Cynulliad Cenedlaethol Cymru

Yn ôl i Chwilio

Pwyllgor yr Economi, Seilwaith a Sgiliau

Economy, Infrastructure and Skills Committee

14/02/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Adam Price AC
David J. Rowlands AC
Hefin David AC
Joyce Watson AC
Lee Waters AC
Mark Isherwood AC
Russell George AC Cadeirydd y Pwyllgor
Committee Chair
Vikki Howells AC

Y rhai eraill a oedd yn bresennol

Others in Attendance

David Jones Cadeirydd, Deeside Enterprise Zone
Chair, Deeside Enterprise Zone
Duncan Hamer Dirprwy Gyfarwyddwr, Entrepreneuriaeth a Chyflenwi, Llywodraeth Cymru
Deputy Director, Entrepreneurship and Delivery, Welsh Government
Ken Skates AC Ysgrifennydd y Cabinet dros yr Economi a Thrafnidiaeth
Cabinet Secretary for Economy and Transport
Mark Langshaw Cadeirydd, Ardal Fenter Glynebwy
Chair, Ebbw Vale Enterprise Zone
Mick McGuire Cyfarwyddwr, Busnes a Rhanbarthau, Llywodraeth Cymru
Director, Business and Regions, Welsh Government

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

Ben Stokes Ymchwilydd
Researcher
Gareth Price Clerc
Clerk
Robert Lloyd-Williams Dirprwy Glerc
Deputy Clerk
Stephen Davies Cynghorydd Cyfreithiol
Legal Adviser

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Dechreuodd y cyfarfod am 09:45.

The meeting began at 09:45.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Bore da; good morning. I'd like to welcome Members to the Economy, Infrastructure and Skills Committee. I move to item 1. There are no apologies this morning. Are there any declarations of interest? There are none.

2. Papurau i'w nodi
2. Paper(s) to note

In that case I move to item 2, papers to note. Are Members content?

3. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o'r cyfarfod ar gyfer eitemau 4 a 5
3. Motion under Standing Order 17.42 to resolve to exclude the public from items 4 and 5

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd ar gyfer eitemau 4 a 5 yn unol â Rheol Sefydlog 17.42(vi).

Motion:

that the committee resolves to exclude the public for items 4 and 5 in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

In that case, I move to item 3 and we'll be back in public session at 10:30. Can I resolve, under Standing Order 17.42, that we exclude the public for items 4 and 5? Are Members content with that? Thank you.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 09:45.

Motion agreed.

The public part of the meeting ended at 09:45.

10:25

Ailymgynullodd y pwyllgor yn gyhoeddus am 10:27.

The committee reconvened in public at 10:27.

6. Cadeiryddion byrddau'r Ardaloedd Menter (Panel 2) - Ardaloedd Menter
6. Chairs of the Enterprise Zone boards (Panel 2) - Enterprise Zones

Right, we will move to item 6 with regard to our inquiry into enterprise zones in Wales. I'm very pleased that we've got two more witnesses before us this morning to provide us with evidence for our inquiry. I'd be very grateful if you'd both introduce yourselves and your roles for the public record.

Bore da; good morning. I'm David Jones, chairman of the advisory board for the Deeside enterprise zone.

Good morning. I'm Mark Langshaw, chairman of the advisory board for the Ebbw Vale enterprise zone.

Lovely. Thank you ever so much for being with us and coming across Wales to be with us in committee this morning.

The Cabinet Secretary, as part of his review of advisory boards has said that he's had discussions with each of the boards across Wales. I wonder if you could just tell us a little bit about those discussions that you've had with him.

The Cabinet Secretary visited the Deeside enterprise zone board last autumn, and certainly we've had at least, I think, two meetings with him as chairs of enterprise zones in the last year. I think the main message around governance has been probably something that I think he's made quite public, which is that there are a lot of advisory boards in different names across Wales—enterprise zones and lots of other things. I think there are somewhere near 50 different bodies that he inherited, and all with boards and chairs and things like that. So—

Well, I think he's made that quite clear, hasn't he, publicly? And he's certainly made that clear to us as chairs of enterprise zone boards. That's a process that, with officials, he's going through at the moment in terms of the future of enterprise zone governance post August 2018.

I've had a similar experience to David's. So, we had these joint meetings with the Cabinet Secretary and officials, and also the Cabinet Secretary has visited Ebbw Vale several times to look at the area and look at our performance and also to have wider discussions. We have been made aware of the changes around the governance and some potential ideas and also the potential to reduce the number of advisory boards down.

And what should happen after July this year? Did you have discussions about how you would like to potentially see your enterprise zones either come to an end or develop?

Yes. I think all zones will be given the opportunity to put their views forward—or the chairs to put their views forward. I think the zones are on a different journey and are in different development phases, with different levels of maturity because there are different economic conditions, different business conditions, and different challenges in those areas. So, every board was given the opportunity to make their own representation of what their thoughts were. Personally, for Ebbw Vale, our board's view is the fact that it's not job done yet. There has been some good work done to build the foundations that we should continue to focus on, but it's a good opportunity, I think, after a number of years, to pause and reflect and think, 'Actually what has worked well? What could work better? What do we need to do differently? What's the learning that we could take from this?', and maybe change the view and the scope a little bit, going forward. So, that's the discussion that we've had and obviously we’re waiting to hear back now the views of that governance review.

10:30

If I could just add to that. Certainly there's been a significant discussion, not just involving the Cabinet Secretary, but also with officials over probably the last 12 to 18 months. I think what is positive is that it's not a one-size-fits-all approach that's being proposed. There's a recognition that we all know that the enterprise zones are very different; some started later than others as well and they've got different plans and so you need different solutions. It appears that people have been listening, so we look forward to seeing a proposal that will see different approaches for different enterprise zones.

In Deeside, it's likely to mean that the enterprise zone board will not exist in the same form in which it currently exists after August this year, but we as a board are content with that because our priorities have moved forward and we're clear that the things that we've put in place, which are hopefully going to be legacies for 10 or 20 years, will have their own governance structures to take them forward. I'm talking particularly about the development of an advanced manufacturing research institute, which is a working title, as probably some of the current members of the advisory board might have a role to play with that board. So, we're content in terms of our aspirations and the advice and the response to the advice that we've given to the Minister.

Do you need to have boards for the future operations of enterprise zones?

In terms of Deeside, I don't think we need them for the longer term. Certainly, if anyone knows me on a personal level, you'll know one thing I don't like is just talking shops full of people who just want to meet together, which become clubs. I'm not suggesting for one moment that any of these enterprise zones are of that nature, but certainly with my responsibility at Deeside, which is not my day job—it's simply an advisory body—when I turn up to a meeting with industrialists—and we meet every two months on a Friday morning—they are short and sharp two-hour meetings and we get on with the business.

We feel as if we've been making progress and have some real things in place that we can now move forward. There's no point just maintaining an enterprise zone board, certainly in Deeside in the longer term, just to have one. Equally, having enterprise zone status in Deeside is quite important because of the benefits that would continue that are associated with it. At the same time, we need to be cognisant of wider developments across north Wales, particularly with the growth deal, and some of the things that have come through the learning of the enterprise zone need to be factored in, I believe, when the growth deal proposals are presented a little bit later this year.

So, to be clear, you clearly want to see the enterprise zone continue, but you don't think that there's a need to have an enterprise board to facilitate the enterprise zone.

No, I don't think so, because we've put things in place—. We've given advice and a large number of things that we've put forward have been implemented or are being implemented.

From our point of view, yes, because we've provided advice and it's been taken. Clearly, we have no executive function; we have no income or anything, so we're purely advisory. I think the key thing is: every time we have a board meeting, we agree the recommendations that are to be presented to Welsh Government through the Cabinet Secretary and he gets them sent through. So, that's where we're looking for the reassurances and we've had them.

And Mark, I have the same question for you about potentially your board continuing in the structure it is or a different structure.

From Ebbw Vale's perspective, we found the board very beneficial. I think it's given us a good opportunity to bring together Welsh Government, local authority and the private sector to work together for the broader benefit of the region. So, I think it's been a good opportunity to do that and it's worked very, very well and harnessed some good synergies and good energy around that. From our perspective, we'd like to see the challenge and the focus and the information that that board has brought continue in some format. We have representatives from lots of different sectors and different areas in the area and I think they bring some expertise that adds value to the support and the engagement that Welsh Government has with inward investors coming into the area. So, I think that would be a good thing to bring together.

So, am I hearing you saying something slightly different to David, in that you're thinking that the board should continue, but perhaps in a different capacity?

10:35

I do. I think the board should continue and there's an opportunity to think about how could we improve on it and take it stage further forward. So, I think that's an opportunity for us to do at this time.

If I may, just, firstly, on the growth deal, to what extent has your board been able to engage with the development of that as a board, or do you believe you've been, effectively, replicating some of the work that the economic ambition board and the Mersey Dee Alliance have been doing?

We've had, probably over the last two years, a number of sessions where we've had people who are involved with the growth deal come forward to present their ideas and to listen to us and some of our ideas. We're now at quite an important stage. So, this Friday afternoon, there's the first full meeting of the growth board for north Wales, and I'm there with my day hat on as the chief executive of Coleg Cambria, but, clearly, I can't throw away the hat of being the chairman of the enterprise zone. I am keen to ensure that we maximise the impact of that growth deal and that it in no way duplicates any of the work that has already been achieved, not just by the Deeside enterprise zone but also by the Anglesey enterprise zone and the Trawsfynydd board. Certainly, I will be making absolutely sure that that doesn't happen. 

Obviously, then, you feel that, as the enterprise zone, you've had a voice; without an enterprise zone board, how will that voice be articulated in the new growth board?

