Geraint Talfan Davies reports from the Wales Regeneration Summit

If you wanted to see signs of the way that the world is changing in the wake of the banking crisis and recession, you could not have done better than be at the Wales Regeneration Summit in Swansea in late October. In the conference suite of the new Liberty Stadium you could see and hear the tectonic plates move and grind against each other. Ministers, councillors, planners, housing specialists, environmentalists, architects, developers and bankers looked into a different future.

This was no parochial gathering, but drew together some of the best expertise available - a by-product of the appointment of Tim Williams as a specialist adviser to the Welsh Regeneration Minister, Leighton Andrews. Williams reputedly has been one of the key players in the regeneration of London and an adviser to three successive Westminster housing ministers.

Leighton Andrews set the tone with the declaration that “Keynesianism is back”, and before this could be dismissed as merely the wish fulfilment of the left, he was soon supported by both bankers and developers, who concurred that “the old models of regeneration are bust”.

Andrews’ adviser, who professed to be a “strong municipalist”, in favour of “double devolution to local authorities and neighbourhoods” argued that “the new phase belongs to the public sector” which would have to take a large part of the land value risk off the private sector. Private sector speakers queued up to agree.

Philip Jenkins from the Royal Bank of Canada, and a specialist on housing finance, surveyed the recent triple wave of consolidation, retrenchment and nationalisation in the banking sector, and worried about the vicious cycle of decline that could result from a “negative feedback loop”. The public sector, he said, would have to lead us out of that.

Both he and Chris Brown of the Igloo Regeneration Partnership - one of the most highly rated ‘ethical developers’, now faced with the difficult task of developing a large site alongside Cardiff’s Roath Basin - saw the end of an era when “flats masqueraded as regeneration”. There was a need to rewrite the rule book urgently. The property crash was transforming the market from “short term traders to long term investors”, and Brown believed a banking style rescue was needed in the regeneration world.

There was a need, he said, to stop good companies going bust. Government agencies could also buy land, use financial covenants, provide gap funding, and recruit good people from the private sector to act as programme managers. Brown was gloomy about the immediate prospects for deprived neighbourhoods that, he said, would probably take a 1979-style hit. Government should invest in affordable housing to mitigate unemployment, and in social development to reduce crime. He, too, regretted the fact that ‘some developers stole the word regeneration from us some years ago’.

This undoubtedly chimed with Leighton Andrews’s emphasis on ‘integrated, holistic regeneration where people are as important as place’. It also hints at the kind of policies that might make use of the new £250m urban development fund, backed by the European Investment Bank and the EU’s Jessica programme, that Andrews unveiled on the day. The irony is that a healthier equilibrium, with the public sector in the driving seat, may actually give the private sector a more assured place in regeneration.

The holistic theme was picked up by two authoritative voices on the social benefits of good public space: Sir Stuart Lipton, of Chelsfield Partners, a former Chairman of England’s Commission on Architecture and Built Environment, and Oliver Schulze, from the Gehl architectural practice in Copenhagen whose founder has written some of the most influential works on quality public spaces across the world.

Stuart Lipton, who has something of a hero status in the urban movement, bemoaned the fact that looking after the young and poor was not part of the planning agenda. He wanted greater stress on the civic side of our life, putting quality back into the ordinary, thinking less about big projects and concentrating on high quality small-scale projects ‘that can come together like a string of pearls’. Great spaces are more important than the buildings, he said, arguing for the human scale and purpose of the village green. He thought good design was for everyone, not least in our hospitals and schools.

He was one of many who criticised the preponderance of apartments in modern urban development, arguing for more family housing, and even the return of the spacious Parker Morris council house standard that disappeared in the early 1970s. Significantly, he had found it difficult to find good examples of modern public spaces in Wales to add to his illustrations.

Oliver Schulze, drawing on the Danish experience, asked whether a high level urban culture fits with the market economy. His was a plea against “bottom-line urbanism”, though he realised that urban cultures cannot be transplanted. Copenhagen had benefited from “an ingrained DNA about building a good city”, by implication saying that this is not something that he finds in Wales or Britain.

As if to prove the point, a presentation about the development of Cardiff, by Tom Morgan, one of Cardiff City Council’s corporate managers, managed not to mention people, communities, or sustainability once, instead extolling large projects – some of them admittedly valuable – and flat-led regeneration as if both the rest of the conference and the banking crisis had not happened.

