LOW CARBON ENTREPRENEURS AND THE NORTH WALES ECONOMY

Last week, a fascinating report landed in my email inbox.

Published by the Carbon Trust and Shell UK, “Low Carbon Entrepreneurs: the new engines for growth” looks at the critical role that small and medium sized enterprises (SMEs) can play in the low carbon sector. This includes both nuclear and renewable power, transport and activities within various manufacturing and services industries that essentially contribute, either directly or indirectly, towards reducing environmental impacts or adapting to environmental changes.

Whilst some may believe that it is still a relatively small industry, it was one of the few sectors to grow during the recent recession and it is estimated that such green business accounted for over a third of the economic growth in 2011/12. Indeed, the low carbon economy is estimated to be worth over £120 billion to the UK and currently employs 940,000 people.

And the good news is that the market is set to grow, driven by small dynamic companies that are focused on international opportunities. For example, a survey from the report shows that almost forty percent of low carbon SMEs are already exporting despite the fact that the majority have a turnover of less than a half a million pounds. Given that the global low carbon industry is forecast to be worth £4 trillion by 2015, this is certainly a sector that demands further support in its development.

Yet, when we look at the five main locations for the growth of low carbon SMEs in recent years, the report shows that the most successful areas have been London, Cambridge, Oxford, West Yorkshire and Hampshire.This must be enormously disappointing, but something of a challenge, for North Wales, where Anglesey has not only been branded as the ‘energy island’ as a result of potential investments into nuclear and wind power but, more importantly, has recently been given enterprise zone status by the Welsh Government to drive forward this sector. In addition, the status of Bangor University as having one of the highest concentrations of environmental science students in the UK means that there is a local skill base already available for businesses in the sector.

However, all is not lost. According to the report, the most common reasons for a low carbon SME’s current location were access to talented people and support from the local innovation network, both of which could be developed locally if the new Science Park touted for the Menai area focuses specifically on energy and low carbon sectors. More importantly, two thirds of low carbon firms would move location if there was regional funding available to help the business. This is certainly a vital lesson for those who are putting together the financial ‘offering’ that the Anglesey Enterprise Zone will have in order to attract businesses to the island in the future.

But there are also opportunities to develop new dynamic businesses in the region. A survey of participants in the Shell Livewire programme, the biggest online community for young entrepreneurs aged 16-30, shows that almost a third say they would like to start a new low carbon business or get involved in the low carbon economy but don’t know how to go about doing it.

Given this, there is certainly a real chance for North Wales to focus its efforts on helping young people within the region to get into the low carbon economy and to help build up a cluster of businesses in this sector. Therefore, whilst North Wales has been slow in getting into this growing sector, it does have several competitive advantages that, if managed properly, could see the region emerging as one of the main low carbon areas of the UK during the next five years and creating hundreds, if not thousands, of highly paid skilled jobs in the local economy.

DONE PROPERLY, NEW SCIENCE PARK COULD MAKE A REAL DIFFERENCE TO NORTH WALES ECONOMY

Due to its failure to win a majority at the last Assembly election, the current Welsh Government has to make a deal, around this time every year, with one of the other parties in order to pass its budget.

This time, Labour has agreed a compromise with Plaid Cymru which, in exchange for passing its financial plans, will result in thousands of additional apprenticeships and a new science park involving Bangor and Aberystwyth universities.

Given the way that the new Secretary of State for Wales has hit the ground running with his announcements on Wylfa and rail electrification in North Wales, it is not surprising that Plaid has made an effort to demonstrate that the region remains important to them electorally.

Indeed, the unexpected announcement that £10 million of capital funding is to be committed to the science park has enormous potential for the economic development of the region if managed properly.

Of course, there have already been earlier attempts to connect both universities with the business community through the Technium programme that, to be blunt, failed badly.

Both the CAST building on Parc Menai and Aberystwyth Technium, which cost the Welsh taxpayer over £30million to build and operate, were closed down by Ieuan Wyn Jones when economic development minister, having generated considerable debts and having had very little impact on the local economy.

Despite this, I think that the new science park can work if its leadership and location are prioritised.
First of all, it is fortuitous that Bangor has a Vice Chancellor with an excellent record in linking industry and academia from his time in Ireland. Certainly, if he takes the lead on this project and drives it forward, then the chances of success are increased considerably.

The second issue is that of location, which may be slightly trickier. Indeed, some may argue that a largely rural area such as North West Wales is the wrong place for a successful science park.

However, my own experience of working with colleagues at Linkoping in Sweden disproves that theory.

With only 105,000 inhabitants, this former market town currently has the largest science park in Northern Europe, being the base for 250 firms employing more than 6,000 people, with the majority of those generated from the local university.

But the real question is where will this new science park be located, given that Aberystwyth and Bangor universities are eighty seven miles apart?