I don't see a stark difference between Mark's version and mine. I think it's just because of circumstances—. To answer your question, I need to explain this. In developing an advanced manufacturing and research institute, that will itself have a board to run it. So, in that sense, the board of the Deeside enterprise zone will partly, potentially, morph into that. So, that board will still exist, so I'm confident that, with the people involved with the AMRI, they will have a voice into the growth deal group, which will ensure that continuity that is absolutely essential.

Thank you, Chair. You said there's been a good dialogue between you and the Cabinet Secretary over the last 12 to 18 months. I was wondering: has that specifically been around the need for a more regional approach for economic development from the enterprise zones?

I'm sure that that has come up somewhere in discussion but I must admit that that doesn't come over to me as a particular thing that comes to the front of my mind. What I would add, though, is that, if you're talking north Wales regional, prior to having the role of this Cabinet Secretary, which I think were new roles that was introduced here since the last Assembly elections, but, prior to that, when Mrs Hart was the Minister, what we have done in north Wales is very much work together. I think you may have visited my two colleagues at the other enterprise zones in the last week; some of you may have. We work very much together, and even though they're three separate enterprise zones, we are very much signposting to each other because we can see real synergies between our work, particularly, for instance, with Anglesey. A lot of that is around energy and possibly Wylfa Newydd. In reality, Anglesey hasn't got the capacity or the capability to meet all the job requirements that are going to come with that power station if it takes place. However, there are real opportunities in advanced manufacturing in north-east Wales that benefit Wales if we can do that. So, certainly, working with my counterpart John Idris Jones there is very much at the forefront of the work that we're doing and there's also one person on the Deeside enterprise zone board who's also on the Anglesey board. That's purely coincidental, but it is helpful in terms of that continuity and linking through.

From my perspective, I'd concur with what David has said. I think it came up in some of the conversations that we had in general about the options about restructuring and reducing the number of boards, but not specific detailed discussions around a regional approach.

Okay. Okay. And what about the fact that enterprise zones aren't explicitly mentioned in the economic action plan? Does that give either of you cause for concern?

I think they're referenced in terms of the work in a more general perspective, and I think, in terms of the economic action plan, it was taking maybe a bit of a broader view and perspective around the changes that were proposed. I think we wait to hear a little bit more about the governance of how it will affect our area as that becomes more apparent.

Okay. And one final question from me. In an ideal world, what future role would you like to see enterprise zones play in the Welsh Government's regional approach to economic development?

I think the challenge with enterprise zones is that—and there were enterprise zones in the mid-1980s as well—. But the enterprise zones that I think were launched in 2012—I think there were about five or six to start with, then a few more came on, and then, clearly, Port Talbot came on last year or at the end of the year before. I think the challenge is deciding—you know, where do you need an enterprise zone? What are the criteria? Where I work, in north-east Wales, people say, 'Why haven't we got an enterprise zone in Mold, or an enterprise zone in Wrexham?', for instance. I think perhaps that is one of the lessons. I'm not suggesting for one moment that, necessarily, the enterprise zones that we've got are wrong, they've all got something to achieve, but I think maybe there needs to be some reflection perhaps for future things—if you like, the son or daughter of this set of enterprise zones. What can we learn from it that might help to signpost the development of future enterprise zones or similar bodies in the longer term, which could be five or 10 years down the line?

10:40

I think, from the perspective of Ebbw Vale, enterprise zones are an opportunity to focus and channel activities into a specific area. As David says, you could probably make a case for enterprise zones in lots of different regions across Wales, and that's very hard to do and support. So, it gives you that opportunity to focus activities in certain areas. For our area, there's an area with some specific challenges that has allowed us to market and focus those activities around the area. So, I think it was of benefit, and I'd like to see it continue in some sort of format with that focus around there.

Okay. I'm going to come to Lee in a moment, then I'll come to David, then Mark, to lead on your sections. Lee—Lee Waters.

David Jones just mentioned the enterprise in the 1980s. I wonder to what extent there have been lessons learned from that experience and how that's been drawn into the current iteration.

I think that was a Geoffrey Howe announcement in 1980. I was an engineering student doing my ordinary national diploma in Coleg Sir Gâr, in your constituency, Lee, at that time. So, I think that sort of stuff was way off my radar. I don't know. The little bit that I do know about the 1980s is that they were very different enterprise zones. I know there are some publications out there that look back at them, but with no significant outcomes that provide any particularly informative information on how we should take them in the longer term. I think they were very different, and responding to different circumstances.

From my perspective, I was probably even that bit younger than you, so it wasn't on my radar, either. But, when appointed, I obviously researched a little bit around to understand what the enterprise zones were before getting involved. My perspective on it, from the 1980s, is that they were very different, maybe more focused around development, retail and a little bit more developer-focused in terms of buildings and infrastructure. So, I think the key learning that I remember looking at there was a lot of questions around displacement, and did people move areas, just chasing lower rates and better benefits. So, that was one thing we were keen not to replicate, and I don't think we have replicated that. That's not been one of the challenges that we've had. So, I think that was, really, our main part of the learning in that.

And was that true of Deeside as well? Is displacement something that you've been seeking to avoid?

Yes. It hasn't happened on this occasion. It's interesting, in terms of the 1980s—. I did do a little bit of work on it. The 1980s enterprise zones, it is quoted that the demise of enterprise zones was attributed, interestingly, to the effects of delays owing to European Commission state-aid regulations. That's what one of the publications I've looked at comes up with. But, you know, you're talking the 1980s; you're talking 30-odd years ago. It's changed. But, certainly, at the moment, I think—. One of the questions people sometimes say—if you do a media interview on enterprise zones, they say, 'Okay, Deeside: that's easy, that is, isn't it? Why have you got an enterprise zone there? It's easy to get good outcomes'. Well, I'm sorry, it's not easy to get outcomes. Yes, I know Deeside is an area that's very, very well-developed already, lots of big companies and so on there, and a history in manufacturing, but also, when you go over the border, as I'm sure all of you know, into Cheshire and Warrington, there isn't a big sign there and, all of a sudden, you go from this beautifully fertile north-east Wales and Deeside into this fallow area of north-west England. It's equally good across the border, and there's a LEP there, a local enterprise partnership, and there are four enterprise zones, all within 20 minutes of Deeside. I'm really pleased that there has been the foresight to invest in Deeside, recognising that it's a good area to invest in, because, otherwise, we would have been knocked out of the water by the enterprises and enterprise zones on the other side of the border. They have slightly different benefits to the ones in Wales. Some of our benefits to potential investors are more short-term, whereas in England the enterprise zones have slightly different benefits, and they provide them over five years. On saying that, they are quite similar, and I don't think the differences are so significant that you're just going to find companies—. There's no evidence of companies suddenly saying, 'I'm going to move from Chester to Flint, or that sort of area, because of the benefits short term'.

10:45

So, are there things the English enterprise zones and the LEPs have had that you wish you'd had?

I think it's nice to be able to offer things over a longer period, to be able to say, if you're looking at the rates relief scheme or whatever, it's over five years. I think that's good. What we've done in Wales is have a range of different times when we've done that rate relief scheme. There's been a good response to it, but it's been more of an initiative thing rather than set in place. So, maybe there needs to be some consideration of whether having a five-year scheme in England provides a more attractive environment to keep employers and encourage new ones in. But I've known no evidence of losing companies out of north-east Wales. In fact, a lot of new companies have come in during the period, and we're already talking at the moment with about five live enquiries—some quite large companies—who are attracted by the enterprise zone and coming to that Deeside area.

And is that because of specific incentives you've been able to offer?

I'm from west Wales. I've been up in Deeside since 1999 and I didn't know anything about the area, but it is a brilliant area. As Jack Sargeant said yesterday when he spoke in the Senedd, he talked about that engineering, manufacturing base—it's really in the DNA up there. And it's also a brilliant location. When I bring investors into the area and Government say, 'Can you show somebody around and look at the college and other things?', what I always do is I drive out of Wales towards England, and I drive out, not very far at all, to the M56, and suddenly—Mark Isherwood will know exactly what I mean here—you drive out and you look at your sat nav and you pump into your sat nav 'Manchester Airport', and they say, 'Oh, that only says 25 minutes', and I say, 'Because it's only only 25 minutes away'. And then I turn the car around and then we can see the mountains of Wales, Snowdonia in the distance and Moel Famau. And you look down and you see the Deeside enterprise zone; it's just there.

My answer to your question, Lee, is: there's a huge amount that that corner of north-east Wales has to offer. I think, alongside other bits of Wales, it's one of the jewels in our economy, and we've really got to look after it, which is what I think we've done with the enterprise zone.

Okay, that's a great sales pitch. My question was: are there specific incentives you've had through the enterprise zones that have been effective?

Sorry for not answering the question straight, but I suppose the answer is 'no, not really', other than we're offering the same as the others and there's a lot to build on already. And, of course, things like the AMRI, and that commitment to the AMRI, opening up the Northern Gateway through investment in the flood alleviation and the road infrastructure, are sending a very strong message that north-east Wales is growing and that the Welsh Government supports it.

From my perspective, I think if we didn't have the enterprise zones offering the similar sort of benefits that we'd see in England in the LEPs then that's a reason not to come. My experience of most of the inward investors who we talk about is, when they come to an area, they look first of all at the availability of property, they look then for the availability of labour, and then they look then to how they can match that labour to the skills' requirements for their business. Those are really the key things that come and attract businesses to the area. Then the opportunity, the infrastructure links, are critical—for us, the opportunity to have the road links improved to the midlands is a key benefit and a key structure. Then, obviously, the communication links with the airport are key. But I think that's the main benefit. But if we didn't have those same benefits as other areas, that's a reason not to come, and it puts you on the back foot to start with.

Mark alluded to it earlier on, but, if we could be a little bit more specific now about the success or failure of the enterprise zones, first, can I ask each of you what you think were your greatest successes to date within your—?

