PUBLIC SECTOR DOMINATES UK JOBS GROWTH SINCE 1997

The Sunday Times business section refers to a fascinating paper from Manchester University’s Centre for Research on Socio-Cultural Change.

Entitled “UNDISCLOSED AND UNSUSTAINABLE: PROBLEMS OF THE UK NATIONAL BUSINESS MODEL”, the paper presents new arguments and evidence about public and private employment creation in the UK.

Its measures of public sector employment count state employees and estimate para-state employees whose private employment is state supported.

On this basis, state and para-state (S&PS) since 1998 account for more than half the job creation nationally in the UK and for much more in the ex-industrial regions.

For example, in London and the South, S&PS accounts for no more than 38-44% of employment growth between 1998 and 2007; while in the Midlands, North, Wales and Scotland S&PS accounts for more than half of the employment growth over the same period.

In Wales, 55 per cent of all new jobs in the decade between 1998 and 2007 have come from the S&PS sector as compared to 45 per cent from the private sector.

Whilst some of the conclusions of the report are contentious, the one point of real discussion is whether public sector expenditure has essentially been hiding a low performing business sector. i.e. that the UK government has been propping up a feeble and untransformed private sector whose problems are now horridly aggravated by bank failure and market crisis which was caused by the financial sector.

If that is the case, then it is clear that the next government, of whatever political colour, must focus its efforts not only on public sector expenditure reduction but, more importantly, on improving the competitiveness of UK businesses.

INVESTING IN EXPERIENCE CAN PAY DIVIDENDS FOR THE WELSH ECONOMY

With provisional Government statistics showing that the UK is finally beginning to emerge out of the worst economic downturn since the 1920s, policymakers will no doubt turn their focus away from recession minimising programmes towards strategies that can help to kick-start the economy quickly.

In previous recessions, an important part of that solution has been the efforts of entrepreneurs in developing new products, processes and services that will stimulate economic growth.

However, a paper I recently wrote with Dr Piers Thompson of the Management School at Uwic suggests that, while important, any economic policy that is primarily aimed towards encouraging more people to enter entrepreneurship for the first time may not be as effective a strategy as many policymakers think.

Utilising data from the Global Entrepreneurship Monitor (GEM) survey, our study analysed interviews with 843 entrepreneurs who were in the process of starting a new business. However, rather than focusing only on those novice entrepreneurs starting a business for the very first time, the research also examined those habitual entrepreneurs who were involved in establishing starting multiple businesses.

Such habitual entrepreneurs include serial entrepreneurs – those who prefer to close one business before starting another (such as Steve Jobs) – and portfolio entrepreneurs – those who run a number of businesses concurrently (such as Richard Branson)

So what have we found out?

First of all, we discovered that habitual entrepreneurs make a disproportionate contribution to the level of business start-ups across the UK. Whilst making up less than 1% of the UK population, habitual entrepreneurs set up around one in three start-ups of all the start-ups in the UK. In addition, those with previous entrepreneurial experience are over three times as likely to start a new business as those with no previous experience.

Similarly, those with previous experience are more than twice as likely to be intending to be involved in starting a new business in the future as compared to those with no previous experience.

This may reflect the greater resources which are available to those who previously sold a business, which provides the start-up capital required to make intentions become reality.

Therefore, the study shows what many in business probably know already – that those with previous entrepreneurial experience are more likely to be thinking of and actually starting a new business. However, this still begs the question why enterprise support is focused almost exclusively on getting new entrants into entrepreneurial activity?

Of course, the “holy grail” for policymakers is not the lifestyle business established by the vast majority of those starting a business, but those new businesses that can create can create wealth, employment and innovation in their local economies.

Previous research indicates habitual entrepreneurs may be the solution. They tend to run larger businesses than novice entrepreneurs, which reflects their ability to raise start-up capital from the proceeds of previous businesses or through leverage of existing company assets.

They also utilise their previous track record in business ownership and their entrepreneurial experience to persuade venture capitalists to invest in their business. Not surprisingly, our sample of habitual entrepreneurs had a far higher requirement for start-up finance than novice entrepreneurs. This is particularly the case for portfolio entrepreneurs, where more than a quarter require in excess of £125,000 in capital for their new businesses. This clearly suggests that their focus is on creating high growth firms over a period of time.

The networks and skills developed through prior business ownership also make it likely that up to a certain point, habitual entrepreneurs will be aware of a great quantity and quality of opportunities, and the confidence that such entrepreneurs gain from prior entrepreneurial activity usually leads to future success with other ventures.

Therefore, it should be of no surprise that habitual entrepreneurs expect to create a greater level of employment, higher turnover in both the first and third years of trading, and export a high proportion of their output.

If these expectations are accurate, then it is clear that businesses started by habitual entrepreneurs are exactly those which governments across the world are looking to support, and conform to the “gazelles” concept of the minority of rapidly growing businesses which create a majority of employment in the small business sector.

In particular, portfolio entrepreneurs are also more likely to be running businesses which are providing entirely new products to the market, entering markets where they face no competition, and to a lesser extent using newer processes and technology. This may reflect the use of new business starts by portfolio entrepreneurs to enter high risk growth markets, whilst insulating their existing businesses.

Therefore, given the importance of those with previous ownership experience in generating new businesses, it seems clear that government policies and resources could, and should, be better targeted at supporting proven entrepreneurs rather than increasing start-up levels in general.

Currently, there seems little focus within other UK regions in promoting the entrepreneurial potential of those individuals who have “been there and done it”.

Therefore, if the Welsh Assembly Government wants to accelerate the development of the Welsh economy and ensure a return on its investment, it could focus some of its £250m business support budget on engaging with the 5,000 or so successful Welsh entrepreneurs who are already running fast growth businesses and work alongside them to generate new, innovative businesses to create sustainable wealth and employment in the economy.

THE TSUNAMI

There is some depressing news for the economy on BBC Wales this afternoon.

According to various reports, hundreds of further jobs are under threat across Wales, including at Toyota on Deeside and Shops Direct in Powys.

Two local authorities - Swansea and Newport have also stated that they will be considering substantial redundancies to deal with their growing financial problems.

I was speaking to a very senior partner in one of Wales' top accountancy companies at a dinner before Christmas. I asked him whether he through the economy would recover in a year and if companies would start hiring again.

His answer?

"Dylan, the last few months have been a precursor to a far worse economic situation and we ain't seen nothing yet. Many companies have just been holding on to jobs until the Christmas period is over and it looks like we should all get ready for a Tsunami of business closures over the next few months".

Unfortunately for the Welsh economy, that tsunami may just be about to hit.

We can only hope that the predictions of someone who has his finger firmly on the pulse of the Welsh business sector, and who is rarely wrong about such matters, has made the wrong call this time.

GRANT OR NO GRANT - THAT IS THE QUESTION?

Last Wednesday, the Western Mail's business team 'scooped' the news that the Japanese firm Toyoda Gosei is to create 600 jobs in Swansea.

I originally thought it was a deliberate leak but from what I hear from the rumour mill around the Bay, WAG went ballistic as the spin doctors had hoped to control the release of the jobs announcement for their own political purposes.

Nevertheless, it is difficult to argue that this isn't good news for the Welsh economy, especially after the Bosch closure.

Indeed, at a time when we have lost around 500 jobs a week in 2009, every job we can get is precious, especially for those thousands who are still looking for work.

However, there is a simple question that no-one seems to have asked.

Back in October, the Deputy First Minister stated that the "grants culture was over"?

As he said at the time, "there had to be a radical shift from offering large grants to multi-national companies to move here"

Does that mean that Toyoda Gosei didn't receive a penny of public money to come to Wales or, as would be expected in a deal this size, around £6-7 million was provided from the Single Investment Fund to attract the jobs to Gorseinon?

Can we now say that the grant culture over or are we still paying companies to come to Wales?

