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MAKING THE ECONOMIC CASE FOR POWYS

As Wales’ largest county, Powys has had some notable industrial successes throughout its history. It was the birthplace of Robert Owen, the creator of the co-operative movement and the location of the first mail order business in the world – Pryce Jones of Newtown.

It is also where Laura Ashley, arguably one of Wales’ most famous entrepreneurs, chose to start her textile business in the 1960s which took Welsh fashion designs around the globe.

Given this business heritage, it is disappointing that, in terms of economic policy during the last decade, Powys has become very much the forgotten county of Wales.

For example, when Wales applied for European funding back in the late 1990s, Powys was omitted from the list of counties that was put together to make up the artificial region now known as West Wales and the Valleys.

As a result, not only did Powys then lose out on a share of the £1.2 billion of European funding made available to West Wales and the Valleys, but it also lost out on any assisted area status for the vast majority of the county with the notable exceptions of Machynlleth and Ystradgynlais.

This status is critical for companies wishing to expand their operations or for those inward investors looking to relocate as it means that a higher level of grant support can be given to a company setting up or expanding in an assisted area. As a result, maximum grant support of up to 50 per cent has been available within West Wales and the Valleys since 2000 whilst none has been forthcoming for any business wishing to relocate or expand within the majority of the county, including the main conurbations of Newtown and Welshpool.

The question, of course, is whether this failure to include Powys within the West Wales and the Valleys region has affected the Powys economy at all?

If we examine the economic data for the county, it does suggest that there has been a slowdown as compared to the rest of Wales.

For example, official data from the Office for National Statistics shows that Powys has now suffered a fall in economic prosperity (GVA/head) from 75.0 per cent of the UK average in 1999 to 66.1 per cent in 2007. This decline of 8.9 per cent compares with an overall fall in the prosperity per head of West Wales and the Valleys of only 1.9 per cent.

By the time the first round of Convergence funds via the Objective 1 programme was drawing to a close in 2007, the GVA/head in Powys in 2007 was £12,771 per head. In four of the counties receiving funding it was higher, namely Swansea, Gwynedd, Bridgend and Neath Port Talbot.

Indeed, whilst the economic prosperity of West Wales and the Valleys had grown by 41 per cent during the period 1999-2007, that of Powys had increased by only 29 per cent.

Given this, you have to ask the question why the Welsh Assembly Government (WAG) did not make a case for Powys to be included in the second round of European Structural Funding for the period 2007-2013, which has resulted in an additional £2 billion of funding for the West Wales and the Valleys region?

Why didn’t anyone within WAG stand up for Powys during this time, especially given the fact that it had been overtaken in economic prosperity by other counties which still qualified for funding? Would it have been too difficult to make a strong case for inclusion and therefore access to vital funding for economic development?

Assuming that Powys would have had its fair share of the two European funding programmes, this exclusion has meant that the county has lost out on around £200 million of additional financial support for the economy during the period 2000-2013.

One can only imagine what such investment would have done for its prosperity during this time.

If the Welsh economy continues to decline relative to the rest of Europe, then current estimates suggest that the fifteen counties that make up West Wales and the Valleys may well qualify for an unprecedented third time.

If that does happen, then there is certainly a case to be made for Powys to be included in this next round of European funding and therefore gain access to funding opportunities that could turn around the economic decline suffered by the county during the last decade.

Comments

Disgusted said…
"For example, official data from the Office for National Statistics shows that Powys has now suffered a fall in economic prosperity (GVA/head) from 75.0 per cent of the UK average in 1999 to 66.1 per cent in 2007. This decline of 8.9 per cent compares with an overall fall in the prosperity per head of West Wales and the Valleys of only 1.9 per cent."

That is a terrible indictment of economic development policy over the last decade. It also demonstrates that the support received from Europe and the assisted area status is critical for the poorer parts of this nation. It shows what happens without the grant and business support required to attract companies to those areas which need jobs. Wales has been hit hardest by the recession and isn't ready for an end to the grant culture. If this is what has happened in Powys, what will happen to the rest of the deprived areas of Wales if IWJ puts his faith in broadband and six sectors of the economy.
Anonymous said…
It doesn't say much for the way European money has been spent in Wales that the targeted areas still managed to see their prosperity drop - and that before the recession started biting.
Jeff Jones said…
Dylan You are in danger of rewriting history and really being very unfair to WAG on this one. In the early 1990s no one even believed that any part of Wales would qualify for Objective One status. The Tory controlled Welsh Office was going through the motions with the idea of a very small area mainly centred on the Heads of the Valleys authorities being put forward as a possible Objective One area. When the new local authorities came into existence the WLGA began to campaign for a much larger area of Wales to be put forward. The key figure providing the evidence was Victoria Winckler.Some of us went to Brussels to lobby EU civil servants for the change . Their reaction wasn't one of optimism because as one civil servant explained to me the attitude of the then Tory UK government. All of this changed in 1997 when Labour was elected and the attitude of the UK government changed.If John Major had been reelected much of Wales would not have obtained Objective One status. As for the extension again at the time with the accession of new countries to the EU many believed that Objective One money would come to an end. The decision not to include Powys in any new bid has to be seen in this context. To argue that somehow Wales lost £200 million is counterfactual history at its worst.On whether the money,on the other hand, has been well used you know my views on that one.
Jeff

