Open for Business® Business Continuity Training Presentation
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Foreword The focus of commentators, most politicians and others during and since the Great Recession has largely been placed on UK-wide headline economic indicators. Plaid Cymru welcomes any signs that the downturn is being reversed, that more people are in employment and that confidence is returning to the economy. But to be drawn into arguments on the headline figures for the UK risks neglecting an issue of significant importance to Wales: the deep structural and historic flaws in our own economy that even in times of UK-wide growth, hinder the opportunity for businesses to grow and for people in Wales to secure well-paid, highly skilled work. During Plaid Cymru’s Spring Conference, a commitment was made to the business sector to engage in a meaningful consultation that would aid us in making Wales the best place in the British Isles to do business and to give business leaders and entrepreneurs an unprecedented role in government capital expenditure so that investment is maximised for the long-term economic good. This is that promise being realised. We want to hear the views of business leaders on a range of issues - from infrastructure to skills and from procurement policy to exports. We want a thriving business sector because that is central to building a just, prosperous and confident nation. We reject the notion that business flexibility and high standards of working conditions are mutually exclusive. Often the countries with the highest levels of business activity are the ones with the best conditions for the labour market. Securing high-paid, highly-skilled jobs needs a successful business environment. Both go hand in hand. The economic upturn must not again be a hollow recovery for Wales. To avoid this, the Party of Wales will work with all partners to ensure we overcome the structural weaknesses in our economy and rebuild our nation. Thank you for taking part in this consultation.
Leanne Wood AM Rhun ap Iorwerth AM Leader of the Party of Wales Party of Wales Shadow Economy Minister
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Table of Contents
The situation at present 4
About you 7
Business and government 9
Business and finance 11
Business and European funding 14
Business and infrastructure 17
Business and exports 21
Business and rates 23
Business and skills 25
Business and procurement 27
Business and taxes 29
Business and inward investment 30
How to respond
Please send all consultation responses to [email protected]
The closing date for submissions is 17:00 on Friday the 18th of July.
Plaid Cymru – the Party of Wales
www.partyofwales.org
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The situation at present
Assuming that UK annual growth reverts to its long-run rate of 2% in the coming decade, and Wales continued to lag the UK by an average of 0.5% then on current projections by 2016 GVA per capita will be 70.3% of the UK figure, and by 2036 will be barely above 60%. Table 1: UK Commission on Employment and Skills, Annual Growth Rate, Gross Value Added and Employment (%)1 GVA Employment 2000-2010 2010-2020 2000-2010 2010-2020 England 1.5 2.7 0.4 0.5 Wales 0.9 2.2 0.7 0.5 Scotland 1.5 2.2 0.4 0.2 Northern Ireland 1.4 2.5 1.0 0.5 United Kingdom 1.5 2.7 0.4 0.5
The data in Table 1, taken from the UK Commission on Employment and Skills’
Working Futures report, illustrates a point that Plaid Cymru has long been making –
that Wales has done relatively well in terms of the creation of jobs but poorly in
terms of GVA, meaning the jobs that we are creating are low-value, poorly-paid jobs.
Tackling this problem and bringing better, rather than simply more jobs to Wales
must be central to our efforts to close the gap with the rest of the UK.
Plaid Cymru has previously highlighted the importance of export base as a catalyst
for economic growth. The mid to late nineties marked the beginning of both a long-
period of relative decline in Wales’ economic performance and a parallel decline in
Wales’ net exports.
Between 1996 and 1999 Wales’ net exports (extra UK) fell by £1.6 billion which
amounted to 6% of Welsh GDP – the same amount by which Welsh GDP fell relative
to the rest of the UK during the latter half of the nineties.
The damage to the business sector during this period still has a bearing today. The same mid to late nineties period coincided with a precipitous decline in Welsh business profitability. Gross Operating Surplus – which includes income not derived from wages – had a higher share in Welsh GVA than the UK as a whole at the beginning of the nineties but collapsed in the middle of decade and is now 5% lower than for the UK.
