The Belly or the Chequebook?

John Jones is unemployed.

He gets Jobseekers allowance through the Llandudno JobCenter. His benefit is clearly noted as one paid in Wales.

When he visits the JobCenter on Monday he sees a job that fits his profile so he applies for it. The interview is on Friday, so in preparation he goes to Asda to buy a new suit, he buys the cheapest one, of course (he is on benefits).

Despite buying the suite in ASDA Llandudno, Wales, and paying VAT on his purchase, that VAT isn't a tax paid in Wales; the tax will be paid in Leeds, where ASDA has its accounting office.

The person who serves him on the clothing counter lives in Wales and works in Wales, but her income tax will also be paid in Leeds, because her pay check will be taxed in head office.

John gets the job, so he comes off the Welsh benefit take, but his job is also taxed in England so he doesn't become part of Wales' contribution to taxation.

Of course it is swings and roundabouts.

John's new job may involve manufacturing a component that is created in Wales and is exported to the rest of the world, something that is measured on a Wales basis and will show up as a plus in Welsh exports.

But remember that cheep suit he bought in Wales in order to go to the interview? That was probably imported through England, so statistics that show that Wales has a good balance of payments between imports and exports might not be as good as it first looks.

The fact is that the UK produces economic statistics for UK reasons. The UK would never, ever produce economic details that promoted nationalism.

Data that proved beyond doubt that Scotland or Wales or, Heaven forbid, even England would be better off outwith the UK will never, ever be available.

Of course the complete lack of proper data is a means to an end. Without the data we can't make a proper decision based on economic policy as to whether nationalism is good for our nation's economy, or a recipe for disaster. That is precisely why the data isn't available!

We can argue these economic points till kingdom come, but why should we?

Shouldn't the campaigns for English, Scottish, Cornish and Welsh self determination come from a fire in the belly rather than from a chequebook?


  1. As at least some of what prompted this post is my post here on Syniadau and your comment, I am duplicating a response both there and here

    Alwyn, I can accept that factors other than economics are what matter to you, but that does not make all economic arguments futile. Although I think it's a rather artificial distinction, some people are influenced more by the "heart" and others by the "head" ... although life is a lot less trouble when both heart and head agree!

    So yes, we need those with fire in their bellies for independence, but in order to win more people round to the idea of independence some of us must also address the cold, hard practicalities of doing it. Let us each do our part in our own way. I'll win over some, you'll win over others.


    On a more detailed note, the point is that we do know some of the picture, but not all of it. So, in your example, you're right about VAT, but wrong about income tax. We know exactly who pays what in income tax and national insurance, so these can both be properly accounted to Wales either on a residence or workplace basis.

    I should perhaps note that both this and my previous post were about Wales export figures. It was Owen who introduced the balance of payments question and, although I was grateful to him for doing that, I did point out that there were some question marks over the import side of the equation. You are almost certainly right about the point of import being a factor. However it is clear from the documents that the point of export is not a factor, because the data is based on the exporter. I found it unfortunate that people (for example on the WoL forum) have picked up on the balance of trade as such a major factor. It is not that much of a factor, because it doesn't reflect trade within the UK.

    The clearest picture we have of Wales' overall balance of payments is from the Holtham Commission. Its final report arrived at a deficit of just over £6bn a year. The difference between its figure and that of £9bn from Oxford Economics is that Holtham took some account of the "head office/production location" anomalies, using the same methodology as is used in Scotland for GERS. But, for example, Holtham didn't take account of this for VAT and used estimates of retail spending instead. But that is to quibble over details that might make a difference of hundreds of millions, but not billions. In broad terms it is right to say that Wales has a deficit of just over £6bn.

    What I have done in this second post is show the same "head office/production location" anomaly, but in a slightly different way. It is only a "snapshot" and it is ironic that it has only come about because of a retrograde change in the way the figures are calculated. I think that the only real solution is to require companies to produce national/regional accounts for tax purposes. This will become a necessity if Northern Ireland gets the lower rate of corporation tax that the ConDem government seems minded to pursue.

    Too long for one comment, more to follow ...

  2. Continued ...

    The argument for fiscal autonomy is that it is only by controlling the levers of the economy ourselves that we in Wales can hope to change this situation for the better. Over-centralized political arrangements go hand in glove with an over-centralized economy. A one-size-fits-all solution cannot suit the City of London and the peripheral nations/regions of the UK at the same time. In quite a few countries the argument for independence is that "we're rich enough to go it on our own" but for us the argument is that we cannot become rich unless we go it on our own. The political and economic structures of the UK inevitably draw wealth to the centre, with the result that there is greater inequality between the richest and poorest parts of the UK than in any other member of the EU.

    The additional financial argument for independence is that Wales would have no interest in the UK as a "world power" and therefore would not spend so much money on trying to maintain that position.

    But to come full circle, Alwyn, I fully agree that independence for Wales is not just about the economy. It is also about a hundred and one less tangible, but no less important issues. Pride in our national identity and the self-confidence to make our own decisions about what matters to us as a society are, if anything, much more important than mere pounds or euros.

  3. Guto Bebb M.P 2010 - 2015
    He is pissing off his own.