Examination of Witnesses (Questions 380
- 397)
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
380. One of the important things which we discussed
yesterday, which I mentioned, is this idea of a one-stop shop.
If you have a plethora of different schemes and different organisations
and places to go, it is very difficult for somebody wanting to
get help to get it. Just a point. I am sure you have taken that
on board.
(Mr Willott) That relates to the Business Connect
discussion as well.
(Mr Rowe-Beddoe) I gave some numbers and I had the
thoughts in my head. It is a bit of a moving target. I see in
the Pathway to Prosperity document that it is 1988-98. I was quoting
1987-98 and I put a three instead of a two. In the last ten years
the figures are £266 million overseas and it is £228
million non-overseas of regional selective assistance.
Ms Morgan
381. In paragraph 6.2 you suggest that a number
of the Welsh Office business services programmes should come under
the WDA. Which programmes did you mean by that?
(Mr Morgan) Grants are available through the Welsh
Office Industry Department, SPUR and SMART awards. There is the
work of the Technology Division within the Industry Department
where they work very closely with us at the moment. It would be
very helpful if they could be brought together and avoid duplication.
It is mainly in the area of grants and awards.
(Mr Willott) It is essentially service delivery to
businesses. The view is that it would be sensible to have service
delivery in one organisation.
382. Would you think it would be a good idea
to bring the whole of the Welsh Office industry department under
the WDA?
(Mr Willott) No, the focus is where they are actually
providing a service.
(Mr Rowe-Beddoe) Delivering the programmes.
383. Would you see it as a good move to merge
with the WDA the whole of the Welsh Office Industry Department?
(Mr Willott) I do not know what they all do—that
is not meant to be a pejorative comment—but clearly they
will have a role in supporting the Assembly in policy development
so we would not propose that should change.
384. Specifically the service delivery elements.
(Mr Willott) Yes and RSA and delivery.
(Mr Rowe-Beddoe) And export promotion.
385. What about the enterprise functions of
the TECs? We have already mentioned the TECs. Do you think that
would be best coming back to you?
(Mr Rowe-Beddoe) It would be a major subject for consideration
by the Assembly to look again at that situation and see whether
or not greater effectiveness could be brought about by even more
focus.
386. What is your view?
(Mr Rowe-Beddoe) I should like to see a very close
coordination if not total merger.
Mr Caton
387. In the submission you acknowledge that
Wales underperforms in the financial services, transport, storage
and communications sectors and the service sector, such as it
is, is mostly low paid, low skilled. This is in paragraph 3.7.
Why is this? Do you think WDA bears any sort of responsibility
for this? What is the new Agency going to do about it?
(Mr Willott) Part of the reason is historical. You
start with the industrial structure you have and Wales built up
a very powerful coal and steel based economy in past decades,
whereas places like the south east of England and London built
up a very strong financial sector. We are all prisoners of history
and there are limits to the rate at which you can change things.
Clearly what we have now in Wales is a very productive, strong
manufacturing sector, but a service sector, as we have said in
the paper, which is weak in a number of areas. It must be a major
objective of the strategy to increase the proportion of high value
added tradable services in the Welsh economy. That means financial
services if we can attract them in. It means building up Internet
and electronically and telecommunication delivered services. It
means building services which add value to manufactured products,
either sophisticated software which goes with the product or sophisticated
after-sales service. All these areas will generate wealth and
better paid jobs. Software is an activity which could be carried
out anywhere. You could deliver the software over the telecommunication
network. You do not have to be based anywhere in particular. We
must build on the strength of the universities and get people
spinning out from the universities and developing the higher value
added industries around them. Does that answer your question?
388. Yes, except, do you feel that perhaps WDA
has come to this approach a little bit later than it should have
done. Do you think that in the concentration on the manufacturing
sector, the automotive, the electronics, this sector has been
less supported?
(Mr Rowe-Beddoe) No. May I say on the financial services
side, Mr Willott mentioned being a prisoner of history in a way.
It is quite interesting that if you look from Wales to Scotland
you will see a very different picture in financial services and
that of course is not just a difference of history. It is a difference
of geography and that London and its over-dominance as a financial
centre was something which was a little further away from Scotland
so they historically developed. Having said that, since we embarked
some years ago—and I believe it must be five, six or seven
years ago—on a Financial Service Initiative, in fact it
was at the beginning of this decade, we have been very successful
in attracting financial services to south east Wales. That part
has been a success story and if you look at a number of quite
well-known names, international companies, insurance companies
and so on, they are not only there, but they are expanding there
and they like being there. The reputation is growing. What we
are doing now is to move away from the back of house type of service,
which is not necessarily that part of the financial service market
which is of high recompense, and get more front of house operations.
That we are now working on with success coming through. There
has been a transformation. To say whether the WDA is responsible
or not responsible for being late in the game, I really cannot
comment. I just know that in 1990 or 1991 is when the initiative
started. The question of call centres, which is somewhat different
to the financial service initiative, is something which is being
prosecuted with great vigour by the Agency and again with some
good success because this is a particular sector which if we get,
and as we are getting, the telecommunication infrastructure correct,
we can actually locate in places which would benefit greatly from
such activities.
Mr Thomas
389. The Scots seem to think that their success
was due to the Scottish accent. Do you have any comments to make
on that?
(Mr Rowe-Beddoe) One company suggested the Welsh accent
was better.