1 UKCES, 2012. Working Futures: Report for Wales. Available here:
http://www.ukces.org.uk/assets/ukces/docs/publications/working-futures-wales-final-report.pdf. P.5
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Total Welsh Exports in Goods
Chart 1: Gross Operating Surplus of Welsh and UK businesses as % of GVA
Whilst Economic Development is nominally devolved, much of the meaningful economic policy levers available to an independent national government – exchange rate policy, fiscal or monetary stimulus and so on, are out of the reach of the Welsh Government. Developing policy at Welsh Government level therefore requires a degree of creativity.
Since the decline in Welsh exports in the mid-nineties the figures have rallied significantly:
Chart 2: Total Welsh Exports in Goods.
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However, the sudden drop in exports in late 2012 exposes a weakness in Wales’ recovery. Since 1996 Welsh exports have become considerably less diversified. In 1996 seven sectors registered a share of 5% or more of total exports. By 2012 this had fallen to just four with two sectors, petroleum products and power generating machinery and equipment, responsible for over half (51%) of total Welsh exports.
It is clear that we must expand and diversify Wales’ export base but we also need to look at inward investment as a means of increasing Wales’ economic output.
Attracting inward investment brings not only the direct boost to the economy through job creation and increased tax revenue, but also, as the Cardiff Business Partnership and Cardiff Business School say in their report entitled ‘Selling Wales’, generates spillovers for the local economy and “…create[s] economic churn; this rejuvenates ideas and brings much needed capital to local firms”.2
The promotion of inward investment has undergone significant change since devolution. In 2006, the globally recognised brand, ‘the WDA’ (Welsh Development Agency) was absorbed into the Welsh Government and rebranded as International Business Wales (IBW). The succeeding One Wales government then commissioned a report (The Massey Review)3 to assess its performance in attracting inward investment which was highly critical of IBW and led to its closure in 2010.
Attracting inward investment since the demise of the WDA has proven difficult for the Welsh Government. As with most economic indices, figures for foreign direct investment at sub-UK level are vague, but if the figures are considered in terms of overall inward investment projects won, the last decade has been a period of stagnation for Wales. Scotland on the other hand, whose activity during the late ‘90s was far below Wales’, has now overtaken all other standard nations and regions to lead the UK.
Wales faces a challenge. The importance of business profitability to the wider economy is clear. The link between profitability and wider economic output is proven and only by bringing all sectors together in partnership and in meaningful cooperation will our country re-emerge as an international business success story. Plaid Cymru is asking for your views and for your input as we work to build a programme for government that will result in Wales unleashing its potential.
2 Crawley, A., Munday, M. and Delbridge, R. (2012). Selling Wales: The Role of Agencies in Attracting
Inward Investment. Cardiff: Cardiff University. 3 Available here:
http://wales.gov.uk/topics/businessandeconomy/publications/reviewofibw/?lang=en.
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About you This consultation is anonymous but to best inform our policy process and in aiding us to have a fuller understanding of the thoughts of business leaders Plaid Cymru would be grateful if you would complete all sections of this consultation that are relevant to you. Which of the following best describes you?
Business owner Director Other (please specify)
Manager Shareholder
……………………….. In which parts of the country do you operate professionally?
Blaenau Gwent Bridgend Caerphilly Cardiff Carmarthen Ceredigion Conwy Denbighshire Flintshire Gwynedd Isle of Anglesey
Merthyr Tydfil Monmouthshire Neath Port Talbot Newport Pembrokeshire Powys Rhondda Cynon Taf Swansea Torfaen Vale of Glamorgan Wrexham
How many years have you been involved in the business sector?
Less than a year Less than ten years Less than 30 years
Less than 5 years Less than 20 years 30 years or more
What sector of the economy is your business a part of?
Production Motor trades Retail Accommodation & food services Finance & insurance Professional; scientific & technical Education Arts; entertainment; recreation
and other services
Construction Wholesale Transport & Storage (inc. postal) Information & communication Property Business administration and
support services Health
Are you: Male Female
How many employees does your company have?
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Business and Government Evidence has emerged that there is often a lack of knowledge of government programmes aimed at supporting businesses and of a lack of proactivity on the part of government to engage with business. Have you sought business support or advice from the Welsh Government? Yes No
Were you satisfied with the support you received? Yes No N/A
What would you improve about your experience? Have you sought business support or advice from the UK Government? Yes No
Were you satisfied with the support you received? Yes No N/A
What would you improve about your experience?
