Executive summary
The Welsh Government and local authorities are aware of the territorial disparities they face and are committed to addressing them. Successfully achieving large-scale territorial objectives, such as minimising disparities or increasing well-being, is linked to the good governance of regional development and public investment policies. It leads to more effective use of public investment funds and creates growth possibilities. To support more effective public investment, the Welsh Government and local authorities could refine their approach and take stronger action in three areas: i) effective policy design and co-ordination, ii) sound and appropriate fiscal and investment frameworks, and iii) building capacity for policy implementation and learning by and at all levels of government.
The Welsh Government requested this OECD report as input into its policy actions for regional development and public investment. The report examines productivity and well-being performance across Wales, Welsh fiscal and public investment frameworks, and Welsh governance structures supporting regional development and investment decisions. The insights and recommendations in this report may be particularly timely in light of Brexit’s potential impact on multi-level governance systems and regional investment financing in Wales, as well as the impact of the COVID-19 pandemic on the Welsh economy, service delivery capacity and fiscal health.
The territorial context
Persistent regional inequalities can increase mistrust in institutions, and generate discontent with the economic, social and political status quo, particularly in lagging regions. In 2018, the wealthiest top 10% of UK regions exhibited a gross domestic product (GDP) per capita close to five times higher than the bottom 10% of United Kingdom (UK) regions – 4 out of 12 of which are in Wales. Wales’ two main urban areas cover less than a quarter of the Welsh territory, but are home to 70% of its residents and produce 75% of its GDP. In terms of well-being, Wales’ performance across 11 OECD regional well-being dimensions is in the mid or top-range for OECD regions. However, when compared to other UK regions, Wales performs less well in income, health and education.
Despite improving economic growth rates, Wales has difficulty catching up with UK average levels of economic prosperity and well-being.
Productivity contributes to sustaining well-being. Unfortunately, labour productivity levels in Wales are among the lowest in the UK. Investing in high performing transport networks, research and development (R&D) and innovation, as well as in the skills of the Welsh workforce could boost productivity in Wales.
Well-being is at the heart of the Welsh Government’s policymaking, and ensuring it is balanced across all Welsh regions is essential for resilience and sustainable development. Addressing regional disparities in youth unemployment, income deprivation and access to high-speed Internet will be particularly important to spread well-being and economic growth more evenly across Wales.
The fiscal gap and public investment financing
Limited fiscal devolution, a low tax base, and low-levels of own-source revenue are creating a large fiscal gap for the Welsh Government and Welsh local authorities. This restricts their ability to pursue regional and local development objectives and to bridge an investment gap arising from several years of austerity. In the 2014-2021 EU programming period, Wales is the UK’s largest recipient of EU funds per capita. Managing the investment financing uncertainty arising from Brexit depends on strengthening fiscal institutions and rules and improving the ability to attract public and private investment financing.
Public investment frameworks or strategies help co-ordinate and target regional development financing. They will best support the Welsh Government’s public investment aims when they: i) are supported by multi-annual funding frameworks; ii) integrate the priorities of diverse stakeholders; and iii) incorporate an outcome-based evaluation.
Balanced fiscal decentralisation and stronger fiscal autonomy will contribute to effective regional and local development in Wales but must be coupled with sufficient financial and administrative capacity among local authorities and a well-designed fiscal equalisation scheme.
Diversifying own-revenue sources at the Local Authority level, including through reconsidering user charges, and easing borrowing restrictions or making them more flexible, could help narrow the fiscal gap.
Reinforcing the governance of regional development and public investment
Treating regional development and investment as a policy package supports an innovative, stable, long-term development path. To accomplish this, a more coherent and co-ordinated approach to regional development policy design and delivery is called for in Wales. This includes introducing a stronger, more diversified mix of co-ordination mechanisms, generating agreement among government and non-government partners on policy and investment objectives and priorities, and better supporting local-level implementation capacity. Success also depends on the Welsh Government and local authorities adapting their roles in policy and service delivery, increasing their focus on results, and promoting learning at all levels of government.
An integrated regional development policy could generate greater policy continuity, establish clearer guidelines for decision-making and action, align priorities and serve as a roadmap for sector policies and programming.
An office at the centre of government responsible for strategic planning and public investment for regional development could strengthen policy co-ordination, oversee relevant public investment funding, and lead monitoring and evaluating policy initiatives based on the outcomes they yield.