Okay. So, the role of the enterprise zone when it was first set up was, really—the first thing was to look at the critical key sites that we had in the area and to bring them to market and look to what we needed to do to make that almost shovel-ready for an inward investor coming, and there were some key challenges around that, a lot of it around the infrastructure side. So, I think that's the first thing that we actually did is solve those issues, which took a bit of time.

I think we gave it then some focus and some structure around to market the area and actually put forward what the benefits were and where the location is, because a lot of inward investors, when they land in the UK, they struggle to know where Wales is, let alone Ebbw Vale, so that's a challenge that we need to get across. But then I think we've built on that. We've had the opportunity of the infrastructure links that may be outside the enterprise zone decision, but certainly support us. There are 390 jobs created to date, which is not as good a performance as we want, for sure, and it's not as good as some of the other enterprise zones, but I think, as we both mentioned, it's different conditions and different challenges. 

There are a further 175 jobs going to come with the start of production from TVR, and we have a strong pipeline as well. Looking back as well, there has been a number of opportunities for clients coming in, which, unfortunately, we missed out on, and we always look to reflect on that to see why we did not get that opportunity. When you look at most of them, it actually wasn't because of a failure of the offering in Wales or the failure of the support or not enough effort put in from the sector teams—that all has been exemplary in the offer. It has come down to things outside of our control. So, one inward investor that we worked with for many years to really try and land and secure, which should have brought many hundreds of jobs, unfortunately, their parent company bought another business just at the same time and had an empty space available elsewhere, and you can't fight against those sorts of challenges. So, I think they are some of the key areas.

I think we've brought the business community together to a very strong network and a very strong opportunity for businesses to work together and communicate. I think we've given an opportunity to really understand what the demand is in the area as well, from the existing businesses. So, that's something we can't lose focus on as well; it's not all about inward investors, we've got some good, strong indigenous businesses and it is just as important to work with them and retain them in their area and sort their issues. And it probably takes a little less effort to keep them there than it does to bring in an inward investor. So, we need to keep that focus. I think the enterprise zone has given us an opportunity to harness that information, to focus it and to distil it and then feed that information into Welsh Government, and other opportunities that we need to into the council and so on. So, I think they're some of the key benefits.

One other key thing as well, just to mention, is that we've got a shared apprenticeship scheme up and running. Engineering and manufacturing apprenticeships in Ebbw Vale and the wider Blaenau Gwent area were not very prevalent, so one of the things that came back from this demand view was that need and we worked with local colleges to create a shared apprenticeship scheme, which I think is quite unique and novel in its approach. There are 52 apprentices now in that scheme, with 14 companies participating. We hope to build on that further forward and that's part of the mixing and matching of the labour availability and looking at future skills, which gives us that base from which to attract inward investors.

10:50

I think, clearly, comparing the performance of enterprise zones is difficult and comparing with England is also difficult. But, certainly, we are proud that the statistics that we looked at, the Welsh Government statistics, I think show that we've either safeguarded, assisted or created 6,014 jobs in Deeside, which is over 56 per cent of the jobs in those categories for the whole of Wales, which shows how important Deeside is for Wales, and that's what we need to make use of. So, that, I think, is a massive achievement.

I think, on top of that, there's been the take-up of the business rates relief scheme—we've done well there. I think, to that end, I would need to also just mention the fact that we've got a very employer-facing, employer-positive local authority in Flintshire County Council, and will involve the enterprise zone, which really makes a difference as well, and using their networks. Then, in terms of particular developments—and I touched on them just now when I responded to Lee—certainly, we identified early on that the 200-plus-acre Northern Gateway site, strategically, is such an important place, and bringing that on stream by making it shovel-ready has been important and we work with Government to highlight how important that is. Through their support for the flood alleviation and putting the road infrastructure in place, that opened something that isn't about 500 or 1,000 jobs today. That really is going to be the thing that, hopefully, I'll be looking back at in 20 years, and I'm confident of it—we will look back and we'll say, 'What we did in that period was make the Northern Gateway a massive new enterprise zone area, a new industrial park'. And it is, again, 30 minutes from Manchester Airport—I know, it's in Wales and I'm a proud Welshman, but you've got to remember that businesses work east to west across the north there. So, that's a massive one for us.

And then, the other one is the project that's ongoing, and Government have earmarked the sum of £20 million towards it, which is the advanced manufacturing research institute. Again, those two things together can be real legacy issues for the future of Deeside in the same way that Deeside industrial park today is a legacy of people who had the foresight to deal with that 20 or 30 years ago.

Okay. Let's flip the coin, as it were. Are there any particular outputs or indicators where the zones have not performed or achieved as expected? And following on from that, I suppose we should be asking: were there barriers preventing the expectations that might not have been achieved?

I think in terms of indicators I guess the challenging one is the jobs and value for money aspect of it. I talked a little bit around the jobs in terms of the value for money. I think we often get the comment made about how much has been spent in the area, and then the cost of those jobs, and I think that gets slightly distorted by the fact that people are taking a one-year view in terms of what the number of jobs is. Also, we're building into that equation some of the more regional, larger, infrastructure-based projects that—

10:55

The railway's a good example.

I was wondering whether that's factored in, because we've seen the figures with regard to cost per job—very low in Deeside, very high in Ebbw Vale—but, obviously, if they're factoring in things like that, which are a benefit for the community as a whole, ongoing for many years—

That's exactly right. And a longer term benefit. I think that the road widening, the infrastructure, and the dualling comes into that. So, those two together are something like—out of the £94 million, it takes up about £88 million of that. So, you're looking at around £6 million, around those 390 jobs. So, we're looking at a more credible £17,000 per job. I think we have to take a view that those jobs are there to be sustainable jobs going forward over many years. The businesses are paying rates into the area, the employees have disposable income that's spent in the area, there are the supply chain benefits, so I think that's a focus to it. So, that's how I'd answer that question.

It does come over to us, and it has when on our visit to north Wales, that the boards are enablers of things, really. They can stand back and say, 'Well, what do we actually need here, infrastructure-wise et cetera?' Would you say that that's part of what you felt about what you're doing—ongoing things?

Absolutely. The board has given us the opportunity to view some of those decisions, those questions, and take a wider view from the private sector as well as the public sector perspective to see if that's the right lever to pull. So, I think we've had the opportunity to reflect on that, absolutely.

This question is to Mark, really, and I suppose David. You mentioned the shared apprenticeship scheme, and there's another one, Cyfle, in local government, and they started in Coleg Sir Gâr with a partnership some time ago. But my question is this: they are great, shared apprenticeships, and I'd just like to know—you might not have the figures now, but I'd like to have the figures about the diversity that exists within those apprenticeships, and whether they're mostly focused on one group of people or whether there's an opportunity for all. If you do know, I'd like an answer.

I have some of the data in my head, but certainly we could provide some more detail behind it. I think the important thing about diversity was really looking around the economic background, and making sure they're open to everybody with different economic backgrounds and different opportunities. So, it's a wide range. They are focused around employers' needs, so we actually set out to understand exactly what an employer needs from an apprenticeship scheme, what the training needs to be, and how it needs to be different to what's offered now. We worked very closely with the two local colleges to design a scheme that meets the employers' needs. They focus a little bit more around being manufacturing-related, so there's a lot of mechatronics, electrical engineering, but there's a quality technician, there's a lab technician for a pharmaceuticals company, there's an IT one, and there's a financial apprenticeship in commercial studies. So, it's a broad range from that side.

I'm very proud to say that in the last year we've had our first couple of ladies join our engineering scheme, so it is demand focused, and it's also down to who applies to the scheme. We do have some challenging criteria to enter. We have to have five GCSEs in grades A to C, and that's done deliberately, because we want these apprentices to be the ambassadors of our area in terms of the skills development. So, it is a challenge to get on to that scheme. There's a very robust interview process and a very robust process in matching with the employers' needs, so that maybe restricts the opportunities a little bit, but it's deliberately called 'Aspire' because it has to be something the youngsters aspire to join. It has to have some really good value, and I think that's one of the things that we've lost over many years with apprenticeships—people have lost the true value of those and are focused more around university-to-career. So, that's something that we really set out to achieve, and we're very proud of the scheme that's in place, and very proud of our ambassadors on it.

I think, responding to both your questions, really—because your question was almost about any sort of failures—there's nothing significant, but I suppose one thing that didn't come off for us was that we also had a shared apprenticeship scheme and it didn't work for us. We ended up, I think, having one person on it. But that wasn't because—. I think it's because apprenticeships in our Deeside area are so ingrained and well developed already they almost didn't need that programme to get it going. So, that was the only failure I could think of, if I'm going to use that word.

But I would say more generally, I think a key to our success is having the right board membership, which Mark touched on as well. I'm sure you've got the list of our board members, but they are industrialists and it's not always local people; it's about people who bring the right skills. Yes, we've got a mix of people who are local as well, but, for instance, picking up on the educational side, one of our members is the vice-chancellor of Swansea University, Richard Davies. Now, you say, 'Swansea is a long way', but I believe that in Wales we need to be linking things up and looking at the great work around materials and manufacturing at the bay campus in Swansea—a huge investment there—and bringing the expertise of Swansea. It's almost as if there's a link there to the enterprise zone and, again, in a similar way, we had 15 degree apprentices who graduated with degrees in engineering early January, and they're working in north-east Wales, studying in a centre we've got there, with virtual links into Swansea, and picked up their cap and gowns down in Swansea at a very highly rated university. That's got to be good, hasn't it?  

11:00

That's got to be good but you didn't talk about diversity in the way that I'm sure you understood the question, and if you have got figures that are broken down and disaggregated, that would be useful, particularly because you mentioned it. 

If you could provide them to us after the meeting, that would be useful. Thank you. Mark Isherwood. 