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Have you been contacted proactively by UK Government for offers of business support? Yes No
Have you been contacted proactively by Welsh Government for offers of business support? Yes No
Would such contact be of value to you? Yes No
Have you had dealings with local government in terms of your business and its prospects? Yes No
Do you have comments on your experiences in dealing with local government?
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Business and finance The Federation of Small Businesses’ Voice of Business survey shows that 42% of FSB their members identify cash flow as a barrier to growth – the second most frequently identified barrier behind ‘the economy’ generally.4 The same survey showed that half of those who borrowed money in the past 12 months did so to ensure cash flow. It is widely reported however that there is a funding gap of £500 million in Wales between the demand from SMEs and the current supply by the banking sector.5 Have you sought finance from a bank recently? Yes No
Were you successful with your application? Yes No N/A
Do you have comments to make about your experience with dealing with banks? Have you heard of Finance Wales? Yes No
Have you approached Finance Wales for advice or support? Yes No
4 FSB, (2014). Voice of Small Business. P.33
5 Jones-Evans, D. (2013). Access to finance review: Stage 2 report. Cardiff: Welsh Government
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What was your experience in dealings with Finance Wales? Are there any other financial mechanisms such as public grants that you’ve received or sought? Please share any such experience you’ve had in this respect:
Plaid Cymru has proposed establishing a publicly-owned, not-for-dividend, arm’s
length business development bank for Wales.
The Bank of Wales would offer finance to businesses at competitive rates whilst also
providing a one-stop-shop for business support by bringing together the different
support streams of the Welsh Government into one easily accessible body.
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Do you agree that Plaid Cymru’s proposed Bank of Wales is a good idea?
Yes No
Do you think your business could benefit from Plaid Cymru’s Bank of Wales
proposal?
Yes No
What services would you like to see as part of the Bank of Wales proposal?
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Business and European funding Since 2000, Wales has qualified for European convergence and structural funding as
a result of the poor economic performance of some of our regions. The funding is
intended to support these regions in closing the economic gap with the EU average.
As a result, Wales has received over £3.4 billion in European funding, which together
with match funding from a variety of sources has generated over £11 billion of total
project investment in Wales.
However, latest GDP data for Wales show that Wales’ poorest performing region,
West Wales & the Valleys has actually lost ground, having fallen from 65% to 64% of
the EU average, while Wales as a whole has also fallen from 75% to 74%.
2014 marks the beginning of a new funding round which will see Wales receive over
£2 billion in additional funding up to 2020.
Does your business benefit from trading with the European Union?
Yes No
Has your business benefitted directly from the allocation of European convergence
and structural funds?
Yes No
Has your business benefitted indirectly from the allocation of European convergence
and structural funds? (For example, through road improvements in your area).
Yes No
Do you think the Welsh Government is spending European money wisely?
Yes No
What could be done to improve the way European funds are allocated?
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Plaid Cymru has proposed establishing a private sector-led body, to work at arm’s
length from Government but alongside the Welsh European Funding Office to
provide guidance on how European funding should be spent.
While at the moment, the Welsh European Funding Office operates reactively to
applications for funding, the private sector-led body could work proactively, seeking
out potential investment opportunities and acting as a catalyst for engagement
between the funding office and potential partners.
Do you think the private sector could offer a valuable contribution to the process of
allocating European funds?
Yes No
Do you agree that giving the private sector a voice in the decisions surrounding the
allocation of European funding is a good idea?
Yes No
Do you think there is merit in adopting a proactive approach to the allocation of
funding?
Yes No
How do you think business could become more directly involved in the government’s
work of growing the economy more generally?
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What sort of projects should receive European structural funding?
Do you think the new private sector-led body should include representatives from
universities?
Yes No
What other sectors should be represented on the new body?
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Business and infrastructure
Wales’ internal infrastructure forms the central nervous system of our country.
Networks of roads, rail lines and digital cables link people to economic activity and
make capital flows and trade in goods and services possible. Having access to good
infrastructure encourages entrepreneurship, investment and overall economic
activity.
A report by Martin Boddy to the Economic Research Advisory Panel within the
Welsh Government in 2006 studied the underlying causes of the 40% gap in 2003
between GVA per employee in London and in Wales. One of the biggest factors
identified by Boddy was peripherality.6
Is your business dependent on transport infrastructure within Wales?
