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Statement by the Minister for Economy: Regional Economic Development

I am pleased to have this opportunity to update on the progress that we are making to support stronger regional economic development against an extremely challenging backdrop. Dirprwy Lywydd, our vision for regional investment is to support jobs and growth in communities across Wales. We know that the inclusive and sustainable growth this requires relies upon regional decision making that links national priorities with local opportunities. Our regional economic frameworks were co-designed with partners in each of the regions, including local authorities and regional bodies. They’re based on evidence, with clear priorities aligned with our economic mission.100

Aligning regional economic wellbeing, transport and planning in new corporate joint committees provides a fresh opportunity to capitalise on the interdependencies between them. This will support local authorities to deliver their regional ambitions, develop successful regional economies and to encourage local growth. Indeed, the four city and growth deals reflect the existing drive for sustainable growth and innovative partnership working amongst regional partners. Although these deals are still in their relative infancy, my officials, alongside the UK Government, continue to work closely with the four regional delivery partners to assess the opportunities within the business cases developed over the lifetime of the deals.101

Dirprwy Lywydd, our commitment to regional working is also an investment in more integrated skills delivery. With shared governance, regional skills partnerships will be in a stronger position to influence investment and match provision to demand in a way that is responsive to local opportunities to expand fair work.102

Our work across all regions is wedded to the collective goal of securing investment in the industries of the future, which will fuel better-paid, skilled jobs. In south-east Wales we’re working with Thales to create a cyber resilience campus in Ebbw Vale through our Tech Valleys programme. Together with our local partners and Cardiff University we are investing in our strengths and supporting new start-ups in cyber security. Tomorrow, I’ll be at a groundbreaking ceremony for the latest investment in the semiconductor industry, creating many hundreds of new, well-paid jobs.103

In north Wales, we’ve established Cwmni Egino to pursue ambitious new developments at Trawsfynydd, including small modular reactors to generate low-carbon electricity and a medical research reactor to help with the diagnosis and treatment of cancer and more.104

In mid Wales, collaborative working helped us to secure more than 100 jobs with support for automotive parts manufacturer the Marrill Group in Llanfyllin in Powys. And in Baglan Energy Park, we saw how strong partnership working staved off the very real threat of catastrophic harm to businesses and families. As well as issuing legal proceedings, the Welsh Government worked with the local authority, Dŵr Cymru and local businesses to secure power to the energy park and save hundreds of jobs.105

We’re also taking forward our co-operation agreement commitment to co-produce phase 2 of the Arfor programme alongside local authority partners. This will be supported by additional resources, with £11 million for the three-year period to 2024-25. A further announcement is anticipated in the near future.106

Dirprwy Lywydd, we continue to work with the Organisation for Economic Co-operation and Development on regional policy. In the context of the co-operation agreement with Plaid Cymru, the OECD will focus on supporting Arfor and the Valleys through their current project. The OECD will look at and design models for local government to work together, which includes opportunities to develop joint working across regions with Valleys communities. I look forward to working towards a model that brings together decision makers and budget holders on a permanent basis to maximise our collective ability to deliver stronger, long-term economic outcomes across Valleys communities.107

Across all our regions, our Business Wales service helps to inspire individuals to become entrepreneurial and ensures that microbusinesses and SMEs have access to support. I’ve committed to provide £20.9 million per year up until March 2025, extending the backbone of the Business Wales service beyond the end of EU funding in 2023. This includes dedicated advice and support for our social enterprise sector. While providing a one-stop shop for support, I recognise that Business Wales cannot deliver on all local business support required by entrepreneurs, micro and SMEs across Wales. As such, the service is designed to build on its strength as a nationally delivered offer that complements local delivery and wider funding opportunities available to the third and public sectors.108

Dirprwy Lywydd, as you will know, Wales’s ports are an incredible national asset and an intrinsic part of our history, economy and way of life. We have reached agreement with the UK Government on delivering a free-port programme in Wales, which should support our economic mission to develop the fundamental goal of achieving inclusive growth. I look forward to receiving ambitious and innovative bids that offer the prospect of sustainable, economic and social benefits to Wales. Our message in the prospectus is clear: the free-port programme in Wales must contribute to, not take away from, our wider objectives to create a stronger, fairer, greener Wales. This is a significant example of how Governments can work together in a partnership of equals.109

Dirprwy Lywydd, the economic performance of our regions is of course exposed to the extreme macro-economic picture that we now face. In addition to the twin challenges of leaving the European Union and the COVID pandemic, we also face global threats to our energy security and a terms-of-trade shock that have combined to cause dramatic price rises for all. The UK Government’s regressive and unfunded fiscal statement sent shock waves through our economy, triggering a market response that will negate much of the support confirmed for households and businesses. The lasting impact of the statement will mean higher costs for all levels of government and our settlement is worth £4 billion less than was the case at the time of the comprehensive spending review.110

The UK-level rejection of industrial policy specifically disadvantages regions and nations beyond London and the south-east. Instead, it sends a signal that the new UK Government does not regard them—us—as essential to the UK’s growth path. Levelling-up plans, such as they are, in no way make up for this problem, whilst causing duplication and poor value-for-money outcomes at the same as undermining devolution. The funds that support the so called levelling-up agenda represent a shortfall to Wales of £1.1 billion by 2025, compared to the UK Government’s manifesto promise to match the size of EU funds for Wales. The UK Government is using these funds to support its own priorities in devolved areas over which it has no mandate. It is clear that Multiply, for instance, is too narrow in focus and will duplicate devolved provision, leading to preventable waste and poor value for money. The top-down shared prosperity fund represents similar challenges and has been defined by delays within an incoherent approach that is widely criticised by expert independent voices at both a Welsh and UK level. The shared prosperity fund will also compound existing inequalities as it is not allocated on the basis of need. Instead, a smaller overall sum is being skewed away from our most deprived communities at the worst possible time.111

Dirprwy Lywydd, UK Ministers responsible for these new funds will know that they face significant delivery problems. Welsh local government was not consulted on the funds and have been kept in the dark as Whitehall announcements were frequently delayed. This fundamentally undermines the ability of all partners to produce joined-up plans that meet the needs of our communities. It is becoming increasingly clear that UK Ministers were keen to claw back powers but uninterested in taking responsibility. It is crucial that the right lessons are learnt from this aggressive attack on devolution, and we will challenge any attempt made by UK Ministers to shift the blame for their costly mistakes onto Welsh local authorities. Dirprwy Lywydd, this Welsh Government will continue to invest in stronger, distinctive regions to support a fairer, greener Welsh economy. I look forward to updating Members as we develop our ambitious plans for delivery across all four regions.

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