How Labour destroyed Wales

Wales was once the powerhouse of the Industrial Revolution. By the 1820s, it was responsible for 40 per cent of Britain's iron exports, pioneering new technologies such as Henry Cort's "puddling" method, which made wrought iron cheaper and more malleable. By 1913, it was producing 61 million tons of coal, fuelling ships and factories across the globe.

For as long as Wales depended on coal, steel and heavy industry, Labour could take it for granted. At every general election since 1922, the party has triumphed here. But that long-standing solidarity is rapidly fracturing. Now, it's quite possible that the party will finish fourth in the Senedd election on May 7.

To understand why, look to the county borough of Neath Port Talbot. Once home to industrial giants, now among the poorest areas in Wales. In Port Talbot itself - thrust into the spotlight, in recent years, after Tata Steel shut its blast furnaces in 2024 - deprivation is ingrained and persistent. Roughly a fifth of its neighbourhoods rank among the 10 per cent most deprived in Wales. It is one of the region's most challenged areas, specifically in employment, education and health.

But Port Talbot is not atypical of wider Wales. Economically, the nation has underperformed relative to other parts of the UK. Since 2018, its economy has shrunk while England's has grown by approximately 2 per cent. Productivity remains lower than in other UK regions. A third of children in Wales are classed as living in poverty.

Wales's employment rate, which had been catching up with the rest of the UK before the pandemic, has since fallen, leaving a gap of around four percentage points. This steady, stubborn decline, combined with persistently lower earnings, is dragging down living standards and creating a significant fiscal challenge for whichever party forms the next Welsh Government.

In short: on almost any metric, Wales has serious problems.

Higher spending

Any assessment of its performance must grapple with the Barnett formula, which determines how much funding flows from Westminster to Cardiff Bay (as well as to Scotland and Northern Ireland). Since Labour was re-elected in 2024, Eluned Morgan, Wales's First Minister, has been walking a tightrope - caught between defending the current settlement and insisting she is "fighting for a lot more to come".

The formula already gives Wales a substantially higher level of public spending per head than England, bolstering the Welsh budget and allowing the Government to spend more generously on public services without having to trouble the Welsh taxpayer for extra revenue.

But this weakens the link between decision-making and accountability. When the money comes in the form of a block grant from Whitehall, there is less immediate pressure to prioritise efficiency. Higher spending has become the default response to structural problems, allowing politicians to duck meaningful reform. Worse still, when growth and improvements in living standards or public services remain elusive, it's all too easy for Welsh Labour to argue that Westminster is being parsimonious.

Two decades after Joel Barnett, the Labour chief secretary to the Treasury, introduced his formula - initially intended as a temporary measure ahead of the 1979 general election - Tony Blair pushed devolution through against a background of Welsh apathy. The 1997 referendum only just squeaked "yes" - marginally more than 50 per cent. The Welsh had already rejected having an assembly by a big margin in the 1970s.

When the National Assembly was established in 1999, it inherited a country already lagging behind the UK average in terms of GDP per head and productivity. Wales was operating at roughly three-quarters of the UK's economic output per person, a huge deficit. The expectation - or promise, even - was that devolved governance would allow for more tailored, responsive policymaking to pull the country out of the doldrums.

Virtue signalling and pet projects

Over time, the powers of what is now the Senedd expanded, giving it control over health, education, transport and economic development. This created space for genuine policy divergence, yet rather than seizing it in the positive way federalists once hoped, it has been channelled into political virtue signalling and the indulgence of pet projects.

These included attention-grabbing initiatives and experiments that carry economic costs such as a Universal Basic Income pilot in 2022 which provided £1,600 monthly to participants. The Welsh Government was forced to conclude the cost was too high for a broader rollout. Many of us could have used the back of a fag packet to guess that in advance.

Overall, Wales spends around 15 per cent more on public services per person than England. Yet it consistently delivers worse outcomes in the two areas that arguably matter most, health and education. Despite rising budgets over the past decade, NHS waiting times remain longer than in England. More money has gone in, more staff have been hired, yet performance continues to lag.

This has devastating knock-on effects. Whilst welfare spending is under Westminster's control, health is fully devolved. And performance is an order of magnitude worse than the worst English health boards, exacerbating the problem of people being left unable to work for health reasons.