UK ECONOMY "CRAWLS" OUT OF RECESSION

I am not too sure if anyone else perceived the irony of the Labour Party organising a £1000 a head fundraising dinner on the day that Save the Children was announced that Wales has the highest levels of child poverty of any UK nation.

Unfortunately, these stories will be lost quickly as they broke on the day that it was announced that the UK economy has just about ‘crawled’ out of the longest recession since the 1920s.

According to the Office for National Statistics (ONS), the UK economy grew by only 0.1 per cent between October and December, well below the 0.4 per cent growth forecasted by the great and the good in the City of London.

This, of course, does not take away from the fact that the economy shrank by more than 4.8 per cent in 2009, the fastest annual decline for 88 years, and more than any other 12-month period since the 1930s Depression. In fact, this 2009 final quarter figure could be revised downwards (or upwards) by the ONS as it is estimate based on only 40 per cent of the data analysed.

However, the worse aspect of this miniscule growth is that we could easily see the economy shrink again in the first quarter of 2010, especially given the fragile state of retailing after Christmas and the withdrawal of government stimuli such as the VAT reduction and the ending of the car scrappage scheme

Of course, unlike the BBC headline which stated that "Wales is out of recession", that may not be the case at all as it may be the other regions of the UK which have helped to push the 0.1 per cent growth in the overall UK economy.

Given the state of manufacturing in Wales and the higher level of unemployment than other UK nations, the Welsh economy may still be shrinking although thanks to the fact that we do not have separate GDP estimates for wales, we will probaly never know the answer.

GORDON BROWN, PENNY PINCHING AND THE LOST HELICOPTERS

Last week, the Prime Minister finally relented to intense political pressure and agreed to appear, either in late February or early March, before the Chilcot inquiry into the Iraq War.

Commentators have already noted that this is a high risk strategy as not only has Gordon Brown built a reputation for avoiding answering any direct questions, but also it could reignite the concerns of many over a subject that the Labour Party wanted to bury two months before a general election.

On a positive note for the Government, his appearance will ensure that the Prime Minister will dominate the news headlines for days after his questioning.

The question, of course, is whether such headlines will be favourable or not, especially as there remains ambiguity over the role of Tony Blair’s second in command over the decisions made to go to war in Iraq?

Many will also want to hear his evidence relating to allegations that the Treasury, which he headed for over a decade, made decisions on defence spending that have since had a catastrophic effect on our armed forces in that other theatre of engagement, Afghanistan.

According to Geoff Hoon, the Secretary of State for Defence at the time, the Treasury pushed through cuts of £1.4 billion to the military helicopter budget in 2004. As a result of this decision to save money, military chiefs were unable to buy new helicopters that would now be flying in Afghanistan.

In addition, the Scrooge-like approach to defence spending meant that even those Chinook helicopters that had been delivered in 2001 could not be used by Britain’s armed forces. This is because, in order to save money, the Ministry of Defence opted for a cheaper option of supplying their own software to the helicopters rather than buying directly from the helicopter manufacturers.

This ‘buy cheap, pay dear’ approach resulted in the eight Chinook helicopters purchased to support our ground troops failing to meet airworthiness standards for combat flying. As a result, they have since sat in an air-conditioned aircraft hanger awaiting a refit, which was finally approved last year with the result that they should all become operational during 2010.

The National Audit Office described the procurement of these helicopters as a "gold-standard cock-up" but, unlike other similar government purchasing decisions, this prevarication has had very serious outcomes.

As we know from daily reports from Afghanistan, the consequences of these budgetary decisions by government beancounters have been catastrophic, as the lack of air support has forced British troops to take dangerous journeys by road, exposing them to Taliban attacks. Worse still, ministers supported this penny-pinching philosophy by bureaucrats to take precedent over ensuring the safety of our serving soldiers.

During the last year, various opinion polls have shown that a significant proportion of the British public have doubts about the war in Afghanistan. Nevertheless, I am sure every one of those opposed to the conflict would support our troops having the best equipment whilst serving this country's Armed Forces, whatever their concerns over the reasons for being out there.

The Chilcot inquiry started off as an investigation into the Iraq War but has now become a judgment on the commitment of government departments to supporting the capabilities of this country’s soldiers in undertaking armed conflict on behalf of our political leaders.

If its conclusions indicate that the spendthrift nature of the Treasury resulted in the loss of British lives and the terrible injuries of hundreds of more soldiers, then it will be a black day for this nation and its leaders.

BOSCH AND WELSH MANUFACTURING - A REFLECTION ON THE WEEK'S EVENTS

There have been a number of comments on this blog to the reaction to Bosch’s decision to shut its plant near Cardiff with the loss of 900 jobs.

As there has been a considerable amount written on the subject and a debate in the Assembly Chamber on this matter, it has given me the opportunity to re-examine the events during the last eight days.

According to the Welsh Assembly Government’s statements during the last week, it did everything possible to keep the jobs in Wales, although it was admitted on Tuesday that no ministers had bothered to make the visit over to Germany to discuss the situation with senior directors of Bosch.

Of course, when a company employs more than a quarter-of-a- million people worldwide, the situation of a plant with under 1,000 employees hardly figures on the radar of a large organisation going through major restructuring as a result of the recession.

Yet, in such situations, establishing and continuing dialogue with major employers is critically important if we are to stand any hope of retaining jobs.

For example, as I quoted in a blog entry last week, back in June 2006, I wrote, in this very column, that

“the Assembly Government, despite having over 1,500 civil servants in the enterprise department, has no strategy to deal with manufacturing cutbacks, apart from closing the gate after the horse has bolted. It is no longer good enough to say that they are not prepared for further cuts and they need to urgently consult with all major manufacturing employers remaining in Wales to ascertain what can be done to ensure they remain.”

However, that consultation should not be limited to the branch plants in Wales and there is a key role for International Business Wales in brokering an urgent discussion between WAG and the parent companies of these businesses as soon as possible.

Indeed, if senior managers such as Bosch’s chief executive, Franz Fehrenbach, could have heard our political leaders underline the dedication, high productivity and skills of the Welsh workforce, then the German giant may well have reconsidered its position.

As it happens, we’ll never know, as it seems no-one actually thought about whether they should set up such a meeting although one can only hope that Carwyn Jones may well try one last ditch meeting to see whether Bosch will change his mind.

He certainly has nothing to lose and everything to gain.

I also made the case that if a manufacturing strategy for Wales may have made a difference if it had been implemented. Unfortunately for its reputation with the business community, the One-Wales Government was arguing this week that a manufacturing strategy would not have helped the Bosch situation.

This, of course, begs the question why they bothered developing one in the first place?

If the high-skill, high-value- added approach to move companies up the value chain endorsed by the Welsh Manufacturing Forum’s in their draft manufacturing strategy had been implemented back in 2008 as originally planned, then greater focus could have been made to ensure that companies within the sector, including Bosch, could have benefited.

No-one can argue with the fact that having a strategy “written for the manufacturing industry by the manufacturing industry” was the right approach for policy development.

Yet, by delaying the implementation of the strategy for over a year-and-a-half and then claiming that it would have had little effect on the sector in any case, the Assembly Government has essentially dismissed the hard work of those business leaders who gave their time and efforts to develop a strategy to take Welsh industry to the next level.

Such irresponsible actions could not come at a worst time and it was worth listening to the former Minister Andrew Davies, the Swansea West AM, who, in an interview yesterday with Good Morning Wales, said that the problem with WAG’s approach to the economy was not the lack of strategies but the failure of civil servants to implement them.

Earlier this week, there was a plea from the Minister for Economy and Transport for the private sector to come forward with ideas for his department’s Economic Renewal Programme. This should be broadly welcomed as it is critical that businesses are fully consulted on how the public sector can support their efforts to become more entrepreneurial, innovative and productive.

