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Wales voted to leave EU but now finds itself in conflict with Johnson government

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Readers of Brexit Briefing know plenty about Northern Ireland, where the impact of Brexit has been most acute. But what of Wales, the only UK devolved nation that voted to leave the EU? 

The region of 3.2m is closely tied to England, which occupied it in 1283 and annexed it in the 16th century. Political institutions were abolished and the legal system subsumed into the English one, with the Welsh language banned for official purposes.

Welsh identity was buried until the revival of cultural institutions and the flowering of nonconformist Christian movements such as Methodism and Baptism in the 18th century.

The nation lacks Scotland’s centuries of independence and distinctive political and institutional history. The border is far more populous and porous, with a fifth of the Welsh population identifying as English.

A 1997 referendum approved an assembly and a later one extended its powers and converted it to a parliament. There is now a huge battle between Labour-controlled Cardiff and Conservative-controlled Westminster about who should determine issues once decided in Brussels.

While Scotland is run by nationalists who want to leave the UK, Welsh Labour want to stay in it. But Welsh first minister Mark Drakeford says UK prime minister Boris Johnson’s government is undermining the unionist cause by concentrating power in London. 

As the poorest part of the UK, Wales was the biggest per capita recipient of EU money. So it was a surprise it narrowly backed Brexit in 2016, by 52.5 per cent to 47.5 per cent in a turnout of 71.7 per cent.

There has been a modest rise in pro-EU feeling since. In early May, the Welsh Election Study, which conducts regular polls, asked “Was Britain right or wrong to leave the EU?” and, stripping out the “don’t knows”, 46.5 per cent said it was right and 53.5 per cent wrong.

In May’s Senedd elections, Labour gained a seat to win 30 of the 60 available but experts suggested that was more about voters giving their approval for the job done by Drakeford’s government during the pandemic.

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Since the election, the future of EU funding has produced the biggest clash. Wales received £375m a year, twice the level of Scotland and four times that of Northern Ireland. While London has promised to maintain the grants, it has yet to set up a mechanism to provide them.

Johnson is replacing EU money with a Shared Prosperity Fund, worth £1.5bn annually but has yet to outline how it will work. A pilot scheme, the Community Renewal Fund which covers all UK regions and is worth £220m, is in place for the current financial year but Wales expects to receive just £10m. 

And while EU funds were given directly to Cardiff to spend, under the new arrangements Whitehall will have control. For replacements such as the Levelling Up Fund, the 22 local authorities must bid for them, with the Welsh Office, a UK government department, advising on which bids to accept.

Simon Hart, the UK government’s Welsh secretary, styled this as a welcome resurgence of local democracy in a recent appearance before MPs. He attacked Drakeford for only backing the union “as long as everything is decided by the Welsh government”. 

Hart also made it clear that the government could override Cardiff’s objections and widen the M4 motorway near Newport, even though it is a devolved competence. In the same way that Brussels could ensure vital European arteries were up to scratch, London could do so across the UK, he said.

Opponents complained Hart was overstepping his powers but they were dismissed. “I want to talk about jobs, not constitutional minutiae”, he told the Welsh affairs Commons select committee in June. He may not want to talk about it but actions speak louder than words. Just behind Cardiff station, a huge new UK government office has opened, replete with large union jack. 

Even Stephen Crabb, a Conservative backbencher who chairs the committee, suggested this “muscular unionism” was about a “projection of strength” rather than collaboration.

Freeports are another source of tension. Eight of the 10 low-tax enclaves have been identified in England. The UK government has also earmarked one each for Wales and Scotland. But the two devolved nations contend they have not been consulted and are being offered less money than English freeports. They are sceptical of the benefits, believing they will simply displace jobs by attracting companies who would have invested somewhere else but want the tax benefits. The two governments sent a joint letter demanding talks on July 15.

Drakeford himself on June 28 launched a plan to reform the UK, which was “fragile” as a result of Brexit.