And although Wales has a higher proportion of people aged 65 and over, who require more frequent and complex healthcare, this alone does not adequately explain the significantly longer delays in receiving treatment. As opposition parties in Wales have repeatedly stressed, it's a question of how capacity is planned, and how effectively resources are allocated and managed.

In Maesteg, a 15-minute drive inland from Port Talbot, Paul, a Barbour-clad former paramedic, says the real problem is where additional funds are put - towards "additional layers of managers and bureaucrats", he says, rather than beds, front-line workers and equipment. His daughter-in-law is a dentist, but she and his Oxbridge-educated son put down roots in England years ago - part of the wider brain drain afflicting the region. One 2022 study found that 81 per cent of young people in rural Wales believed they would have to move away for education, training or work.

Ken Skates, who has been a Labour member of the Welsh Senedd since 2011, explains that the region emerged from Covid restrictions more slowly. "We were responding to public concerns [over the pandemic], and that in turn has had a knock-on effect on services." It's certainly true that Wales is suffering a longer hangover from the tougher measures imposed under Mark Drakeford. Perhaps not surprisingly.

Not only did the former first minister introduce lockdowns in Wales sooner, but restrictions went further than elsewhere: supermarkets were, for example, forced to stop customers purchasing "non essential" items. Limits on sectors such as hospitality and leisure remained in place longer; bizarrely, at certain points entry to Wales from elsewhere in the UK was prohibited.

Widening gap

Meanwhile, school performance has slipped behind not just the UK average but also comparable British regions with similar or even higher levels of deprivation. Welsh pupils perform worse than their counterparts in England in Programme for International Student Assessment (Pisa) tests and there is evidence this gap is widening. The Institute for Fiscal Studies (IFS) has argued that recent curriculum reforms in Wales, which placed greater emphasis on skills over knowledge, have had a detrimental impact.

In other words: money has not translated into better outcomes, but more power has worsened them. The Welsh Government scrapped school league tables - a change which weakened performance incentives. And while Nick Gibb's educational reforms prioritised phonics - which brought about sustained improvements in early literacy in England - Wales followed a different path, and now has consistently lower reading levels.

Nor has a higher proportion of public sector employment improved outcomes. Around 10.5 per cent of the Welsh population works for the state. Public sector employment is around 25 per cent, compared with 17 per cent in England - drawing resources and workers away from productive, wealth-generating enterprises. At least they're in work: not enough of the population is.

Around 11 per cent of the Welsh population receives Personal Independence Payments (Pip) - well above the UK average. In areas where secure employment has disappeared, ill-health and inactivity often follow, creating a cycle of dependency that is hard to escape.

Devolution was meant, at least in part, to give Wales the freedom to chart a more dynamic economic course - to do what federalists often argue for: compete, differentiate and attract investment through more business-friendly policies. That opportunity has gone unused. Rather than experiment with lower taxes, lighter regulation and a more concerted effort to draw in entrepreneurs and skilled workers, the Welsh Government has too often exceeded the ham-fisted interventionism seen elsewhere in the UK in recent decades.

Self-harm

Tourism and housing policy have also prompted a fierce backlash. Measures aimed at limiting second-home ownership are unlikely to address housing shortages for residents. The number of second homes registered in Ceredigion, for instance, has dropped by just 16 in the past two years - a figure far below the "behavioural change" the county council hoped to instigate by imposing a punitive 150 per cent council tax premium. Maxwell Marlow, of the Adam Smith Institute, warns that councils are "driving away capacity for their area to house tourists, and thus crushing their tourism. It is deeply short-sighted."

Wales became the first UK nation to impose the 20mph speed limit - justified on grounds it would save around 10 lives per year - on residential and unrestricted roads. Documents produced by the Government at the time estimated between £2.7bn and £8.9bn could be lost to the economy over 30 years, as the average journey time would increase by between one and two minutes.

The change provoked an online petition bearing an unprecedented 469,571 signatures, calling for the Senedd to rescind the law. It stated that the Welsh Government had "failed to produce any convincing evidence to support these claims of safety. This law is being spearheaded by the Welsh Government Climate Change department."

Maureen, a Port Talbot resident, worries that the infrastructure simply isn't there for the transition to electric vehicles that Labour is planning. Recent polling has found more Welsh voters oppose than support the incoming ban on petrol cars - a Westminster policy - saying electric vehicles are too expensive and unsuitable for long trips on Wales's winding roads.