One can only hope that, unlike the manufacturing strategy for Wales, his civil servants actually take on board the views of the business community and, more importantly, implement them, without delay, for the benefit of the Welsh economy.

AGREEING WITH ADAM PRICE

It's not often that Adam Price and I agree on economic matters. However, there is little to argue with much of his latest blog posting, in which he states that

"if Wales is to derive real long-term economic benefit from the pendulum swing back to manufacturing then we need to see investment in the kind of business-facing R&D facilities which the Germans, the French and the Danes have in droves. That’s why it was disappointing to hear the UK Government announce this week that the three new Engineering and Physical Sciences Research Councils’ Manufacturing Research Centres were going to be in Southampton (photonics), Loughborough (regenerative medicine) and Brunel (liquid metals). This follows on from the previous EPSRC Innovation and Knowledge Centres which were in Cambridge (photonics again – a sector in which Wales has considerable industrial expertise); Leeds (regenerative therapy); Cranford (surface engineering) and Belfast (IT). Wales has never had its fair share of UK R&D money or jobs. In the event of a hung parliament, we should demand that this appalling record of under-investment in Wales’ R&D base is reversed. A major Government Research Establishment should be moved here – or the National Science Academy to be set up under the One Wales Agreement should be funded partly by Central Government".

This decision on the location of manufacturing research centres is yet another kick in the teeth for the Welsh science base, especially given the logical conclusion that their presence would only boost higher value added manufacturing within a region.

However, this is not an isolated incident and follows the announcement in 2008 by the UK Government in which they pledged £250 million of funding for 44 Ph.D training centres in science and engineering, not one of which was based in Wales.

Adam's main point, on government research establishments, is one which I wrote about back in April 2006:

"Another key factor in the development of a strong knowledge based economy is the £2 billion that Government itself spends on R&D annually, although only 2% of this is spent in Wales. In contrast, three regions - London, the South East and the East of England - account for nearly 60% of all government expenditure in this area. In my opinion, it cannot be right that the most prosperous areas of the UK are benefiting from what is essentially a form of government grant".

"If the Secretary of State for Wales can encourage various civil service functions to be moved out of London into Wales, then there is no reason why he cannot use his astute political and persuasive skills to ensure that a large proportion of the £1.1 billion spent annually by the UK Government within its three richest regions is redistributed elsewhere, preferably to Wales

"Urgent steps need to be taken by our politicians - at Cardiff Bay and Westminster - to ensure that increased investment is generated within these sectors. Without such increased investment, Wales will find it difficult to transform itself into the knowledge base economy that is vital for our future prosperity".

Unfortunately, the latest statistics are only available for 2007 and they show that Wales remains with only 2 per cent of Government R&D. The majority of government R&D carried out in the UK remains concentrated within the most prosperous regions.

If this funding was 'Barnettised', then it would mean that an additional £70 million would be spent on R&D in Wales but, more importantly, it would act as a magnet for high value businesses.

I can only hope that the next government will look at this issue carefully, especially in considering whether funding can be transferred into Wales to support one of the four key sectors - low carbon, digital economy, advanced manufacturing and biosciences - identified by WAG. We then may not even need a Hung Parliament to make it happen.

Anyway, it is at least something that Adam and I can agree on.

As our politics are somewhat different, I can only put it down to the influence of the innovation academics, such as Kevin Morgan and Phil Cooke, that we both worked with at Cardiff University.

REVITALISING THE WELSH ECONOMY?

Last week, the Economic Development and Transport Minister, asked businesspeople in North Wales to tell him exactly what sort of support they think they need if they are to flourish and grow.

One of the 'suggestions' put forward in this 'consultation', was for "WAG to set up a citizens’ bank "that would look at the needs of small businesses" because, according to the Minister, the businesses which will find it most difficult to access funding will be small businesses".

Don't whisper too loud but, believe it or not, WAG is already the 100 per cent shareholder in a 'bank' to support small firms known as Finance Wales.

This organisation recently received £150 million from the Jeremie Fund to, yes you guessed it, help small firms access finance.

Perhaps if the Minister had a word in the ear of the senior managers of Finance Wales and told them to act less like a private equity house and more like a development bank funded by the public sector (as originally intended), then more money just might its way to the small firm sector in Wales.

He may also want to ask the question why an organisation funded by the Welsh Assembly Government is running a fund in the North East of England when it should be focusing its entire efforts on supporting the Welsh small business sector through the economic recession?

BACK TO ANGLESEY

Last week, yet more bad news emerged for the economy of Anglesey when Welsh Country Foods announced that 200 jobs were at risk at their factory in Gaerwen.

This follows the closure of other major employers on the island including Anglesey Aluminium (400 jobs), Eaton Electric (250 jobs), Peboc (100 jobs) and Menai Electrical (50 jobs). In addition, 140 jobs were lost at Vion when they reduced to one shift at their plant in Llangefni.

That means that nearly 1200 jobs have been lost within major employers on Anglesey during this recession. The loss of income from each of these jobs will also have a subsequent knock on effect in local shops and businesses, which will lead to drastically lower sales over the next twelve months as a result of the closures.

It is estimated that at least 1800 other jobs are dependent on the employment within these companies that have either closed down or reduced their workforce.

Back in October, the local authority made a case to the Welsh Assembly Government (WAG) for “special status” to be given to the island, as had happened with coal and steel closures in South Wales in recent times.

Two months later, there is still silence on the matter from Ministers in Cardiff Bay, including the local Assembly Member, about any type of additional financial support for Anglesey’s dire economic situation.

Whilst over £100 million pounds of European funding has been awarded to more prosperous areas such as Swansea, Anglesey has received very little of this money despite the fact that it is the poorest county in the entire United Kingdom.

For example, when the Ebbw Vale steelworks in Blaenau Gwent was shut down in 2002 with the loss of 1100 jobs, there was additional money of over £150 million provided by the Welsh Assembly Government to redevelop the area.

These included funds to build business premises capable of accommodating 1500 jobs, some 500 new homes and a new £27 million local general hospital. It also provided financial support for a £35 million Learning Campus to provide professional and vocational courses for up to 3500 full-time students and a new £30 million rail link to Cardiff.

To date, Anglesey, which has approximately the same population as Blaenau Gwent, has received no financial support from WAG, despite experiencing similar number of job losses from its major employers during this recession.

Of course, it could be argued that Anglesey is due a future jobs bonanza via the proposed giant windfarm that will be built in the Irish Sea and the new nuclear power station at Wylfa.

However, these are both some years away from their start date and if action is not forthcoming soon from WAG, there won’t be any workers left on Anglesey to benefit from the new jobs that will be created as a result of these projects.

At a time when the new First Minister has promised a fairer deal for North Wales, it is time that political rhetoric was turned into real action. Simply put, Anglesey needs vital financial support immediately to cope with these job losses and their effect on the island’s declining economic prosperity.

What was good enough for Ebbw Vale eight years ago is surely good enough for Anglesey today.

WAG must therefore give special status to the island immediately and ensure, as it did for those areas in the South Wales Valleys hit hard by earlier recessions, that the money is there to support a new start to the future of the local economy.

LEARNING FROM PREVIOUS RECESSIONS

During this recession, the job market in Wales has been hit hard.

The most recent government data showing that there were 125,000 people registered as unemployed in Wales for the period August-October 2009, an increase of 30,000 on the previous year.

To date, the private sector has borne the brunt of these job losses, with no actual net job losses in the public sector since the beginning of 2009.

However, given the reduction in public expenditure now signaled by both Labour and the Conservative Party after the general election, there is likely to be a second tsunami of job cuts during the next twelve months with potentially up to 30,000 public sector posts going across Wales unless savings can be found outside of the staff budget.

Indeed, the process has already begun in the university sector with Bangor University indicating last week that up to 100 jobs will be lost with the closure of five academic departments.