Yes No
Is your business dependent on transport links with other parts of the UK?
Yes No
Is your business affected by poor transport infrastructure?
Yes No
What is your experience of transport infrastructure in your area?
In the event of the Welsh Government being given the power to borrow, Plaid Cymru
has called for borrowing to be used to fund an integrated public transport metro
network in South East Wales and the Valleys.
6 Boddy, M. (2006). ‘Understanding productivity variations between Wales and the rest of the UK.’ Report to
the Economic Research Advisory Panel, Welsh Assembly Government. Bristol: University of the West of England
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The cost of the metro proposals is estimated to be around £1 billion – roughly the
same amount as the proposals to build a new M4 to the south of Newport.
Do you agree that investing in a metro system would improve Wales’ productivity in
the long-term?
Yes No
Considering that a significant proportion of traffic congestion on the M4 is due to
local commuting traffic, do you agree that investing in the metro system, bringing
commuters off the motorway, would be a better way to spend valuable resources than
on a new M4?
Yes No
What road infrastructure improvements do you think are needed in your area?
Does your business make use of airports?
Yes No
If so, do you use Cardiff Airport?
Yes No N/A
If not, why not?
Too far away Poor accessibility
Too expensive Other
Not enough flights …………………………..
Plaid Cymru has called for the power to set Air Passenger Duty to be devolved to
Wales, as has been done in Northern Ireland. Devolving APD would enable the
Welsh Government to vary the duty paid by passengers using Cardiff Airport and
other airports, influencing the cost of flights and attractiveness of the facilities to
airlines.
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Do you agree that the Welsh Government should have the power to vary Air
Passenger Duty?
Yes No
Plaid Cymru has called for all parts of Wales to benefit from electrification of
railways including the North Wales Main Line which will reduce journey times from
the far North West of Wales to North Western England, and the Marcher line which
would achieve reductions in journey times between the North and South of Wales.
Would your business benefit from the electrification of the North Wales Main Line?
Yes No
Do you agree that the North Wales Main Line should be electrified?
Yes No
Would your business benefit from the electrification of the Marcher line?
Yes No
Do you agree that the Marcher line should be electrified?
Yes No
What other rail infrastructure improvements do you think are needed in your area?
Is your business dependent on having a connection to the internet?
Yes No
Do you have a broadband connection?
Yes No
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Do you have a ‘superfast’ connection? (i.e. fibre optic)
Yes No Don’t know
If not, why not?
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Business and exports
Wales is still a strong exporter of goods. The value of our exported goods far exceeds
the value of our imports while the UK as a whole runs a trade of goods deficit of over
£100 billion.
However, diversifying our export base will build resilience into our economy and
ensure we can better withstand setbacks in the future.
Does your company export goods or services outside Wales? Yes No
Does your company export goods or services outside the UK? Yes No
Does your company export goods or services outside the EU? Yes No
Would you like to increase your exporting?
Yes No
Have you sought financial or non-financial assistance with expanding your business
overseas?
Yes No
If so, from whom and what was your experience?
While Wales is nominally represented abroad by UK Trade and Investment (UKTI),
of the 600 staff based within the UK, 498 are based in London, 48 in Glasgow and 54
are in nine English regions. They have no representation in Wales.
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Plaid Cymru has proposed establishing a new body to form part of the Bank of Wales
proposal, to work proactively overseas to encourage greater trade links between
Wales and the international community.
The Overseas Trade Initiative would work at arm’s length from government, but
accountable to Welsh Ministers. It could help those businesses who are already
looking to expand and also actively seek out opportunities overseas and connect
them to Welsh expertise, encouraging businesses not currently thinking of exporting,
to do so. The body could make use of the UK’s embassies across the world and have
dedicated staff working in different countries, tasked with building trade links with
Wales.
In addition to providing international business services such as export finance and
market research, the OTI could build international supply chain links for Welsh
businesses. It could provide financing for other countries seeking to invest in capital
infrastructure for example, in return for an agreement to use Welsh expertise or
Welsh resources to complete the work.
Based on the successful Nordic Investment Bank, the service would not only generate
income for the Welsh public purse through interest payments, but would also act as a
catalyst for international trading between Welsh companies and the international
community, building international supply chains and developing Wales’
international reputation.