In his defence one could say that the same sins of omission were made by Elizabeth Taylor, from the Dublin Docklands Development Authority. However, at least she could point to the participation in her city of some of the world’s leading architects, including Foster and Libeskind, as well as of front rank landscape architects, demonstrating a passionate concern for high quality urban design as opposed to Cardiff’s current pile it high philosophy.

There are still planning permissions for 16,000 more apartments extant in Cardiff and, under its emerging Local Development Plan the city seems keen to banish family housing to the Vale of Glamorgan and the valleys. The long-term implications for the Welsh capital’s social cohesion are deeply worrying but, sadly, are the sort of issues that scarcely ever form the meat of public debate at election time.

The biggest challenge thrown out at the conference came from Peter Head, of Arup who, apart from being Project Director on the Second Severn Crossing, was earlier this year named as one of Time Magazine’s 30 worldwide ‘Heroes of the Environment’. He pointed to the carbon intensive nature of our cities and suggested how they might be ‘retro-fitted’ to reduce their carbon emissions. He suggested several ways in which Welsh towns and cities might tackle the task, but one was left with the uncomfortable feeling that most local authorities in Wales are a long way from embedding his kind of thinking into their urban and rural planning.

As Leighton Andrews remarked, “in Wales we ought to find it easier to work together, but we are not very good at sharing best practice”. I suspect he was talking about sharing best practice within Wales, but we also have to share world best practice, and that presents a wider chasm to cross. Let’s hope this bold conference was a start.

• Geraint Talfan Davies is Chair of the IWA.
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Professor R. Ross Mackay argues that we should take a leaf out of Franklin D. Roosevelt’s book and prescribe a new advance for the 21st Century to overcome the credit crunch

This is a fascinating but alarming time. We are witnessing the financial systems astonishing volatility and how it is underpinned by animal spirits. At present, the economy and the community have lost trust and confidence in finance. The key question is how we restore trust, without losing the energy and drive of capitalism?

One way in which financial institutions build income and add to share value is to accept excessive risk. That is what happened in Northern Rock and other finance companies in serious trouble. Loans were made to people who could not repay. Toxic debt followed from doubtful practices, including teaser rates: mortgages offered at artificially low interest, but climbing at a later date. Lending became reckless with securitisation – loans bundled together and sold to other institutions. This had the effect of making the initial lender indifferent as to loan repayment.

The incentive for financial institutions to take excessive risk was enhanced by a bonus culture that emphasised short-term returns and immediate growth – without recognising long-term risks. Markets, especially financial markets, often fail to work as advertised. Failure can be self-reinforcing, rather than self-correcting. Finance markets are different. Financial growth relies on innovations that are for a time lucrative, but are eventually disastrous. Financial instability is a direct consequence of a period of growth and stability. Over confidence encourages excessive optimism, financial experiment, financial innovation and excessive risk taking. Speculation – gambling on the turn of the market – does little harm when it merely operates on the surface of the economy: it is disastrous when it becomes the heartbeat.

At the heart of the credit crunch is loss of trust. The unwillingness of banks to lend to each other is a breakdown of trust. Neither the public nor the banks trust the available information on the risks that banks have taken. There is no reliable way to value their assets. The High Street has fallen out of love with the City. The loss of trust and respect links to a bonus culture and a payment and compensation system that has been over generous. That culture and reward system has been at the heart of excessive risk-taking.

We will come out of recession and we will recover from the disastrous mistakes that have been made. However, the cost to the real economy and to jobs and to community will be substantial. We cannot return to business as usual. The financial system cannot be allowed simply to privatise gains and socialise losses. There has to be recognition of a wider social and civic responsibility by those who control finance, money and power.


Refocusing the Economy

A famous economist of the last century – Joseph Schumpeter – described capital as a means of dictating a new direction to production. Economic development is a harsh process. It depends on innovation and involves creative destruction. Creative destruction implies that old industries wither on the vine: physical and human capital is not slightly reduced in value, it is destroyed. New trades have to be learned, new habits to be acquired. A new set of external and internal economies of scale has to be developed. Given severe decline, it takes time and capital to provide a new direction for industry. The next step forward is likely to be difficult, but the financial system is important in finding new direction. The longer the delay, the harder it will be to employ those who have become accustomed to and demoralised by unemployment.