Whilst higher education is taking an early hit, it likely that local government will also be forced into efficiency savings through cutting hundreds, if not thousands, of council jobs across Wales.

Given such a scenario, many are questioning whether Wales can recreate the record levels of employment we saw in August-October 2007, given that the economy has 48,000 less people of working age in employment than two years ago?

Some optimists will point to the fact that the UK economy is widely expected to come out of recession for the fourth quarter of last year, thus ending the largest contraction in the economy since 1921. Indeed, the National Institute of Economic and Social Research predicts that the UK economy grew by 0.3 per cent between October and December 2009.

Of course, we mustn’t forget the fact that the UK has contracted for six consecutive quarters with an annual fall in output last year which was worse than the Great Depression. This means that those who are expecting a quick recovery for the UK economy may be optimists in the extreme, especially as the signs from the last two recessions are ominous to say the least.

As a recent report from the Office for National Statistics demonstrated, the UK’s employment rate fell by 7.5 per cent between 1980 and 1983, and by the same amount between 1990 and 1993 before recovering.

However, there was only a fall of around one and half percent in employment during the initial twelve months of both recessions, a situation which is similar to 2009. The vast majority of the fall in employment actually happened during the subsequent two years as the UK economy struggled to get back on its feet.

Given this, the worry is that we will see yet another jobless recovery during the next two years, which will do little to help those who are currently unemployed.

Of course, this is very different recession, especially in terms of the reasons behind the economic downturn, namely the collapse of the banking sector. Therefore, there is real uncertainty as to how, or if, the economy will recover quickly.

Certainly, there are those who believe that whilst the economy may return to growth, albeit a fragile one, the same pattern as in the 1980s and 1990s will be followed i.e. very few employment opportunities within both the public and private sectors.

Whilst the election debates are raging over which of the main parties has the best solution to aiding recovery at a UK level, we mustn’t forget that the Welsh Assembly Government (WAG) has announced that it will be developing an economic renewal programme to bring the Welsh economy out of recession over the next twelve months.

Given that 9 per cent of the fall in employment in the UK during the last year has occurred in Wales (when we have 5 per cent of the UK population), cynics would say that there is very little that politicians and civil servants in Cardiff Bay can do, beyond empty rhetoric, to help the economy recover.

I disagree, and I believe that with the right approach, the public sector in Wales can work alongside the private sector to create real opportunities for the future of this nation.

After all, there are billions of pounds of funds available in WAG’s economic development, transport and education budgets that, if used properly, could transform the Welsh economy. This is in addition to the £2 billion of European funding that has been awarded to Wales for being one of the poorest regions in Europe.

However, as the British Chamber of Commerce noted recently, the key to any type of recovery, be it at a regional or a national level, is to allow the private sector the freedom to create jobs and wealth.

If politicians and civil servants are prepared to reduce the bureaucracy that has become a byword for supporting business in Wales, use public funds to match fund private sector projects (and vice versa) and work alongside our entrepreneurs to support their businesses, then perhaps, and against all the odds, we may well begin to see employment growth in the Welsh economy sooner rather than later.

THE MANUFACTURING STRATEGY FOR WALES

Last night, I received the following comment on the previous post relating to a piece I had written back in early 2007 about the state of the manufacturing sector in Wales.

"Dylan, you seem to be ignoring the fact that manufacturers in Wales have written the manufacturing strategy. Small and large manufacturers, all represented at the Manufacturing forum, have co-written this strategy. WAG has recently supported this strategy and have funded a co-ordinator with resources. Manufactures are happy with this progress as they are following the strategy they wanted. I know that the Conservatives have attacked the strategy as they seem to think that WAG wrote the strategy. They couldn't be more wrong. The Manufacturing Strategy was written by manufacturers, for manufacturers and is supported by WAG. If you don't agree with this, then I can invite you to the next Manufacturing Forum and you can explain to the manufacturers how their strategy is wrong....I appreciate that there is a need to keep the government in check, but please Dylan, stop trying to pull the wool over peoples eyes to make political points.....you are much better than that"

Whoever this anonymous commentator is, they seem genuinely concerned over the state of the manufacturing strategy but the fact remains that WAG has yet to publish a manufacturing strategy for Wales

So what is the truth of the matter and who is actually pulling the wool over whose eyes?

Let's consider the evidence.

At the Enterprise and Learning Committee on December 2nd 2009, there was a short discussion of the manufacturing strategy and a paper was presented by the Welsh Assembly Government on the issue. A full copy is presented here for those who wish to read it but the main points related to the Welsh Manufacturing Forum and the manufacturing strategy are as follows:

• In November 2006, the Minister announced the creation of a Manufacturing Forum for Wales.

• The Forum was constituted from a broad representation of invited members from industry, trade unions, representative bodies, sector forums, sector skills councils and WAG

• The Forum met for the first time in March 2007, accepting as terms of reference that it should (a) develop, implement and keep under review a manufacturing strategy for Wales that addresses issues of generic concern to the sector; (b) assist in obtaining the best possible return on public sector investment in providing support to the manufacturing sector; (c) Endorse detailed sector strategies developed by those sector forums representing priority manufacturing sub-sectors in Wales and support, as appropriate, the implementation of those strategies

• Through late 2007 and early 2008, the Forum concentrated its efforts on the development of a draft Manufacturing Strategy for Wales which was submitted, in draft form, to the Minister for the Economy & Transport in October 2008.

• However, the overriding issues of the recession in late 2008 and the economic uncertainties that characterised the first half of 2009 meant that, instead of being able to drive forward towards finalising this document, it became necessary to engage in more immediate discussions linked to the creation of measures to assist the short term survival of companies such as ProAct.

• The Deputy First Minister and Minister for the Economy & Transport then met with the Chair of the Forum in June 2009 to reaffirm the Forum’s important role in leading on the strategy with WAG committing to continuing to support its work in completing and then implementing the draft Strategy.

• WAG asked the Forum to refresh its draft document taking into account new trading conditions relating to the availability of credit

• It was noted that those leading the Forum would no longer be able to contribute at the same intensity due to the recession and therefore WAG would provide funding for the Forum of £50,000 per annum for a two year period to enable it to engage resource to drive forward its plans.

• It is anticipated that the Forum will now complete its strategy by March 2010.

So there we have it.

Simply put, the Manufacturing Forum was established over three years ago and whereas it has delivered a draft manufacturing strategy for Wales, this was essentially rejected by WAG and a new one will not be ready until the Spring of 2010.

Given the thousands of jobs lost in the sector during this period, you can imagine the deep frustrations of AMs over the prevarication by WAG over this matter.

When the Minister for Economic Development was given the opportunity to come before the Enterprise and Learning Committee to discuss this vital strategy he did not turn up and sent senior officials instead.

I have read through the transcript of the Committee last night with total incredulity.

The only word I can use to describe the response from officials is shameful. They offered no real explanation as to why the manufacturing strategy was not implemented and one even has the audacity to claim full credit for suggesting ProAct as a tool for the recession.

I urge everyone to read pages 1-11 (link here) as it demonstrates the complacency, prevarication and total incompetence that is at the heart of this government's response to the recession and their complicity in helping to destroy what is left of the manufacturing sector in Wales.

Their response is an insult to the hard work put in by the manufacturing forum for Wales to develop the strategy back in 2008. I know, because I attended one of the sub-groups.

If that is the level of strategic thinking within the upper echelons of WAG, then we might as well all give up now.

Indeed, for the first time ever, I actually have sympathy for the Minister in having to work within such an environment in which there is no sense of urgency and managing the status quo, rather than growing the Welsh economy, seems to be the main concern of civil servants.

WHAT COULD HAVE BEEN DONE FOR THE MANUFACTURING SECTOR IN WALES.