(Mr Turner) When Legal and General announced the launch
of their call centre operation which is based in Cardiff, one
of the reasons which they stated publicly—and I think it
is on record—that project was announced was the positive
market research response they got to a Welsh accent. I do not
think there is anything unique about a Scottish accent.
390. You can make market research tell you anything
you want it to I suppose.
(Mr Rowe-Beddoe) It was not our market research.
(Mr Turner) That is a question for the commercial
companies to address. A lot of international investors cannot
actually differentiate between a Welsh or a Scottish accent, let
alone differences within Wales.
Ms Morgan
391. Are the call centres the basic grade call
centres or the higher level call centres as a whole?
(Mr Turner) Call centres are at the moment one of
the fastest growing ways of doing business. This is something
which was pioneered about 15 years ago in North America and is
now very much moving this side of the Atlantic. Within Europe
the prime growth is within the UK. Call centres are not an industry
as such: call centres are a way of doing business. It is a shorthand
term for the whole question of electronic commerce. If you look
at the Internet for example, in the States the growth of the Internet
in terms of commercial application is doubling every 100 days
at the moment. There is a huge, huge explosion there. The spectrum
of applications of call centres within Wales really goes across
the whole spectrum of business. You are going to get some very
high quality call centre operations. For example, there are applications
in that area in the use of telemedicine. We know of a business
which is looking to provide a cardiac monitoring service over
the telephone. On the other hand you can get call centre operations
which may be merely providing timetable information, for example
for a railway company.
392. And pay fairly low wages.
(Mr Turner) And pay fairly low wages. If you look
at the big operators globally, there is a significant shift in
terms of the quality of operation. They are not just call centres,
for example corporations are outsourcing the whole question of
customer care. They are outsourcing the whole question of technical
support so the big global call centre operators may enter into
a three or five-year contract with a well-known company and say
they will take care of all of that for them. They may do this
globally on a seven days a week, 24 hour basis. In those circumstances,
where time zones and geography are becoming increasingly less
critical, that means from a Welsh point of view that is an opportunity
because those types of operation can go anywhere. The critical
factor then is not buildings and sites, the critical factor is
the availability of the right skill. The art is then going to
be to find the right size of operation to go in the right type
of rural community. It is a question of people, demographics and
skills.
393. How have we done so far with call centres?
(Mr Turner) If you look at it in the context of what
has happened in terms of the growth in terms of this type of activity,
up until now it has had a bias in the financial services sector.
If you look in the last two and a half years then the jobs which
have been created in that sort of call centre financial services
operation account for just over 22 per cent of all the jobs which
have been created in Wales coming from other parts of the UK.
It is already an important part. Certainly in terms of the work
which we currently have in the pipeline, which we are working
on, by far and away the most active sector which the Agency is
currently working on is call centres.
394. Yes, I realise that but I wanted to know
whether they were the basic grade call centres or whether they
were more advanced types of call centres.
(Mr Turner) There is a mixture of both.
(Mr Willott) It is a mixture, from telephone banking
to on-line insurance, to telemedicine, to commercial business
travel, which is quite a complex and sophisticated operation,
to a standard railway call centre. Quite a range.
Chairman
395. DBRW had powers for social and community
developments. Under the new arrangements is this going to be extended
to all areas of Wales?
(Mr Rowe-Beddoe) We welcome the provision of the Government
Bill in that regard which transfers to the enlarged Agency those
very social and community powers. It will call for true partnership
and coordination and it will be very helpful in supporting the
statements that we made in the past that we are taking the best
practice from mid Wales and extending it to other parts of rural
Wales.
(Ms Lloyd-Jones) We are equally pleased that those
powers are reinforced by the Act and will continue in the enlarged
Agency. I do believe that you need to get balance in the mix between
social and economic development right, particularly when you are
talking about local community development. This gives us a real
opportunity to build on the experiences of the last 20 years or
so and to add value to those activities which local authorities,
voluntary groups and community groups are already undertaking.
There is some sensitivity around about what we might be doing
in this arena but there is a real opportunity for us to do more
and work in different ways with different interest groups, which
the Agency in particular has not had the ability to do or the
power to do in the past.
396. That is very encouraging but you will not
be surprised by my next question. Where is the money coming from
to provide the same level of service throughout Wales? If the
money is not forthcoming, is it going to be more thinly spread?
(Mr Willott) Obviously you can do so much by learning
the lessons of the past and being effective and efficient, but
one has to be realistic and we are not going to be able to deliver
the same level of service that has been available in mid Wales
throughout the rest of Wales. We will get as close to it as we
can but it cannot clearly be the same sort of service. We will
have to achieve the same sort of results by different means.
397. May I take you into fantasy land now? Assuming
you could have as much money as you liked, how much money do you
think the new WDA would need to provide not just the DBRW's functions
but your optimum level of functions in terms of job creation throughout
Wales and still get good value per job? In other words, what is
the optimum amount of money you would need?
(Mr Rowe-Beddoe) We have looked at it many times and
that is a moving figure. It is certainly no less than £30
million and probably £50 million would be a most desirable
number. That is the fantasy world.
(Mr Morgan) With the corresponding management running
costs.
(Mr Rowe-Beddoe) That is absolutely right. Together
with the management running costs line which would permit us to
spend that effectively; obviously you would expect that. You would
not be talking about one without the other.
Chairman: Perhaps someone can help you out in
the future. We do have a great opportunity to get it right now
with your reorganisation and we are pleased to have had your answers
today. I want to thank you for the informal briefing which we
had in Cardiff; that was very useful. Thank you very much. I am
most grateful to you for coming today.
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