Inward Investment in Wales

Written evidence submitted by South East Wales Economic Forum

1. Capital Wales is a partnership between the 10 south east Wales local authorities, the Welsh Assembly Government and the private sector. It replaced a number of separate local authority inward investment partnerships and promotes the region through the dual benefits of being a quality location for business combined with a high quality of life. It has a highly effective lead handling protocol that provides transparency and accountability and promotes the region in an equitable manner.

2. Historically Foreign Direct Investment (FDI) played a major part in determining the future direction of the Welsh economy. In those days we were seen as a low cost country with good links into Europe and an available work force. However there is now more competition for FDI than ever before and the type of investment has changed. There is now more limited demand for the ‘big sheds’ that secured the ‘screwdriver’ operations of the past. Equally there is no point in chasing only the ‘high quality’ FDI which is also being chased by every other RDA, major city and foreign location. We need to reflect our commitment to securing FDI with an acceptable level of budget (people in work will need less support from the health service, will improve their own environment and will enhance their own skill levels), quality enquiry support and high quality after care from a partnership of all relevant staff in Wales.

3. Levels of support are now more targeted but could be improved by more open access to information, particularly in developing a single centre for property and site information. A more integrated approach between local authorities and Welsh Assembly Government regarding FDI and subsequent business support activity is required.

4.Following the Welsh Assembly Government’s announcement (Economic Renewal: A New Direction) in September 2010 of changes to the grant regime, there has been an information vacuum while the new regime is being developed. This causes difficulties for both internal (Welsh) and external customers.

5. There is some concern that funding for education, social services etc. will largely be safeguarded, whilst job creation (either indigenous or inward investment) funding may decline as finances are stretched. It is important to take into account the health, education, skills and social benefits of people being in work.

6. There have been some successful relocations of central government offices to Wales (such as the Patent Office, Office for National Statistics). These are valuable both in terms of the employment they provide and their addition to the local research base, which in turn is attractive to potential investors. However some jobs that have been relocated in the past are now being axed to reduce costs for example the Newport Passport Office proposed closure which is vital to Newport and the surrounding area’s economy.

7. Refocusing business support expenditure into technology (such as digital broadband rollout) is likely to be of particular benefit to more rural areas where the market sees little value in investing, but most businesses want to locate on the main routes into Wales where connectivity is already good. This suggests high level investment in high speed broadband in rural areas is unlikely to deliver strong business/employment growth benefits.

8. Transport infrastructure creates an initial impression to the FDI client and airport access, motorway quality etc can ‘make a difference’. Access to main sites is generally good but the presentation of older sites does not always give the best impression to 21st century investors.

9. South East Wales contains the country’s only Russell Group university – Cardiff. There is some research of excellent quality throughout the SE Wales region, but greater critical mass and a higher profile would be of enormous value in attracting to knowledge-based potential investors.

10. There needs to be a review of all the elements that influence FDI: property, skills, taxation etc to ensure we offer what the client is looking for and not what we think they want.

March 2011