Do you agree that establishing an Overseas Trade body would be a good idea?
Yes No
Would having a dedicated Welsh Government-sponsored export department
encourage you to explore new markets?
Yes No
What support do you need to reach overseas markets?
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Business and rates
Non-domestic rates (NDRs), commonly known as business rates, are paid by
businesses as a tax on the occupation of non-domestic property.
Currently, all businesses occupying non-domestic properties are given a Rateable
Value, set by the valuation office. The last revaluation took place in 2008 and came
into effect in 2010.
Rateable values are then multiplied by a multiplier, set by the UK Government. The
multipliers are set as follows:
Multiplier 2014/15
Wales All: 47.3%
Scotland Small: 47.1% Large (RV >£35k): 48.9% Super*: 60.1%
England Small: 47.1% Standard (RV >£18k): 48.2%
*Businesses with a rateable value of £300,000 or more and sell both tobacco and alcohol
Small businesses in Wales are therefore disadvantaged by having a multiplier that is
0.2% higher than both the Scottish and English equivalents.
Business Rates are expected to be devolved in full to the National Assembly and Plaid
Cymru has proposed using the new powers to reform the multiplier system to help
small businesses.
Plaid Cymru has proposed introducing a second multiplier in Wales for all businesses
with a rateable value of over £35,000, set at 48.0%, which would be 0.9 percentage
points lower than the Scottish equivalent and 0.2 percentage points lower than the
English equivalent.
Using the increased revenue generated by the second multiplier, Plaid Cymru has
proposed cutting the lower multiplier to 46.6% - 0.5 percentage points lower than
both the Scottish and English equivalents, and applying to all businesses with a
rateable value of £35,000 or less.
The introduction of a second multiplier would more than offset the cost of cutting the
lower multiplier and would actually generate an estimated £9.1 million.
Do you agree that introducing a second multiplier for large businesses is a good idea?
Yes No
Plaid Cymru’s proposal is to set the threshold between the small and large multiplier
at the Scottish level of £35,000, rather than the English level of £18,000 to ensure no
business is worse off in Wales. Using the English level would raise more money for
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the public purse, but it would mean large businesses would be worse off in Wales
compared to England.
Do you agree that the rateable value threshold between a small and a large business
should match the Scottish threshold of £35,000?
Yes No
Would your business benefit from this policy?
Yes No Don’t know
Plaid Cymru has also called for an extension to the Small Business Rate Relief
Scheme so that it helps all businesses with a rateable value of £15,000 or less and
would give those businesses whose rateable value is £10,000 or less full relief from
rates.
This policy would help over 83,000 businesses across Wales and mean that over
70,000 businesses would not pay any rates at all.
The cost of introducing both the extension to the Small Business Rate Relief Scheme
and the multiplier reform would be between £29 million and £37 million.
Do you agree that extending the Small Business Rate Relief Scheme would be a good
idea?
Yes No
Would your business benefit from the proposed extension?
Yes No
What further reforms would you like to see to the business rates system in Wales?
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Business and skills
What skills do you look for in potential employees?
Do you find it hard to find the right employees?
Yes No
Have you ever taken on an apprentice?
Yes No
If so, did you feel it was worthwhile for your business?
Yes No N/A
Have you ever heard of the ‘Young Recruits Programme’?
Yes No
Have you ever taken on an apprentice under the Young Recruits Programme?
Yes No
If so, what was your experience of the programme?
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What would make you more likely to take on an apprentice in the future?
Do you think young people have the necessary skills to succeed once they leave
school?
Yes No
If not, what skills do you think young people are missing?
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Business and procurement
The Welsh public sector spends approximately £4.3 billion every year buying goods
and services from the private sector. This ranges from contracts for school dinners to
paying for a contractor to build a new road.
Currently only around 52% of that money is spent within Wales and that supports
around 98,000 jobs across the Welsh private sector. It is estimated by Value Wales –
the government’s own procurement department that with every 1% increase in the
proportion of public procurement money being spent in Wales, 2,000 new jobs will
be created in the private sector.
The purchasing power of the Welsh public sector is therefore a significant tool with
which to grow the Welsh economy. The German public sector manages to keep
around 99% of its procurement spending within Germany, while France manages
around 98%. The UK as a whole manages to keep 97% of its spending within its own
borders but in Wales we allow 48% of our money to leak through our borders.