Unfortunately, UK finance recognises no responsibility for a new sense of direction, for the economy and for the regions. The task of the City, it is argued, is to make money for its shareholders. The City refuses to recognise any wider role within the UK. Lending is astonishingly concentrated on the capital city – to a much greater degree than in the rest of Europe. Part of the problem in finding a new direction is the failure of the City to commit to British companies and to locations outside the capital. The financial system is both too wide and too narrow. It regards itself as international, but does not accept any responsibility for regional balance.


Regional Balance

Market Economies provide a tension between the dynamism generated by new investment and the lingering decay associated with dated investment. Economic growth is uneven, or so it has been in the UK over the last 35 years. New capital and new investment has concentrated on the capital and its commuting regions, the rest of the country has lost ground. The realisation of potential, the development of people, the recovery of local economies and local communities depends on a better-directed demand.

Demand and growth has concentrated on the most heavily populated parts of the most crowded country within Europe. They have added to congestion, to commuting, to housing problems, to inflation. They have created severe problems for those who work in the capital and its zone of influence.

New Labour has been negligent when it comes to the growing regional divide within the UK. It has protested that inequality within regions is at least as great as inequality between regions. It is a naïve claim. First, because the two forms of inequality cannot be compared and second, because inter and intra regional inequality grow together. They are both products of an increasingly unequal economy and society.

Regional imbalance has particular pertinence to Wales, one of the poorest regions within the UK. The problem is starting to be addressed by some public bodies. By 2016, 50 per cent of BBC production will be outside of London. This will include 17 per cent from Scotland, Wales and Northern Ireland. It is too little and too late, but it is an attempt to overcome the concentration of BBC creative resources in and around London. That concentration was unquestioned, indeed it was celebrated, until recently. However, it is now recognised as the BBC’s Achilles heel. Spreading employment is the key to winning a decent settlement in the next licence fee negotiations and, critically, its next charter.


A New Deal for the 21st Century

The deep depression of the 1930s must be avoided. This financial crisis must be met with programmes designed to maintain demand. Our greatest primary task is to put people to work and to encourage creative effort. The UK government has recognised the importance of a swift response – via lower interest rates and higher public expenditure. Social housing needs new investment: housing repossessions should be a last resort. But a New Deal for the 21st Century has to be broader and deeper than has yet been recognised.

Part of the 1930s New Deal for the United States involved projects to stimulate and reorganise the use of the United States natural resources. A new deal for the United Kingdom must link to climate change by building a low carbon economy of high-skill workers who build a new energy infrastructure. Wales has considerable potential for sustainable energy development: both wind and wave power. We could bolster Wales’s micro-generation capacity and link generators to the National Grid. Wales may even learn from Scotland. Maitland Mackie (the ice cream man) has a plan for wind turbines designed to generate income for local communities and for Scottish farmers. In Wales, as elsewhere, we need to restore the links with localities and people. Economic development is not just about money or goods and services. The other side of the development coin is the need to play closer attention to human development, if we want to balance the productivity needs of the economy with the social needs of its human resources and so ensure that people gain from the beneficial impacts of structural economic change.


Conclusion

Deregulation has contributed to competitive innovation in finance. Light touch, or soft touch regulation, was part of a strategy designed to add to the power of the City and to open new fields of opportunity for capital. A clear focus on the dilemmas of financial fragility and systemic and spreading risk must be part of a new regulatory framework. We are not the fully informed, ice-cold calculators that Economics 101 presumes. Given stability and growth, we are more optimistic than we should be. With loss of confidence, panic sets in. Money seeking to expand itself without committing to long-term investment in the real economy adds to risk and to instability.

And finally, the strength and energy of markets and the economy does not depend on everything being privatised and marketised. When you have organisations that have public obligations and a public role you have sources of employment that are sheltered from the abrupt reversals that can destroy productive capacity, jobs and community. The obvious and high relevant example is the Post Office. In recent years, every effort has been made to withdraw revenue sources. The shock to the economy provided by private finance may encourage us to recognise that the Post Office has an important community role. Building the Post Office business is a proper government objective: reducing its business is not. Read more...