In my opinion, it is unlikely to be based around Aberystwyth so will it be based around Bangor itself building on current developments such as Parc Menai?

Alternatively, will Lord Elis Thomas use his considerable powers of persuasion to get his University, and his Plaid colleagues, to put it into Trawsfynydd which is diplomatically half way between Bangor and Aberystwyth but which also has the added attraction of recently being granted enterprise zone status?

However, in my opinion, there is only one viable location that will make this project a success.
The recent announcement that a new power station at Wylfa B is likely to go ahead gives Anglesey a once in a lifetime opportunity to maximise the economic benefits for the region.

If the ‘energy island’ also had a science park, then it could become one of main centres for sustainable energy in Europe, attracting companies in the sector to the region, creating hundreds of well-paid jobs and taking real advantage of the academic expertise within the local university sector.

I am also convinced that this development could attract considerable additional funding from the science and technology budget of the UK Government.

Hopefully, such joined up thinking in taking advantage of a major infrastructure and energy project could, and should, add real value to the local economy and ensure that North West Wales has a bright economic future.

NORTH WALES AND RAILWAY INFRASTRUCTURE

Last week, the UK Government made its long awaited announcement on the future of the railway infrastructure.

Describing it as the biggest investment in the railways since Victorian Times, it committed £9billion to upgrade transport links across the country.

For Wales, the main Great Western line between London Paddington and Swansea is to be electrified, cutting 20 minutes off the journey. 

There is also going to be electrification of the South Wales Valleys lines, ensuring quicker access from some of the most economically deprived areas in the UK. And, more importantly, both of these investments complement the Welsh Government’s decision to award city region status to Cardiff and Swansea as a catalyst for attracting investment. 

Whilst this is great news for the Welsh economy as a whole, those living in North Wales must wonder what they need to do to attract similar attention from Westminster and Cardiff Bay.

The good news is that the Secretary of State for Wales has made it absolutely clear that she will now be focusing on upgrading key routes in the North, including those to conurbations in North West England which, according to the latest census have arrested decades of decline and are actually growing again.

For example, Liverpool has recorded a 6 per cent growth in its population in the past decade, whilst Manchester recorded an increase of 19 per cent. Connecting North Wales to these growing urban areas are vital in getting both individuals and businesses to markets and job opportunities.

However, the holy grail in terms of attracting real investment remains the link to London. The fact that it takes the same time to travel between Bangor and Crewe on a diesel train as it does on the electrified route between Crewe and Euston, despite the former being only half the distance of the latter, speaks volumes for what can be done.

So how do we ensure that transport in North Wales is fully upgraded in the future?

One of the highlights of the campaign for electrification of the railways in South Wales was the way in which businesses, civic groups and politicians of all persuasions came together to make a strong case for the upgrading of the transport links. However, I would argue that this joined up approach in lobbying the Welsh and UK Governments for further investment has yet to happen in North Wales. 

And while some may argue that we have missed the boat on obtaining significant funding for transport, I still believe that there remain various opportunities to obtain the estimated £300m needed to upgrade the railway infrastructure in North Wales.

For example, it is likely that the poorest parts of Wales, including Anglesey, Conwy, Denbighshire and Gwynedd, will qualify again for the highest level of European Structural Funding. Under such circumstances, and given the fact that the UK Government is picking up the tab for rail improvements in South Wales, one would hope that the Welsh Government will prioritise these funds to pay for a large proportion of the transport links needed in North Wales, thus ensuring a lasting legacy from the billions of pounds of European funding allocated to the region.

And by working closely with the Irish Government, it must also make sure that those road and rail links across North Wales, and that form part of the transport network that connects Dublin to mainland Europe, get their fair share of the £50bn that will be allocated by the European Union to core transport routes in 2014.

So, the hard work begins now and it is critical that the local business, political and civic communities across North Wales come together to make a strong case, as happened in South Wales, for the region to get the attention and funding it deserves in terms of transport infrastructure improvements. (Daily Post column, 23rd July 2012)

NORTH WALES AND CITY-REGIONS

Last week, the major announcement from the Welsh Government concerned the report of a special taskforce that had been commissioned into looking into the potential of city regions as drivers for economic growth.

Essentially, city regions are exactly what they say on the tin – they are those areas surrounding a major urban location that, as academic research has shown, are major drivers of economic growth and employment.

Normally, they consist of areas that collectively have a minimum population of 500,000 residents, thus creating the critical mass needed for economic growth and enables policies on issues such as transportation to be effectively utilised towards maximising the potential of the city region. Given Wales’ demographics and geography, it is not surprising that the Task Force recommended that only two city regions should be created.

The first, with a population of 1.4 million would be in South East Wales and centred on Cardiff and taking in Newport, Bridgend and the Valleys. The second, to be known as Swansea Bay and with almost 700,000 residents, would consist of Swansea, Neath, Port Talbot, Llanelli and Carmarthen. In my opinion, such developments are long overdue and if this signals the beginning of the end of tribalism and parochialism within our industrialised areas, then it can only be good for the Welsh economy as a whole.

