Examination of Witnesses (Questions 360
- 379)
TUESDAY 14 JULY 1998
MR D ROWE-BEDDOE,
MR B WILLOTT,
MS S LLOYD-JONES,
MR J TURNER
MR G JACKSON
AND MR
A MORGAN
Chairman
360. We have a figure here of £13 million
of business which is one of your targets which you have to secure
through your business development programme. Is that entirely
indigenous? That is what we have had from the Secretary of State
based on his priorities in the strategic guidance letter.
(Mr Morgan) That was the value of business gained.
In-1997-98 we actually achieved £43 million so we overachieved.
It is all to do with business development.
361. Is it all to do with indigenous business
development?
(Mr Morgan) Yes. The ones described by the Chairman
in his opening remarks, the 3,000 companies which we target.
Mr Caton
362. I should like to explore a little bit further
this subject of targets and achievement. I was interested in what
you said about moving away simply from job creation as a measure
to other things, including what were mentioned in the Pathway
document. I realise you do not have a definite answer to this
yet from what you have said, but have you thought about the sort
of criteria which you would expect to be measuring against in
future?
(Mr Willott) No, not yet. It will take quite a lot
of serious work to do this. The difficulty is the timescale issue.
Clearly the objectives which are set in the Pathway document are
very much long-term objectives; they will take five, ten, 15 years
to achieve. For there to be effective targets for an organisation
which are set year by year, you have to have-short-term targets.
We really are a long way from identifying what the short-term
targets ought to be in order to achieve long-term objectives.
There is a lot of serious work. It would be really facile to say
we know the answer.
363. You could argue that the big long-term
target in that Pathway document, although it is job creation,
is the 200,000 jobs which are described as needed by Wales. In
your submission, you make reference to the 160,000 jobs which
since 1983 you have either safeguarded or created. Does that take
any account of possible displacement?
(Mr Willott) I do not think it does, but there is
no evidence that there is a lot of displacement to be frank.
364. But we do not really know.
(Mr Willott) No. There is no domestic industry for
a lot of the projects which have come so you would not expect
displacement.
365. Thinking of that 200,000 figure, what sort
of timescale are we realistically talking about tackling that
on?
(Mr Willott) A decade.[2]
366. We could do it within a decade.
(Mr Willott) That is the sort of time.
(Mr Rowe-Beddoe) It would not be less. In other ways
if you look at the GDP gap, which is perhaps something which between
Wales and the UK average we are talking about 17.5 per cent, the
figure is that we would have to achieve a higher GDP growth by
about half of one per cent per annum than the UK average over
a decade to close that gap. This is not unrealistic if everything
worked, but I would have thought that it would be at least a decade.
(Mr Willott) You can slice it another way. The inward
investment creates around 8,000 or 9,000 new jobs a year. It ought
to be possible to get the same sort of success from indigenous
companies. It is very difficult. We do not know enough about job
creation by indigenous industry and we need to have quite a bit
of research done on that. It must be possible to achieve the same
target. Therefore you are talking about getting on for 20,000
jobs a year between the two which would be the basis for saying
a decade.
(Mr Rowe-Beddoe) What we know about is the 3,000 businesses,
and the 1,000 businesses in mid Wales. These are but 4,000 out
of 58,000 VAT registered businesses. I suppose if one is being
somewhat absurd you could say if those 52,000 businesses, or 53,000,
which we are not dealing with hired one more person you have half
your target. What we know, and we have our basis, is on that constituency
with which we deal. We are, of course, less conversant and have
less information on that part of the universe which we are not
dealing with.
367. How accurately do you monitor jobs actually
created as against the forecast?
(Mr Rowe-Beddoe) Very accurately. I believe our figure,
certainly on inward investment as against forecast, runs to about
82 per cent. Very accurately and we are ahead of Scotland, I am
happy to say, and the UK average, on that number.
Mr Llwyd
368. I was rather astonished to hear Mr Willott
say that he did not know enough about the creation of jobs in
indigenous business. The perception outside of these hallowed
walls, amongst the public certainly, is that perhaps the WDA are
more concerned with the glamour projects, LG, etcetera, than the
indigenous sector. Perhaps that is not misconceived, if you do
not know enough about it. Where are we going?
(Mr Willott) There are statistics which give you net
figures, but the economic analysis for understanding the dynamics
of the gross births of companies and job creation by companies
is not there. We do need to have some studies of this. The information
is not sound.
(Mr Rowe-Beddoe) I was hopeful that I had in my opening
statement tried to take some of these misconceptions away. I did
say what we did not do. It is not because of desire or anything
else but we do not look after or try to look after more than 3,000
of the 58,000 registered VAT businesses. That is a whole range
of historical reasons, largely, not just policy and resources,
both in financial and human terms. When I look at what we spend
and what we achieve in that part of the indigenous business universe
in which we are dealing, then in fact it is a credible performance.
