PROFESSOR DYLAN JONES-EVANS

In December 2007, I posted a blog entry on immigration that examined its positive and negative impact on the UK economy. Given the press coverage of the Prime Minister's speech on immigration policy earlier today , I thought it would be worth examining some of those points again. In particular, it is worth noting that the statistics in the article suggest that the Labour Government's apparent success in developing the UK economy was partly a result of mass immigration to the UK during the last few years. It is also more pertinent today, given that the Labour Government's failure to deal with the low skill culture amongst 18-24 year olds over the last decade has helped to contribute to the record levels of youth unemployment we have in this country. Tuesday, December 18, 2007 Immigration skews the UK economy I hope that policymakers will be reading the report from Ernst and Young's ITEM Club this morning. According to the Telegraph, "The study found that although th...

According to the UK Government, the much lauded car scrappage scheme will have protected around 4,000 jobs in the UK automotive industry, Government estimates have claimed. Given that the subsidy from Whitehall amounted to £400 million, the cost has been an incredible £100,000 per job. One would be hard pressed to find a higher subsidy for any industry during the last decade and shows the lobbying power of an industry that has failed because it has refused to modernise in line with changes in the global business environment. One can only imagine the effect of £400 million on supporting thousands of small firms across the UK, especially at a time when banks were unwilling to lend money. Indeed, it makes any support for inward investment over the last twenty years by the Welsh Office or the Welsh Assembly Government pale into insignificance. Even the disastrous LG project would have cost less than a third (per job) of what has been given to the automotive sector by Lord Mandelson. The pr...

As predicted on this blog a few days ago, the Welsh Assembly Government has replicated the decision by the UK Government to introduce an enhanced business rate relief scheme for Welsh firms. At least WAG has finally reacted to the criticism that Wales has a worse business rates regime than England. Now all we can say is that it is exactly the same and there is no real difference between business rates for English firms and Welsh firms, at least for the next twelve months. This small step, which is more to do with the largesse of the Treasury than any independent policy decision by WAG, is certainly a step in the right direction. Of course, the Welsh Conservative Party has already guaranteed that a far greater proportion of small firms will pay no rates and that this change will be permanent - a policy that has been made in Wales for Welsh businesses. Given the antipathy towards the 'London-based parties' by one half of the One Wales Government, you wonder how its Ministers can ...

Last week, I examined the export performance of the UK economy during 2009. Today, it is the turn of Wales. According to government statistics, the value of exports in Wales in 2009 was £9 billion as compared to £10.6 billion in 2008. This represents a decline of 15.4 per cent over the last twelve months as compared to a fall of 9.8 per cent across the UK. Only three other regions (Yorkshire and Humberside, Northern Ireland and the West Midlands) had a greater fall in export performance over this period, with Scotland actually increasing its export performance by 4.8 per cent in 2009. However, it is not all bad news for the Welsh economy. Some sectors did actually grow their exports during the worst recession since the 1920s. For example, oil and gas (41.7 per cent), agriculture (30.4 per cent), creative/media (20 per cent), food and drink (18.9 per cent) and transport (17.2 per cent) have all shown considerable improvements in performance since 2008. Both the creative/media industrie...

The demise of Highland Airways yesterday prompted me to examine whether the tide has really turned and that confidence is seeping back into the economy. Whilst the official unemployment figures seem to be reducing across the UK, it is clear that this hides continuing job losses in many companies across a range of sectors and in all parts of the UK For example, a quick examination of the BBC News pages shows that continued to be major job loss announcements in March alone, North-south air flights grounded -The airline which runs the troubled north-south Wales air route has ceased flying and entered administration (100 jobs) Jarvis to call in administrators - Rail maintenance company Jarvis announces that it will go into administration after failing to secure credit (2,000 jobs) Further jobs go at Ethel Austin - The administrator of Ethel Austin and its sister chain Au Naturale has confirmed that a further 81 stores will close. (700 jobs) Engineering firm hit by recession - More than...