I know David's previously given evidence to this committee about the cross-border implications of the apprenticeship levy for your border catchment area, so that's on the record from the past, I think, rather than re-rehearse it—. Given some of the comments, I think I should declare I used to be a member of the Deeside business community. I was a member of the Deeside commercial enterprise group and I ran the Deeside business luncheon club, so perhaps I should mention that—both a long time ago.

And also, perhaps given David's comments about the cross-border nature of the impetus behind the enterprise zone, I should point out that, unlike the others, Deeside or Flintshire council, when Matt Wright was the executive member, put in a bid for an enterprise zone to the Welsh Government there before bids were requested and before the Welsh Government had even announced it was going to introduce enterprise zones, so they sort of led the way on this agenda. A bit of history. 

But moving forward, to what extent have your enterprise zones evaluated the value for money you've provided so far? 

We meet monthly at the enterprise zone board, so we have a range of key performance indicators that we look at in there. So, we look at the number of jobs created and the spend that's gone into that area. I think, to be honest with you, we exclude that infrastructure work that I talked about for that reason. We look to see, really, how strong our client pipeline is and the potential jobs created in there, because that's probably the truest measure to see how good the work that you're doing in marketing the area and looking at the benefits really works, and I'm pleased to say we have a strong pipeline in place. So, we look at that side. 

We then look at the performance of some of the other wider aspects, for example the Aspire shared apprenticeship scheme. We keep a watching brief on their performance and look at the achievements of the apprentices on there, look at the recruitment numbers and retention numbers to make sure that it's working well. So, we have a wide range of KPIs, really, where we look to make sure that we are meeting what we set out to do.  

It's difficult to measure performance indicators, and maybe that's something that does need to be looked at to get the right performance indicators, short and longer term, and maybe there needs to be some look at some sort of economic impact assessment or something. But, clearly, from a Deeside point of view, we look at the reports that are generated by Welsh Government. We're pleased to see that performance compared to other enterprise zones, and recognising that things are different. And also, interestingly, I've compared another indicator—the number of businesses produced per enterprise zone in Wales is 1,197. Compare that to England, where it's 729. Now, you could say, 'Well, that's just another statistic', but it is a statistic and it's another way of looking at it. But it just highlights to me the complexity of the whole thing around enterprise zones, and perhaps it's about maybe people looking back right to the start and saying, 'What were they trying to achieve?', because I think if you're really going to measure the success of something, that's what you've got to do: 'What was the objective at the start, and how are we now going to measure it?' But, as I said, from a Deeside point of view, we're very pleased with the outcomes that we've received and the things that we've put in place for the longer term to sustain and build on what we're doing.  

And you mentioned our visit last week to the two zones in the north-west. They were telling us about the work they'd done to date, but why they believe they need to continue to drive through the projects that were in the pipeline for the future—they're looking at sustainability. Is that less of an issue in Deeside, do you think, or potentially with you, Mark?

11:05

I think it is for us, simply because of where we are on the journey, and the fact, as I said earlier on, that one of the main things that we are putting in place will have associated with it a governance structure to oversee an advanced manufacturing research institute—okay, not one that is accountable directly like an enterprise zone would be to Welsh Government, but something at least that's got governance in place and representation that feeds in. I understand why over in the west they need to extend their enterprise zone boards, certainly for a little bit longer, but I would say that if you've got enterprise zone boards over there in five years' time, I think we've got a problem, to be honest. I think, over the next two years or so, they need to be moving things forward so that things progress.

I think, from our perspective, we'd like to see the continuation of the work that's been done going forward. There's been a lot of effort and time put into building the foundations, and there's some good, strong, green shoots, certainly, of the results of that, but there's still work to be done. And there's a very strong pipeline that needs to be maintained and shepherded into delivery. So, there's some projects there that do need that support, and it would be very important to us to see that be sustained in some way. 

Thank you. Leading on from that, the Welsh Government said that its stated objective was for the zones to be 'catalysts for growth.' You've mentioned a number of ways in which you already believe that that's been achieved in your own areas. Are there any other areas where you feel that you have acted as catalysts for growth, or areas where you feel you might do things differently?

Do you mean other geographical areas?

Within the existing enterprise zone area?

Yes, although you might talk about multiplier impacts from being there on wider areas. 

I think a lot of work that we've put in place and I'm doing has the potential to impact in quite a broad sense. I think the big focus of Deeside has been on advanced manufacturing. I think a lot of people get advanced manufacturing wrong because they think advanced manufacturing is about building wings or engines or things like that. Yes it is, but to me, advanced manufacturing is about advanced manufacturing processes, as well as advanced products. So, in that sense, for instance, I know it's not in the Deeside area, but if you take a big company like Village Bakery in Wrexham, go and see the way that they make bread and various products. They are only in the game because they make it in a highly automated way. So, we think that from the work that we've done, there are huge spin-offs for a range of companies, some of which are in high-tech products and others that are in relatively rudimentary products. 

I think, from our perspective, one thing we haven't touched upon is really the strong business community that's been created in our area. So, in our last business-to-business event that we had, we had 170 plus attendees. And I remember, not that many years ago, where there was probably less than 10 around the table. So, there's a very strong network now of businesses coming together, sharing experiences, sharing knowledge, supporting each other, so if one business has a problem, they know who to go to for some ideas on how to solve it, but also starting to trade amongst themselves, and looking at opportunities there. So, I think that's strong in terms of what comes from it, but it's very hard to put a key performance indicator against that. And I think that's something that we really need to keep building on, and that's really where all this market intelligence comes from.

Within there, we have also an enterprise liaison project, where we have a member of a local authority who's a key partner with us and really works very, very closely with us, who goes around looking at businesses to try to see their needs. And this relationship management, I think, is a key thing to engage with a business, to understand what their challenges are, to be looking at things a little bit further out, so if there are some issues there, we can try and support, and support that business through that challenge to make sure that they still exist in that area. And our person on here has now got something like 200 different people registered in employment, has worked with 45 companies and placed 22 people who were unemployed in that area into jobs, just by engaging and understanding and meeting those needs. So, there are some good benefits in there that we can continue to build on, I think, and whatever happens in the future of enterprise zones, our board is very determined to make sure that will continue in some format, no matter how we do that—we're not quite sure; in fact, we have a board meeting on Friday to think that through and just to scope a little bit, but there are some good opportunities, I think, to take that forward. 

Thank you. And my final question: the committee's received figures on the cost per job created, safeguarded or assisted, showing a wide variation across the enterprise zones. Again in the north-west, last week, we heard the strong view that their focus wasn't just on job creation. They have other priorities and that's the reason they were created. But what are your views on that variation? Do you have considerations that you wanted to share with us?

11:10

I think we both said that the different job creation levels represent the different areas, the nature of the business environment in those areas, the different opportunities and the different challenges, so I think a direct comparison between the Deeside zone, which has done a fantastic job and have got good opportunities and some good results, with the job creation in Ebbw Vale, is maybe not so important; it's about looking at what's happened in those specific areas with the challenges that they've had and whether there has been the progress against trying to create those catalysts. So, I think that, to me, is the important view on it.

Yes, it's just one measure, isn't it? But it's an important measure and I think, I suppose—. I'm a keen gardener and when you garden, you try and sow your seeds into fertile ground. That doesn't mean that you don't use other parts of the ground; you develop them in different ways, but you get a greater yield from some other parts of it. I think that's why areas like Deeside—and clearly this Cardiff area is another area, in the bigger-picture interest of Wales—we have to sow those seeds in those areas that are going to give you the greater return, but recognise that you don't ignore the other areas either, and you have different strategies that are part of the whole picture of what we do for Wales.

No, I don't think so. We'd have lost jobs—I have no doubt about that. When you've got, across the border, basically a totally porous border and a local enterprise partnership with other enterprise zones, saying 'We're an enterprise zone'—. There's a big part, Mark, around the branding thing, as you know around Deeside with the signs, and also it's about the greater business community and people like me out there banging the drum all the time. That's the bit that you do outside of a meeting and making people know that we've got an enterprise zone. In north-east Wales, we know there's an enterprise zone because we keep on telling people about it all the time and we have a real strong board commitment.

Okay. We've got a bit to get through. We're going to try and finish about 11:25. I'm going to come to Hefin for a specific question and then come to Joyce. Hefin.

Mark, you mentioned availability of property. On 31 January, the chair of the Central Cardiff enterprise zone made quite a stark statement that, if you look across the whole of Wales, there are only perhaps two or three vacant industrial buildings. I tweeted that just to try and test it out to see if anybody was going to come back to me and say it was rubbish, and Chris Sutton himself came back and said that he stands by that:

'Modern or "Grade A" employment floorspace in short supply across all parts of Wales.'

Do you agree with that—two or three industrial grade As?

I do. As I said earlier, one of the most important criteria to any business coming to your area is to say what available properties there are. I know that within Blaenau Gwent, we've lost out on opportunities because we haven't had available premises in certain specific sizes. So, that is an issue. We did a market research study to look at the availability of property in Blaenau Gwent and across the south-east region, and we saw that level of issue. There hasn't been major investment for 10 to 20 years in those areas and what properties there are are pretty much taken. So, the occupancy levels, especially in Blaenau Gwent, are very high. So, we have missed out on opportunities and that's one of the reasons why we looked at this data: to encourage Welsh Government to build the 50,000 sq ft that has been announced at Rhyd-y-Blew, and we're also now working with the local authorities in a joint venture to look at two further developments of a 20,000 sq ft hybrid start unit at the Works, and a 43,000 sq ft, and we're just working through the business case on those. So, I would support that statement.

And in the response to that tweet thread, Christina Harrhy, chief executive of Caerphilly County Borough Council, came back and said—. Well, Chris Sutton said that perhaps there's a role for the Cardiff capital region deal, and Christina Harrhy said that, yes, the Cardiff capital region deal was already onto it. So, it does then beg the question: to what extent do you have a relationship with the Cardiff capital region and their projects, if they're going to help solve those problems, and also the Valleys taskforce? Is there a relationship there?