John Osmond looks at the problems Welsh Labour will face in filling the gap that will be left when the First Minster steps down next September:

Environment Minister Jane Davidson’s announcement that she will not be contesting her Pontypridd Assembly seat in 2011 underlines the problems Labour will have in putting together a high-profile leadership at the next Assembly election. She is widely regarded as one of Welsh Labour’s more effective communicators but she will be nowhere near as missed as the First Minister, Rhodri Morgan, who will also be standing down, vacating the leadership in September 2009.

Rhodri Morgan is the Donald Dewar of Welsh politics, in many ways the father of Welsh devolution. He is the only politician of any party currently in the National Assembly who is widely known by the electorate. His historic role has been to legitimise devolution, and to make people comfortable with the National Assembly.

In many ways his personality is contradictory. He is an intellectual by background and temperament, but is keen to project himself as an ‘ordinary bloke’, someone you’re quite likely to meet drinking with a few friends in one of his favourite haunts in his Cardiff West constituency.

His slightly shambolic image, colourful language, and occasional gaffes actually endear him to many Welsh people. It was noteworthy, for instance, that a recent attack on his personality by Opposition Tory leader Nick Bourne, spectacularly backfired. A Conservative dossier on the First Minister’s shortcomings, signed off by Bourne, criticised Morgan’s hairstyle and dress sense and called him the “Clown Prince of Wales”. Pressed in media interviews Bourne backtracked, distancing himself from the attack. The result was a threatened revolt from within his own Assembly Group, bringing his leadership into question and forcing him into a public apology.

The First Minister, who will be 70 next year, studied PPE at Oxford, and followed that with an MBA at Harvard. His father, T.J. Morgan was Professor of Welsh at Swansea, and his brother Prys is a distinguished Emeritus Professor of History at the same university. In Welsh terms this is an aristocratic pedigree, making the First Minister in effect a Prince of Wales. Nonetheless, he has maintained, and consciously cultivated, a common touch.

In a contribution to a new book, Politics in 21st Century Wales, being launched by the IWA at an event in the Senedd in Cardiff Bay during the early evening of Monday, 17 November (click on the Events button of this website for more details), Morgan demonstrates a commanding feel for Welsh Labour’s prospects. He sets out how the party must engage more in western Wales, where it has all but retreated from the electoral map, and must find a way of expressing a more confident Welshness at the same time as espousing the benefits of its British identity.

All of which means that Rhodri Morgan will leave a gaping hole in Welsh Labour’s electoral armoury when he departs the stage next September. The analogy with the departure of Scotland’s first First Minister, Donald Dewar, is apt. Since his premature death in October 2000 – the same month that Rhodri Morgan put the final touches to his first coalition government with the Liberal Democrats in Cardiff Bay – the Labour Party in Scotland has struggled to establish a stable leadership and identity. It has been torn between those wishing to strike out as a more autonomous Scottish Party, and those placing greater emphasis on defending the union against the Scottish Nationalists.

A number of personalities have been mentioned as possible successors to Rhodri Morgan. The most likely is perhaps Carwyn Jones, the affable Welsh-speaking barrister from Bridgend, currently holding the relatively obscure position of Counsel General in the Cabinet and Leader of the House in the Assembly. Better known is the combative Health Minister, Edwina Hart, but she is more likely to be kingmaker than king. Finance Minister, Andrew Davies, is another possibility, alongside Regeneration Minister, Leighton Andrews, and an outsider, backbench Merthyr AM Huw Lewis. However, as yet none of these have the stature or profile of Rhodri Morgan, or his unique ability to somehow encompass Wales’s identity and aspirations within his own personality.

The latest Welsh opinion poll, carried out by Beaufort Research for Plaid Cymru between 12 and 21 September, show that the Labour-Plaid coalition in Cardiff Bay appears to have benefited the partners. Among those saying they were certain or likely to vote in an Assembly election Labour would get 35.0 per cent (up from 32.2 per cent in 2007), Plaid Cymru 25.7 per cent (22.4 per cent), the Conservatives 18.9 per cent (22.4 per cent), and the Liberal Democrats 12.1 per cent (14.8 per cent).

These results are within the range of margin of error and essentially indicate that little has changed since the May 2007 election. Counter-intuitively Labour’s support was up slightly at a time when its poll ratings across the UK were in the doldrums, yet the Conservatives were down while in the UK overall they were well ahead.

