Transcript Re-building the Economies of Wales* Industrial Communities

CLOSING THE PROSPERITY GAP
KEY POLICY AREAS
THE REGIONAL DIVIDE
 Greater London GVA- 171% of UK
 West Wales and Valleys- 72.6% of UK
 41000 jobs to be created in the Square Mile by 2023
 40000 jobs needed in Valleys to reach average employment rate
 Most geographically unequal nation in the EU
THE WIDENING GAP
• Inner London West GVA/head
£136k
• Forecast growth of 36% by 2023
• Gwent Valleys GVA/head £13.29k
• 3.5% annual growth rate needed
just to maintain the gap
OUTPUT PER HEAD
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UK
England
Scotland
Northern Ireland
Wales
West Wales & Valleys
£23394
£24091
£21982
£17948
£16893
£14763
LABOUR PRODUCTIVITY
Nominal GVA/hour worked – UK =100
 England
101.5
 Scotland
97.4
 Wales
85.2
 Northern Ireland
82.8
 Complex reasons – low business investment,
infrastructure, low rates of innovation and relatively
low skills etc.
WHOSE ECONOMIC RECOVERY ?
 UK Increase in Employment 2009-2013
6.7%
 Caerphilly Increase in Employment 2009-2013 2.0%
 Impact of Welfare Reform on Caerphilly
£73m pa
 UK Average Loss per Working Age Adult
£470 pa
 Caerphilly Average Loss per Working Age Adult £640 pa
RE-BALNCING THE ECONOMY
 Growth will not close the gap – need redistribution of
economic activity
 Developing regional dimension to economic policy
 Maximizing the impact of City Regions/City Deal
 Devolving powers to local authorities
 Reviving industrial investment and production
 Targeting places and creating resilient economies
A PROACTIVE REGIONAL POLICY
 Move Away from unsustainable South East - centric
mentality
 Target Investment on under-utilized assets in the
regions such as land, labour, property and infrastructure
 Include Regional Benefits Test in Government decision
making
 Build on the manufacturing base in the regions
 Improve inter and intra regional connectivity
CARDIFF CAPITAL REGION
 Need for labour market realism
 Develop poly-centric approach
 Role of infrastructure – Valleys Metro & M4 Relief Road
 City Deal – opportunity to re-balance infrastructure
spending?
 Need to address governance & accountability issues
 Needs versus opportunities
DEVOLVING POWER TO LOCAL
AUTHORITIES
 Combined Working
 Fiscal devolution – flexibility over spending and
borrowing
 Building economic resilience through investment in
skills, infrastructure and business support
 Remove uncertainty
 Promote strong leadership
REVIVNG THE MANUFACTURING
SECTOR
 Caerphilly – 22.5% jobs are in Manufacturing – almost 3x
GB average
 Maximize potential of Tier 1 Assisted Area Status with
the balance in favour of grants rather than loans
 Target business support finance on projects that
improve productivity
 Support successful companies as well as target sectors
 Address skills mismatch and under-employment
 Develop Anchor Companies
CREATING BETTER JOBS
 UK has a higher proportion of lower skilled jobs than any
other OECD country, except Spain
 Low skilled jobs contributing to productivity gap & increasing
in-work poverty
 21 % of workers over-qualified for their jobs, up from 13% in
2011
 40% of Welsh companies failing to invest in workforce
 Need to build on WAG’s Employer Pledge
 Enhanced role for anchor companies WAG’s apprenticeship
programme & UK Futures programme
ROLE OF ANCHOR COMPANIES
 Global companies have a significant presence in Wales
 38 Anchor companies identified by WAG
 Less than 1% of all companies but provide 40% of private
sector employment
 Tend to invest more in R&D and training
 Generate more GVA that can be shared through the
supply chain
 Potential across all sectors to support diverse economy
Targeting Places and Creating
Economic Resilience
 Geography and decision making
 Using procurement as a development tool – supply
chains and SMEs
 EU Funds – need for balance between large projects and
local needs
 Target Jobs Growth Wales on weaker labour markets
 Re-focus Work Programme on skills , health,
intermediate labour markets and local delivery
Some Final Thoughts
 Move beyond simple employment numbers
 Commuting can widen job choice – but needs to be
accompanied by raising skills and earning potential
 Understand that where money is spent rather than where it is
earned is just as important to local economies
 Avoid over-dependence on particular sectors
 Be better informed on local labour markets and the local
business environment
 Plan for all eventualities in a fast moving world
 No quick solutions – 1923 Special Development Areas!