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“Too often we see the UK government act in an aggressively unilateralist way,” he said.

The UK should be reset as “a partnership of equals” and Cardiff should get powers over policing and justice as well as decision-making enjoyed by the other devolved nations, said Drakeford.

These tensions do matter. The pro-independence movement is on the march. The Welsh Election Study reports that support for a Yes vote to independence, discounting “don’t knows”, rose from 25 per cent in December 2019 to 32 per cent in May 2021.

That is a long way short of a majority but support has grown fastest among younger people, who mostly voted Remain in the 2016 referendum.

Richard Wyn Jones, who heads the Wales Governance Centre at Cardiff University, ponders what might happen if Scotland votes for independence, Northern Ireland is absorbed into the Republic and Wales is left alone with England.

“Wales is the UK’s Montenegro,” he says. As long as Yugoslavia existed, the mountainous republic of 620,000 people was a happy member. Even after the split, it stuck with Serbia, thanks to family and linguistic ties. But the country eventually voted for independence in 2006 after it got fed up of the feuding Serbs and wanted to apply for EU membership. 

Brexit in numbers

Those who will feel the biggest change from Brexit are farmers. Wales has three times as many sheep as people and the hill farmer is as central to its identity as the steelworker and rugby player.

Sheep keep many remote communities alive but raising them in harsh, moorland landscapes is not profitable.

So the EU subsidy linked to the amount of land farmed, the Basic Payment Scheme, was vital. After rent and finance charges were deducted, the average profit for hill sheep farms was £158/ha, with income from the BPS accounting for £243/ha, according to Aberystwyth University’s farm income survey for 2018-19. Farming itself is often lossmaking.

Across the industry as a whole, the survey found that each year about a fifth of farms made an overall loss with a subsidy, and more than half made a loss without subsidy and diversification, which could include running a bed and breakfast or a farm shop.

Average annual farm incomes, at about £24,000, remain well below the average UK household income. 

The Welsh government, which controls agricultural policy, has pledged to continue the BPS until at least 2022. But it has angered farmers by proposing to replace it with a sustainable farming scheme. To earn a subsidy, farmers must deliver environmental outcomes such as improved soils, clean air and water, improved biodiversity, and help to reduce global warming alongside sustainable food production.

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The government will also introduce national minimum standards for agriculture, with a new enforcement regime.

“The proposals to ratchet up rules and restrictions and further distance farm support from food production . . . threaten the viability of the Welsh family farms that are central to our rural economies and culture,” said Glyn Roberts, Farmers’ Union of Wales president, when the policy was published in March

Sheep farmer Phil Jones, FUW county chair for Carmarthenshire, said he felt “like I’m part of a social experiment; like every farmer in Wales is part of that experiment”. 

About 4 per cent of people in Wales work in agriculture, and many businesses supply it, so don’t be surprised to see tractors on the streets forcing a government rethink.

And, finally, three unmissable Brexit stories

  • Brussels has paused legal action against the UK government in an attempt to de-escalate tensions over customs rules on goods entering Northern Ireland. The European Commission said this week it would freeze an infringement process triggered in March over the UK’s breaching of the terms of the post-Brexit Northern Ireland protocol.

  • Within the maximalist British demands over the Northern Ireland protocol there are some legitimate points, writes the FT’s editorial board. While the EU should rightly reject structural changes to its trade agreement with the UK, it does make sense to ask (as it already has in a few areas) whether it cannot be more imaginative in implementing regulations to draw the sting of the most heartfelt and visible grievances.

  • Rachel Reeves, UK shadow chancellor, has committed Labour to working with Brussels to fill in “gaps” in Boris Johnson’s Brexit deal, to help professionals, the food sector and creative industries. The former Bank of England economist said boosting exports was one of the “five tests” Labour was setting the government as the economy started to recover from the effects of the coronavirus pandemic.

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