Absolutely. It's important that we work together—

We have a board member on our board who also sits on the Cardiff city region. We've also had several meetings with the Heads of the Valleys taskforce; in fact, they were up in workshop in Blaenau Gwent two weeks ago, looking at this enterprise hub, to decide what that looks like. We've had engagement areas where both Cabinet Secretaries have met the community to look at what this engagement looks like and what are the needs going to be. So, yes, it's very important.

So, what are the outcomes going to be? What kind of projects are going to emerge as a result of that interconnection between you and the others?

That's still being worked through. We're looking at the opportunities around that. There's a business case at the moment that confidentiality prohibits me from really talking through in detail, but there are some good, strong opportunities now that we're looking at supporting together. I've already mentioned the three property investments that we've looked at and the enterprise hub that's been announced—

No, but those things that I've talked about in terms of the confidential projects are going to maybe be part of the Cardiff city region, subject to the business case. The three units aren't. The next step in the enterprise hub is part of the Heads of the Valleys taskforce that's been recently announced. We're working together now to scope exactly what does that look like.

11:15

So, are you confident those things are connecting together well?

Yes. Of course we can always do more, but that connection is there and that's something we need to build on as both projects develop and grow and take forward over future years.

Okay, thank you. David, did you want to come in on any of those points?

Just very briefly. It is also an issue in that there is some space available but we always need more. I think we need to try and create the environment that encourages speculative building—some things are there. One of the challenges is when you speak to an investor, as in a company that wants to come in, it's all about jam tomorrow sometimes, or in two years' time or three years' time. Some of these things we've got to provide and be able to show it to them. In terms of the link, you talked about the Cardiff growth area, certainly in north Wales I can confirm that it's very much part of that growth deal in terms of developing different sites.

Then, a totally different point but another issue I think you'd need to be aware of is that for many of these areas a big issue, rather than buildings, is power infrastructure, as in electricity. I know broadband's an issue, but we spend a lot of time talking to SPEN about it—the Scottish Power Energy Networks—AND that sort of organisation. I think that's an issue. You can land a new company and you can do all that and then you think, 'Oh, we haven't got enough electricity for this', and you cannot—even if you say you'll put it in, it'll take you maybe three years to put it in place. So, there needs to be real thinking and forward planning for those sorts of issues.

On that note, and I think it might have some relevance, there are local development orders that, according to the Government, would see an enterprise zone benefiting from a faster planning decision. I'm sure that's part of what you just mentioned. Is that happening? Have you found that you are benefiting from that? Maybe it's more relevant for you.

I'm no expert on LDOs. I know a little bit because we've had some discussion at board meetings about them, but as I understand it it's a decision for local authorities. But what I would add is that local authorities, certainly, again, in the case of Flintshire, when there are particular developments, they fast track them anyway, within the rules. So, I think in some ways I don't see that planning at the moment is an issue that's getting in the way of the developments that we face so far.

But I think my question was: because the Government identified it as a possible barrier, and then put in the local development orders in recognition of that, you ought to be able to benefit through the enterprise zone, but what you're saying is you weren't seeing those barriers.

Not really, and I'm not aware of any of those LDOs coming into play, certainly not in our area anyway.

From our perspective, we don't have an LDO either. It's something that we've tested a couple of times through the life of the enterprise zone. We have a very proactive, very business-focused council that tries to take a very quick approach to planning applications, again within the rules that are required. So, we don't see that as being a barrier. Maybe it wasn't the barrier that people thought at the start. I'm not aware of any issue In Ebbw Vale where an LDO would have helped.

Bore da. Hoffwn i droi at y cwestiwn o'r lwfansau cyfalaf uwch. Mae gyda'r ddau ohonoch chi, rwy'n meddwl, yr incentive hwnnw. A ydych chi wedi gwneud defnydd penodol o'r lwfansau cyfalaf uwch yma yng Nglannau Dyfrdwy ac yng Nglynebwy?

Good morning. I'd like to turn to the matter of the enhanced capital allowances. I know that some of you have those incentives. Have you made specific use of these enhanced capital allowances in Deeside and in Ebbw Vale?

Fe wnaf i ymateb yn Gymraeg. Nid wyf yn ymwybodol bod unrhyw gwmni wedi elwa o'r cynnig yma. Hefyd, rwy'n deall bod hwn yn rhywbeth sy'n cael ei weithredu drwy'r Llywodraeth yn Llundain. So, dyna un o'r pethau eraill. Rwy'n credu mai un o'r pethau ydy bod rhai o'r cynigion eraill sydd ar gael i gwmnïau yng Nghymru ac yng Nglannau Dyfrdwy drwy waith Llywodraeth Cymru y tu allan i ddatblygiadau parthau menter hefyd yn cynnig pethau sydd yn ddylanwadol i bobl ddod mewn i'r ardal. So, nid wyf yn siwr—rwy'n credu bod yna ryw feddylfryd, os yw maint yr arian rydych ei eisiau yn fach, nad yw'n werth yr amser na'r broses i edrych i mewn i'r enhanced capital allowances. 

I will respond in Welsh. I'm not aware that any company has benefited from this offer. I also understand that this is something that is being implemented by the Government in London. So, that is another aspect. I think that one of the issues is that some of the other offers that are available for companies in Wales and in Deeside through the work of the Welsh Government that fall outside of the enterprise zone developments also offer influential things that draw people into the area. So, I think that there is some sort of mindset that if the sum of money that you want is quite small, it's not worth the time or the effort involved in looking into these enhanced capital allowances.  

11:20

From Ebbw Vale’s perspective, we have ECAs only on one site, the Rhyd y Blew site, and we have no businesses currently on that side, although there is a strong pipeline of interest. So, for us, from our perspective, it hasn’t been the useful tool that we thought it might have been. We certainly marketed it, and I’d agree with David’s comments that, actually, some of the range of benefits that are available from Welsh Government support that don’t exist, for example, in LEPs are more beneficial than the ECA itself. So, it’s an either/or situation, as I understand it, and I think, to date, most of the companies have been focused more on the other benefits that they can get in the area.

O ystyried nad ydych chi’n ymwybodol o unrhyw gwmni sydd wedi manteisio ar y lwfansau arbennig yma, a oes gyda chi farn ynglŷn â p'un ai a ddylai Llywodraeth Cymru lobïo Llywodraeth Prydain i barhau â’r lwfansau ychwanegol yma?

Considering that you are not aware of anyone who has benefited from these specific allowances, do you have an opinion as to whether the Welsh Government should be lobbying the UK Government to extend ECA?

Wel, mae’n swnio i fi fel ei bod yn beth da i wneud hynny, oherwydd maen nhw’n gorffen yn 2020, rwy’n credu. So, mae cael y cyfle yna—. Rwy'n gwybod bod pobl heb gymryd y cyfle yna, ond rwy’n credu bod cael y cyfle yna fel rhan o fwydlen o bethau sydd ar gael i gwmnïau—nid wyf yn gweld unrhyw beth negyddol am gael hynny, so byddwn i’n dweud 'ie'.

Well, it sounds to me as if it would be a good thing to do that, because they do come to an end in 2020, I believe. So, having that opportunity—. Although I know people haven't taken up that opportunity, I believe that having it available as part of a menu of things that are available to companies does not seem to me to be a negative thing, so I would say 'yes'.

From my perspective, again, it was very hard won, so why give it up? I think that, if it does expire in 2020, its usefulness is probably coming to an end now by the time a business built a factory. So, I would suggest that it would be worth lobbying for it to continue, but maybe look to say, 'Could that ECA be applied to the other sites within the zone?' It's still the same amount of money from the Treasury, but maybe it could be better used on a different site than the Rhyd y Blew site currently.

Jest ar y cwestiwn ehangach yma o incentives ariannol, pan rydym ni’n edrych ar draws y byd ar barthau tebyg, felly, a pharthau economaidd arbennig, special economic zones yng Ngwlad Pwyl, er enghraifft—ac mae rhyw 15 ohonyn nhw yn Tsiena hefyd; maen nhw wedi cael eu defnyddio yn helaeth iawn—fanna mae’r incentives yn llawer uwch. Rydym ni’n sôn am gael gwared ar y dreth gorfforaethol am gyfnod o bum mlynedd, a chael gwared ar y dreth incwm, hyd yn oed, ar gyfer gweithwyr arbennig, er enghraifft, gweithwyr ymchwil a datblygu, er mwyn recriwtio ar lefel fyd eang. A oes eisiau inni efallai fynd yn fwy radical, yn fwy uchelgeisiol a gwneud yr achos i Lywodraeth Prydain, 'Wel, beth am inni edrych ar draws y byd ar y special economic zones yma a gweld y pecyn y maen nhw’n ei ddefnyddio a gweld sut y gallai hynny weithio i ni'? 

Just on this wider question of financial incentives, when we look across the world at similar zones, then, and special economic zones in Poland, for example—and there are about 15 of those in China as well, where they're used to a large extent—the incentives are much higher there. We are talking about getting rid of corporate tax, for example, for a period of five years, and getting rid of income tax, even, for specific staff, for example, research and development staff, in order to recruit at a global level. Do we perhaps have to be even more radical and make the case to the UK Government, you know, 'Well, what about looking across the world at the special economic zones and seeing the package they are using and seeing how that could work for us'? 

