Conclusions and recommendations
Economic Statistics
1. The
monitoring of the Welsh economy is an important part of identifying
the relative strengths and weaknesses in Welsh manufacturing.
We welcome the additional funds that have been allocated to the
Office of National Statistics to undertake this task. We look
forward to a greater level of assessment and analysis of Welsh
manufacturing in the future. (Paragraph 16)
Welsh Economic Base
2. The
transition from traditional manufacturing in Wales was a difficult
journey and not without pain. Our inquiry has shown us that while
some traditional manufacturing survives, Wales has managed to
diversify its manufacturing base, and in some areas now leads
the field. We welcome that diversity and look forward to further
success in the future. (Paragraph 23)
Steel Industry
3. The
decision of Outokumpu to close its operations at Panteg is to
be regretted. It is a timely reminder that industry in Wales cannot
rest on its laurels in the global market place. We welcome the
announcement that the majority of its workforce are no longer
looking for alternative employment but remain concerned at this
further diminution of the steel sector in Wales. (Paragraph 27)
Foreign Direct Investment
4. The
attraction of Foreign Direct Investment to Wales remains an important
part of Wales' economic policy, but the quality of that investment
should not be overshadowed by the quantity of investment. We recommend
that the Department of Trade and Industry, where appropriate,
supports fully the Welsh Assembly Government's policies to attract
high value added FDI and its accompanying higher level functions
to Wales. (Paragraph 40)
Welsh Development Agency and Wales Trade International
5. The
decision to bring in-house agencies such as the Welsh Development
Agency, Wales Trade International and Education and Learning in
Wales is a matter for the National Assembly. We hope that the
predicted streamlining of links between UK Government Departments
- including the Department for Trade and Industry, Foreign and
Commonwealth Office, Department for Transport and the Department
for Education and Skills - and the Welsh Assembly Government will
ensure that the needs of Welsh manufacturers and business continue
to be vigourously promoted in the future. (Paragraph 50)
The UK's position outside the Euro zone
6. The
debate surrounding the United Kingdom's entry into the Euro zone
has often been conducted in a highly political environment. Therefore,
it was enlightening to find a general level of agreement from
our witnesses on the economic benefits of the United Kingdom joining
the Euro zone. In the absence of such a move, a stable exchange
rate between Sterling, the Euro and the Dollar was considered
vital. We conclude that the Government should place a greater
emphasis on the economic benefits and disbenefits to manufacturing
of the United Kingdom joining the Euro zone. (Paragraph 61)
Governmental Relations
7. It
is clear that the UK Government and the Welsh Assembly Government
are making strides to ensure that their economic policies complement
each other to the benefit of the Welsh economy. Equally important
is the need to demonstrate clearly to business which institution
is responsible for each part of that policy. In general we conclude
that business is aware of the distinction and, in particular is
able to access the Welsh Assembly Government with ease. (Paragraph
65)
European Structural Funds
8. The
enlargement of the European Union will have a significant impact
on the economy of Wales. The accession of countries whose economies
are less developed than Wales has the potential to change Wales'
qualification for structural funds. Those structural funds have
been vital to the economic development of Wales, and we look to
the Government to give a clear undertaking that Wales will not
lose out as a result of European Enlargement. (Paragraph 77)
Regional Selective Assistance
9. Regional
Selective Assistance has been an important factor in the ability
of Wales to attract and sustain Foreign Direct Investment. Its
emphasis on job creation has also made significant advances in
the drive for full employment. However, small indigenous businesses
should not be excluded from Government assistance. We believe
that the Welsh Assembly Government should be allowed the greatest
appropriate flexibility when delivering Regional Selective Assistance
across Wales to meet the challenges of job creation, job retention,
and support for innovative small businesses. (Paragraph 86)
Research and Development Tax Credits
10. Research
and Development Tax Credits have been a welcome addition to the
package of support offered to manufacturing in the United Kingdom.
However, its introduction has done little to generate a demonstrable
flow of R&D activity to Wales. We agree with the National
Assembly that a regional element should be included in the allocation
of Research and Development tax credits which would better target
those areas in need of assistance. (Paragraph 98)
11. We further recommend
that the Government compile statistics on the regional take-up
of Research and Development Tax Credits. (Paragraph 99)
Research Council Grants
12. We
remain concerned that without a regional dimension to the dispersal
of Research Council grants, London and the South East of England
will continue to be the predominant consumers of those funds.
While we do not wish to see the dilution of the expertise and
excellence derived through the Research Councils, a regional element
to grant allocation would greatly assist in the dispersal of centres
of excellence outside of the South East of England. Therefore,
we recommend that the Government consider including a regional
element to the Research Councils' grant allocation procedures.
(Paragraph 103)
Defence Aviation Repair Agency
13. It
is deeply disappointing that the Ministry of Defence has decided
to relocate its Defence Aviation Repair Agency operations from
Wales to England. In light of the inequitable spread of public
procurement we would expect the DTI to have understood both the
economic imperative of retaining the DARA in Wales, and also that
its withdrawal to England would be perceived as even less public
money being spent in Wales. We recommend that the Government reconsider
its decision and continue DARA's operations at St Athan. (Paragraph
107)
Transport Infrastructure
14. We
welcome the proposed transfer of powers to the National Assembly
contained within the Transport (Wales) Bill and the Railways Bill.
However, many important issues regarding Welsh infrastructure
will remain the responsibility of the UK Government. We recommend
that the UK Government look closely at the National Assembly's
concerns about both the M4 road route and the Paddington to South
Wales Main Line. We further recommend that the UK Government assist
the Welsh Assembly Government in its policies to increase the
level of communications and activity at Cardiff Airport. (Paragraph
113)
Energy Consents
15. We
welcome the establishment of a working group to consider the Welsh
Assembly Government's request for increased powers over energy
consents. We expect the Government to look favourably on this
request and recommend that the Government update the committee
on the findings of that working group at the earliest opportunity.
(Paragraph 117)
Skillbase
16. The
availability of a workforce with the necessary skills to attract
higher level manufacturing is vital to the prosperity of Welsh
Manufacturing. We welcome the initiatives put forward by the Welsh
Assembly Government. (Paragraph 123)
Technology Transfer
17. Manufacturing
Centres of Excellence have the potential to improve significantly
the transfer of knowledge and expertise between industry and academia.
We are pleased to see that Wales is developing its own Centres
of Excellence. (Paragraph 129)
18. We are disappointed
that the UK Government has decided to reduce funding for the
Manufacturing Advisory Service in Wales which was regarded as
a success by both industry and academia. We recommend that the
Government reconsider those funding levels to enable the Service
to build upon its success in Wales. (Paragraph 133)
19. The UK Government
and the Welsh Assembly Government have established a number of
important vehicles for knowledge transfer and closer collaboration
between academia and industry. However, we are concerned that
Welsh academic institutions may not be receiving an equitable
level of funds for those vehicles. We look to the Government to
demonstrate that public funding for Welsh institutions is not
playing second best to their English counterparts. We further
expect the UK Government to assure us that successful but smaller
institutions such as the North East Wales Institute would be able
to compete on a level playing field with larger, more established
universities, for technology transfer funds. (Paragraph 137)
Techniums
20. We
welcome the establishment of the Technium Programme in Wales.
The alliance of the National Assembly, academic institutions and
business has the potential to kick start the knowledge economy
in Wales. It is evident that the Technium Programme will continue
to need levels of financial support. We recommend that the UK
Government assess what financial support it can offer out of the
UK Science Budget to assist the National Assembly in the development
of this programme. (Paragraph 146)
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