1. Most of the processes at work in British society operate in Wales as well. But there have been significant developments in Wales in the last 12 months.

2. The critical need for a new workers party was demonstrated in the Welsh Assembly elections of 2007. Voters rejected the “Welsh” Labour government but in the absence of a class alternative Plaid Cymru were the biggest beneficiaries. Labour lost five seats and just about hung onto seats that in the past counted Labour majorities in tens of thousands. Labour achieved its worst result in Wales since 1918 and lost control of the Assembly. The success of Blaenau Gwent Peoples Voice in what was Labour’s safest seat in Britain showed the potential for a new mass workers party.

3. The One Wales coalition government of Labour and Plaid Cymru that emerged from the weeks of horse-trading by the four main parties has done little different to the previous Assembly government. Nevertheless the new government will have important results. The entry of Plaid into the government marks an historic development.

4. The Plaid leaders, based mainly in the North, would have preferred a “Rainbow Coalition” with the Tories and Liberals with Plaid leader Ieuan Wyn Jones as First Minister. But a coalition with the Tories would have spelt disaster for Plaid in the South Wales valleys and was unacceptable to its left wing. Despite its recent rehabilitation in the media the nightmare of previous Tory governments still lingers in the consciousness of most working class people in the valleys.

5. Labour leaders would have preferred to have had a coalition with the Liberals, but this was unacceptable to Liberal council leaders in Cardiff, Swansea and Bridgend who have been able pin the blame for cutbacks on the Assembly administration and are facing big battles with Labour this May in the council elections.

6. So needs must, and both Rhodri Morgan and Ieuan Wyn Jones, first minister and deputy first minister, were forced into this uneasy marriage of convenience.

7. The One Wales agreement marks a partial victory for health campaigners fighting to save local hospitals and health services. The opposition to the threatened closure of a number of hospitals particularly contributed to Labour’s losses. Plaid, sensing the huge opposition to the reconfiguration of health services, made it the central part of its election campaign and so no mergers or closures will take place for a year or so after the election.

8. Labour’s Designed For Life programme to centralise services is dead. None of the parties, the health bureaucracy or the media will admit it, but health campaigners have killed the programme indirectly through the results of the Assembly elections. This vindicates the position of Socialist Party Wales in opposing the strategy from the beginning and our party played an important role in opposing it in Cardiff, Swansea, Rhondda Cynon Taff and Merthyr. The campaign we initiated in Swansea became a central issue in the Assembly elections as a whole.

9. The victory means that the attempt to downgrade district hospitals, which was begun earlier in Wales, has now been put on hold while it is being implemented in England. The One Wales document also pledges to eliminate the use of private hospitals by the NHS in Wales by 2011. The working class in an unconscious way has been able to exercise its relative social weight in Wales to use the Assembly elections to delay the cutbacks. However the absence of a mass workers party means that the cutbacks have been only delayed and softened. Unless health funding is increased then it is inevitable that that Labour, along with Plaid leaders this time, will come back again with new plans implemented in a more tactically astute way. Already Rhodri Morgan has re-opened a new consultation process for the closure of hospital services in Swansea. The Assembly’s purse strings are still controlled by the Brown government in Westminster.

10. Another important clause of the One Wales document is the promise of a referendum on full law making powers for the National Assembly by 2011. If the referendum takes place then it is likely that there will be a Yes vote in the referendum and that the Assembly will gain similar powers to the Scottish parliament although a number of Labour MPs will campaign against the proposal. These MPs are worried that their influence at Westminster will be reduced by the Assembly gaining more powers. More Welsh issues will be taken over by the Assembly and the issue of Welsh and Scottish MPs voting on English-only issues (the so-called West Lothian question) will grow as a result.

11. The Barnett formula which determines the level of funding of public services in Wales at the same per person as England will also come under review, but neither a Brown government nor a potential Cameron government is likely to increase public service funding in Wales relative to England. In fact all public spending in Wales is being squeezed as public spending across the UK is held down by the Brown government. Council services will come under even more pressure as the Assembly’s budget provides a cut in council spending in real terms.

12. The spending on schools in particular could provide a backlash as across Wales the councils implement the Assembly’s plan to close schools. This is an issue that will affect every area urban and rural, North and South, English-speaking and Welsh-speaking. The Assembly’s funding formula on an amount per pupil guarantees falling spending as pupil numbers fall. Instead of cutting class sizes the Assembly is cutting spending. Already there have been significant campaigns in Rhondda Cynon Taff, Cardiff and Gwynedd, and there will be even more in 2008.

13. School closures is a policy that unites all four parties against parents, teachers and school students in community schools across Wales. Plaid is closing schools in Gwynedd, the Liberals in Cardiff and Labour is pushing the policy in the Assembly. It makes little difference to school closures which parties win local elections this May. Initially localised campaigns have concentrated on saving their local schools, but we must attempt to generalise the issue exposing the Assembly government’s policy.

14. The coming slowdown in the British economy will have a particularly harsh effect on Wales. Many communities have still not recovered from the decline of manufacturing and mining in the 80s and 90s. Employment in the finance sector which grew in South Wales in the 90s and 2000s is likely to be badly hit in the economic crisis. The cuts in public spending and attacks on benefit claimants will further intensify poverty in Welsh communities creating anger and bitterness as well as a degree of demoralisation and despair.

15. Brown’s attack on public sector pay could have a big effect on Wales with 30% of the workforce working in the public sector. The rotten role of the trade union leaders, with the exception of the PCS, has thus far prevented a united struggle against the pay restraint, but the discontent of public sector workers could flare up in other disputes.

16. 2008 will provide new opportunities to build our party across Wales and establish new branches. The need for a new workers party in Wales has intensified in the last year with the entry of Plaid Cymru into the Assembly government. It will be harder for Plaid to claim that it is the left alternative to New Labour in Wales. Our party in Wales is well placed to take forward this vital strategic task in the next period and at the same time build support for our ideas as the only way out of the new crisis of capitalism that is developing in Britain.