In response to yesterday's posting about reducing business rates, I have had a predictable response that Wales can't afford to do this because we haven't got any money to do so. This is yet another in the long line of excuses fro supporters of the Labour-Plaid Government who have everything to avoid the case for lower business rates in Wales. To now say that the Assembly has not got the money is simply another red herring. As was reported from Ieuan Wyn Jones' meeting with business leaders this week in North Wales: “On business rates, Mr Jones said that any move to bring in additional rate relief of the sort enjoyed by businesses in Scotland would take a £40m chunk out of his department’s £240m budget.” So there we have it. Finally, a confession of sorts which clearly states that it is not a matter of money but a matter of choice. What the Deputy First Minister is indicating is that the current Welsh government is essentially refusing to transfer £40 million from a busi...

Having finally got in from Turku University - we are two hours ahead here - I have had a chance to look at the Budget announced earlier this afternoon. I am still trying to digest all the information but the one issue that really did catch my eye, given my policy interest in the area, was the proposal on business rates. Having checked this up on the Treasury website, the following information was provided: "To provide help with the fixed costs of starting and running a small business, the Government will fund a temporary increase in the level of small business rate relief, so that eligible small businesses occupying properties with rateable values up to £6,000 will pay no business rates for one year from October. In addition, small businesses benefiting from the rate relief taper (rateable values up to £12,000) will receive significant reductions. It is estimated that over half a million businesses across England will benefit, many by well over £1,000. Around three quarters of all...

As predicted on this blog last week, Welsh universities are facing a stark reduction in their budget for 2010-2011. The Higher Education Funding Council for Wales (HEFCW) confirmed £403 million in grants to universities, compared to £434 million in 2009-10, equating to a 7 per cent cut. This a similar reduction to that implemented across the border in England and suggests that Welsh universities, despite the rhetoric from Cardiff Bay as to their importance in driving forward the new innovation and skills agenda, must to get used to further cuts in the future. Glyndwr University, with a 3.4 per cent reduction, has taken the biggest hit with Lampeter, soon to be merged with Trinity University College, actually getting an increase of 0.32 per cent. Interestingly, the fund for widening access has increased by 28 per cent (or £1.54 million), whilst there is an increase of £78,276 (or 6 per cent) for Welsh medium education. Despite the positive press releases from the sector, universities ac...

One of the few silver linings of the economic turbulence of the eighteen months, at least for manufacturers, has been the decline of the pound relative to other major currencies such as the dollar and the euro. In theory, this should have made our goods more competitive in overseas markets as we would be able to compete with other countries on price as well as quality. Unfortunately for UK PLC, this has not been the case. An analysis of recently released government statistics on our overseas trading performance shows that the value of exports has plunged by an incredible £24.4 billion in 2009 as compared to the previous year, an overall decline of 10 per cent. The trade with Europe – which is half of the exporting trade of the UK – accounted for three quarters of the decline in overall UK export performance, a fall of £17.5 billion between 2008 and 2009. The second biggest market, the USA, which accounted for 17 per cent of the UK export market in 2009, saw a drop of 4 per cent during ...

The Higher Education Funding Council for England (HEFCE) has announced that three quarters of English universities are facing a real term cut of £573m from this year's budget, with unions warning of hundreds of job losses. Indeed, some are facing cuts of up to 14 per cent in their budgets for next year. As yet, universities in Wales has not been told of the financial settlement from the Higher Education Funding Council for Wales (HEFCW) but if assume the Barnett formula, this could amount to as much as a £30 million cut in Welsh higher education. Will HEFCW ensure that all universities have to cut proportional to the grant they receive or will they, thanks to intense lobbying by certain vice chancellors, try and protect some institutions from the worst cuts. For example, three institutions - Cardiff, Glamorgan and Swansea - receive over half of HEFCW's funding. Will these three also therefore be subject to the same proportion of the cuts expected in government funding? Will th...

