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David Porter » Articles at Suite 101 » A Welcome in the Vales: Where Is the Welsh Economy Going?

A Welcome in the Vales: Where Is the Welsh Economy Going?


Whether down in the gloomy depths of valleys or high on the hills of optimism, Wales’ economy is in the spotlight as discussion continues about direction.

In the traditional-nostalgic Welsh anthem, We’ll Keep a Welcome, the chorus goes: We’ll keep a welcome in the hillside/We’ll keep a welcome in the Vales/This land you knew will still be singing/When you come home again to Wales’. That’s determination to keep going, look on the bright side and welcome people home.

Economic realities don’t live up to folk culture and song, but the fact is, that like much of the rest of Britain, Wales has the necessary resilience, commitment, ideas and drive to regenerate and thrive. Of course, different people hold different views.

Professor Dylan Jones-Evans is Director of Enterprise and Innovation at the University of Wales. He is also Chairman of the Conservative Party’s Economic Commission for Wales, and the only person to write a weekly column in the Welsh national newspapers, Western Mail and the Daily Post. In a personal viewpoint in December 2009, he commented on the Welsh economy in terms of ‘myths, fables and fairy-tales’.

Since 1997, Wales experienced the lowest increase in average full time weekly earnings of any UK region; the earnings gap between Wales and the rest of Britain, had widened; many of the poorest UK areas were Welsh – Central Valleys, Gwent Valleys, Anglesey, Conwy and Denbighshire, he said.

Manufacturing the Key?

The Professor stated that the relative importance of manufacturing in Wales rose between 1992-1997 from 27% to 28% with output up 31%, but had declined to 18% with no growth after 1997, when Labour came to power. Agriculture’s contribution also declined.

His political point was about people’s collective amnesia and anti-Tory bias among politicians and media, that Conservative years were bad for Wales. These were the ‘fairy-tales’. In speaking of the need to ‘encourage enterprise, invest in innovation and get the economy back to work’, he sounded identical to other parties’ commentators.

After Labour took power in the Welsh Assembly after the 2011 elections, Edwina Hart was appointed Minister for Business, Enterprise, Technology and Science. She told Western Mail’s Sion Barry in June 2011 her department’s goals and challenges. ‘I find a very risk-averse culture within the Assembly’.

The Official Line

She wanted to improve ‘the clarity’ of business support and decisions and to be ‘strategic’. Welsh entrepreneur Sir Terry Matthews agreed, saying he wanted the Welsh administration to ‘speed up decision making, planning or whatever’.

As a small nation on the edge of Europe, the ‘main economic levers are not with us. We must use what resources we have for best advantage’, Hart said. On the question of transport as an economic driver, she recognised links between better rail connectivity and improved economic performance.

Her brief does not include transport as such, but it cannot be divorced from jobs and growth. There are to be more cross-portfolios, or ‘joined-up thinking’ as the jargon has it. Investment projects such as electrifying the Valley lines into Cardiff, can only happen with total co-operation, governmental and business.

The previous administration identified six sectors in Economic Renewal Programme, including ICT and the creative industries. They could now be widened to take in construction and tourism. The English idea of enterprise zones could move into Wales, with groupings round, not geographic areas, but specific industry sectors.

Support to micro-businesses, encouragement of enterprise and entrepreneurs seem high on the agenda. Utilising the UK government’s Business Growth Fund should help businesses with potential.

It’s recognising that governments can’t make wealth, but need to create environments for wealth to be made. Tax-varying they cannot; borrowing powers may come. Fewer grants, more repayable loans may continue. Former policies are under review, as normal with a new regime.

Five Years Ahead

Edwina Hart has a formidable reputation as an achiever and ‘not suffering fools gladly’. She wanted to see more people in work, up-levelling of skills and Wales ‘seen as the place to come to invest in’. Larger, more strategic regional work is possible, co-ordinating councils’ transport, regeneration and economic development.

Greater collaboration between business and academia is required. Research and Development bring the most exciting new ideas, products and ways of doings things. She felt where English or Scottish universities were already ahead on a given area, Wales should focus on ‘what we are good at’.

Gloomy View From the Hills

An alternative view came in August 2011, when Claire Miller writing in the Western Mail, warned the ‘Welsh economy may already be in recession’. She drew on figures showing retail footfall in Wales dropped by the most in Britain, jobseekers rose by 10,000 in three months to indicate concern about the country’s economic vulnerability.

She cited Dr Calvin Jones, from Welsh Economy Research Unit at Cardiff University who said it was hard to measure the economy, but ‘even if it’s not in recession, growth is so slow that a fraction of a percentage point makes little difference’. Zero growth is just that.

To say that other countries are in the same position is cold comfort. The Welsh economy depends on the UK as a whole, plus European and global contexts. He felt the problem could be worse in Wales because ‘we don’t have much economic resilience’, relying on leaders’ decisions elsewhere.

University of Glamorgan Professor in Economic Development Policy, David Pickernell, concurred broadly, arguing the public sector cannot rescue them with more public expenditure, only the private sector can. Most business leaders reported that despite it being tough, they were determined to survive. Institute of Directors Wales director, Robert Lloyd Griffiths, heard businesses saying: ‘we’ve had this before, we’re getting on with it’.

Niche Making and Selling

Peter Midmore, Economics Professor at Aberystwyth University told Claire Miller that Wales needed to find its economic niche, rather than focussing on strategies like high-tech manufacturing, telecoms infrastructure and green energy that have succeeded elsewhere. Instead, he felt they should try areas others haven’t done so well.

He suggested high-quality food and tourism should contribute more that they do already. Developing a distinctive brand is essential. This was borne out by Village SOS, broadcast on BBC 1 on 31 August 2011.

The prime-time TV programme showed how the small village of Myddfai, Carmarthenshire, had attracted lottery money to create a business selling gifts that drew on the area’s history and skills of locals. It paralleled redevelopment of their ancient village hall into a community resource and enterprise magnet.

Tellingly, when they took the products to a trade fair in London, non-Welsh business people disliked the unpronounceable name. The people of Myddfai stuck with it, though, homing in on the local, niche idea, and it’s working. Perhaps that’s a model for other parts of Wales, too.

First published on Suite 101, 3 September 2011

Image: Welsh Tourism Ripe for Development? – Arpingstone

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