prior to becoming first minister, Drakeford’s previous roles included minister for health and social care, where he was responsible for almost half of the £25 billion annual Welsh government expenditure.

He drew specific attention to this spending in his manifesto, including calling for an annual review of private finance initiatives (PFI) – contracts for the private sector to fund and deliver public services – within a broader redesign of public procurement. The redesign was particularly notable because of the significant role of the public sector within the Welsh economy.

Figure 1: Country and regional public sector finances expenditure (spending) and revenue from financial year ending 2000 to 2022

Source: Office for National Statistics (ONS)

Governance

Drakeford’s government worked through cooperation with Plaid Cymru, as his Labour Party was short of an overall majority in the Senedd. The aligned progressive agendas of the two parties allowed for a deal, and the agreement between them describes a focus on social justice rather than economic growth.

In terms of economic policy, the agreement also drew attention to the Plaid Cymru heartland of the more rural mid and north Wales, alongside the urban and industrial Labour-dominated south.

Plaid Cymru’s ambitions for an independent Wales are tempered by economic and ballot box reality, which has kept focus on delivery issues and meant that the party remains both cooperative with and critical of the Labour-led Welsh government.

How has the Welsh economy fared?

Despite two decades of devolution, the performance of the Welsh economy was in a sorry state when Drakeford took over – and those problems persist today.

The Welsh economy lags behind most other UK nations and regions, and this difference has become a permanent feature (see Figure 2). Wales currently ranks 11^th out of the 12 UK nations and regions.

Figure 1: Gross value added per capita by UK nation, 1997-2017

Source: ONS

The nation has serious, chronic and interrelated issues resulting from declining industries and much of the population lacking the health or skills for raising economic productivity (see Figure 3).

Figure 3: Economic inactivity in Great Britain

Source: Annual Population Survey

Successive European Union (EU) structural funds programmes, which have involved spending billions of pounds on infrastructure, skills and business support, have not stopped the Welsh economy from lagging behind the rest of the UK.

Rampant deindustrialisation of the nation’s prized steel and coal industries has been followed by continuing factory closures. These developments came at the end of a hugely successful era of foreign direct investment (1982-94) during which Asian and US firms created manufacturing branch plants in Wales.

The need to replace this success has been a long-standing and elusive goal for the Welsh government. The plants were often attracted to Wales by access to the EU’s single market using comparatively cheap labour. After Brexit, overseas headquarters have found that elsewhere.

The more recent focus of foreign direct investment has been on knowledge-based activities, aiming to embed innovation and higher productivity sustainable enterprise. There has been encouraging progress, with Wales attracting 47 projects and 3,062 new jobs in 2022/23.

But at the same time, public investment in infrastructure and skills to support this has become increasingly sparse. As noted by the OECD, Wales has limited tax-raising abilities and a struggling economy from which to raise revenue.

Welsh government finance is also largely limited by the outdated Barnett formula, which allocates funding based on population rather than requirement. This is something that Drakeford himself has written about.

The post-Brexit loss of EU structural funds has compounded this challenge and reduced the scope for Welsh government-led investment.

Weak coherence, insufficient accountability and limited involvement of external perspectives are issues that contribute to the continued economic underperformance of Wales, cited by commentators, including former economy minister Andrew Davies.

Despite this, Drakeford’s government has continued a shift towards state intervention and ownership. Rail services across Wales were nationalised in 2021, following an earlier public takeover of Cardiff Airport. But concerns remain over how necessary investment will be achieved going forward.

These state-centric changes sit in contrast with the UK government’s approach to economic development policy. Westminster-driven ‘city and growth deals’, together with freeports, focus on private sector leadership and funding.

Politically at least, such interventions also show ‘levelling up’ as rolling back Welsh devolution, as the UK government undertakes greater involvement in devolved areas of economic development and skills.

Indeed, not all responsibility for Welsh affairs sits within Wales despite the expectations and ambitions that Drakeford has had for the nation. The absence of a sustained UK industrial strategy and strained inter-government relations have certainly stymied some of the needed transformation.

