Corporate Strategy 2023-2028
Long Term Trends
Welsh Government guidance for setting well-being objectives states the Corporate Strategy should make reference to the Future Trends Report Wales 2021 (opens in a new tab) (and its Evidence Pack (opens in a new tab)). This report is based around four mega trends (people and population, planetary health and limits, inequalities, and technology) that can impact both positively and negatively on the well-being of future generations. The report also has insight on the trends covering public finances and public sector demand and digital. Also of interest is The State of Natural Resources Report (opens in a new tab) (produced by Natural Resources Wales) which contains the assessment of Wales’ sustainable management of natural resources, including Wales’ impact globally.
Any projection or forecast always comes with a ‘health warning’ – and no more so than projections that were developed during the COVID-19 pandemic and prior the Russian invasion of Ukraine. They also predate the publication of the 2021 Census estimates. Some of the information in the Future Trends report is available for Counties though there is much greater uncertainty for these figures.
- Whilst the global population is still projected to grow by 2 billion by 2050, Wales’ population, in common with much of Western Europe is predicted to grow comparatively slowly, with growth concentrated in south Wales. Migration remains one of the most difficult factors to predict and without migration, Wales’ population is likely to fall.
- Despite low population growth, the number of households, particularly single households is projected to grow across Wales (in the case of single households from 440,000 in 2020 to around 525,000 by 2043). This will fuel growth for new housing, though there is a lot of uncertainty around numbers.
- While estimates vary significantly, prior to the COVID-19 pandemic, life expectancy increases in Wales looked set to continue, although the rate of increase has slowed over the past decade. Whilst there is evidence that the gap in healthy life expectancy between deprived and non-deprived areas is narrowing, overall health life expectancy has changed very little. The combination of these two factors has the potential to drive continued demand for social care.
- The prevalence of chronic disease is projected to increase. Dementia prevalence is expected to increase from 7% in 2019 to 9% in 2040, fuelling growth for complex social care.
- In 2019, the number of Welsh speakers was expected to increase, with projections of the number of Welsh speakers by 2050 varying considerably. Initial figures from the 2021 Census suggest that the number of Welsh speakers may be falling.
- The most recent population projections for Pembrokeshire are based on 2018 estimates. It is clear that these over-estimated Pembrokeshire’s usual resident population. Updated projections will not be produced until 2024.
Inequalities and equality of opportunity
- Globally, extreme poverty (people living on less than $1.90 a day) has declined over recent decades. As poorer countries become richer, inequality at the global scale is also decreasing. However, on a global scale, efforts to reduce poverty have been impacted by the COVID-19 pandemic and have set back efforts by the equivalent of between 5 and 9 years.
- Whilst rates of unemployment (up until the pandemic) were tending to fall across Wales, the rate of poverty in households where all adults are in work has continued to increase, indicating that being in employment alone is not enough to take someone out of poverty in Wales. In relative terms, rates of child poverty in Pembrokeshire have increased and are now amongst the highest or the highest in Wales. This is also in the context of an increasing rate of relative income poverty for children living in homes where all adults are in work over recent years.
- Based on pre-pandemic data over the medium term, the income of the Welsh median household has been around 95 per cent of that of the UK as a whole and has tracked the UK income closely. Over this period of time employment rates in Wales have been a little below those for the UK as a whole, but above historic rates. Mirroring the UK as a whole, the qualification profile of the Welsh population has improved over time but gaps with the UK as a whole have widened slightly.
Planetary health and limits
- By 2050 in Wales it is predicted that the summer average temperatures will increase by 1.34 ⁰C. Winter precipitation is expected to rise by 5 per cent in the same period while summer precipitation will decrease by 16 per cent and rises in sea levels are expected across the country.
- Climate change and extreme weather can exacerbate health and wellbeing inequalities. There is also a risk that responses to climate change can place disproportionate burdens on people and communities who are already vulnerable. For instance, the risks of heat-related deaths are projected to triple by the 2050s in the absence of additional adaptation, and disadvantaged groups are currently more likely to live in buildings that are poorly adapted to high temperature conditions.
