Sunday, 27 December 2009

Rhodri looks down the well

Posted on This is My Truth on 27 December 2009

Martin Shipton has written an interesting valedictory interview with Rhodri Morgan in which he reflects on his own political philosophy and the challenges ahead. It is worth a read

In one passage that caught my attention Rhodri muses "What are the limits to which left-of-centre parties can go?". He said:

“It’s going to be very much put to the test over the next few years now in this period of taxation restructuring which we are having to have in Britain because North Sea oil revenue is going out. We’re going to have to start making things again and encourage capital and enterprise to make up the trade gap because we haven’t got North Sea oil and gas any more.

“We’ve got a 30-year run of oil and gas, then it’s gone. There’s a massive change in the economy needed now, so you have to persuade people with the capital to use the capital or borrow capital to run those businesses, and run those businesses to believe that Wales is a very good place to run those businesses".

Rhodri always has been an astute analyst of the economic scene. He is right to identify the enormous trade gap which is already beginning to emerge through the decline of the North Sea oil field. The ongoing implications for the balance of payments will be profound.

But there seems to me to be a piece missing from the analysis. Of course we need to start manufacturing things again, but if North Sea Oil is running out this is likely to be part of a piece. It is not just revenues that will dry up. The price of the remaining oil from other parts of the world (often unstable regimes) will inevitably rise. And an economy based on traditional manufacturing will struggle.

Rhodri Morgan's solution - according to Martin Shipton's account - is “You need more people like Admiral Insurance – you need half a dozen Admiral Insurances, not just one".

I can't help but feel this is akin to fighting the last war. It is not just that we need to start making more things, but we need to start putting a heavy emphasis on cleaner technologies - allied with measures to encourage people to change their behaviour and the way we consume. We need to become less dependent on oil.

If we don't we face a considerable threat. If we grasp the challenge there is a considerable opportunity for Wales to lead. But to do it we need a change of mindset.