And it's worth considering that, according to new analysis from the TaxPayers' Alliance shared exclusively with The Telegraph, Wales has the worst electric vehicle (EV) charger coverage in the UK. It has a public EV charger for every 3.69 miles of road, against 2.11 miles for Britain as a whole.

The think tank estimates it would cost £133m - a fifth of the region's entire transport capital budget - to meet the Welsh Government's EV charger target. Wales is a country where car use is not optional; it's essential, particularly in rural and post-industrial areas where public transport is patchy and irregular. Yet Cardiff's policy is becoming increasingly hostile to motorists.

Elsewhere, farmers have voiced strong opposition to proposals under a sustainable farming scheme that would require them to allocate 10 per cent of their land to tree planting and another 10 per cent to wildlife habitats. For many, government mandates on the use of a big chunk of their productive assets represents not just an environmental adjustment but a fundamental challenge to their livelihoods.

The Welsh Government has treated decarbonisation as a point of differentiation with Westminster - with costly and unrealistic green pledges such as the public sector "Net Zero 2030". It has real-world consequences that are being felt sharply in places such as Port Talbot. There, the shift away from traditional steelmaking is emblematic of something more unsettling: the sense that livelihoods are being sacrificed at the altar of distant, technocratic, climate goals determined by an out-of-touch political class.

Ending primary steelmaking at the site, bringing to a close over a century of continuous operation, has resulted in around 2,800 direct job losses. The impact extends beyond employment figures, however: the industry historically underpinned local incomes, business activity and regional output. Whilst Tata will be transitioning to electric arc furnaces as part of a shift to "green steelmaking" the shutdown has nevertheless caused the loss of skilled, well-paid industrial work, scarring the local community.

Stagnation

It's a bright day in Port Talbot, but there is a chill in the air. The wind comes off the sea and runs down the pedestrianised high street. Many of the units are boarded up; outside one vacant lot a couple of buskers have set up, guitar cases open, hoping for some passing trade. "Port Talbot is a ghost town," says Chloie. "Pubs are shutting, shops are shutting. And opening in their place are barber shops and vape shops.

Her friend Charley, a mother-of-two, would move away if she could. "There are so many better countries you could live in," she laments. "My father worked all his life, paid his taxes, and now in his retirement the state isn't looking after him." They are both looking for work, but finding opportunities thin on the ground. Many of those who can leave do: Wales retains fewer university graduates than Scotland.

The sense of unfairness is palpable. Chloie says that, at six months pregnant, the best accommodation she could find was a homeless shelter. Like many, she pins blame on immigration for placing additional pressure on public services. Like many, the options she is weighing up are Reform and Plaid Cymru.

Other residents are opting out altogether, because political parties are "all the same". Skates is more optimistic about Labour's prospects: "I would place an intense health warning on the polls," he says. "There are so many votes to be won; so many people who still don't know who to support."

For the past century, Wales has effectively been a one-party state. The lack of political change might, on paper, improve stability, but it has also led to stagnation. The region has only ever experienced administrations that favour an interventionist approach to the economy.

What's more, while analysis of Wales's performance tends to look at averages, the reality is that whatever modest gains have been achieved since devolution have been highly geographically concentrated. Cardiff, which ironically voted against the Welsh Assembly in the 1990s, has been the clear beneficiary.

Per head, its Gross Value Added (GVA), the measure of the value of goods and services produced in the area, is now roughly double that of places such as Port Talbot. Looking at the post-industrial Valleys and parts of West Wales, it is hard to avoid the conclusion that devolution has not levelled Wales up so much as entrenched internal divides.

All the major parties are now pledging significant improvements in the NHS, both in hospitals and through a focus on prevention and primary care, but with virtually no detail on how much they would spend. They are promising to lift school standards, ease housing pressures and address the cost of living either through tax cuts or new entitlements. However, as the IFS has set out, the combination of a slowdown in increases in UK Government funding and growing demands of health and social care will mean a Welsh budget under significant pressure for some time to come.

That the current Welsh Government has not published spending plans beyond 2026-27 - unlike either the UK Government or the Scottish Government - means that it is not yet clear which services will face cuts. But some will, especially in the first full Welsh budget of the next Senedd term covering 2027-28 - when overall funding will not increase at all, implying particularly deep cuts to other services if the next government wants to boost health spending.

Whoever is in charge, difficult economic decisions lie ahead. Whether any of the contending parties are seriously up for the challenge remains to be seen.

Data reporting by Ollie Corfe and Ben Butcher