I hate to say I told you so, but given that the Welsh Assembly Government's economic department lives in a sort of cotton wool world where they seem to be totally divorced from the reality of the real world, I thought I would repost an article I wrote nearly three years ago.

It says a lot about the arrogance and complacency of those leading our economy that, even before the recession, they were in complete denial over the declining state of the manufacturing sector in Wales.

When a good number of us were warning that we needed to improve the offer to the manufacturing sector, our concerns fell on the usual stony ground.

Even now, when David Melding repeats his regular call for a manufacturing strategy for Wales, it is ignored by those who think they know best.

Read the article and weep.


Wednesday, February 28, 2007
Shutting the gate after the horse has bolted

Last week, the news broke that yet another manufacturer in Wales was shedding jobs as a result of the changing nature of the marketplace.Aykroyd’s of Bala, which makes children’s nightwear, announced the loss of 66 jobs in a rural area which can ill afford to have increased unemployment.

Indeed, one could argue that the proportional impact of such an announcement in South Gwynedd is as high, if not higher, than the job losses that will come as a result of the Burberry closure in Treorchy.

Could such an announcement have been avoided? Well, it is been an open secret here in North Wales that the company has been struggling of late and, earlier this year, was forced to cut its production by almost half due to a drop in demand.

The question from the point of view of Assembly intervention is whether they had any discussions with the business when such problems were becoming apparent. Certainly, there is the impression that the Assembly only steps in after the ‘horse has bolted’ and an Assembly spokesman responded to the closures at Aykroyd by stating that "We will be seeking a meeting with the company at the earliest opportunity to discuss this announcement.

Perhaps I am being naïve here, but surely the time to seek a meeting with a company in difficulty is before they announce jobs cuts not after? Indeed, if you look at all the recent closures that have happened in Wales, which have amounted to thousands of manufacturing jobs lost in the last twelve months, the Assembly always moves in only after a restructuring or redundancy situation.

Yet, I would agree with the Wales TUC that many Welsh manufacturers, if given the right investment and training support, can survive and prosper, although it would seem that such support is only available after they have made a strategic decision to downgrade or close their operations.Clearly, there is a lack of intelligence within the Assembly Government on the current business situation of many of these businesses in Wales.

I would find it hard to believe that there is no ongoing dialogue with major employers in Wales but it would seem that every time an job loss announcement is made, our politicians seem to be caught like the proverbial rabbit in headlights with the usual reaction that ‘Team Wales’ will move in to clear up the mess.

Wouldn’t it be more sensible to set up a system where civil servants are in regular contact with the largest employers in Wales and are monitoring their current position? For example, if an American-owned medium-sized manufacturer is looking to move its operations and close down a plant in Wales, then there could be options to closure, such as a management buy out, which the business could consider.

Certainly, putting a Team Wales approach in place then, with money from Finance Wales, support from business development specialist such as GAMBIT, training grants from DELLS, grant support from the Department of Enterprise, and manufacturing advice from private sector organisations such as SA Partners, could secure jobs for the future.

At the very least, it is about time that a better relationship was built with the major employers in Wales and that an open door policy was enacted between the managing directors of these firms and senior politicians and civil servants.

For example, statistics suggest that there are around 1200 firms in Wales employing more than 50 people, with a total turnover of £29 billion pounds and overall employment of 275,000 people.

Now, if I was working in the Assembly, I would certainly be monitoring the health of such major employers and wealth creators in Wales and ensuring, through regular meetings, that they could get access to the support they require for their further development.

Perhaps the place to start is to undertake a baseline audit of all these businesses to determine their current situation and ensure that there will be no more job shocks in the near future. Certainly we have enough civil servants within the Assembly to undertake such an important task.

Building up a business to become a significant local employer takes many years but announcing redundancies takes less than minute, a situation that could easily be avoided if the business had alternative scenarios for its future supported proactively by business support agencies.

I certainly hope that the Assembly Government can find the resources to ensure that there are individuals that such businesses can approach immediately if major redundancies or closures are being considered, especially if routes such as succession planning or management buyouts could be utilised through greater co-operation with the private sector.

FOUR MICHELIN ONE STAR RESTAURANTS FOR WALES

News has just reached me that Wales has three new restaurants to join the Crown at Whitbrook in the list of one star establishments in the 2010 Michelin Guide.

They are the Walnut Tree (Llanddewi Skirrid, Monmouthshire), Tyddyn Llan (Llandrillo, Denbighshire) and Ynyshir Hall (Machynlleth, Powys).

Scotland has sixteen Michelin Star restaurants and Northern Ireland one. London, believe it or not, has 51 Michelin Star restaurants, including two of the four Michelin Star Restaurants.

Perhaps the greatest disappointment is the fact that Cardiff is the only capital city of the four UK countries not to have a Michelin starred restaurant, although I believe that may well change by next year if Le Gallois push forward with their plans.

WELSH OPINION POLL FROM HTV

ITV Wales have just released a new YouGov poll of Welsh voting intentions which doesn't seem to have been picked up at all by the Welsh blogosphere (as I have been out last night and since first thing this morning, I didn't either!).

The main voting intentions are as follows:

• Conservative 32% (+1)
• Labour 35% (+1)
• Liberal Democrats 13% (-1)
• Plaid Cymru 13%(-1).

As Anthony Wells points out, this shows a bigger swing than for the rest of the UK and could result in the Conservatives winning 12 seats, although there could be varied swings within different parts of Wales.

All to play for with, if we believe Andy Burnham, 16 weeks to go.

Further discussion of the poll on politicalbetting.com.

BOSCH TO GO

The news finally came through last night that Bosch has done what many of us feared, namely announced the closure of its plant in South Wales factory with the loss of 900 jobs.

Of course, with Bosch being linked in strongly into the region's manufacturing supply chain, this will probably result in the loss of another hundreds of more jobs in the sector. In addition, the indirect jobs dependent on the employment at the plant will be around another 1500 people. So the overall impact could be three times as much as the actual jobs lost in Miskin.

According to Deputy First Minister Ieuan Wyn Jones, there is 'disappointment' regarding the closure despite "the Assembly’s efforts to save the 900 jobs".

What exactly has been those efforts?

For example, how many meetings did the Minister have with senior management in Germany, where the real decisions are made?

I think we have the right to know what exactly WAG has done to try and keep the business in Wales.

Certainly, the much vaunted ProAct scheme, seen as the saviour of the Welsh economy, has proven absolutely useless in this is respect.

But should we really be surprised? Back in June 2006, I wrote that

"It is becoming increasingly clear that the Assembly Government, despite having over 1500 civil servants in the enterprise department, has no strategy to manufacturing cutbacks, apart from closing the gate after the horse has bolted. It is no longer good enough to say that they are not prepared for further cuts and they need to urgently consult with all major manufacturing employers remaining in Wales to ascertain what can be done to ensure they remain in this country. I know that decisions for closure are usually made in overseas HQ, as clearly happened with Dura, but with a better early warning system, the Assembly can at least begin to discuss options, such as MBOs, well before any strategic decision is made to close the plant".

Three and a half years later, it seems that this advice was never taken and it would seem that WAG still haven't got a clue on how to keep jobs in Wales.

So much for the economic renewal programme.

WAG'S GREEN STRATEGY?

According to the BBC today, industrialists believe that, to use a pun, WAG's promises on green jobs is simply hot air.

In evidence to the Enterprise and Learning Committee, the commercial manager of Eco2 - a leading Welsh supplier of renewable energy - said that Wales has missed out on the chance to create manufacturing jobs in green energy, especially wind and wave power.

Of course, a WAG 'spokesperson' responded directly by saying that it was committed to "making Wales a leading provider of green energy" and that "the growth of the 'green' technology and services has been rapid over the past five years - the sector is already estimated to be worth 9 per cent of Welsh GDP".

Really?

That means that this sector is now worth around £4.2 billion to the Welsh economy?