I have struggled with my conscience over whether I should write this blog piece today. I rarely criticise a fellow academic in the pursuit of their subject - when it comes to reviews of academic papers, I am always the soft touch who thinks that the paper should be published in the journal after some changes - never a rejection. It is therefore with a heavy heart that I utterly and totally condemn the car crash television that epitomised " Ban the Boss" last night on BBC Wales , presented by Dr Paul Thomas of the University of Glamorgan Business School. This was like an episode of "The Office" that had been scripted by anyone but Ricky Gervais. I cannot believe that the BBC had decided to put licence payers money into this total disaster of a 'reality TV programme' that, despite the heavy editing, was the equivalent of Fawlty Towers without the funny lines. Who authorized this programme? On what basis did someone think that thousands of pounds of taxpayers’...

Yesterday, the latest unemployment figures showed that Wales had 133,000 officially unemployed. If you add those who are economically inactive to that figure, it means that ONE in THREE of working age adults in Wales are not in a job. Predictably, the reaction by politicians to these statistics is a sterile debate over whether the figures are accurate and whether we should trust the jobseekers allowance data which is itself flawed as an accurate depiction of those who are looking for work. As this blog stated back in December , "The fact that JSA doesn't actually cover everyone who is looking for work at this present time. For example, contribution-based Jobseeker's Allowance is only paid for 182 days and excludes the self-employed whilst income-based Jobseeker's Allowance is based on income and savings and is only for those on a low income. Therefore, it is clear that the JSA will miss out a significant proportion of those looking for a job who, for various reasons, w...

Whatever your views on the new Minister for Education (and I have had the odd run in with him in the past), you can never say that he is a man who does not take his job seriously and is more than willing to make a real difference to his brief. Leighton Andrews' call for a review into the governance of higher education in Wales has certainly set the cat amongst the pigeons and has let the university sector know who is actually paying the bills at a time when there is clear inevitability about future cuts in expenditure. Regardless of your politics, you cannot help admire a masterstroke move from one of WAG's more adept political operators which has completely wrongfooted the sector. If WAG does complete its bonfire of the quangos by abolishing the Higher Education Funding Council for Wales, will each university then get its own remit letter from WAG stating exactly what is expected of them in terms of the use of government funding for research and teaching? That will, of course,...

Despite an incredibly successful and intense visit to California last week, certainly in terms of academic outcomes for the University of Wales and links for Welsh businesses, the highlight of the trip was the hour spent with one of this nation’s most successful business exports, Mike Moritz. Michael Moritz was born in Cardiff in 1954 and, after being educated at Oxford and Wharton, started working for Time Magazine, where he wrote a seminal book on the history of Apple . In 1986, he joined Sequoia Capital , one of Silicon Valley’s most successful venture capital companies which subsequently invested in a range of companies that have epitomised the internet revolution during the last fifteen years, including Yahoo!, Google, PayPal and YouTube. The initial public offering of Google in 2004 catapulted Mike Moritz into one of Wales' richest men and a position as one of the most influential dealmakers in the World. Therefore, this sixty minute meeting was an opportunity to learn from a...

Following the recent article on business rates which appeared in the Western Mail and the Daily Post, as well as on this blog, I have been inundated with emails and telephone calls from businesses in Wales who simply cannot believe that we have a worse relief regime here than in either England or Scotland. However, another issue which is related to the large increases faced by many small firms in their rates bills in just over three weeks time is that of transitional rate relief. If you remember, the Welsh Conservatives proposed as an emergency measure to help with the higher bills faced by 40 per cent of the business population in Wales as a result of the recent revaluation exercise. This system, if enacted, would have enabled any large increases to be phased in over time rather than in one large bill this April. Of course, critics of applying such a system to Wales have assumed that we would merely adopt the same transitional rate relief system as England for business rates. To be f...

Being in Finland this week, I may have missed the news about the launch of Sir James Dyson's review for the Conservative Party on Tuesday. It certainly is an inspiring document and seems to have been influenced by a lot of work that has emerged from NESTA during the last few years. The full 57 page report can be downloaded from here and is worth reading alone for the detail on the relative position of the UK economy in areas such as high technology, postgraduate education, patenting and financing. It also seeks to look at what has worked well in places such as the USA, Israel and Singapore and how they can be applied here. In short, the recommendations are as follows: Cultural change to develop high esteem for science and engineering, including a major national prize scheme for engineering and commitments to ‘grands projets’ such as high speed rail and nuclear power to demonstrate a Conservative Government’s ambitions for the country. Changes at university level to encourage more...

