Select Committee on Welsh Affairs Minutes of Evidence

Examination of Witnesses (Questions 280 - 299)



  280. A lot of the evidence we have taken, including the oral evidence from the First Minister, has focused on the idea that Wales does not get its fair share of inward investment, overseas trade and so on when compared to the rest of the UK. British Trade International told us that they had no formula for assessing whether different regions of the UK were getting their fair share of inward investment. Do you think such a formula can be devised or does the Government have one?
  (Dr Howells) It would be very difficult to devise such a formula. You can devise tables and say Wales received £X billion of inward investment last year and the year before that and so on. I shall give you an example of why I think it is difficult. What has happened in recent years is that I consider the really valuable investment has been going into the south east and the Thames corridor and that is because we are getting knowledge-driven industries going in there. Their success or failure is quite difficult to measure. They are going there for all kinds of reasons and it comes back to the point I made earlier. All this has to do with how Wales presents itself in terms of its education, in terms of its communications, in terms of its skills, its industrial infrastructure and so on. If Wales presents itself as attractive enough, it will not have difficulty in attracting inward investment. After all, Cardiff, the capital of Wales, is only 160 miles from London. Newcastle is twice as far, Edinburgh and Glasgow are much further again. Geographically Ireland is way out on the fringe of the European Union. So we are very, very close to some of the biggest markets anywhere in the world. I do not think we fulfil our potential in that respect; we do not have a strategic and sharp enough view of what we have to do as a country in order to attract that inward investment and grow our own businesses. Remember this. The most vibrant part of the whole of the British economy is along the Thames corridor. All of us in this room who live in Wales know it and see it as we have seen those headquarters and plants spread from the west of London out towards Bristol and luckily over the Channel and along the M4 corridor. There is no excuse for it really. We are not geographically isolated. What we are is still confused about what makes economic success and in my view it is a job you have to do yourself. Do not expect Westminster to do it. Those days are long gone. I think that we have to re-invent ourselves, create the infrastructure which is going to make us irresistible as far as inward investment in Wales is concerned. If we cannot do that, then we will continue to bumble along in the way that we have done for the past 30 years.

  281. I hear what you say and agree with it. However, clearly British Government and agencies do have a role to play, that is the very reason you are here today. From your own submission we learn that Invest-UK attracted 757 projects to the UK in 1999-2000 but only 45 of those came to Wales. It is those sorts of figures which make people think that perhaps we are not getting a fair share and perhaps agencies like Invest-UK are not always pointing possible investors in our direction.
  (Dr Howells) I do not think that is true. I know it is not true from my own experience abroad. We have two DTI Ministers now who are from Wales; people may have noticed. Believe me, if we were trying to influence the way in which people made decisions about where they are going to come to, or where they are going to invest, then I suspect that even if I did it unconsciously, I would be leaning in favour of Wales. That is not the point. The point about the way in which our agencies work is that they are customer driven. There are places in Kent for example, much closer to London than Wales is, where they cannot get investors to go. Sometimes it is a factor X. Maybe it is to do with the way in which the economy has changed in that area. Maybe there are shadows of problems in the recent past hanging over them. In the end, you cannot push customers. I should love to see industry going to mid-Wales for example and down further into the west and into the north west of Wales, because their economies have hardly begun to scratch their potential. The reason they do not go there is because that is not where customers want to go. Somebody mentioned, quite properly in my view, the problem of not having a busy airport. We have a first class airport, but it is not a first division airport. If you look at the way in which Manchester, for example, has decided that it is going to be something more than a third tier airport, we ought to have learned from that. I notice, something which troubles me a great deal by the way, that Bristol airport now has a new terminal which is very nice, very good to travel out of, they have started to expand their destination base and we ought to be looking very, very carefully at these factors. Invest UK certainly do not discriminate between any areas. They will try to guide people to where we are strongest in terms of our skills bases and our education system. I do not think we play to our skills in Wales. Somebody said something to me the other day which started as a joke, "What do you have more of than anything else in Wales?". I said sheep. He said, "Where's your centre of wool and sheep excellence in terms of what you do with the products which come from sheep?". I had not thought about that before. We do not have one. We are hopeless at playing to our strengths and trading on our strengths. What we are looking for all the time is another big coal industry or another big steel industry which will somehow move in and transform the Welsh economy. It is not going to happen. A lot of those projects you mentioned are small, they are knowledge driven, they are computer based. Those are the ones which create employment and which are going to grow in the future and, much more importantly, are going to underpin economic achievement as far as this country is concerned.