Wel, mae rhai o’r pethau roeddet ti'n sôn amdanyn nhw yn fanna yn fwy tebyg i rai o’r pethau a oedd ar gael yng nghanol y 1980au. Ond, rwyt ti wedi sôn am bethau fanna sydd yn mynd ymhellach byth. Nid wyf i yn erbyn gwneud pethau fel yna, ond rwy’n credu bod hynny’n newid mawr iawn o beth sydd ar gael ar y foment. Nid oes dim yn rong â hynny, ond rwy’n credu y byddai’n rhaid i hynny fod yn rhan o ryw drefn newydd, efallai, sydd yn ailedrych ar y blaenoriaethau o safbwynt rhanbarthau dros Gymru lle yr ydym ni’n mynd i elwa drwy wneud rhywbeth tebyg.

Well, some of the things that you talked about are more similar to the things that were available in the mid 1980s. But, you have talked about things there also that go even further. I'm not opposed to taking such action, but I think that that would be a very big change from what's available at present. There's nothing wrong with that, but I think that that would have to be part of a new system, perhaps, and one that looks again at the priorities in terms of the regions throughout Wales and looking at where we would benefit from doing something similar.

I'd agree with David's comments; we need to be competitive. So, we need to see what the offering is in different areas to see at least what we can do to offer the same. But we should be trying to offer better, to make sure that businesses come to Wales as the first choice. I think it would be very sensible to look at this.

David has already referred a few times to competitive pressures from enterprise zones in the north-west of England, and you also provided us with comparative jobs per enterprise zone between Wales and England, showing that Wales on average had generated more per zone. Can you tell us: are there any other areas where you benchmark performance against zones in England, and, if so, what your conclusions were, and/or any other areas of collaboration with zones in England? I know that that is particularly pertinent in the context of the growth vision in north Wales. 

Well, for us, because we're based right on the border, we can't get away from it, because we butt right up to it, and many of us live and work and socialise and all sorts of things over that border, so it feels like one country, in many ways. So, we're very aware of what's going on the other side of the border, but we don't do any specific benchmarking. In terms of co-operation, yes, I've met, on occasions, with the chief executive of the LEP, I know one or two of the chairs of the enterprise zones, but it's a competitive old world, and let's be honest, they want that business, so we've got to look after ourselves here and do our best for Wales.

11:25

Yes, I'd agree. So, co-operation, no, because we are competing against each other, but certainly, we've tried to look at just some of the performance and some of the ways they operate to see what we could do to emulate some of their successes. It is a very different statistic, some very different methods of collection, so it's hard to make direct comparisons, but we've had informal discussions just to understand a little bit more how those LEPs work, to see how it could inform our work.

Can I thank you both, today, for your evidence to us? You're both energetic in your particular areas, so we greatly appreciate that. You've really informed our inquiry, and we'll have some good discussion afterwards as a committee, I'm sure. So, we're very grateful for your time with us this morning. Thank you very much.

Diolch yn fawr. 

Thank you.

Can we just take a two-minute comfort break? And we'll reconvene again at half past eleven.

Gohiriwyd y cyfarfod rhwng 11:26 a 11:33.

The meeting adjourned between 11:26 and 11:33.

11:30
7. Craffu ar waith Ysgrifennydd y Cabinet dros yr Economi a Thrafnidiaeth - Ardaloedd Menter
7. Scrutiny of the Cabinet Secretary for Economy and Transport - Enterprise Zones

Right, I move to item 7, and with regard to our inquiry on enterprise zones in Wales, this is our last public session. I'd like to welcome the Cabinet Secretary, Ken Skates, to provide us with evidence this morning and I'd be very grateful if you could introduce your officials for the public record. 

Thank you, Chair. It's a pleasure to be with you this morning, and I'm joined by Mick McGuire, who's responsible for sectors and the regions, and also Duncan Hamer who's responsible for entrepreneurship and delivery.

Lovely, great. I'm aware that you're doing a review of the many advisory boards across Wales, and as part of that you've been speaking to each of the enterprise zone boards as well. So, I wonder if you could tell us anything specific about those conversations you've had in that light.

Okay. Again, can I offer my thanks for the invitation to appear today and also thank you for engaging so thoroughly across all the enterprise zones? I'm aware that you've had discussions with the boards, chairs have given evidence, and that you've also been to visit a number of the enterprise zones as well.

I'm proud of the delivery that we have seen across our enterprise zones: 10,700 jobs supported since 2012. There have been varying degrees of jobs created across those enterprise zones and jobs supported, but I think that reflects the different stages that each of the enterprise zones are at. You're right to say that there have been numerous discussions concerning the future of the governance arrangements for each of the zones. I am able to share with you today news confirming that I will be moving forward with a refined approach across many of the enterprise zones. If you'd allow me, Chair, I'll run through the changes that will be coming in the months ahead.

First of all, the Port Talbot Waterfront and Haven Waterway boards will continue for a further three years through to July 2021. I know that those boards were particularly keen to continue in the current guise. That will happen. I think there's still a huge amount to accomplish in both of the zones, and the chairs are now developing a tailored forward work programme for each of the respective areas. For example, on the Haven Waterway front, I've asked for specific work to be conducted in regard to the potential of free ports and a distinctive offer for a post-Brexit Wales.

Moving on to Anglesey and Snowdonia, the boards will be merging, and I would like to see, as a final investment decision is reached on Wylfa Newydd, the focus to then shift to Snowdonia to ensure that some of the big projects that are coming down the line in that enterprise zone are brought to fruition. Both of those enterprise zones are focused on long-term major projects that I think could be distinctive and game-changing for the respective areas. In particular, Trawsfynydd in recent years, as a consequence of the work that's been carried out by the enterprise zone and partners, including Welsh Government, I think is now recognised as a potential site of excellence for small modular reactors, and I think that that's something that we should congratulate the board on.

Moving on to the Deeside board, it can cease, but one of the major outcomes of the enterprise zone in Deeside has been the work carried out on the advanced manufacturing research institute. So, I see the governance arrangements on the AMRI as replacing the governance arrangements for the enterprise zone.

Ebbw Vale: the Ebbw Vale enterprise zone board will cease to exist as the Tech Valleys governance arrangements are taken forward. Now, the governance arrangements have already been endorsed by the enterprise zone board, and so we're going to be working very closely with the board to ensure that there is a smooth transition.

Then on to the Central Cardiff and Cardiff Airport and St Athan boards, again they will cease, having effectively, in my view, accomplished the objectives that were set out. I think, in particular, we've seen remarkable success insofar as financial and professional services are concerned, and I think the arrival of Aston Martin Lagonda has shown that the Cardiff Airport and St Athan board has again delivered on its objectives. The governance arrangements for those boards will transfer to other suitable advisory structures—for example, with Cardiff Airport and St Athan, I envisage the Cardiff Airport board taking on responsibilities for ensuring that the business is operated as usual.

So, that's going to be the future of the enterprise zones across Wales, and I think it reflects the respective journeys that have been taken by each of the boards since 2012. Of course, there were additions. Originally, there were five; now there are eight. With those newer ones, I think it's important to give time to the boards to ensure that they are able to take forward a very strong work programme.

11:35

Okay. Thank you, Cabinet Secretary, for making your announcements in the committee this morning with regard to the future of the boards. Can I ask: how important are the boards themselves to the operation of enterprise zones, in your view?

I think the boards have been incredibly important in informing Government of the support that is required to grow business opportunities in the respective areas. I firmly do not believe that the AMRI would be where it is today had it not been for Deeside enterprise zone board input, nor do I believe that we would have seen some of the infrastructure that's being developed in other enterprise zones and around other enterprise zones were it not for the boards. For example, I think it's recognised that the Llangefni link road is one such piece of infrastructure that was delivered as a consequence of strong advice and recommendations from the board. So, the boards are not just there to ensure that the enterprise zones are marketed and promoted as attractive places for investors to come to and to grow businesses; they do serve a crucial purpose in advising Government and, I think, in ensuring that local authorities also support the development of those areas in an appropriate way.

Can you tell us about the financial implications with regard to what you've just announced this morning?

The financial implications are not severe on the public purse because there is a delegated budget of approximately £50,000 that is used by each board, so winding up of some of the boards will not release a huge amount of financial resource. Nonetheless, I'd expect there to be a small saving.

11:40

And the other boards—you'd expect to fund those for £50,000 for the foreseeable—

Yes, that will be for consideration in future budgets, but £50,000 appears to have been adequate, so far, to ensure smooth delivery of objectives. I don't envisage that figure changing significantly.

Thank you, Chair. Cabinet Secretary, you've answered a lot of my questions already, with your announcement here at the start of the session, but turning to the economic action plan, there's no explicit reference within that to enterprise zones, so I wonder whether you could just furnish us with some more details about where they sit within that strategy.

I recognise there's been some criticism of the fact that enterprise zones were not name-checked in the economic action plan, but the economic action plan was designed to identify the policy changes that will be taking place. The economic action plan as well frames economic development in a way that's going to be different than that which we've operated on the basis of in recent years insofar as regional and place-based economic development is concerned. Enterprise zones, I believe, have a huge part to play in regional place-based economic development.

The appointment of chief regional officers, I think, will be important in ensuring that there is complementarity across the regions and internally in the regions of the enterprise zone offer. I think the changes that I've been able to share with you today will also enhance a more co-ordinated and cohesive regional response to the challenges that are to come, but also the existing strengths, and the strengths that have been developed by the respective boards thus far.

Thank you. We've taken evidence so far that looks towards that more cohesive approach—for example linking in with the work of universities nearby to enterprise zones. Is that the kind of model you'd like to see?

Absolutely. That's right. It struck me that there's a huge amount of activity across the regions, whether it might be in growth, in the city deal activity, whether it might be regional working on economic development, Welsh Government activity, enterprise zone activity, sectoral activity and, of course, further and higher education. I think what's absolutely crucial is that all of our work is aligned to get the best possible outcomes from each of the efforts that are being put into growing the economy.

In terms of your discussions with Anglesey, they provided evidence to us that it wasn't their model to merge with Snowdonia. Can you enlighten us a little bit more about your rationale behind the two merging?