It would seem that Wales isn't the only region that has problems with public investment into businesses. According to an article in yesterday's FT , an investment by taxpayers of £74 million into regional venture capital funds has been marked down to just £5 million according to a report that is highly critical of the government’s wider venture capital programme. Since 2000, the Department for Business has invested £338 million in 28 venture capital funds – through seven umbrella schemes – that have provided seed money to more than 800 companies. According to a report from the Commons’ public accounts committee: Funds were structured in a way that taxpayers bore a “disproportionate” share of the risks involved when compared with private sector co-investors. Whilst the Department for Business has provided “scant information” about the performance of the funds, using “restrictive” confidentiality clauses, it appears that many made annual losses. One of the seven umbrella schemes ...

It would seem that there have been various commentators suggesting, quite erroneously, that the Conservatives don't have any policies to get the country out of recession. Whilst that may suit the spin emanating from No 10, nothing could be further from the truth. Indeed, the Conservatives have already announced as series of policies for growing the UK economy whilst the UK Government remains largely silent on the issue. For the avoidance of any doubt, these include the following policies which have already been announced by David Cameron, George Osborne and Ken Clarke: Creating the most competitive corporate tax environment in the G20 and starting by cutting the headline rate of corporation tax to 25p and the small companies’ rate to 20p, funded by reducing complex reliefs and allowances. Making the UK a more attractive location for multinationals by simplifying the complex Controlled Foreign Companies rules Improving the corporate tax system by consulting on the merits of moving t...

As Chevron announces plans to sell its refinery in Pembrokeshire to focus on gas and building up its market in Asia, Forbes magazine worryingly suggest that they may not be able to find a suitable buyer in the near future This begs the real question whether they will take the hit and just close it down, especially as Chevron has indicated that it intends to cut 2,000 jobs this year and will continue reducing its work force through 2011. This would be a serious blow to the industrial sector within Wales, which has already seen major job cuts during the last eighteen months. Indeed, the employment statistics related to occupations showed that, during the period Jun 2008-Jun 2009, over 34,000 posts were lost in Wales, a reduction of 3 per cent. However, according to statistics wales, whilst managerial and service occupations only declined by around 4 per cent, jobs such as process, plant and machine operatives - the key workers in production industries - went down by 11 per cent and accou...

I have been reflecting on David Cameron's speech to the Welsh Conservative Spring Conference earlier today. It was certainly a more confident speech than last week's effort. More importantly, it carried clear messages which, although not 'sexy' as some political commentators noted, will certainly strike a chord with many voters. First of all was his statement on the economy and what the Conservatives would do to encourage enterprise. "Take the economy. We understand that in the end it’s not government that will get the Welsh economy growing……it’s enterprise, it’s entrepreneurs, people with a great idea and the courage to start their own business. That’s why we’ll cut corporation tax rates, abolish taxes on the first ten jobs created by new businesses and get people off welfare and into work." Clear, simple and unambiguous - cut taxes for entrepreneurs to help them get the economy working and establish a contrast with a Labour Party that is increasing taxes on...

A report from the Wales Rural Observatory has expressed concerns about the viability of Welsh rural communities. Its criticisms were wide ranging and included a lack of rural focus from the Welsh Assembly Government, unrealistic budgets for rural local authorities, non-existent employment prospects, inflated house prices, a withdrawal of services (particularly local schools) and a high cost of living. In addition, four key areas – broadband provision, public transport, house prices and access to services – were highlighted by residents as being critical in addressing some of the deep rooted problems facing rural areas. While factors such as a sympathetic and empathetic rural planning system, more affordable housing and subsidised travel were suggested as possible policy solutions to these issues, probably the most important factor in stimulating economic regeneration from a business point of view is the development of a better broadband service within these more remote areas. As the re...

Finally back after a highly successful week in the USA. Some really exciting results which I will try and blog about over the next week, including a visit to speak with one of Wales' most successful business exports. Watch this space!