Actively assisting Welsh regional and local-level actors invest in and implement regional development programming would be valuable. Doing so can include integrated and regionally-designed development plans, formal agreements/contracts, a stronger learning-based approach, as well as an institutional structure, such as a regional development agency, to help identify public investment opportunities and grow local professional/productive activities.
Considering economic regions in Mid Wales and South West Wales
Using economic regions to support the devolution of regional economic development planning can lead to better-targeted regional development initiatives and investment. They can also delineate adequate scale for local authorities to deliver new tasks. Yet Welsh local authorities need sufficient economic, administrative and institutional capacity to meet these responsibilities.
Regional-level co-operative bodies, as proposed by the Welsh Government, could build scale and local-level capacity. Success will depend on such bodies having the means to act effectively and to serve as intermediate-level partners that reflect local needs.
Additional ways to help local authorities fulfil regional development responsibilities include reconsidering the grant structure, the equalisation mechanism and generators of own-source revenue. All local authorities should also be able to provide a standard/minimum level of service.
Piloting four official economic Regions for development planning with clearly established and specific objectives, is a way to promote learning. They should be subject to an independent evaluation after a specified period of time, after which consideration can be given to whether four regions – or more, or fewer – makes sense.
*The Welsh-language version of this Executive Summary follows.
Mae Llywodraeth Cymru ac Awdurdodau Lleol yn ymwybodol o’r gwahaniaethau tiriogaethol sy’n eu hwynebu ac maent wedi ymrwymo i fynd i’r afael â’r rhain. Mae cyflawni amcanion tiriogaethol ar raddfa fawr yn llwyddiannus, fel lleihau’r gwahaniaethau neu gynyddu llesiant, yn gysylltiedig â llywodraethu polisïau datblygu rhanbarthol a buddsoddi cyhoeddus yn dda. Mae’n arwain at ddefnydd mwy effeithiol o gronfeydd buddsoddi cyhoeddus ac yn creu posibiliadau o ran twf. Er mwyn cefnogi buddsoddi cyhoeddus mwy effeithiol, gallai Llywodraeth Cymru ac Awdurdodau Lleol goethi eu dull a chymryd camau mwy cadarn yn y meysydd hyn: i) llunio a chydlynu polisi yn effeithiol, ii) fframweithiau cyllidol a buddsoddi cadarn a phriodol, a iii) meithrin gallu ar gyfer gweithredu polisi a dysgu ar bob lefel o lywodraeth.
Gofynnodd Llywodraeth Cymru am yr adroddiad hwn gan y Sefydliad ar gyfer Cydweithrediad a Datblygiad Economaidd (OECD) fel mewnbwn i’w chamau polisi ar gyfer datblygu rhanbarthol a buddsoddi cyhoeddus. Mae’r adroddiad yn archwilio cynhyrchiant a pherfformiad llesiant ledled Cymru, fframweithiau cyllidol a buddsoddi cyhoeddus Cymru a strwythurau llywodraethu Cymru sy’n cefnogi datblygiad rhanbarthol a phenderfyniadau buddsoddi. Gall y safbwyntiau a’r argymhellion a wneir yn yr adroddiad hwn fod yn amserol dros ben yng ngoleuni effaith bosibl Brexit ar systemau llywodraethu aml-lefel ac ar gyllido buddsoddi rhanbarthol yng Nghymru, ynghyd ag effaith pandemig Covid-19 ar economi Cymru, ar ei gallu o safbwynt darpariaeth gwasanaethau ac ar ei hiechyd cyllidol.
Y cyd-destun tiriogaethol
Gall anghydraddoldebau rhanbarthol parhaus gynyddu’r diffyg ymddiriedaeth mewn sefydliadau, a chreu ymdeimlad o anfodlonrwydd gyda’r drefn economaidd, gymdeithasol a gwleidyddol, yn enwedig mewn rhanbarthau sydd ar ei hôl hi. Yn 2018, dangosodd 10% o ranbarthau cyfoethocaf y DU Gynnyrch Domestig Gross y pen a oedd yn agos i bum gwaith yn uwch na’r 10% isaf o ranbarthau’r DU - ac mae 4 o’r 12 yng Nghymru. Mae dwy brif ardal drefol Cymru yn cwmpasu llai na chwarter o diriogaeth Cymru, ond yn gartref i 70% o’i phreswylwyr ac yn cynhyrchu 75% o’i Chynnyrch Domestig Gros. O ran llesiant, mae perfformiad Cymru ar draws 11 dimensiwn llesiant rhanbarthol y Sefydliad ar gyfer Cydweithrediad a Datblygiad Economaidd yn yr amrediad canolig i uchel ar gyfer rhanbarthau’r Sefydliad. Fodd bynnag, o’i chymharu â rhanbarthau eraill yn y DU, nid yw Cymru yn perfformio cystal o ran incwm, iechyd ac addysg.