  282. From what you say about being customer driven, is it fair to say that you consider thinking in terms of fair shares for bits of the country is a wrong way of looking at it?
  (Dr Howells) Yes, it is a wrong way of looking at it. The idea of trying to shove a business into mid-Wales, a white van business for example, which might need excellent communications to deliver products bought through the internet; they would find it very difficult to make ends meet in mid-Wales with the state of the roads at the moment. We have to be realistic about this. We cannot tell people where to go. The world is full of footloose capital looking for a home, looking for the best returns on capital and if we do not understand that, if we assume that somehow we can force people to go here and force them to go there, the only way to do that would be to bribe them with huge amounts of money and we have seen with Valeo recently and other firms where that leads us.

  Mr Caton: I would like to open up the discussion about Valeo, but a group of local MPs are coming to your Department to discuss the problems of Valeo later.

Mr Edwards

  283. We took evidence from Sir David Wright, the Chief Executive of British Trade International. He told us that whether British Trade International suggest a prospective investor goes to one part of the UK or another depends largely on that client's business needs. Where the DTI promotes Wales abroad, it tends to be as part of wider exercises promoting the UK as a whole. If Wales's profile is already lower than that of other countries in Great Britain, is there a danger that it is getting swamped in a UK-wide approach?
  (Dr Howells) If it is lower. I do not accept that premise. The profile is what you make it, that is what companies have to deal with every day of the week. If their profile drops, if their reputation declines, they are going to lose business. The very idea somehow that Sir David or anybody else is going to say they will not push them towards Wales because it does not have such a high profile, to me is just nonsense. Wales has done very well from inward investment over the past 20 years. One of its great strengths has been that it has a reputation still as somewhere where education is important. We have good communications west to east, lousy north to south. We are not far away from big markets. We are members of the European Union which is another very important one. May I say that I remember going to Taiwan to try to find out why the world's largest manufacturer of television tubes decided to locate in Lanarkshire and not in Cardiff next-door to the new glass factory which was going to supply all of its components. In other words, they were ready for the next 20 years to load glass products onto the backs of trucks and send them 400 miles to Lanarkshire to be put together. They said that when they got to Britain a Scottish Minister came to meet them at Glasgow airport. They said your Minister, who was a member of a different political party at the time, could not even be bothered to come out of the Welsh Office and cross the road to the Temple of Peace to meet them. They also told us that the whole of the package was very important. Locate in Scotland had put together a superb package which meant that they had room to expand, they had guaranteed good education for their children, very close links with universities and a lot of those were lacking at the time in the provision made by the WDA. If you are asking me why that company decided to locate in Scotland, it was not because of the higher profile of Scotland: Scotland were offering them a much better deal than they got in Wales.

  284. I can assure you that the Committee did go to take evidence from Locate in Scotland as part of a previous inquiry and was very impressed with their approach. What would you therefore recommend the WDA does that it does not do already?
  (Dr Howells) First of all it has to be humble enough to learn from other agencies. I happen to think that WDA has done a very, very good job in balance over the past 20 years for Wales, but it still has a lot to learn and the world moves on. Its relationship with the Assembly at this point ought to give it enough creative drive to make those leaps forward. Now is the time to do it. If we let it go much longer, then do not forget this: there are now new regional development agencies in England and some of them are very big. Some of them have populations bigger than Scotland, Northern Ireland and Wales put together and they are going to be big players in trying to attract footloose capital into their regions. We have a doubly difficult job at the moment. My view is that to look for dole-outs and subsidies from the Westminster Parliament would be the kiss of death. We have to be creative. We have to play to our strengths and realise we have a new competitive field in which we are involved.

  285. If you were the Minister for Economic Development in Wales what would your priorities be?
  (Dr Howells) It would certainly be to try to continue the transformation of the Welsh economy and to make sure that we understand the significance of the great changes towards knowledge driven industries. I am not sure we have understood that yet. We are beginning to understand it. We have more universities per head of population than any other part of Europe. We do not use our universities in the way that we should as centres of excellence and innovation. We have a long way to go yet. We are still looking for quangos to save us.
  (Mr Wilson) To reinforce some of what Kim said, the figures quoted for Invest-UK are only a part of the story, or the Invest in Britain Bureau as it used to be. I would imagine the majority of projects which go to Wales, as in Scotland, are direct links between the inward investment agencies in Wales and Scotland and the companies; that they have been out in the field targeting their own companies. The role of Invest-UK is to attract investment to the UK generically and then make sure there is not wasteful competition between different parts of the UK. It is worth remembering that for these 20-odd years, in the case of Scotland 25 years, we have had the bonus of having an agency which is working specifically for Scotland as well as the UK effort and you have the same in Wales. So we are both well ahead of the field in terms of the combined effort to get inward investment into Scotland and Wales. The point Kim makes is very timely, because that is now changing, because of the RDAs in England. There is no future in complaining about the generic UK effort, increasingly it is going to be the value which is added by the regional or national agencies to that overall effort. May I very briefly comment on Mr Caton's question about making sure of an even spread of inward investment. It just is not possible because this is a buyer's market. In every one of these cases it is not only different parts of the UK which are possibly competing against one another but every one of these inward investors is coming to the UK or any part of the UK because we are part of Europe. Therefore we are competing against the rest of Europe every time to attract these inward investments. The idea that we can say Wales does not have its quota this year, would you mind going to Swansea, is a dream world and it just cannot happen. Every area within the UK and the UK as a whole has to fight its corner in a highly competitive market and that can only be done by the sheer professionalism of approach.