Where is the evidence for this?

This data would suggest that the 'green sector' is now larger than most other sectors in the Welsh economy and is over twice the size of the financial services sector.

So where are the green equivalents of Admiral PLC, Legal and General and the Principality Building Society?

I don't know where WAG's 'spokespeople' gets their facts from but they really need to stop being so defensive all the time and stretching statistical data to try and prove a point as it undermines the credibility of the Assembly Government.

The warning from Eco2 was a heartfelt one from a person who wants the industry to succeed. Rather than hiding behind a wall of rebuttal, perhaps they can be more positive and come out with clear statements that they will support the development of the green industry in the future.

After all, as I pointed out here and here, the future is green and WAG must do everything in its power to support a viable cleantech sector in Wales. End of.

BUY LOCAL?

Last week, I came across an interesting FOI request on the Assembly's disclosure log.

Someone had made a request for information relating to the names of all the subcontractors for the new Welsh Assembly Government office at the former Hotpoint site in Llandudno Junction.

The main contractor for the £20 million contract is Cheshire-based Pochins PLC which stated back in January 2009 that they wanted to "to give local companies a fair crack of the whip. We don’t have a North Wales office but our heart is in North Wales.”

The full list of subcontractors involved in the construction project is provided below and you can judge for yourselves what has actually happened. Unfortunately, due to FOI rules, there is no value attached to each subcontract.

You may also want to read the following article from Contract Journal which demonstrates how the Welsh Assembly Government's procurement rules are precluding local firms from bidding for contracts.

List of subcontractors for new WAG North Wales Building

AAC Waterproofing Ltd, Anglesey
Achnashean Fencing Ltd, Bangor
Austin Smith:Lord, Liverpool
Bretton, Chester
Craftwork Services Ltd, Uttoxeter
Carillion Specialist Services Ltd, Leeds
Carrino Access Flooring Ltd, Eaton Socon
Carlton Building Services, Bolton
Celtic Security Service Ltd, Caernarfon
Cerrig Ltd, Pwllheli
C&C Baseline, Wigan
Clive May Brickwork Ltd, Mold
Collier & Henry Concrete Floors Ltd, Manchester
Combined Catering Services Ltd, Liverpool
Considerate Constructors, Ware
Core Utility Solutions, Warrington
Curvasure, Colwyn Bay
Dwr Cymru Welsh Water, Abergele
Engineering Design and Logistics Ltd, Bolton
Fire Management Ltd, Shrewsbury
Food Ventilation Consultants, Newbury
Fulcrum Infrastructures Service Ltd, Rotherham
Gunnebo (UK) Ltd, Wolverhampton
GW Jones Carpentry and Joinery, Llangollen
Hard Hat Logistics Ltd, Birkenhead
HRS Services, Sheffield
Kone, Chertsey
Levolux AT Ltd, Gloucester
Lanes Group Plc, Bretton
Lester Fabrications and Cladding Co Ltd, Buckley
Louvre Sol, St Helens
Moore Bros Tiling, Holywell
Movawall System, London
MG Ceilings and Linings Ltd, Bootle
Mona F&T Co Ltd, Anglesey
Ombler Williams,Llandudno
Openreach BT, Sheffield
Owen & Palmer Ltd, Bangor
Parry Bowen, Burntwood
Propaint Painting and Decorating Contractors,Rhyl
Ross Hughes Flooring, Caernarfon
Rotary North West Ltd, Chester
RS Scaffolding Erection Services Ltd, Colwyn Bay
Sapoflow Ltd, Barnsley
Scorpio Signs Ltd, Northwich
SI Sealey and Associates Ltd, Stockport
Sheildcom, Liverpool
Sol Acoustic, Manchester
Solway, Cumnock
Scottish Power Systems, Glasgow
Tarways Ashphalte, Liverpool
TBS Fabrications, Manchester
Tier Consult Ltd, Chester
Thomas Plant Hire Ltd, Holywell
Wright Landscapes, Mold
WYG Engineering Ltd, Leeds

THE DRUID RETURNS TO ANGLESEY

A new blog has been set up which has been prompted by recent posts and others on this blog on the plight of Anglesey

Called "The Druid: Fighting for Anglesey", is is non-political, non-partisan and is, according to the blurb, "fulfilling an ancient oath" as "the Druid has returned to defend Anglesey at the moment of it's greatest peril".

It is extremely well written and a useful addition to the Welsh Blogosphere. The focus on issues related to Anglesey will hopefully allow a more detailed analysis of local concerns. For example, the article on Anglesey Aluminium is excellent and worth reading.

I hope that others will access this to read a brand new approach to examining the future of Anglesey.

THE BETRAYAL OF RURAL NORTH WALES

As I did a review of the North Wales economy last week, I thought I would do the same for the state of agriculture in North Wales to complement the article from Saturday.

As someone who was brought up on the Llyn Peninsula, an area where farming is in the blood of every resident, it has constantly surprised me how politicians have, during the last few years, forgotten the significance of agriculture to the local economy.

Indeed, it would seem that North Wales has suffered as much as any other since Labour came to power in 1997:

According to official statistics:

• the economic contribution of agriculture in North Wales has declined by 67 per cent during the period 1997-2007 as compared to an overall UK decline of 7 per cent
• whilst agriculture accounted for 2.5 per cent of the North Wales economy in 1997, this had fallen to 0.6 per cent by 2007. Indeed, agriculture was producing £175 million for the North Wales economy in 1997 but this had plummeted to £57 million a decade later. Unbelievably, this decline accounts for 8 per cent of the total reduction in overall UK agricultural output during this period.
• worst of all, if the relative contribution of agriculture to the North Wales economy had been the same in 2007 as it had been in 1997, then the sector would have been generating an additional £187 million in output that year.

Of course, such a massive drop in agricultural output has had a massive knock on effect on rural communities across the region resulting in depopulation, lower business activity and increased poverty.

Just imagine if an additional £187 million had been generated for the sector in North Wales in 2007. Most of that would have been circulated locally because of the nature of the industry.

Worst of all, many of those rural communities are the heart and soul of Welsh language and culture. Their decline economically will have a serious knock-on effect on a vital part of the soul of these villages and towns across rural North Wales.

It is a sad indictment of Welsh politicians at both Westminster and Cardiff Bay that this has been allowed to happen almost unnoticed over the last decade.

Is it because the Labour Party, until a week ago, had little or no interest in the farming industry? If so, then they should hang their heads in shame in allowing this industry, so vital to many rural communities across Wales, to decline so disastrously during this period.

GORDON BROWN AND THE AFGHAN HELICOPTERS

The Mail on Sunday, with the rest of the press pack following close behind their coup, is going big about revelations by the former General Secretary of the Labour Party.

In a series of damning extracts from his book, Peter Watt makes serious allegations about Gordon Brown and whether he is fit to lead this country.

This, of course, comes out a mere six days after the botched coup by Hoon and Hewitt.

Whilst such tittle tattle is bound to stir up excitement in the press and amongst political anoraks, I believe that the real damage to the Prime Minister has come from elsewhere.

Revelations in the Sunday Times today indicate that, according to leaked letters, Gordon Brown personally overturned earlier Treasury assurances that the Ministry of Defence would be free to spend extra cash on troop-carrying helicopters for Iraq and Afghanistan.

According to the article, the leaked letters show how Brown’s actions during the crucial period of 2002 to 2004 meant that military chiefs were unable to buy new helicopters which could now be in service in Afghanistan. The lack of air support has forced British troops to take dangerous journeys by road, exposing them to deadly Taliban bombs.

If true, this is the most damning indictment of the Prime Minister's judgement yet.

There are many who have serious doubts about the war in Afghanistan, although I am sure every one of those people would support our troops having the best equipment whilst out there serving within this country's Armed Forces.

