Wales needs an international face

Geraint Talfan Davies looks at the issues that arise from a depressing set of figures on inward investment

This week’s announcement of the latest figures for inward investment to the UK – which showed Wales taking a mere 2.6 per cent of the projects and 3.7 per cent of the jobs secured or safeguarded – is a sobering event. In the heyday of inward investment, in the late 1980s and early 1990s, Wales would regularly take more than 20 per cent. This precipitous decline is the main reason that the issue of Wales’s international presence is at the top of the in-tray for Edwina Hart, the new Welsh Minister for Business, Enterprise, Technology and Science.

There is little doubt that Wales has suffered from the rash withdrawal of the WDA brand from the international marketplace in 2004 – whatever the case for absorbing its economic policy functions into the civil service – and from the abandonment of its rather ineffective successor, International Business Wales, as part of Ieuan Wyn Jones’s rejig of priorities in his Economic Renewal Programme in 2010.

But the resulting gap coincides with new opportunities. These include a new emphasis on re-balancing the British economy in favour of manufacturing, and the window of opportunity presented to Wales by the UK Government’s abolition of England’s regional development agencies. Together they cry out for an imaginative new initiative.

There has been justified criticism in the past of our over-reliance on inward investment at the expense of the development of our indigenous business. But this should never have been an either/or proposition. We need both. In 2010-11, 1,434 inward investment projects came to the UK: all of them in sectors in which the Welsh economy does have or should have a keen interest.

UK Inward Investment 2010-11:

Projects by sector

Software 229
Advanced Engineering 177
Life Sciences 139
Environmental Technology 111
ICT 101
Finance 99
Business Services 96
Creative and Media 69
Other* 413
Total 1,434

*includes food and drink, power and chemicals

An indication of the opportunities yet to be seized was evident in last month’s three-day visit to the UK by the Chinese Premier, Wen Jiabao, during which trade deals of £1.4 billion were announced. He went to Birmingham to announce that a new MG car would be built at the Longbridge plant. Other announcements included a planned research and development centre at Nottingham University and a tie-up between University College London and a Chinese bio-energy group.

But commentators noted the fact that he went on to Germany where deals amounting to more than £10 billion were announced – a sign of Germany’s manufacturing strength and Britain’s comparative weakness. If British industry as a whole has ground to make up, how much more true is this of Wales?

Much of the British end of the Premier’s tour was connected with the Chinese-British Business Council, which supports the overall UKTI strategy towards China, and which itself signed a deal during the visit that will see the setting up of a new China-UK Creative Office to promote UK design. The CBBC – not to be confused with the BBC’s children’s channel – is a pretty active organisation, but a glance at its members’ mailing for May, creates a disturbing impression that Wales is not fully on board.

In May the CBBC arranged five events in London and no less than three in Scotland – in Fife, Edinburgh and Glasgow – and a visit for business interests in Yorkshire and Humberside to China itself. Another China briefing event was arranged in Birmingham for rail industry representatives. A wider visit to China for West Midlands companies was scheduled for July.

Some will ascribe Wales’s absence from this schedule of events as a reflection of the fact that there are fewer than ten Welsh members of the CBBC – and one of those is the Welsh Government. Certainly, it brings Wales’ current lack of international presence into sharp focus. It is an issue that is being discussed not only in Cardiff Bay and Cathays Park, but also by the  Welsh Affairs Committee at Westminster in its current inquiry into inward investment.

This being Wales, much of the evidence to the Committee has been historical, harking back to the glory days of the Welsh Development Agency, absorbed into the Welsh Government civil service during the bonfire of the quangos in 2004. But thankfully, rose-tinted spectacles have not been much in evidence. Although witnesses – notably the last WDA Chairman, Sir Roger Jones – exhibited some anguish at the abandonment of the 30-year-old WDA brand, many were highly critical of the WDA in its last years. Some were even sceptical of that brand value, recognising that even the most familiar of logos cannot compensate for under-performance on the ground.

It is tempting to say that all that is history. Yet the merged civil service entity, under both Labour and Plaid ministers, has failed to produce the policy cutting edge, speed and commercialism that our situation desperately requires. In education, the Minister, Leighton Andrews, has been bold enough to say that his own department was not fit for purpose. Edwina Hart, the new Minister for Business, Enterprise, Technology and Science must be tempted to say the same thing. She will have an opportunity to recast it under a new head when the current appointment process is complete.

In evidence to the Welsh Affairs Committee, Glen Massey, who prepared a critical report for the Welsh Government on the performance of International Business Wales, complained that Wales had relied for too long on a strategy that was dependent manly on regional selective assistance grants. He added:

“We have to recognise that we are no longer in that game. The problem Wales had was that the toolset it developed to attract that type of investment did not change to reflect the new world economy. The foreign direct investment that is coming into the UK now is not really looking for regional selective assistance; that is inappropriate. As a consequence of that, we should have developed a suite of other instruments – whether it be skills, a property proposition or R&D through universities, a whole raft of things – to make things attractive to inward investment companies. We have not done so. I think there is a recognition in Wales that something needs to be done, and I still think it is in the process of trying to figure out what it is. Sadly, that has been going on for a long time.”

The challenge must be to establish machinery that is sharper in its intelligence gathering, clever and forceful in its projection of Wales and its businesses, light and swift on its feet, and able to connect with potential investors at the highest level. Those last two criteria are the most difficult ones to meet within the process-driven culture of the civil service.

The regular refrain from some quarters, calling for the revival of the WDA, is unlikely to cut much ice. Plenty of people have told the inquiry that in its latter years the WDA was well past its peak, and that its record on inward investment – once the envy of every other economic region in Britain – had already been slipping. But if that is not the chosen route, some other way must be found of harnessing people with the panache and flair that the WDA exhibited in its earlier, best days.

The solution will not only be about creating the right apparatus to represent Wales, but also about using existing UK networks effectively. Lord Rowe-Beddoe, another former WDA chair, and far and away the sharpest marketeer to have operated on Wales’s behalf, has always maintained that in selling Wales to potential inward investors one had always to sell the UK first. It was only when that point was reached that the WDA machinery could be used as the differentiator.

But there is wider point, too. There is a need to develop a more clearly articulated international policy for the Welsh Government, that should be soundly based on an audit of all of Wales’s international connections – political industrial, educational, and cultural. It should embrace all departments of government and, importantly, make use of all those other actors in Welsh society that reach out beyond Wales. It needs to be a collective enterprise.

Geraint Talfan Davies is Chair of the IWA

Comments are closed.

Also within Politics and Policy