But what implications will this have for North Wales? The task force was also asked to look at whether there was scope for a city-region based on Wrexham and Flintshire, especially given the importance of manufacturing within the region through companies such as Airbus and Toyota and the recent announcement of an enterprise zone on Deeside.

Unfortunately, it recommended that even if this city-region was extended across the border into Cheshire, it did not have the necessary population to guarantee success. Instead, it suggested that the Mersey Dee Alliance, which has been critical in building cross-border links, should become a regional strategic body with powers for economic development, although this would mean that the Welsh and UK Governments should consider giving this body the additional powers to enable it to undertake successful interventions in the local economy.

I am sure that many in North Wales will be disappointed that, yet again, the impression given is that the focus of the Welsh Government has been on South Wales and that the task force did not consider, even within its specific remit, ways in which the rest of Wales, especially the rural areas, could benefit from having a more joined up approach to economic development.

Perhaps that is something for the Welsh Government to consider in the future because, as we have seen recently with the furore over milk prices, there remains a fragility within many parts of the rural economy that needs to be addressed urgently. However, I am heartened by the fact that the North Wales Economic Forum is already ahead of the game when it comes to collaboration on economic matters between public bodies.

Only last month, it announced the creation of the Economic Ambition Board, a partnership between the six local authorities that has the aim of attracting inward investment and boosting job growth across the region. It may not have the title of a city region but this development certainly has the potential to make as much of a difference if real collaboration can take place between the councils involved.

I would hope that the Welsh Government considers carefully the level of resources it will direct, from its own coffers and European funding towards the two city regions in South Wales. At the very least, North Wales politicians and policymakers will need to make a strong case that the region gets an equitable amount towards its own economic plans for the future.

REGIONAL GROWTH FUND AND ITS EFFECT ON THE NORTH WALES ECONOMY

DAILY POST ARTICLE 7TH NOVEMBER 2011

Last week, the UK government announced that it would be looking to award £950 million to boost the economy through the second round of its Regional Growth Fund.

This is a £1.4 billion fund that aims to stimulate private sector investment by providing support for projects that offer significant potential for long-term economic growth and the creation of additional sustainable private sector jobs.

Sounds fantastic for the economy but the bad news for Wales is that the Regional Growth Fund is based in England only and, as a result of devolution, the Welsh Government will need to find its own funding for such economic development levers What is more worrying though is that increased spending across the border on economic development may well have a knock on effect on North Wales.

Certainly, the neighbouring area of the North West of England is one of those regions that has benefited with funding of £227m awarded to 39 projects, some of which are going directly to private businesses and others that are supporting key new infrastructure projects.

For example, Burnley Council's bid for £8.8m will reinstate 500 metres of rail track that, in turn, will halve the train travel time between Burnley and Manchester. It will also help to regenerate a collection of former mill buildings along the Leeds-Liverpool canal. That will certainly help the area become more attractive to potential investors.

In addition, Energy Coast West Cumbria has been awarded £5.5m to help firms maximise opportunities in nuclear and renewable-energy supply chains, a move that could have serious implications for Anglesey’s bid to become one of the key centres for the energy sector in the UK.

In the private sector, one of the companies that has individually benefited from the fund is Cheshire-based Bentley, which received a £3m grant to support the development of a new engine plant, safeguarding more than 200 jobs.

So, whilst the North West of England has access to funding for projects that will create over 47,000 jobs, what is happening here in Wales? As many businesses are no doubt aware, the last Welsh Assembly Government decided to abolish grants to businesses, replacing it with the Economic Renewal Programme (ERP).

Yet, according to data released last month, only 16 firms have been helped by the ERP in the first six months of 2011. But what about the billions of European funding available to the poorest parts of Wales, including Anglesey, Conwy, Gwynedd and Denbighshire?

Despite the Welsh Government having already committed over £1.5 billion to 236 projects since 2007, only 256 jobs have been created in Anglesey, only 46 new businesses created in Conwy and only 254 participants have gone on to further learning through European funded training schemes in Gwynedd. 

That is a woeful performance and there are real worries that the effect of the Regional Growth Fund along with those enterprise zones already established in the North West of England, will place North Wales at a serious disadvantage at a time when support for private firms is critical.

But this should not be surprising, as the private sector has been largely excluded from direct participation in European funding schemes in Wales, with the vast majority of projects going to Welsh Government or local authorities. In contrast, there is now an emphasis on greater partnership between the public and private sectors in England, with council and business groups coming together to bid for projects, as they did for enterprise zones.

That is something that has been sadly missing in Wales over the last decade and I fear that the billions of European funding that could, and should have made a real difference, as the Regional Growth Fund will do in the North West of England, will have little effect on the transformation of the North Wales economy.