Responsibility for major infrastructure projects – particularly in the energy sector, where consent and/or significant levels of financial support are required – also resides with the UK government. Indeed, the long-discussed replacement nuclear power station for Anglesey remains just that.

Meanwhile, initiatives such as the tidal lagoon proposed in the south have faltered, despite the adjacent now-proposed electrification of the Port Talbot Steelworks involving up to £500 million of public investment. The future of this project is likely to be important for Wales and industries across the UK in discussions ahead of the next general election.

Social justice and the Covid-19 response – Drakeford’s defining impact?

Regular TV addresses to a housebound nation during the pandemic made Drakeford more visible than his softly spoken and modest manner may have otherwise attracted.

Arguably, his premiership was defined by his stewardship through the pandemic – until the controversial introduction of 20mph speed limits in built-up areas captured the headlines in 2023.

This included Drakeford living in a garden shed while his wife and mother-in-law shielded indoors, which sits in stark contrast to the behaviour reported in Downing Street.

As waves of Covid-19 took the nation in and out of lockdown, a tussle emerged with Wales wanting a ‘firebreak’, but the UK government refusing to support its costs. Drakeford’s view of the ‘truly awful’ Boris Johnson was caught on camera and emerged some time later. This insight showed a calm water running deep, only publicly seen later in his moderate ‘outburst’ at a Conservative Senedd member for his support for Liz Truss and her impact on the UK economy.

The Confederation of British Industry praised Drakeford’s leadership through the pandemic, but noted that work needed to be done to boost growth and productivity. Welsh government budgets were torn up to provide £1.7 billion of support during 2020, in addition to the UK-wide job furlough scheme and other assistance.

Despite this, the economy was far from untouched. For example, tourism alone suffered a £6.6 billion hit from just the first four months of the pandemic.

Since Covid-19, there has been greater focus on exploiting and repurposing existing resources to harness innovation in support of economic development. Within this, the Welsh government offering £20 million of grant funding over three years is perhaps dwarfed by the ambition to leverage its £7 billion of annual public spending for greater economic development advantage.

Other interventions are more attuned to Drakeford’s focus on social justice, such as the £20 million to pilot a universal basic income for people leaving care, to support challenged individuals into employment.

There is debate over how well the approach will transfer to Wales, but the trial resonates with the ambitions of the Wellbeing of Future Generations Act. This legislation, which came into force in 2016, is designed to promote long-term decision-making that will improve the social, economic, environmental and cultural wellbeing of Wales.

More broadly, the Welsh government anticipates greater challenges post-Covid-19 than the UK as a whole, due to embedded inequality, an ailing health system and enduring economic challenges.

What do Drakeford’s legacy and succession look like?

Unfortunately for Drakeford, recency and the media cycle mean that the introduction of 20mph speed limits in September 2023 will, for many, be his legacy. This may cast Wales as being in the slow lane, but the policy echoes the outgoing first minister’s ethos of social responsibility over populism.

Economic arguments put forward by detractors quote a calculated £4.5 billion negative impact from the policy. But this becomes less real or concerning when shown to be based on up to 120 seconds being added to the majority of car journeys.

Despite this, a new pragmatism is perhaps emerging with economy minister and leadership candidates Vaughan Gething and Jeremy Miles already suggesting a ‘review’ of the speed limit policy. With Drakeford’s successor likely to face more challenges on economic performance, this may be a shift not just a softening of priorities.

The next first minister will step into many of the same challenges that Drakeford encountered, although hopefully not another pandemic. That withstanding, his successor will find tighter public finances, greater uncertainty (both globally and nationally) and yet more pressure on public services – all of which demand more than ever a better performing economy.

Drakeford’s tenure could be seen more as having averted collapse than a resurrection of the nation’s fortunes. Having guided Wales through the pandemic, the country now needs transformative leadership, doing for the economy what Drakeford and Morgan achieved for Welsh democracy at the turn of the century.