Er gwella cyfraddau twf economaidd, mae Cymru yn cael trafferth dal i fyny gyda lefelau cyfartalog y DU o ran ffyniant economaidd a llesiant.
Mae cynhyrchiant yn cyfrannu at gynnal llesiant. Yn anffodus, mae lefelau cynhyrchiant llafur Cymru ymysg yr isaf yn y DU. Gallai buddsoddi mewn rhwydweithiau trafnidiaeth sy’n perfformio’n dda, ymchwil a datblygu ac arloesi, ynghyd ag yn sgiliau gweithlu Cymru hybu cynhyrchiant yng Nghymru.
Mae llesiant wrth wraidd gwaith llunio polisïau Llywodraeth Cymru, ac mae sicrhau ei fod yn gytbwys ar draws pob rhanbarth yng Nghymru yn hanfodol er mwyn sicrhau gwydnwch a datblygu cynaliadwy. Bydd mynd i’r afael â gwahaniaethau rhanbarthol o ran diweithdra ymysg pobl ifanc, amddifadedd incwm a mynediad at ryngrwyd cyflym yn arbennig o bwysig dros ben i ledaenu llesiant a thwf economaidd yn fwy cyfartal ledled Cymru.
Y bwlch cyllidol a chyllido buddsoddi cyhoeddus
Mae datganoli cyllidol cyfyngedig, sylfaen dreth isel a lefelau isel o refeniw o’i ffynonellau ei hun yn creu bwlch cyllidol mawr i Lywodraeth Cymru ac Awdurdodau Lleol Cymru. Mae hyn yn cyfyngu ar eu gallu i fynd i’r afael ag amcanion datblygu rhanbarthol a lleol a phontio’r bwlch buddsoddi sydd wedi ei achosi gan flynyddoedd o gyni. Yng nghyfnod rhaglenni 2014-2021 yr UE, Cymru sydd wedi derbyn y lefel uchel o gronfeydd yr UE y pen yn y DU. Mae rheoli’r ansicrwydd ynghylch cyllido buddsoddi sy’n deillio o Brexit yn dibynnu ar gryfhau rheolau a sefydliadau cyllidol a gwella’r gallu i ddenu cyllid buddsoddi cyhoeddus a phreifat.
Mae fframweithiau neu strategaethau buddsoddi cyhoeddus yn helpu i gydlynu a thargedu cyllid datblygu rhanbarthol. Byddant yn cefnogi nodau buddsoddi cyhoeddus Llywodraeth Cymru orau pan fyddant yn i) cael eu cefnogi gan fframweithiau cyllido aml-flynyddol, ii) integreiddio blaenoriaethau rhanddeiliaid amrywiol a iii) ymgorffori gwerthuso ar sail canlyniadau.
Bydd datganoli cyllidol cytbwys ac ymreolaeth gyllidol gryfach yn cyfrannu ar ddatblygiad rhanbarthol a lleol effeithiol yng Nghymru, ond mae’n rhaid i hynny fynd law yn llaw â gallu ariannol a gweinyddol digonol ymysg Awdurdodau Lleol ynghyd â chynllun cydraddoldeb cyllidol sydd wedi’i gynllunio’n dda.
Gallai arallgyfeirio ei ffynonellau refeniw ar lefel Awdurdod Lleol, gan gynnwys gwneud hynny drwy ailystyried taliadau defnyddwyr, a llacio cyfyngiadau benthyg neu eu gwneud yn fwy hyblyg, helpu i bontio’r bwlch cyllidol.