If you read the piece carefully, I didn't argue that Wales had lost out on £200 million (although that would be worth exploring again). I instead made the point that Powys has lost out on its (rightful?) share of the funds that Wales has received since 2000 and that nothing has been done to make up for that fact.

I have always been a strong believer that the majority of EC funds should be distributed locally and who is to say what Powys could have done with its share of the funding received under both programmes?

Your contention that WAG believed that European funding would come to an end in 2007 does not make up for the fact that no-one seemed to be on the ball over the declining economic position of Powys relative to the rest of Wales.

So much for spatial planning.

You know as well as I do that Wales would have received transitional funding over the period 2007-2013. My point is that Powys should rightfully have been included in any new geographical area because of its economic position. It certainly had a better case for inclusion than Swansea, for example.

However, regardless of any funding from Europe, the omission of Powys from having any type of assisted area status is probably the main issue, as companies within the region have not been eligible for financial support.

Given there was a review of assisted area status by the UK government in 2006, with a view to submitting a revised list of eligible areas to the European Commission, was a submission made by WAG to include Powys in this new map as the county would have had a very strong case for inclusion? Perhaps someone from WAG could provide the answer.

As for revisionism, who would have known what would have happened of Major’s government had won a second term in 1997?

Given the fact that the manufacturing actually increased in Wales during 1992-1997 and has declined by over 10 per cent of the Welsh economy since under successive Labour Governments, that would be a history worth rewriting.
observer said…
There were a group that provided evidence, not Just Victoria Winckler although she was a part of it.Ron Davies had several people speak directly to the Commissioner on various aspects of the need for objective one.That meeting was in the Llanciach and was key as it showed real issues not just statistics
That included people directly involved in Europe, economic development,community development and local authority management.
Powys problems come from its spatial issues relative to its budget.Its a patchwork and its needs are not cohesive.It needs some good strategic leadership,its not had that.
Powys has never taken full benefit of LEADER and the other rural European programmes. It needs some real support and under standing.
Jeff Jones said…
Observer is right about the lack of strategic direction in Powys. As an outsider its politics often seem to me to be closer to the 18th than the 20th century.The name of the game in the past seems to have revolved around in too many areas in avoiding democratic contests for council seats. In some ways you could argue that its survival as the only pre 1996 County reflected the fact that no one knew what to do with the area. Its MPs pre 1996 wanted to keep Montgomeryshire and the other small districts with no one arguing for Powys. Given that the districts were far too small Powys it could be argued survived by default and has because of its poltical culture limped along ever since. Even if we had another local government reorganisation the question remains what do you do with such a diverse area which encompasses localities with close links to England in both cultural and service delivery terms on the one hand and other areas which are amongst the most Welsh in the whole of Wales. Throw in the geographical and demographic issues and you would need an exceptional group of officers to produce a strategic plan for the area. Unfortunately the political culture mentioned above is hardly likely to attract individual of ability or vision.The failure to deal over the years with falling roles in both the primary and now the secondary sector really sums up an authority where real decision making is often absent.
Charl said…
The main problem with Powis is that it is the most sparsely populated area in England & Wales. It covers 27% of the area of Wales but holds just 4% of the population. The population density is just 22 people per Km2, Swansea is 606 per Km2.

You could invite the entire working population of Powis to see Wales play rugby at the Millennium Stadium and still have tickets spare!

Whilst access to grants does help there are many other factors that will also be taken into account - good transport links, access to local suppliers, education, academia and of course people to name just a few.

In terms of basic deprivation indicators Powis just doesn't appear on the list so I am not sure how you can make a valid case for its inclusion.
Anonymous said…
Seems obvious to me that grants are not the future - if an area cannot make more money when its being given money hand over fist, then there is something seriously wrong.

Could it be that with grants, companies have no incentive to find real paying customers? With grants being available for a generation, isn't the outcome that a whole generation is unskilled in selling in these areas?

Why should anyone buy their goods? Because its made in the back of beyond and has a picture of a Dragon on it, isn't good enough!