What the poll does not reveal is the dynamics of an election campaign and the role and image of leadership as part of that. Welsh Labour had a poor result in 2007, but the outcome in seats would have been much worse if a handful of votes had gone the other way. For instance it held on to the Vales of Glamorgan and Clwyd by 83 and 92 votes respectively. Arguably, it was Rhodri Morgan’s personality and leadership that held off the worst. Labour will not have this comfort in 2011.

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Lee Waters, Sustrans Cymru Director:

I was as surprised as anyone. The night before she told her constituency party that she wouldn't be contending the next election, Jane Davidson attended a meeting of the Sustrans Cymru Advisory Board. She struck everyone present as being passionate and engaged with her brief.

So why then is she off?

The official explanation was that in a small legislature like the Assembly it is important that people should be able to move in and out of public life "to renew our democracy". The Western Mail doesn't swallow it. Martin Shipton wrote that "it is difficult to believe there is not something more behind her decision than simply the desire to go off and do something else".

Perhaps I'm naïve but it makes sense to me. We criticise our politicians for being alien, and then can't quite believe it when one says that she'd quite like to do something else. And she's right that a 60-strong Assembly needs oxygenising. Not least because with such limited capacity the strain on Ministers is considerable.

Whatever you think of her, there's no doubting she'll be a loss to the Assembly. Both as education minister and sustainability minister she forged a reputation as a serious player who had a vision but also had the will to carry it through.

Neither Westminster nor Cardiff Bay is over blessed by such politicians. And what's more she has a public profile – which is not something that can be said of every Cabinet member. A recent opinion poll showed that nearly six out of ten people had never heard of Rhodri Morgan. And only 6 per cent could identify the leaders of the opposition parties.

The Sustainability Minister has a hinterland, and though she rejects suggestions that frustration with being able to persuade her cabinet colleagues about the urgency of climate change is behind her move; if you spend enough time studying the consequences of inaction in the face of catastrophic global warming, it is enough to persuade even the most optimistic that you should be living life to the fullest.

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James Foreman-Peck, Cardiff Business School:

Yesterday saw the creation of an Assembly Government Commission to recommend how Wales’ Government should be funded. The Commission needs to address three essential points. The first is the block grant from UK central government that currently pays for devolved services, together with the Barnett formula, which determines changes in the block grant and has been at the forefront of the Welsh debate so far about funding. Second there is the issue of tax devolution. Finally, the possibility and extent of Assembly borrowing must be considered.

The Barnett formula was a quick and temporary fix devised before devolution, at the end of the 1970s. It is designed to equalise in the long run resources allocated to the (now devolved) nations and England. This goal, for areas with very different Gross Value Added (GVA) per head must generally be wrong, even granted the shortcomings of average GVA as a welfare indicator. The Barnett formula has lasted so long because of the expansion of general state spending in England. Consequently the pressure in Wales has been small. This is now changed. A needs-based formula would have more legitimacy and would be feasible – for this is the way local authority block grants have been allocated for decades. Even a GVA-based formula would make more sense.

Comparing Wales under Barnett and the North East of England without the formula, the North East (with a comparable GVA per head to Wales) receives more government spending. A political drawback to reconsidering Barnett could be that, whereas, given GVA per head, convergence has been achieved by Wales, it has not for Scotland or Northern Ireland (when I last looked). Consequently these influential polities would probably not favour a change that would benefit Wales.

A needs-based block grant could also be more predictable than Barnett but in any case revenue is likely to vary less in a downturn than under complete tax devolution. In effect the central government absorbs the ‘business cycle’ risk with a block grant.

More radical than block grant reform is tax devolution that could render a block grant obsolete. I myself favour a lower corporation tax for Wales in an attempt to mimic Ireland’s precocious economic growth. But both European pressure for tax harmonisation and HM Treasury’s determination not to give up any control of revenue are likely to defeat such a policy.

Standard economic theory indicates that for small, open economies like Wales, taxes should be placed on the least mobile goods and factors. Otherwise the value of taxable assets, investments and incomes – the tax base – is likely to contract with migration. Indeed it is the responsiveness of the tax base to policy that is one of the stronger economic arguments for tax devolution. There is an incentive for the devolved government to pursue sound economic policies that expand rather than reduce the sources of taxation.

