What Welsh business thinks about the future

John Osmond reports on a new survey of key drivers that will define what it will be like to live in Wales in 2030

The Welsh Government should focus on infrastructure investment and education if it is to give Wales a chance of successfully surviving the next 20 years. This is the main message from a survey of Welsh businesses Wales 2030: Perspectives on the Future, just published by the Wales Quality Centre.

Ninety business leaders across Wales responded to the survey, carried out by Swansea-based Opinion Research Services, on what Wales would look like in 20 years time. In many respects business is expecting a bleak future, especially in relation to public spending cuts:

“They believe the substantial reductions in public expenditure over the current four-year spending review are not temporary ‘belt-tightening’, but will set a new baseline for the future. The new reality, if not for everyone then for most, is austerity – in which our assumptions about growth, rising living standards, universal benefits and a growing public sector will probably all be reversed. In talking about living standards they referred to rising taxes, lower welfare benefits, falling or static assets values, and interest rates either eroding savings or making capital investment more expensive – and they did not expect these factors to apply for only ‘a year or two’.”

On the other hand developments in the global economy might present opportunities for Wales:

“Most respondents thought that by 2030 the BRIC countries [Brazil, Russia, India and China] will be building their factories in suitable European hubs to produce and supply their cars and other goods – which has to be the big opportunity for Wales. A number of respondents stressed the need for Wales to position itself as a centre for ‘manufacturing hubs’. However, to achieve this, Wales needs its own ready and continuing supply of skilled motivated workers – while also being able to attract workers and technical talent from elsewhere in the UK. In other words, Wales will have to compete to be an integral part of the free market in labour and capital. If it can achieve this, it will be well-placed to host manufacturing hubs for Brazilian, Indian, Chinese or other car makers wanting to distribute their models around Europe.

This is not impossible: it happened 25 years ago with the Ford engine plant after the fiercest Europe-wide competition; and it happened 15 years ago, again against fierce competition, with Toyota. The only thing that stands in the way is whether we can produce, and go on producing, that skilled motivated workforce.”

We will also only be able to reposition ourselves in this way if we remain alert to a fast approaching revolution in the automotive industry. As the report says, the car industry will reinvent itself with cleaner and more efficient engines, reduced weight with new material and electric or hybrid power – and there will be more focus on hydrogen solutions, but this technology has a long way to go. As one respondent predicted:

“By 2040 at the latest the funeral rites for petrol and diesel engines will be over. The ‘tipping point’ – when more new cars will be sold with electric (or fuel cell driven) engines than petrol and diesel – will come sometime between now and 2030.”

The report also predicts that, as cars become ever more expensive to run, buses will become increasingly important. For young people in particular, cars may be unaffordable in comparison to today. Concessionary travel will probably be reduced and all forms of transport will be more expensive. Overall, though, demand for public transport will rise, encouraging investment and a more continental approach to the car/public transport mix.

One of the main recommendations of the report is for the Welsh Government to focus on improving our infrastructure. As it says:

“The Welsh Government needs to invest in strategic infrastructure to generate successful economies. Because Wales lacks the geography and infrastructure easily to capitalise on emerging markets, it needs considerable investment in road, rail, air, sea communications and power distribution. With the increasing cost of transport in the next twenty years, having an efficient infrastructure is increasingly important. Some companies said they are hampered by incredibly poor broadband connections.”

The Welsh Government is also strongly urged to give more attention to education. As it says,

“Wales produces proportionately fewer school leavers with adequate GCSE qualifications than England and, contrary to general belief, the difference in performance cannot be explained by higher relative deprivation in Wales, for good pass rates can be achieved even with children in the lowest socio-economic quartile. Recent research shows that grade differences often relate to the failure of councils and schools to push teachers and pupils hard enough. In this context it is significant that Wales abolished league tables in schools for almost a decade and has only recently partially restored them though school bandings. Finally, on average Wales spends over £600 less per pupil per year on school education than in England.”

The survey threw up the following suggestions on how these problems might be tackled:

  • Making it clear that teachers and schools are expected to do better: getting pupils and teachers to raise their expectations and work harder.
  • Increasing spending on schools.
  • Refocusing the curriculum on key skills and knowledge – to improve literacy and numeracy as the foundations for further learning, employment and effective participation in society.
  • Promoting a positive ‘work culture’.
  • Developing more links with business and industry.
  • Making schools and teachers more accountable for poor performance.
  • Publishing fuller information about the schools’ banding system and schools’ scores (and making clear how exam performance is moderated for attendance, improvement and free school meals).
  • Increasing business people’s influence on schools-related policies.

The report says that the development of the central business district in Cardiff will have major implications for the future transport hub planning. It predicts that inter-urban movements will increase and regional rail will need strengthening to meet demand, with greater use of bus rapid transit and park and ride. City-region approaches will evolve around Swansea and Cardiff.

In relation to local government, some respondents expected Wales’ 22 unitary authorities to consolidate (like the local health boards have done), initially through shared services, and then through mergers. Other respondents said that workforces will have to become more flexible, skilled and mobile – and so home working and all forms of flexible working will become more common.

“Businesses will increasingly develop direct electronic communication with customers (for example, via their phone apps) to replace more generic communications. As spare parts costs rise, whole life costs will be increasingly important alongside the recycling of damaged/worn out parts. The new younger generation of customers will have different beliefs and values that will influence how companies market themselves and their goods.”

The report found that generally people will have to work longer and harder, and so questions will be raised about the size and extent of employment benefits and the “jobs-for-life-syndrome” of the Welsh public sector. Nonetheless, most respondents thought that the public sector was likely to continue as a key driver for the Welsh economy.

John Osmond is Director of the IWA

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