The first decade of a new millennium was an opportunity for Wales to become an entrepreneurial, innovative nation that would exploit the best of its natural, intellectual and business resources to become one of the growth regions of the UK.Certainly, the signs at the beginning of the century looked good.
In 2000, Wales had just been granted devolution, with powers for areas such as economic development, transport and education and, more importantly, a budget of billions of pounds to go with them.
It also had, in the world of inward investment, the Welsh Development Agency (WDA), whose global brand was synonymous with bringing well-paid manufacturing jobs into Wales during the last decade and was the envy of other regions across the UK.
In a bold move away from the foreign direct investment strategy, the WDA had also endorsed, in 1999, an Entrepreneurship Action Plan for Wales – the first regional enterprise strategy anywhere in the World – which would create a second engine of growth to complement the wealth created by large overseas manufacturers, namely the development of tens of thousands of home grown indigenous entrepreneurs.
Finally, Wales had received an unintended bonus in the form of European Structural Funds and, as a result, £1.2 billion of additional money would be made available for the public, private and voluntary sectors to help our most deprived areas, leaving a legacy of regeneration that would help some of the poorest communities in Wales.
Given this wealth of opportunities, it was not surprising that the Welsh Assembly Government set targets at the beginning of 2001 to increase Wales's prosperity to 84 per cent of the UK average by 2002 and to 90 per cent by 2010. Indeed, who would have argued with them at a time when the Welsh economy seemed to have everything going for it?
Fast forward ten years and what did happen to the economy of Wales? Yes, it has grown during this period but, unfortunately, the vast majority of the UK’s other regions have grown at a faster rate. As a result, the position of Wales relative to the rest of Britain has become progressively worse.
In 2000, Wales was at 76.4 per cent of the UK’s prosperity levels. However, rather than closing the gap as envisaged by the first Assembly Government, the gap has actually widened and by 2008 (the latest data available), Wales’ prosperity relative to the rest of the UK stood at 74.8 per cent, the lowest of any UK region.
Indeed, the Objective 1 funding from Europe did little to arrest the decline of the Welsh economy, being largely squandered on projects that brought very few long term economic benefits to Wales.
In the middle of the decade, the WDA was abolished to make way for a beefed up economic development ministry within the heart of government.
Whilst supporters of this move argued that it was necessary to take the Welsh economy to the next level of development, critics of the ‘bonfire of the quangos” have suggested that this overtly political move has been disastrous for the Welsh economy and that the consequences of abandoning not only the arms length relationship between economic development and politicians, but also a world class brand, are only now beginning to be felt. In particular, they point to the increasing focus of the new department on structures rather than any coherent economic strategy and that an obsession with bureaucracy has taken priority over maintaining relationships with major employers in Wales.
This has clearly has not helped the economic state of the nation at a time when open dialogue between government and business was vital in securing the future of the nation’s manufacturing base, which has declined from being 23.6 per cent of the Welsh economy in 2000 to 17.9 per cent by 2007.
Of course, the decline in large scale manufacturing could have been replaced by a surge in entrepreneurial activity. Unfortunately, a consequence of the abolition of the WDA was the abandonment of the Entrepreneurship Action Plan for Wales in 2004. As a result, the number of new business births in Wales has declined by nearly twenty per cent, which is the worst performance of any region of the UK.
So, it could be argued that the so-called “noughties” was a decade of lost opportunity for Wales. Our economic position has deteriorated relative to the rest of the UK, despite billions in additional funding from the Treasury and the European Union.
Our once proud manufacturing base has been eroded considerably and our entrepreneurial potential has, after a promising start, stalled. Worse still, all of this happened before the depest recession since the 1920s cost the country tens of thousands of jobs.
Yet, some of us who remain eternal optimists still believe that there is still hope for the Welsh economy to bounce back and, looking back to 2000, there is certainly precedence, albeit in a completely different sphere.
Who would have possibly dreamed that a Welsh rugby team would have won not one but two Grand Slam titles in the following decade? Yes, it took a minor revolution for that to happen and a number of false starts but with experienced leadership, a balanced team, a focus on what they did best, lots of hard work and a little bit of luck, the impossible became reality.
There is no reason why the same could not be achieved within our economy, especially as there is enormous potential for the development of key sectors such as digital media, clean technologies, advanced manufacturing and biosciences, but only if all the players in the public, private and university sectors work together for the benefit of Wales and not themselves.
If government can do everything in its power to facilitate rather than hinder this process, then I can think of no better time than the new decade in which to start the renewal of the Welsh economy.
Blwyddyn Newydd Dda - Happy New Year!
Comments