A sales tax would be an example of taxing immobility. I favour a special alcohol tax to correct, or partly compensate, for the impacts of alcohol consumption, on the health service for instance. However, it would not be a major revenue earner. Also, there would be a ‘booze cruise’ problem near boundaries, so any differential tax would need to remain small.

A completely devolved tax system would probably require revenue equalisation, which is, in effect, another name for a block grant. So there does not seem much advantage in this extreme solution. But small taxes, like one on plastic bags for instance, might be useful in this case for an environmentally sensitive Assembly Government, if the administrative costs could be covered.

There is evidence that the public capital stock in Wales has not benefited from needed investment over the last decade to the extent that England has. This is ironic since the Treasury made much of the reversal of disincentives for public sector investment since 1997 (e.g. in the 2002 Spending Review). At least a portion of the shortfall can be attributed to the unwillingness of Assembly Government to adopt Public Private Partnership/Private Finance Initiative schemes with the enthusiasm of the English. Greater borrowing powers could provide an offset. Alternatively or additionally they could impose a greater long term burden of debt service presumably from the block grant, and squeeze current expenditure.

Devolving borrowing powers will be resisted by the Treasury on the grounds that there is an implicit Treasury guarantee to such borrowing although they cannot control the amount. The UK central government would be obliged to pick up the tab if the Welsh Assembly Government defaulted. But are we not seeing something like this for our big commercial banks at the moment? Anyway the Treasury’s point will need addressing in any recommendation for greater powers.
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Peter Finch, Chief Executive of Academi:

Is the decision by Cardiff Council to auction off some of its ancient and valuable book stock a harbinger of larger change to come? I think so. If the book trade hasn’t yet hit the sort of hurricane season that the world of finance has then it is only a matter of time. The digitisation of everything from bestsellers to the documents which define your personal identity are not just around the corner but actually upon us.

Recently the National Library of Wales announced its ten-year plan to digitise a large section of its holdings and to make the results instantly and universally accessible online: books, artworks, documents, letters, maps. Its previous plan to digitise entire runs of twentieth century Welsh periodicals is almost complete. This has been managed despite storms of protest from original authors. These have yet to abate.

All this poses the big question: Do we need original manuscripts when virtual ones allow the world and its uncle slick and searchable access at will?

Old books, and in particular those from the dawn of print, cannot simply be put onto a shelf and called up from the stacks for any casual visitor to handle. They need to be preserved with care, viewed under controlled conditions, repaired, conserved, de-foxed, cleaned, pressed, boxed, have their rot excised and their bindings mended. All that takes money. Cardiff says it is already overstretched and simply cannot find the resource to care for the 18,000 antiquarian volumes, maps and original manuscripts it has decided put up for sale.

The yard sale it proposed has been replicated at libraries elsewhere and not just in the UK either. Libraries, once eternal guardians and repositories of our cultural heritage, can now be seen engaging in Fahrenheit 451 style stock clearances. Get rid of these dirty things. They are mere containers. Their content is that which matters.

It’s a point of view. Many don’t share it.

What troubles me is that conservation and research are developing arts. Who’s to say what the future may be able to extract from an original document actually handled by its original author. More than could be got from a digital replica that’s for sure.

Cardiff Council has since backtracked slightly and are in discussions with Cardiff University about the preservation of at least some of the Welsh-interest component of its soon to be flogged-off holdings. All will not be gone. Just a lot of it.

How much of the past should we preserve? Certainly not everything. How do we make choices? Not that Cardiff were intending to make choices. There were no proposals to digitise and thus release the original as surplus. This was shelf clearance. And it’s not that this kind of thing hasn’t happened before. Check the stacks at Bute’s once great library at Cardiff Castle. Empty. Did you spot the stock leaving? Me neither.
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Marcus Longley asks whether the latest NHS reorganisation embodies Ministerial interference, or proper democratic control:

”You have bitten off more than you can chew on this one and... you will come to regret it.”

Thus spoke Liberal Democrat AM Jenny Randerson to Health Minister Edwina Hart in Tuesday’s Assembly debate about the reorganisation of the NHS in Wales (30 September 2008). She was referring to what critical commentators have branded as a move to increase Ministerial ‘interference’ in the running of the NHS.