We should like to do more but we need more money.
369. I fully accept that and I think you are
absolutely right, given the resources you have. This sector must
be, in my respectful view, a priority for reaching anywhere near
the target set by the document we referred to. We are all agreed
on that, are we not?
(Mr Willott) Yes.
(Mr Rowe-Beddoe) Yes; absolutely.
Mr Thomas
370. You mentioned that in 1991 there were certain
organisational changes to the WDA and indeed you say that organisational
change is probably endemic when you are talking about publicly
accountable bodies such as the WDA. You are in a constant state
of review, I suppose. Could I ask what you did lose in terms of
business support functions in 1991?
(Mr Rowe-Beddoe) Two things. The organisational change
which I believe was being referred to was one which was undertaken
in 1993-94. That was when we devolved into the divisional structure.
That is where we are today and tomorrow where we will be, bringing
in the DBRW to be one of those divisions. In 1991, very specifically,
both funding and responsibilities in certain specific areas were
moved away from the Agency. I shall turn to Mr Morgan.
(Mr Morgan) Up until 1991, we managed the Small Firms
Service by the Department of Employment, which was a one-stop
shop at that time and had a Freephone Enterprise number and was
a UK-wide service. We managed the Counselling Service in Wales
where we had a team of some 80 to 90 business, retired businessmen
or businessmen who had spare capacity and time. We had our own
full-time team of enterprise support executives, actually in excess
of 100 in those days; at the moment we have somewhere in the region
of 50 people involved in business development. We were involved
in training and we ran an awareness programme from schools right
through to Be Your Own Boss courses. We were involved in community
enterprise initiatives which were taken over by the local authorities
and finally the financial support which was referred to earlier
on.
371. The DBRW actually retained—
(Mr Morgan) Most of those functions.
(Mr Willott) Yes.
(Mr Rowe-Beddoe) Yes.
372. As far as business startup is concerned,
do you agree that there is a need to increase the level of business
birthrate in Wales and to have a business birthrate strategy?
(Mr Morgan) Yes.
(Mr Willott) Yes.
(Mr Rowe-Beddoe) Yes.
373. How do you think that can be facilitated?
(Mr Willott) I see this as being part of the entrepreneurship
action plan which is referred to in the Pathway document. Rather
like the regional technology plan, we will need to involve all
the players in Wales in developing that entrepreneurship plan
and that will include a birthrate strategy.
(Mr Morgan) There is a birthrate strategy. It is actually
carried out by the enterprise agencies which we have throughout
Wales. They are lacking in funding and they look to the Training
and Enterprise Councils for their funding. Because of changes
in the structure, they are drying up very quickly and they will
be looking to us to support them in the future.
374. Do you have access to any figures which
show how much RSA has gone to indigenous businesses as opposed
to inward investment?
(Mr Rowe-Beddoe) Yes.
375. Do you have them available now?
(Mr Rowe-Beddoe) I might have them now if somebody
could pass something. It is about 50 per cent. It is surprising.
It is a very interesting statistic. If you take a ten-year period,
you will see that maybe it is 60:40 overseas companies to indigenous
companies. The figure is somewhat like 350 to 300 million pounds.
Chairman
376. Is that in financial terms?
(Mr Rowe-Beddoe) Selective assistance right across
Wales.
377. You say it is 60:40 or 50 per cent. Is
that in terms of numbers of companies helped or in financial terms?
(Mr Rowe-Beddoe) In money terms, which probably means
more in numbers of indigenous companies than overseas companies.
Mr Livsey
378. The WDA appears to be involved in an awful
lot of different schemes, individually worthy, but arguably not
always contributing to a coherent strategy for economic development.
Is this a fair assessment? I gather that Cardiff itself has had
12 individual minor schemes with the WDA. Do you think it ought
to be more focused?
(Mr Willott) Most of the schemes which have been devised
have been devised with a specific objective in mind at the time.
What we probably need to do, which we are doing, is to review
them pretty regularly, to see whether they have outlived their
purpose or not. Certainly if there are too many schemes, this
is liable to cause confusion among the punters. We are reviewing
the schemes and my aim will be to reduce the number.
379. With a more effective use of resources?
(Mr Willott) It is also simplicity for the businessmen
out there. It is much easier for them to understand if there is
a rather limited number of schemes which they can get their minds
round. It is really effectiveness.
2 On further reflection, the Agency believe that it
may take significantly longer than a decade to achieve the 200,000
jobs indicated in the Welsh Office "Pathway to Prosperity"
document, given that on past performance total employment in Wales
has been growing at an average of approximately 7,000 jobs per
annum over the last decade. Back
| 