First of all, they're part of the same region. As we move towards regional place-based economic development, I think there's an opportunity for us to simplify and streamline delivery. There's also, across the two enterprise zones, I think, a strong argument that mutually reinforcing projects could actually be delivered by a single board and that there is an interest in having an enterprise board that serves that entire region. I'm keen to avoid duplication. I'm also keen to ensure that there is complementarity of economic development across regions. I think, on Anglesey and in Meirionethshire, there is an opportunity to ensure that the boards work together as one on a collective vision for what the economy of that region should be shaped to in the future.

And have you had those discussions? Were they aware of your announcement this morning, or is it something that they'll now be aware of?

That it will come as a shock? We've had ongoing discussions with the boards' officials as well, regularly communicating with the boards the direction of travel that's being taken by the Welsh Government. It won't come as a surprise, given that this has been a discussion that we've been having for some time.

Okay. And Ebbw Vale, as a board, they were very keen to exist as a board in some shape—maybe a different form.

Yes, and that form will be Tech Valleys. I'd like them to focus on the development of Tech Valleys as a very distinctive offer, not just in Wales but in the UK and potentially Europe.

Okay. Mark, you wanted to come in on this, and do you then want to come to your set of questions after this?

By all means, yes. Some of them might have been addressed already.

Six days ago, as you indicated, we visited Snowdonia, Trawsfynydd and Anglesey, both a visit to Coleg Menai and then a round-table meeting with many of the members of their board. I think we all went in with open minds, and we heard from each of them independently compelling arguments for them to continue as independent boards. They gave us reasons why, arguing the different directions, priorities and the position that they'd reached on the journey.

In Trawsfynydd, we heard that the initial focus had been on managed decline because of decommissioning, the continuing and forecasted impact on local employment and how to mitigate that, how to focus on development at Llanbedr on the unmanned air vehicles option and others, and also their proposals for becoming the site of excellence for small modular reactors, which has also been picked up by the Northern Powerhouse, referring to Trawsfynydd as a potential site. So, they argued independently that, given all of that and much more, they needed an independent voice in the future.

Separately, Ynys Môn told us the same, ranging from statutory local authority representatives through to the business sector. They didn't just talk about Wylfa, although, clearly, that's pivotal. They spoke and presented to us on the Holyhead port expansion plan, they presented to us on the offshore tidal proposals that they themselves are driving forward. Also, around the table, we had presentations on Menai science park and the involvement they have with that, and a focus on the island infrastructure that exists and will be required as proposals go forward and much more, and therefore put the case that there would be disadvantage to economic growth and GVA gap closure if they cease to exist now as an independent board. How do you respond to those concerns?

11:45

I take the argument, but, on balance, I don't accept it. I think the synergies are very clear and obvious across the two areas, and I think with the projects that have been the focus of their work thus far, delivery of them will be taking place at different stages, and therefore I think a combined single board will ensure that there are no competing interests that lead into a failure to grow the respective economies at pace and that every effort is put into making sure that those primary projects that each of them is working on are delivered in a way that is co-ordinated.

Of course, I'll take the views of committee members, but it's still my belief that the decision that we've reached over those two enterprise zone boards is the right one. Duncan has been liaising with both boards on a very regular basis. I think he's able to give an idea of the direction of travel that being that's taken so far and why it's informed the decision that we made.

Picking up the question specifically, I think representative membership is going to be absolutely essential, so the terms of reference will need to recognise the different needs of both zones. I also agree that it has to have a broader remit than just a single project that is a unified project across the island and Snowdonia enterprise zone board. 

I think the other point, to just add to what the Cabinet Secretary said, is that it's very much a managed transition. So, we've got five months of the current term left and an option to basically move that transition to make sure that the specific work that the Snowdonia board need to do can be conducted, and that, as we move into that dual board, we really finish off those key pieces of work. So, I think there are some options remaining, and we'd be happy to take some advice on how long that transition is. But I think, ultimately, the direction of travel is very much about bringing them together while recognising that we have to have a representative group on there. For example, John and Neil bring a different view. Neil very much brings the broader economic impact—his experience of foundation sectors, for example, in the tourism industry—whereas John is quite specifically around SMRs—he is seen now as a UK leading light in small modular reactors. So, it's important that we keep that balance.

I'm a little concerned that the Ebbw Vale enterprise board is going to cease to exist, particularly as Ebbw Vale is in a particularly deprived area. Mark Langshaw told us earlier on that there are a lot of things in the pipeline, coming through, that, quite frankly, need to be monitored. And he felt that the board would be in a position to do that. Now, you've talked about the Tech Valleys et cetera, but how do you feel that they're going to take over from those operations? Are you absolutely convinced that's going to happen? Because it's a very, very important thing that that area in particular gets the best of attention, if I put it that way. I don't think the Valleys force, which is not as concentrated as the Ebbw Vale board—it's spread right across the Valleys—I don't think that's going to do it, and the Cardiff city region is a little way away from that area as well. It worries me that we're not going to have the attention there that we need.

11:50

There will be a managed transition and a smooth transition to new arrangements for Ebbw Vale, and this has already been endorsed, as I said earlier, by the enterprise zone board. I think it's absolutely essential, as you say, that we ensure that the pipeline of projects that we've been able to develop so far results in projects that land significant numbers of job opportunities for people. But I should stress again that transition does not mean that we'll be leaving Ebbw Vale without an enterprise zone. The enterprise zone will continue. It's the governance structure that will be different, with a stronger focus on a distinct identity for the Heads of the Valleys. I think that's essential because in a global market we have to make sure that we play to our unique strengths, rather than try to be everything to every person.

Whilst there has been a specific focus so far on advanced manufacturing in the Ebbw Vale enterprise zone, I think moving forward we need to develop that identity still further. Making the focus automotive and technology builds in part—well, not in part; largely—on work that has been carried out by the zone board itself, identifying opportunities in the automotive sector: battery technology, 5G potential, the potential to develop infrastructure for autonomous connected vehicles. I think that is the future of the Heads of the Valleys, and for that reason I think it's essential that we develop a new governance structure that recognises where we wish to take that particular region.

But if the enterprise zone is going to be there, who's going to oversee it? That's what that—

Sorry. Again, I should state that the Tech Valleys governance structure will do that. There will be a governance structure that the enterprise zone board will be transitioning to—

It will be focused on managing the business in that enterprise zone. But it will clearly define the objectives of Tech Valleys, and I think that's really important, as I say, to have a strong identity and a purpose to work towards.

Yes, and I was just going to add that I think that, in addition to the strategic project and the work with tech, merging into tech, we're also in detailed discussions with the local authority about having more local advice that the local authority would deliver, and that's about things like the Aspire shared apprenticeship—the more granular-level actions that we also don't want to lose focus on in a difficult-to-reach area. Another example I'd give is around community enterprise and entrepreneurship in difficult-to-reach regions, which Mark has done a lot of work on, so we don't also want to lose momentum on those more local—. But I think it was kind of picking up your point about government in its broader sense as well; so, very much working with the local authority to try and support that action with a more localised group that complements the work of the tech board.

I think the point relates to the point about Anglesey earlier. Mark was very proud of the big pipeline of projects that he had created. Nobody's going to lose those pipelines, so the new regional officers will make sure that those pipelines continue, that those projects continue to be managed. I think what the Cabinet Secretary's talking about is: where are the future projects; where we will be targeting and focusing our efforts in bringing forward the future projects? Nothing that was mentioned by the two separate boards will be lost. We will continue to drive all the projects that have the potential to benefit the economy and the region.

There's a business-as-usual element to the work the board have been delivering there for three years, so we're very much trying to move it into that stage. They've tested the concept and we're trying to almost mainstream it in its delivery.

And that transition period that you talked about, Ken—what's the transition period? What sort of time are we talking about there?

Well, we've got the current terms for the board to July 2018, so we're working rapidly to try and ensure we don't have any gap in delivery.

One of the headlines, maybe, from your announcement this morning would be: north Wales currently has three enterprise zones; it's going down to one. That's going to be disappointing, isn't it?

11:55

Two zones in the north-west with one board making sure that there is complementarity of economic development across those areas, so that they're able to strongly focus on the north-west of Wales as a distinctive region. I don't see an issue in having one board, provided you've got representation from the sectors and the regions that are concerned. One board taking forward work in a very, very co-ordinated fashion. 

Two zones, one board, then. That sounds like a slogan, but an interesting model. That's fairly unique, isn't it? I've never come across, actually, a similar example, because enterprise zones are very—. I mean, they're contiguous areas, but you think—. I mean, it will be unprecedented, but you think that could work. 

Just on the north-east, we heard earlier that the north-east is facing a lot of cross-border competition; there are four enterprise zones the other side of the border, LEPs and the Northern Powerhouse, and what have you. Are we leaving the north-east now under-powered?  

So, the AMRI will serve as, if you like, the game-changing magnet to draw investment into the north-east and, indeed, the wider area of north Wales. That is estimated to be worth something in the region of £3 billion to the gross value added of the region, but I'm not closing the door on the idea of an additional enterprise zone. Wrexham has often been talked of as a place where an additional enterprise zone could be created. 

In the context of the economic action plan, the chief regional officers will be putting together business plans for the regions, and any future consideration of additional enterprise zones will be taken on the basis of the evidence and the persuasive arguments put forward by those chief regional officers. So, it could be that a chief regional officer, in conjunction with local authorities and other stakeholders in the region, determines that an additional enterprise zone is required.  

Right. You come here not to bury enterprise zones but to create them; this is breaking news, Cabinet Secretary. How live is that process now that you've just referred to—the regional officers putting in bids? Is that imminent? Will that be starting soon? Can areas across Wales now start to put their bids together? Could you just give us a sense of the criteria that you will be using to assess where those new enterprise zones might be? 