Atgyfnerthu llywodraethu datblygiad rhanbarthol a buddsoddi cyhoeddus
Mae ymdrin â datblygu a buddsoddi rhanbarthol fel pecyn polisi yn cefnogi llwybr datblygu hirdymor arloesol a sefydlog. Er mwyn cyflawni hyn, gelwir am ymagwedd fwy cydlynol a chydgysylltiedig at lunio a darparu polisi datblygu yng Nghymru. Mae hyn yn cynnwys cyflwyno cymysgedd mwy cadarn ac amrywiol o fecanweithiau cydgysylltu, gan sicrhau cytundeb ymysg partneriaid o’r llywodraeth a thu hwnt ar amcanion a blaenoriaethau buddsoddi a pholisi, a rhoi gwell cefnogaeth i allu i weithredu ar lefel leol. Mae llwyddiant hefyd yn dibynnu at Lywodraeth Cymru ac Awdurdodau Lleol yn addasu eu rolau ym maes polisi a darpariaeth gwasanaethau, gan gynyddu eu ffocws ar ganlyniadau, a hyrwyddo dysgu ar bob lefel o’r llywodraeth.
Gallai polisi datblygu rhanbarthol integredig sicrhau gwell parhad o ran polisi, sefydlu canllawiau cliriach ar gyfer gwneud penderfyniadau a gweithredu, alinio blaenoriaethau a rhoi cyfeiriad i bolisïau a rhaglenni’r sector.
Gallai swyddfa yng Nghanol y Llywodraeth sy’n gyfrifol am gynllunio strategol a buddsoddi cyhoeddus ar gyfer datblygu rhanbarthol gryfhau cydgysylltiad polisïau, arolygu cyllid buddsoddi cyhoeddus perthnasol ac arwain y gwaith o fonitro a gwerthuso mentrau polisi ar sail y canlyniadau a ddaw yn eu sgil.
Byddai mynd ati’n ddiwyd i gynorthwyo gweithredwyr rhanbarthol a lleol Cymru i fuddsoddi mewn rhaglen datblygu rhanbarthol a’i rhoi ar waith yn werthfawr. Gall gwneud hynny gynnwys cynlluniau datblygu integredig a rhai sydd wedi’u cynllunio’n rhanbarthol, cytundebau/contractau ffurfiol, dull seiliedig ar ddysgu cryfach, ynghyd â strwythur sefydliadol, fel asiantaeth datblygu rhanbarthol, helpu i nodi cyfleoedd buddsoddi cyhoeddus a chynyddu gweithgareddau proffesiynol/cynhyrchiol lleol.
Ystyried Rhanbarthau Economaidd yn y Canolbarth a’r De-orllewin
Gall defnyddio Rhanbarthau Economaidd i gefnogi datganoli cynllunio datblygu economaidd rhanbarthol arwain at fentrau a buddsoddi rhanbarthol sydd wedi’u targedu’n well. Gallant hefyd gyfleu graddfa ddigonol i Awdurdodau Lleol fel y gallant gyflawni tasgau newydd. Ond mae angen gallu economaidd, gweinyddol a sefydliadol digonol ar Awdurdodau Lleol Cymru i fodloni’r cyfrifoldebau hyn.
Gallai cyrff cydweithredol ar lefel ranbarthol, fel y cynigir gan Lywodraeth Cymru, feithrin gallu a chapasiti ar lefel leol. Bydd llwyddiant yn dibynnu ar gyrff o’r fath â’r modd i weithredu’n effeithiol a gwasanaethu fel partneriaid lefel ganolradd sy’n adlewyrchu anghenion lleol.
Mae ffyrdd ychwanegol o helpu Awdurdodau Lleol i fodloni cyfrifoldebau datblygu rhanbarthol yn cynnwys ailystyried y strwythur grantiau, y mecanwaith ar gyfer cydraddoli, a dulliau o gynhyrchu eu refeniw o’u ffynonellau eu hunain. Dylai pob Awdurdod Lleol hefyd allu darparu lefel safonol/ofynnol o wasanaeth.
Mae “treialu” pedwar Rhanbarth Economaidd swyddogol ar gyfer cynllunio datblygu gydag amcanion sefydledig a phenodol clir, yn ffordd o hyrwyddo dysgu. Dylent fod yn amodol ar werthusiad annibynnol ar ôl cyfnod penodol, ac yna gellid ystyried ai pedwar rhanbarth - neu fwy, neu lai – sy’n gwneud synnwyr.