Mr Llwyd

  286. May I say I agree entirely with what Dr Howells said about the knowledge based industries. He has hit the nail on the head there. We can actually learn a lot from the Irish experience. There is a better linkup between industry and universities in Ireland and very often European funds come in as well. They are being creative in that regard. We do have some good universities in Wales which need to be brought closer into matters. Referring to what Dr Howells said earlier on that we should not wait for Westminster to do it, we have to do it ourselves, raise the profile and so on, in light of that is there a continuing role for the UK Government in promoting trade and investment or should the whole matter be transferred over to the Assembly and WDA?
  (Dr Howells) No, Brian Wilson has made it very clear and this is my personal view now, that the very idea that we should have to go to the expense of setting up what would essentially be trade missions or embassies throughout the world would be mad. We have some terrific embassies. We have less successful embassies as well in terms of the support they give to trade but generally we have some very good ones. We have to ride on the back of those. Whether we shall continue to do it in the way we have done in the past is hard to say. There is a lot to learn from the way in which Ireland has approached this and other areas, especially Catalonia. I know that when the Secretary of State went out there he was very impressed with the way they performed the very difficult trick of on the one hand being part of the image of Spain, which has this beautiful new logo since the Barcelona Olympics, it brands itself very well, it is an economy which is starting to run again very well now, so it rides that one, but it also says, hey, we are a very special place within that. I suspect that is the way to do it. We have had this discussion many times. In your own constituency people who worked at Trawsfynydd nuclear power station probably ran the most successful magnox that was run anywhere in the world for a very long time. It amazes me really that we can be so frivolous with the skills they have built up by assuming that it is quite right they should be dispersed and that there should not be a special targeted effort on perhaps a new role they could fulfil, but which calls upon those tremendous skills they have built up over that period. We have been very frivolous in the way we have used the skills, because we are one of the oldest industrial nations on earth. We ought really to play to our strengths and understand that we have a great reservoir there, if only we can tap it properly.

  287. This question might have already been answered in part but may I ask it? Does British Trade International have any specific targets for promoting trade and investment in different parts of the UK as well as for increasing the total amount of overseas trade and inward investment? If it does not, should it?
  (Mr Wilson) I would question whether that is British Trade International's role because of the point I made earlier about there being a dual effort between British Trade International and the agencies which pre-dated devolution. I apologise but I inevitably refer back to the Scottish experience more than to my present role. For instance, Scottish Trade International, when I was there a couple of years ago, set a target to increase the number of exporters in Scotland to X thousand over a three-year period. That clearly is a job for Scottish Trade International, it is not a job for British Trade International. The same would be true in Wales. I think the answer to the question is no, that we can set UK targets and attain them but really this is added-value effort within the nations and regions which are more relevant to meeting specific targets there. All we can ensure at a UK level is even-handedness and to make sure that exactly the same opportunities and facilities are available to companies and individuals in every part of the UK. It is in that, if anybody feels aggrieved, that we should look at these complaints. Certainly in Scotland you would find an awful lot of companies who look mainly to the DTI and to British Trade International rather than to the Scottish agencies just because of the nature of their business and the places in which they do business. I am sure it is the same story in Wales. In general there is a pretty high satisfaction level in the service which is provided.