If it is proved that the penny pinching within the Treasury has resulted in lost British lives, then this Government has the blood of 246 troops on its hands and the terrible injuries of hundreds of more soldiers.

That, more than any other reason, is why it should fall and I hope that the press do not let the Prime Minister or his Government off the hook on this one.

THE DECLINE OF WELSH AGRICULTURE UNDER LABOUR

Back in 2000, then Assembly Agriculture Secretary, Christine Gwyther, came under fire for releasing a statement which noted that farming contributed almost nothing to the Welsh economy.

At the same time, one Labour backbencher from a South Wales Valleys seat even suggested that the money going to agriculture would be better spent on alleviating poverty and inequality in Wales.

Fast forward to 2010, and it would seem that the Labour Party, at least in Westminster, has finally appreciated the importance of the agricultural sector to the nation.

Last week, Hilary Benn, the Environment Secretary, launched a campaign at the Oxford Farming Conference to boost Britain's self-sufficiency in food. The "Food 2030" strategy sees the government finally admitting that the UK's food production and distribution system, in which farmers play a vital role, affects everyone.

More relevantly, it has concluded that this system, which depends on imports and long distribution chains, is no longer sustainable and could put the overall security of the nation at threat.

After many years of being accused of being irrelevant to a modern economy, I am sure that farmers in Wales will be both perplexed and delighted at the focus being given by Labour politicians to supporting their industry.

Of course, the Welsh Assembly Government will point to the Tir Cynnal scheme, the £23 million spent on Farming Connect, and various food and processing grants as evidence that they have supported the industry in Wales during this time. Whilst such policy measures are all well and good, the real issue is whether they have had any effect on the industry.

Unfortunately, it is a story of declining fortunes that can be found if we examine the contribution of the sector to the Welsh economy for the decade 1997-2007.

Well, according to the official statistics we have examined:

• the economic contribution of agriculture has declined by 68.1 per cent during the period 1997-2007, the worst performance of any UK region. In contrast, agriculture across the UK declined by 7 per cent.
  
  
• in 1997, agriculture accounted for 2.2 per cent of the Welsh economy, a higher level than the 1.4 per cent for the UK economy. By 2007, this had declined to 0.5 per cent of the Welsh economy as compared to 0.8 per cent for the UK.
  
  
• the importance of Welsh agriculture has fallen relative to the rest of the UK and whilst Wales accounted for 6.3 per cent of the UK’s agricultural sector in 1997, this had dropped to 2.2 per cent a decade later.
  
  
• in 1997, Welsh agriculture was producing £634 million for the economy, but this had gone down to £202 million by 2007, a decline which accounts for over 60 per cent of the reduction in overall UK agricultural output during this period
  
  
• if the relative contribution of agriculture to the Welsh economy had been the same in 2007 as it had been in 1997, then the sector would have been generating an additional £770 million in output for the Welsh economy that year alone.

Of course, critics may point to events such as the foot and mouth disease as having an impact on the sector, but the actual statistics tell a completely different story.

The direct effect from the Foot and Mouth outbreak in 2001 to agricultural output was far less than expected and the main decline in Welsh agriculture during the last decade has actually happened during the period 2004-2007, when the sector lost over half its value.

Given the disastrous decline in the Welsh agricultural economy since 1997, farmers across Wales will welcome any boost from the political parties at Westminster to help revive their industry over the next decade. Thankfully, the signs are that agriculture is set to become a priority once more for politicians. At the same time that Hilary Benn was making his speech in Oxford, the shadow environment secretary Nick Herbert was calling for a "new age of agriculture" where farming was important in responding to a rising population and climate change.

For Wales, it is critical that we take full advantage of any political support for agriculture and the Welsh Assembly Government, along with the sector itself, must works closely with whichever party is in power in Westminster after the next election not only to stop the decline in Welsh farming but to give the industry every opportunity to grow and make a full contribution to the economy of Wales over the next decade.

UNIVERSITY FUNDING CUTS BEGIN IN WALES

Hat tip to Golwg 360, which has just announced news that Bangor University may shut five departments.

According to the report, over 100 lecturing jobs are under threat as the University considers shutting five departments, with worries that it could seriously affect Welsh language course provision at the institution.

At a meeting on December 11th, the University's Council received a request from the Senior Management team to shut Theology and Religious Studies, Linguistics, Social Studies, Modern Languages and the School of the Environment and Natural Resources.

However, the Council has asked for a formal paper from the Senior Management team which will be considered again at the end of this month, although there seems to be serious concerns amongst some members of the council because of the high level of Welsh language content within the threatened schools' course.

The Welsh Language Society also believes this may threaten the viability of the Welsh Language Federal College, which has received substantial funds from WAG for its creation and development.

These cuts follow a stark warning on Thursday from Professor Richard Davies, Vice Chancellor of Swansea University.

Writing in the Western Mail, he said that

"At Swansea, I would expect us to concentrate cuts on areas which are relatively less strong, enabling us to maintain our commitment to building on strength", which seems doublespeak for "we will cut our weakest departments".

It is not as if this column hasn't warned about these cuts over the last six months. However, now that it has become reality, the question is whether this is just the beginning of a decimation of our higher education sector in Wales over the next few years.

TOO MANY PUBLIC SECTOR BODIES?

According to an article on www.publicservice.co.uk, the Welsh public sector has decided to use benchmarking to improve services, identify cost reductions and implement efficiencies.

In a contract with Socitm Consulting, up to 140 Welsh public sector bodies will get access to its benchmarking service.

Using the service, the organisations can compare the performance of their HR, finance, ICT, estates and procurement functions against the audit agencies' Value for Money indicators.

The Welsh Assembly Government believes that by investing in this project the Welsh public sector will be "better placed to meet the serious challenges ahead."

Whilst any type of benchmarking to improve productivity in the public sector is to be welcomed, surely the real question from this article is why how a small nation such as Wales can actually sustain 140 public bodies?

Surely, wouldn't the best way to ensure efficiencies within the public sector be a reduction in the number of organisations within the sector, starting with the number of local authorities we have here in Wales?

THE NORTH WALES ECONOMY

Last week, I examined the state of the Welsh economy since the beginning of the last decade. As a gog, I therefore beg your indulgence to examine the state of my own region - North Wales - during the same period.

For those of you who can remember back to 2000, the first decade of the new millennium offered many opportunities for the economy of North Wales.

Apart from the devolution dividend, with Wales having a budget of billions of pounds to spend on economic development and education in the way that its new elected government saw fit, the counties of Anglesey, Gwynedd, Conwy and Denbighshire had also just been given access to £1.2 billion of additional European Objective 1 funds to help their most deprived areas and leave a legacy of regeneration that would help some of the poorest communities in North Wales.

More importantly, for the local economy, North Wales division of the Welsh Development Agency (WDA) was one of its most successful performers, acting almost autonomously of the central base in Cardiff when it came to the vast majority of decisions on the local economy.

Therefore, as for the rest of Wales, the signs looked good for the growth of the North wales economy. However, jumping to 2010, then we see that, unfortunately, it has not fared as well as could have been expected.

In the period 2000-2007, the UK economy grew by 44 per cent and the Welsh economy by 38 per cent. In contrast, the economy of North Wales grew by only 34 per cent and, as a result, it now has three of the poorest counties - Anglesey, Conwy and Denbighshire - in the whole of the United Kingdom.

Indeed, the Objective 1 funding from Europe did little to arrest the decline of the North Wales economy. Even Gwynedd, which received more European funding per head than nearly any other region in Wales, has seen its relative prosperity decline during the last few years.

Worst of all, the economic powerhouse of the region - Flintshire and Wrexham - has suffered the most economically. Despite having the advantage of the presence large companies such as Airbus and Toyota, both counties have grown by only 27 per cent since 2000, which is the worst performance of any part of Wales.