At least the business people of Powys quickly learnt that to make some money, they need to do business with Birmingham. You might not have heard of this place, but its 80 miles away from Newtown, over the border in England.
Anonymous said…
"At least the business people of Powys quickly learnt that to make some money, they need to do business with Birmingham"

so that is why the Powys economy has gone down the pan. Thanks for working that one out for us.
Anonymous said…
"In terms of basic deprivation indicators Powis just doesn't appear on the list so I am not sure how you can make a valid case for its inclusion"
GVA/head measurement is the main indicator for measuring both assisted area status and qualification for structural funding so Powys should qualify.

As for rural poverty, Kirsty Williams pointed out today that "Rural Poverty and social exclusion "cannot be denied" according to a new report from 'Children in Wales'. The report's title "Families not areas suffer rural disadvantage" highlights the organisation's findings that pockets of deprivation are often hidden amongst more affluent areas in rural Wales. Interviewed agencies highlighted "problems accessing services, leisure opportunities and welfare advice" with "many families' problems…exacerbated by the lack of affordable transport and struggling on a low-income."

She also said that "This report confirms what those of us from rural Wales have constantly tried to impress upon the Assembly Government - that poverty is not restricted to the M4 corridor and does in fact extend to rural areas such as Powys. Areas of deprivation in rural areas may be more spread out and hidden behind idyllic landscape but poverty is still a very real issue. The study states that the unit cost of providing services in rural areas is higher than in urban areas and therefore the rural element of the Revenue Support Grant should be increased to reflect this. The report stresses the lack of resources and policy directed at the support of family and community in rural areas and is essential that the Assembly Government develops support that is specifically applicable to the rural context. The report calls for new indicators of relative poverty so as to include rural areas in WAG deprivation funding, along with longer term grants. Kirsty said: "We need investment in the local economy to encourage new businesses and job creation; we need investment in public transport so that those without car access are not left isolated; we need to retain our local health care services for a healthy population; we need affordable housing with more rural housing enablers and access to inexpensive childcare. (Wales Rural Observatory research shows that that the proportion of working households in rural Wales earning less than £10,000 in 2003 was identical to that in urban areas, at 20% and only slightly below the figure for the valleys (21%)).
Anonymous said…
Maybe the reason that Powys was left out of the Objective One area was down to something as simple as not being of the right political colour and not having political representatives who shouted the loudest?

Powys is a Liberal heartland and as others have said it was Labour that lobbied the hardest for European money that has been so badly misused and mismanaged by WAG.

Its also rich of Jeff Jones to talk about the strategic political failure in Powys which may be true but when his Party's Labour Councils in West Wales, the Valleys and North Wales have presided over some of the worst instances of cronyism and gerrymandering that did little for the communities they serve but managed to make many so called Socialist Councilors very rich indeed it looks rather hollow.
Anonymous said…
Jeff, you miss the point. The reason why West Wales and the Valleys managed to secure the funding was as a result of the National Assembly. It was post devolutiont when the maps were redrawn and the old north and south Wales boundaies were revised. And may I remind Jeff, that without all the opposition parties in the Assembly forcing the hand of Alun Michael and the UK Labour government (an early example of the rainbow coalition, maybe), we never would have secured match funding. Your then leader lost his job because of Objective One and securing the money was one of the first examples on how devolution benefited Wales.

What a short memory you have, Jeff
Jeff Jones said…
Sorry anonymous the Objective One boundaries were drawn up before 1999. If my memory serves me right the National Assembly was established in 1999. One thing that I have been blessd with is a good memory. You are right to state that the misplaced criticism of Alun Michael was based on the failure to obtain match funding. The awarding of Objective One status to much of Wales had absolutely nothing to do with anyone involved with the Assembly except perhaps Ron Davies I'm afraid. Look at the decision dates. I'm glad that you recognise ,however, how much money the Labour Party gave to Wales during its 13 years of power. Let's see what happens in the next few years when the Liberal Democrats and the Tories decide how much money the Assembly will receive. The key to the decision to increase the amount of money from the UK government was not any pressure from the Assembly. It followed as a consequence of the general attitude to public expenditure by the Labour government. If there was any pressure then it came from Welsh Labour MPs at Westminster. Now if we want to debate whether the Objective One money has been spent wisely then that's a different matter. That debate doesn't involve the UK government but centres around the Assembly and the failure as Dylan on many occasions has pointed out to develop a vision for the future and a strategy to implement that vision.

As for the other anon with the comments about cronyism, gerrymandering and rich socialists .Thanks for the laugh. At least I'm prepared to put my name to any comment I make on any blog.

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