  288. Following on that point and also referring to what Dr Howells said about wanting to see industries moving up to mid and north west Wales, where historically it has not been happening in any degree, surely imposing targets as such would assist because then that is a positive target to work to, is it not?
  (Mr Wilson) With respect, it is an internal Welsh matter. The point of contact of the great majority of companies which might go to these parts of Wales would be with the WDA rather than with Invest-UK. When I was a Scottish Industry Minister I asked Locate in Scotland to set up a rural section specifically in order to try to counter this problem. It was a very divisive point within Scotland and there was this great image of Locate in Scotland doing a wonderful job, bringing in industries, but there were huge parts of Scotland which said they had never seen any of it. Therefore we tried to counteract by saying there should be a refocus and they should remember there were parts of Scotland which had never had any inward investment. That has been quite successful. It had nothing to do with the UK level, it was entirely something which was done within Scotland.
  (Dr Howells) I have drawn a little map for myself about the way the system works and if you look at the structure we have British Trade International and one of its arms is Trade Partners UK and they deal with outward investment and trade development which is something we have not spoken about yet. It is how Welsh firms find markets abroad. Then we have Invest-UK which deals with inward investment; it was formerly the Invest in Britain Bureau. Welsh Trade International is the devolved partner of both those arms. There is a strategic committee which is called the Committee on Overseas Promotion (COP), and the WDA are members of that committee. These arguments, theoretically at least, ought to be fought out within that structure. I think Brian Wilson is right. There is BTI, just like its counterparts in Spain or Italy or Germany or France, which is saying we are a good place to come to. Within that they ought to be able to say that if someone is looking for a rural location with a good university, think about Bangor, or wherever. That is the way it ought to work. I am pretty confident it is working that way, but then we come back to those impediments I spoke about earlier, our communications and so on.

  289. That is very helpful; thank you very much. One final question for the Secretary of State. In your opinion, should targets for inward investment in Wales be incorporated into the Wales Office's Service Delivery Agreement?
  (Mr Murphy) No, I think that what my colleagues have said is absolutely accurate. We have to be very careful about putting in artificial targets, which that could well be. The general way in which we approach investment, which Kim has just referred to in detail, in partnership with the Assembly, is by far the best. I am not so sure that targets are the answer.

Mr Livsey

  290. Can we turn to tourism now? We were told by the British Tourist Authority that only four per cent of visitors to the UK come to Wales. In fact it is actually only two per cent if you exclude those entering the country via Irish Sea routes. I certainly do not think that figure is acceptable. Do you?
  (Mr Howie) It is a low figure compared to the numbers coming into Britain generally which is 25.4 million per year. But the British Tourist Authority is working as an equal strategic partner with the Wales Tourist Board to increase the awareness of Wales and to enhance its image. As far as I am aware the Wales Tourist Board think that BTA is doing a good job. I can say that because I have been involved in a review of the BTA and the first stage was published in January this year. The Wales Tourist Board said that it was getting value for money from the BTA. They are working well together but much more needs to be done to try to educate more people to what Wales has to offer.

  291. The Assembly itself now has responsibility for the Wales Tourist Board. It has had its budget increased in its long-term projections quite significantly. Are you in fact involved intimately with the Assembly in trying to promote Wales, because they do have a tourism strategy?
  (Mr Howie) We are involved inasmuch as we are in touch with Assembly colleagues to see what they are doing and to tell them what the tourism policies in England are. It is the British Tourist Authority which has direct contact with the Wales Tourist Board, so we work through them.

  292. Most of us in Wales feel that a lot of tourists spend time in London, Bath and Stratford-upon-Avon. If you actually added all those up, it would make the number of visitors going to Wales look extremely insignificant. What are you trying to do about that to try to redirect tourists in our direction?
  (Mr Howie) What you are saying is true. The majority of overseas visitors to this country come to London in the first instance and it is when they get here that it is the job of the BTA and others to educate them as to the other interesting attractions and scenery and everything else that Scotland, Wales and Northern Ireland has to offer. Whereas 50 per cent or so come to London on their first visit to Britain, repeat visitors tend to go further afield. It is there that we manage to capture visitors to go outside London.

  293. We had a visit from a lot of travel writers from America to Cardiff not so long ago. They were very enlightened and they also got value for money. It come back to the issue of the airport. Undoubtedly barriers are put up by international airlines that you cannot use Cardiff airport, in spite of it having a runway which is perfectly adequate to take jumbo jets etcetera. When is this cartel going to be bust which is preventing proper international travel coming to Wales? Are you working on that?
  (Dr Howells) Certainly. As a resident of Pontypridd, I am appalled at the way in which our tourism industry has been run over the years. It has been run by amateurs. Without becoming personal, it is literally true that the people appointed to chair the Tourist Board in Wales have been amateurs. It reached the heights of absurdity when we had a fantastically expensive advertising campaign, where we had people like Anthony Hopkins standing on deserted hillsides or deserted beaches where it looked as though it was about to rain. They were lovely pictures but who is that going to attract, apart from anoraks? It is not going to attract anyone. The fact is that it has been run for the Cardiff North literati who have some idea of what Wales is and they have wasted every opportunity. The truth is of course that Wales ought to be one of the tourist gems of Europe. It is one of the most stunning countries anywhere in western Europe and we have not even begun to tap its potential because it has been run by amateurs.