Therefore, the economic position of North Wales has, during the last decade, deteriorated relative to the rest of Wales and the UK, and, worse of all, this happened before the recent recession hit the region hard.

Yet, some of us born and brought up in North Wales still believe that there is hope for the region's economy to bounce back if politicians finally appreciated that it is a distinct region with its own economic needs and requirements.

Despite the loss of thousands of jobs across the region, there remains enormous potential for the development of key sectors such as aerospace, clean energy, advanced manufacturing, optoelectronics, marine engineering and high value tourism.

However, to achieve this, North Wales should be given the opportunity and the funding to deliver its own economic strategy for the region and the Welsh Assembly Government should do everything in its power to facilitate rather than hinder this process.

If we could finally have real devolution in terms of economic development in North Wales that doesn't constantly look to Cardiff Bay for approval, then the new decade could finally herald a renewal in the fortunes of the region's economy.

YET ANOTHER PREDICTABLE ARTICLE FROM LABOUR

This morning, Wayne David MP writes a column in the Western Mail entitled "Nye’s warning as apt now as in 1945 election".

With a general election looming, you would have thought that he would have used this opportunity to expound Labour's successes during the last four and a half years of power and to set out their policies for the next Parliament if they won a fourth term.

No such luck.

Yet again, not one Labour policy is mentioned by Wayne David and instead he focuses his entire efforts on promoting a 'class war' with the Conservatives.

However, as usual, the Labour Party shoots itself directly in the foot by focusing on David Cameron's public school background and suggest that he has very little in common with ordinary people.

"The fundamental question that millions of people have to ask is how on earth can we “trust” David Cameron and the Conservatives. Back in 1944, Aneurin Bevan posed the same question. Today, with the economy showing signs of recovery, it would surely be unwise to place that recovery in jeopardy with a Conservative government out of step with modern Britain."

Is that really the case, Mr David?

Should someone with a public school background be excluded from being PM or being a member of the cabinet as they cannot be trusted?

If so, why didn't you raise the issue when Tony Blair, who went to Fettes School (the Scottish Eton), was Prime Minister?

Even better, if people who went to public school cannot be trusted by the public, surely it is time to call for the resignations of senior members of the Cabinet such as Alastair Darling who went to Loretto (£25k per year fees), Harriet Harman who went to St Paul's (£16k per year) and Ed Balls who went to Nottingham High School (£10k per year)?

Frankly, I don't care whether the whole cabinet went to public school, grammar school or comprehensive school.

Indeed, the only truth about Wayne David's article is that class warriors like himself are stuck in 1945.

In contrast, today's society of 2010 is less interested in where people have come from and more interested in where they are going.

Whilst such a message may get a few of the old guard out to vote in Caerphilly and the rest of the Valleys, it will do nothing to convince those with aspirations living within the Welsh marginal seats to vote for a party which has run out of ideas and is reverting to attacking the opposition.

That is why Labour will lose the next general election, and lose badly.

MIXED MESSAGES FROM PLAID CYMRU

Over on WalesHome, Jonathan Edwards, the new Plaid Cymru PPC for Carmarthen East and Dinefwr comes up with "some ideas for banking, economic and financial reform".
One of these "progressive new ideas" is "business rates cuts in the UK’s most disadvantaged areas in order to stimulate growth of local businesses and attract inward investment".

Far from me to correct one of Plaid's rising stars, but he should be aware by now that business rates policy is devolved to the Welsh Assembly Government.

Therefore Plaid Cymru, as part of the coalition, have had two and a half years to cut business rates in Wales.

Yet, Plaid's own leader stated in the Chamber last year that "We are not persuaded currently that it (business rate relief) is the best use of the limited resources that we have. We still think that they are best used for things like ProAct and ReAct".

Of course, we have since seen that two thirds of ProAct has been focused on large firms and that swathes of Wales have received very little from this policy, including Ieuan Wyn Jones' own constituency of Anglesey.

In addition, Mr Edwards should be aware that there has been a concerted campaign by leading members of Plaid to try and discredit any cuts in business rates as unaffordable. This is despite the announcement by Dafydd Wigley back in 2007 which stated that:

"My feeling is that a lower business rate can be a more effective tool than corporation tax for our small businesses....People may well ask how on earth can we pay for this. All I would do is to point to the increases taking place in the economic development budget in Wales since 1999. In fact expenditure has increased from £250m to over £800m per annum - and I really do ask what do we have to show for it? A significant reduction in the business rate might cost between £100m and £200m, depending on how it was applied, but it certainly can be afforded within that budget, and it would be better for that money to be re-circulating within the business sector, enabling it to take on more people, to set up new projects, and to have a new confidence and incentive for its work, than being gobbled up in the bottomless pit of bureaucracy, where so much of it ends up at present."

I couldn't agree more, which is why the Welsh Conservatives aims to do what Plaid has refused to do, and introduce a business rate reduction scheme that will benefit up to 90,000 firms in Wales at the next Assembly elections., ensuring that any businesses with a rateable value of below £10,000 will not pay any rates at all.

I am glad that at least one member of Plaid Cymru supports such a proposal.

Perhaps he can tell his Assembly colleagues to do the same.

A SOBERING ARTICLE ON THE PUBLIC SECTOR

Various articles today have carried reports on the growing gap in pay and conditions between the public sector and the private sector in the UK. In the Sunday Times, the front page story shows that public sector workers earn 7 per cent more on average than their peers in the private sector. This is a pay gulf that has more than doubled since the recession began.

The report also showed that:

• Since Labour came to power in 1997, the number of public sector workers has increased by 914,000 to more than 6 million

• The average annual earnings of public sector workers rose to £22,405 last year — compared with £20,988 paid to the average private sector worker

• Public sector wages are rising at 2.8 per cent, compared with 1.1 per cent in the private sector

• Public sector employees are also enjoying better working conditions – the average public sector employee worked for 35 hours a week – lower than the typical private sector worker.

• The average state employee enjoys three or four more days of holiday a year than the average private sector worker.

• Public sector productivity fell by 3.4 per cent in the decade from 1997 — compared with a rise of 28 per cent in the private sector over the same period.

• Most civil servants receive employer pension contributions worth 19.4 per cent of their salary paid into their final salary pension scheme each year. This is more than three times the average of 6 per cent paid by private sector firms into their employees’ less generous defined-contribution schemes last year.

• Most private sector workers have to work until they are 65 to claim their company pensions whereas the average public sector retirement age is 58.

• Public sector workers take an average 9.7 days of sick leave per annum as compared with 6.4 days in the private sector.

• The generous pay and perks offered by state employers is encouraging more graduates to favour working in the public sector – nearly 39 per cent of public sector workers are now graduates, up from 25 per cent in 1998. Only 20 per cent of private sector workers have a degree, a rise of 5 per cent since 1998.

• Despite the sharpest downturn in living memory, the British state’s recruitment drive has continued with 300,000 civil servants, administrators, social workers and other officials hired since the collapse of the Northern Rock bank in September 2007. In the past two years alone, the NHS headcount has risen by 107,000.

• More than 700,000 people lost their jobs in the private sector during the first three quarters of last year. In comparison, about 44,000 state workers were made redundant during the same period — but despite these losses, the public sector’s total job count still increased by another 47,000.

Given this, it doesn't take a genius to work out that any government that is serious about reducing public expenditure will have to start with the behemoth that the public sector has grown into during the last decade.

However, public sector expenditure alone just isn't good enough and what is more critical for recovery is the growth of the private sector in the UK once more, something which the current Government has singularly failed to focus on during the last eighteen months of the worst recession since the 1920s.

There is now much talk in both Cardiff Bay and Westminster about strategies for economic renewal but if these do not concentrate primarily on stimulating the expansion of the private sector, then the economy will be slow in recovering over the next few months and may even be in serious danger of plunging into another recession by the end of 2010.