Mrs Hart had just announced that, from next year, she will Chair a new NHS Advisory Board in Wales, as well as personally holding the NHS Chief Executive to account. She will also hold annual, public accountability meetings with each of the seven new NHS ‘unified delivery bodies’ which will replace the current seven Trusts and 22 Local Health Boards.

The majority of respondents to her consultation had rejected this model, preferring instead an arm’s-length relationship between the Minister and the NHS. After all, if such an arrangement was deemed good enough by Gordon Brown for the setting interest rates – surely also a highly political act – then why not for the Welsh NHS?

Mrs Hart argues that AMs would not accept anything less than direct accountability by Ministers:

”In a devolved Wales, it is both impractical and undesirable to attempt to create such a distance between political responsibility and service delivery.”

The NHS was a political creation, so of course it must be politically accountable. One also suspects that Mrs Hart doesn’t have much faith in other governance arrangements to make sure that the NHS really responds to what patients wants.

There’s something of a straw man about this, of course. No-one suggests that the NHS should be anything other than politically accountable. But the question is: accountable for what? Is it for the achievement of the aims set for it by the Minister? Or is it accountability for the minutiae of the workings of a £5bn organisation with 90,000 employees?

The dangers of her approach are threefold. First, Ministers – if not the current incumbent, then perhaps her successors – will make decisions on health policy more for short-term political gain than long-term public health gain. Second, they will stamp out local variation and experimentation. Third, it may collapse under the pressure of NHS complexity. Certainly, it flies in the face of Bevan’s great dictum from the early days of the NHS: the danger that “every time a maid kicks over a bucket of slops in a ward, an agonised wail will go through Whitehall”.

But this argument is over, at least for now. If the past few decades are any guide, NHS reorganisations generally last about three years, before a growing chorus for further change emerges, and another reorganisation becomes irresistible after about two more years…so look out for 2013!

It is interesting to see how the Minister is tackling some of the other perennial problems of health policy:

Cinderella services
Having now created seven all-encompassing NHS bodies, the Minister faces the danger that the so-called Cinderella services – mental health, primary and community care, health promotion – will lose out in the battle for resources with their more glamorous secondary (hospital) cousins. She has rejected the suggestion, made by a review that she herself commissioned, that mental health services should be placed in an organisation of their own. Instead, the Cinderella services are to have a Vice Chair in each NHS organisation who will be their champion of such services. This is new, and it will be interesting to see how it develops in practice.

Public health and local government
The link between the NHS and local government is another perennial issue. Better health depends upon local government and the NHS working together. It appears that this will now be the job of the public health service. However, it will be interesting to see how they find enough highly-trained staff to go round the seven huge health bodies, 22 local authorities, and all the national functions which they will also have to support.

The voice of the people
A third issue is public and patient engagement. This is vital in a system that does not believe in patient choice as a driver of improved services. At the national level, the Minister will represent the people of Wales in the big decisions. Who will do the same at the local level? The English approach – to give local government a formal scrutiny role – seems to have been ruled out, as have direct elections to the health bodies (the Scottish solution). So what’s the Welsh approach to be? We don’t really know yet, other than hints that Community Health Councils (CHCs) will play a big role. This will require a step change for these 34-year old bodies, which have few resources, and low public recognition. There are some exciting possibilities being discussed – including the creation of community-based forums and a variety of special interest groups, linked under a CHC umbrella by network governance. Let’s hope there is sufficient appetite for change of this magnitude. Timid local scrutiny, bought on the cheap, will not provide sufficient checks and balances for the seven new monoliths.

So what have we got?

Putting the pieces together, what will the new NHS in Wales look like? We can be sure of the following:

• The split between commissioners and providers (the ‘internal market’ that never was) will go.
• There will be some structural safeguards for services which might otherwise lose out;
• Managers and others in the NHS will come under a strong, national performance system;
• Local variation will be replaced by greater standardisation;
• There is a prospect of a revitalised opportunity for local people to scrutinise what their local health services are up to.
  

Is it worth all the disruption? Maybe. But the devil (as always) will lie in the detail, which has yet to be finalised. Watch this space…

Marcus Longley is Professor of Applied Health Policy and Acting Director of the Welsh Institute for Health and Social Care at the University of Glamorgan.
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