- Estimates show that from 2020 emissions need to decline by 7.6 per cent every year from 2020 to 2030 or the opportunity to limit warming to 1.5⁰C will be lost. However, global greenhouse gas emissions have grown every year since the financial crisis in 2009, at a rate of 1.5 per cent annually. Against this global backdrop, Wales has decarbonised a little more slowly than the UK, but has still seen a reduction of around 40% since 2008. The single largest contribution to this drop is carbon reduction in the energy supply sector.
- There is a great deal of evidence pointing to a decline in species across groups in all parts of the world and this trend is happening across Wales. The UN predicts that one in eight species on the planet will be extinct within 20 years.
- There is evidence that emissions from global food production systems are driving biodiversity loss and reducing ecosystem resilience. For instance, nitrogen pollution is leading to the loss of sensitive species. One source of this pollution is ammonia which originates mainly from agricultural sources.
- Climate change is likely to negatively impact on global food production with nearly half of projections indicating yield decreases greater than 10 per cent beyond 2050. In Wales, as with the rest of the UK, we are reliant on food imports from other countries, and often these are from countries vulnerable to the impacts of climate change on food production.
- Just as it did so in the past, technological evolution is expected to continue to pave the way in defining how modern societies and economies will interact and develop into the future.
- The percentage of internet non-users has declined over time in Wales and the rest of the UK. However, there is evidence that a digital divide remains between those who have access to information and communications technology and those who do not. For instance, there is evidence that the proportion of people aged over 75 who are internet non-users has increased.
- The use of Artificial Intelligence is expected to grow (an example is our Penfro chatbot that can answer customers’ queries) with many potential benefits, but associated risks across areas such as employment, skills and the economy. Low skilled jobs are at much greater risk of being substituted by AI technologies or greater automation. There is also the risk of potential bias creeping into the application of machine based learning, therefore raising ethical issues.
- There is a trend towards more flexible and home working. The ability to work from home – or closer to home – is heavily dependent on industry and occupation, with those is low-paid work often severely limited in their options for working flexibly.
The Future Trends report was written during the pandemic, and of the report’s six dimensions, public finances is the one where the timing of the work had the most impact on accuracy. The Evidence Pack references the Welsh Budget 2022: Chief Economist’s report as a source of information for future reference. The Fiscal prospects section is summarised below:
- Tax as a share of UK GDP is forecast to increase to its highest level since 1947. Large real terms spending cuts have been “pencilled in” for the next spending review period.
- The OBR has again confirmed that the UK’s public finances are on an unsustainable path over the long term.
- Inflation means that the Welsh Government’s settlement over the three years of the current spending review period is worth up to £3bn less in real terms than expected last year.
- Welsh Government’s budget for day-to-day spending per person is set to grow by less than 0.5 per cent a year in real terms over the remainder of the spending review period.
- How England funds its demographic pressures will impact on the resources available to Wales meet these demographic pressures (sometimes referred to as a Barnett formula consequential).
- The devolved taxes are expected to continue making a positive contribution to Welsh Government finances.
- The large gap between total public sector revenue and expenditure for Wales represents a major transfer to Welsh people through the UK fiscal system. This transfer is the main reason for the gap between measures of household income and GDP in Wales and represents a key risk to Welsh living standards.
Public sector demand and digital
- The key driving force creating increased demand is population change; the number of people above pensionable age is growing faster than the number of working age people. Across the UK it is predicted that expenditure on health will grow from 7.3% to 8.3% of GDP by 2064/65.
- There was a steady increase in the proportion of people who use digital methods to access council services pre-pandemic with only 1 in 5 saying they now do not use public sector websites. This proportion of people using digital methods will have increased markedly during the pandemic.
- The response to the pandemic has rapidly accelerated alternatives to face-to-face contact in the health care sector, demonstrating the capacity of technology to change how people interact with the public sector.