Considering the positive impact that public sector procurement can have on Welsh
businesses and on the economy as a whole, and that this money is being spent
anyway, Plaid Cymru believes it is vital that we make every effort to spend as much of
it within Wales as possible.
There have been a number of independent studies looking at procurement practice in
Wales and most conclude that Welsh Government policy is not to blame for the low
percentage of spending staying in Wales, but rather it is poor implementation of
policy by the public sector at large.
Have you ever successfully bid for a public sector tender in Wales?
Yes No
Have you ever unsuccessfully bid for a public sector tender in Wales?
Yes No
If yes, what feedback were you given on your unsuccessful application?
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Do you feel confident that you would be able to bid for a public sector tender?
Yes No
Plaid Cymru has proposed introducing legislation to ensure all public sector bodies
adhere to the Welsh Government’s procurement policy. Do you agree that obligating
the public sector in this way will drive up standards?
Yes No
Plaid Cymru has proposed setting a target to keep 75% of all procurement spending
within Wales. According to Value Wales – the Welsh Government’s procurement
department, doing so would create 46,000 new private sector jobs.
Do you think 75% is a realistic target?
Yes No
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Business and taxes
All business taxes, (not including non-domestic rates) are the responsibility of the
UK Government.
The UK Government is considering devolving corporation tax to Northern Ireland in
order to help create a competitive environment for businesses, boosting efforts to
attract business investment.
Plaid Cymru believes that the Welsh Government should have the power to shape the
Welsh economy in the same way and that corporation tax should be devolved to
Wales.
Doing so would enable the Welsh Government to vary corporation tax in Wales,
potentially making Wales a more attractive place to do business, attracting
businesses from elsewhere, generating economic growth and creating employment
Do you pay corporation tax?
Yes No
Who do you think should set corporation tax rates in Wales?
Welsh Government UK Government
Who do you think should be responsible for setting capital allowances in Wales?
Welsh Government UK Government
Who do you think should be responsible for setting National Insurance rates in
Wales (employer and employee)?
Welsh Government UK Government
What other fiscal powers do you think should be devolved to the National Assembly?
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Business and inward investment
Foreign Direct Investment (FDI) has played a crucial part in building the Welsh
economy. Attracting inward investment not only boosts the economy through job
creation and increased tax revenue, but also generates spill-overs for the local
economy.
The importance of repairing our inward investment strategy is clear. A significant
proportion of current employment is based on previous successes in attracting
inward investment.
Admiral for example located in Wales after a £1 million grant from the Welsh
Development Agency (WDA). Starting in 1993 with only 57 staff, it has now become
Wales’ largest company employing over 5,000 people in Wales with an annual
turnover of over £2 billion. In fact a considerable proportion of Wales’ largest
employers are here on the back of successful promotion by the WDA. TATA Steel
who employ over 5,000 people in Wales and Airbus who employ over 6,000 are two
other inward investment successes.
Currently however, without the WDA or the IBW, the Welsh Government relies on a
multitude of small bodies to do the work of promoting Wales abroad – a setup that
has been criticised for its lack of coordination.7 Staff have complained about differing
messages, confusion over responsibilities and conflicting messages being portrayed
to potential investors.8 But while the WDA brand was disbanded in 2006, according
to the well-respected Oxford Intelligence Report (2011) the WDA was still the second
most recognised development agency brand in Europe in 2011, five years after it
disappeared.9
The WDA brand is still an asset to the Welsh Government that is currently not being
utilised.
Do you think establishing a new arm’s length development agency for Wales,
bringing the work of all those organisations currently involved in promoting Wales
together to coordinate and implement a new drive to attract investment would be a
good idea?
Yes No
Do you think there is merit in using the WDA brand again?
Yes No
7 Crawley, A., Munday, M. and Delbridge, R. (2012) Selling Wales: The Role of Agencies in Attracting Inward
Investment. Cardiff: Cardiff University 8 Ibid.
9 Oxford Intellgience, (2011). The Medtech Report 2011: International Investment Strategies and Location
Benchmarking Study.
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What more should the Welsh Government be doing to improve inward investment?
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