Mr Caton

  294. I agree with everything Dr Howells has said. May I go back to what Mr Howie said. It may be why we have one of the problems. You are saying we get the tourists here and then it is up to the tourist boards to send them out. Do we not need to be tackling the tour operators? We had this in evidence from the British Tourist Authority: the London experience is often not a good one for tourists. The medium-priced hotels are not very good, everything costs a heck of a lot more. Should we not be looking for the first part of the tour package to be outside London, then they can finish off their holiday for two or three days in London? Let us get them out to Wales and to the other beautiful parts of Britain first and let them finish off in London.
  (Mr Howie) Ideally that is what we should all like to happen. We are promoting regional spread to try to get people across the country because London is quite congested with tourists. The BTA are using their influence with operators to do this and in fact they may have shown you some of the brochures which they have produced, which are very positive images of Wales along with England and Scotland. I think they are working hard to try to get people to think of travelling outside London. I have to say that I was in the United States at the BTA's office a couple of months ago and it was quite clear that people over there, and I am sure in many other countries, do not quite understand the composition of Britain. They have heard of London, they might have heard of Stratford, but they have not heard of many other places. It is important to get them over here in the first place. It is then on the second or third visit that we are more likely to get them to go further afield. That is the reality of it.

Mr Llwyd

  295. With respect, should it not be happening over there? Should there not be a promotion video for England, Scotland, Northern Ireland and Wales? Surely it is when people are planning their holidays. If I were to fly to the States, let me tell you now that I am not a very orderly person, but I would not land in Washington and then decide where I am going. I would have some inkling of where I am going before I go there. What you have just said sounds a bit strange to me.
  (Mr Howie) If I may explain further. The BTA are certainly promoting all parts of Britain and their tourist literature abroad does contain all that and also they have a very sophisticated website, which is accessed in 27 different overseas countries in the languages of these countries. That will give detailed information of all parts of the country, not just London. What I was trying to say was that despite all that information, people usually for the first time want to come to see the main sites. We probably all do when we go to countries for the first time. It is only after getting into the country that you realise there are many more aspects of it you would like to visit. It is not that it is getting neglected in any way, in fact it is quite the reverse, Wales is getting promoted quite extensively.

  296. Does that not fly in the face of the evidence we have that most American holidaymakers have one holiday in Europe and that is it? That is once in a lifetime. The figures show that, do they not? That tends to undermine what you have just said.
  (Mr Howie) That might go for Americans but it does not necessarily go for Europeans.

  297. We are talking about the States now. This is the example of the States.
  (Mr Howie) If that is what the figures say. It is not saying they exclusively come here (London) because the Americans come to Britain mostly for the tradition and Wales offers plenty of that. It is the question of trying to capture them and trying to get them to travel as far as possible on their first visit.

  298. With respect, it is rather complacent to say that. I have just made that point to you that unfortunately American visitors do a once-in-a-lifetime visit to the UK. You have just said you will try to catch them the second time round. They have London and perhaps up to Stratford and next time round they go to Wales, but that is a strategy which unfortunately cannot succeed from the evidence we have. It cannot be right.
  (Mr Murphy) That is absolutely right. If you do go on holiday you plan your holiday beforehand and you decide where to go then. The point Mr Livsey made about the American writers is a very interesting one. They clearly saw something happening in Wales which was different. In a post-devolution United Kingdom, in a post-devolution Wales, where the height of the consciouness of this being a separate place with separate language, separate institutions, all the rest of it, does actually mean that more people now are going to be aware of Wales as a holiday destination. When you add what Kim has said, that it is a very lovely place to go on holiday anyway, despite the rain and it rains a fair bit in Pontypridd I guess, as it does all round, nevertheless there is no question in my mind that since devolution—I am meeting the Minister of Tourism later on this afternoon from the Assembly—there has been a change in all this and it will be a change for the better as we go along.

Mrs Williams

  299. It might be an idea if the Minister had the figures. We did see some of the promotional material when we met BTA representatives last week in North Wales. Perhaps there is a good reason for the Minister to have a look at that so-called BTA literature which is sent abroad. Maybe it is not quite up to what we should like it to be. I put it as mildly as that to you.
  (Mr Howie) Certainly.
  (Dr Howells) The act has improved a great deal now over the past couple of years in Wales, there is no question. They are starting to take it much more seriously than before. It might be something to do with this incredible psyche we have in Wales which is that real employment is coal mines, car factories, steel works, and pretend employment is tourism. Nothing could be crazier really.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 27 March 2001