The economic action plan and the objectives in the plan, both in terms of the economic contract and more particularly in terms of the calls to action and the need to make sure that we iron out uneven economic development will determine if, and therefore if other zones are required, where they will be located. The chief regional offices are currently beginning work on their regional business plans. I've not set a time limit on the development of those plans, because I don't wish to have all three plans brought together at the same time if one is able to be worked up more speedily, given that city deals and growth deals are at different positions as well. 

Once the business plans are brought forward, it will be for the chief regional officers, in discussion with stakeholders locally, to determine what interventions are required from Welsh Government and from local authorities. If enterprise zone status for any particular location is deemed to be desirable and necessary, then that's something that I would consider.   

Just finally, could you say a little bit about the local growth zone policy, which was kind of like a sub-enterprise zone, I suppose you might call it, for rural areas in Powys and parts of Ceredigion and Carmarthenshire? Is that still part of your policy armoury, to have this status particularly attuned to rural areas of economic opportunity?

Yes, it is, because I think we're at a critical stage, particularly for mid Wales, in determining whether a growth deal can be pursued at speed. And I think, in the meantime, the work of the local growth zones is absolutely crucial, just as the work of local authorities in growing mid Wales is also crucial. So, I think it's important that we continue with the local growth zones activity, at least until such time as we can determine whether a growth deal is to be pursued and what the shape of that growth deal therefore is. The indication from UK Government is that a growth deal would be considered. We need a firmer response to the call from mid Wales for a growth deal. At the point when we know whether UK Government is willing to accept a bid for a growth deal, then we'll be able to determine the future of those growth zones. 

12:00

It's a complicated picture, isn't it? I'm feeling quite confused by all the things that are going on here. Can I just pick up on something Mick McGuire said about the pipeline that the boards had created and that not being lost? So, I'm just trying to understand the new landscape. So, we'll have the new regional officers who will fill that gap, if you like, to bring some sort of strategic sense to what's going on in the region. I understand that. Is there a danger in the boards? Because the evidence we've had, the boards, the enterprise zones in themselves don't by themselves create very much added value. What they do is they—

No, the zones themselves. We've heard evidence that the additional incentives aren't really significant factors in decision making. But, it does seem that what value they do bring is that they bring people together and they create rich partnerships, and they create an enthusiasm and an energy for an area. So, if the existing boards have created this pipeline, which you're keen to capture and retain, where in the future is that pipeline going to come from? Where's that collision of ideas and that challenge going to come from under this new structure if you're getting rid of the boards?

The pipeline for the future will still come from partners on the ground working together, albeit in a different guise, for example, as part of the Tech Valleys board, but also working in conjunction with Welsh Government, with teams within Welsh Government, and crucially with a regional approach to economic development that's been mandated by my colleague in Government. Essentially, with the revised advisory architecture and the governance structures, we are simplifying and streamlining what is currently operating, and we're giving a stronger identity to those enterprise zones that align with their key strengths. I don't think it's necessarily confusing. I think, actually, we're bringing more clarity to the purpose of the enterprise zones, particularly insofar as what the desired objectives are, insofar as the sectoral approach that they may take, and insofar as other distinctive qualities that they currently have that need to be further exploited are concerned. 

Perhaps I'm just easily confused. But in terms of trying to capture some of the value we've been told about, you mentioned, for example, the Ynys Môn one, where they've come up with an idea of a road, and the implication of that is that that wouldn't have come forward otherwise. If you're suggesting that in the new arrangement it's essentially going to be an internal government process of challenge and exchange, are we not missing a trick in the value that's been brought by these boards?

No, I don't think I said that. There will still be the board that will be able to advise Government Ministers. But what is essential, I think, is that we make sure that structures that are in place for the future can reflect what the projects are today, but also what needs to be done in the future. And I don't see any change in terms of the advice and the intelligence that comes up from the ground insofar as boards are concerned, but what we will be ensuring, through the creation of the chief regional officers, is a greater degree of coherence across the various interventions that are currently being developed across the growth deal, for example, across local authority interventions, across Welsh Government interventions, and also across private sector interventions as well.

In terms of the incentives that have been offered as part of the enterprise zone package, is there any plan to change them? What struck me about the different evidence we've had is that the current ones really haven't been that significant in terms of attracting businesses. 

They may not have been as weighty, if you like, as the incentives that we saw in the 1980s, but those incentives in the 1980s actually led largely to a displacement of activity. 

So, they have been, it's true, softer, or lighter. Nonetheless, we've seen the outcomes, I think, significantly—. Academic experts have highlighted the different jobs created per enterprise zone, and the outcomes have been stronger, in my view, in Wales as a consequence of the approach that we've taken. And, based on the longitudinal survey that was conducted by us, we've been able to identify that the support for skills and infrastructure, and digital infrastructure as well, have been critically important in ensuring that businesses themselves invest where they are located in enterprise zones and they've ensured that businesses are attracted to enterprise zones. I don't know whether you've seen the outcome of the survey, but I'm more than happy to provide details of the survey responses.

12:05

You make the parallel with the 1980s enterprise zones version, if you like. One thing that struck me was the cost per job in the 1980s compared with the cost per job under our version—there's a significant difference. It's cost us a lot more per job than the 1980s managed.

Okay, what cost per job are you currently settling on? Because the figure is £5,971 when you take out the cost of infrastructure, which I think David Rowlands rightly identified should be done.

Right, well, embarrassingly, I don't have the figure with me, but, the evidence we had from last time, it was significantly different.

I think it was because we didn't have that information ourselves originally when we asked for information.

Okay, I'm happy to provide it right now: £132 million on transport infrastructure; direct business support, £63.9 million; property, £14.2 million; infrastructure, digital, £499,000. That's a total of £211 million. I think I'm on record as saying this—£211 million. So, when you take out digital infrastructure, property and transport, you're left with a figure that equates to, as I said, £5,971 per job, based on the 10,700 jobs that have been supported since 2012. That is an incredible figure and it compares very favourably with the figure across the border. It compares very favourably with historic figures as well.

Lee, do you mind if I just bring Mark in, and I'll come back to you if you need to—

Effectively, it follows directly on from that, I think, but, just on your earlier comment, we heard from the enterprise zone boards last week in the north-west that their role went far beyond advising Welsh Government, although clearly that was critical—that the influence that they had just by being a board opened doors for them and was an incentive often for those who they were engaging with. I'm concerned that—clearly, as a committee, we haven't yet discussed and agreed what our conclusions will be from this inquiry, but I'm concerned that you appear to have already closed the door on recommendations we might make. We don't know what we'll conclude, but I hope you'll still give due consideration to whatever recommendations—

I can assure Members that I will. I will do that. I think it's important that I'm able to reach final decisions that are based on the conclusions of this committee. And I'm more than happy to reflect on any recommendations that this committee may make in the coming weeks and months.

Thank you. And you were just talking about cost per job, and I think the figure you gave the BBC on 30 January was £220 million gross—£130 million of that into infrastructure. We received evidence that a lot of those capital projects would have been put in place anyway and that capital figures should be amortised over 20 years. Therefore, have you carried out any further work to provide a more accurate assessment of cost per job in the context of the added value from being an enterprise zone, as opposed to the more broader infrastructure costs, which would have gone in anyway?

In terms of value for money, we always look at the number of jobs created and then the support provided. The support provided by the Government comes in many different ways and I think earlier discussions here have suggested that skills tends to be the most important, infrastructure is the secondary thing in terms of helping assist the company, and then the third thing is the softer support. If you take out the infrastructure costs and you just leave in the softer support—that's Government grant, Government loans, skills support—then the cost per job comes down to the figure that the Cabinet Secretary's just given. So, the value for money in the enterprise zones has been reasonably good, taken over a five-year period, versus the cost of Government intervention in supporting jobs. And I think, going back to the earlier point, that incentives in the enterprise zones weren't sufficient to make the job creation, the successful job creation, happen is a truism, but you must remember that it opens the door for Government officials to come in behind with all the other levers of Government support in those three areas: the skills, the infrastructure and then the softer Government support for job-creation projects. So, if the question was, 'How's the number calculated?' I'm not sure if I've answered it.

12:10

We understood from the other evidence received, and you'll know this from your own professional background, that normally infrastructure costs would be amortised over a longer period. We also know that, even if the zones had never existed, the Welsh Government would still have been investing in infrastructure in these parts of Wales and elsewhere. So, that's what their—. I think that's what the evidence we received was suggesting we might want to consider when actually looking at the true cost per job added by the existence of the enterprise zones.

Exactly right. And that's what the Cabinet Secretary has done. He's taken out those infrastructure costs. I wouldn't underestimate, though, the extent to which the enterprise boards have been helpful in focusing the infrastructure investment, bringing it forward where appropriate and focusing on which roads and where to build them.

If I can just add on that point as well—. I think the point was well made. There are two things. It's very difficult to value the marketing value of enterprise zones. If you think about the Deeside versus north-west comparison, it's quite a soft measure, very difficult to quantify. Secondly, we're also committed to—it's not an end of programme but a mid evaluation, full impact assessment type review of the programme, which—. It's not yet commissioned, so I'd like to think we could take into account the findings of the committee as well in commissioning that report to kind of understand and dig into that in a bit more detail.

I think Duncan's point is right. I think, particularly if you look at Deeside enterprise zone, right on the border, having an enterprise zone in that location is crucial—crucial—because of the competition that exists just miles away. Having an enterprise zone enables us to fight our own corner. From Deeside enterprise zone, you can be in Manchester or Liverpool airport, either of them, within half an hour. Without the designation of an enterprise zone, it would immediately offer up our competition something distinctive that could in turn attract investment away from Wales. I just need to be clear again, because I think there's a little bit of confusion, that there's a difference between the designation of enterprise zones and the existence of enterprise zone boards in the current guise. There will still be eight enterprise zones, but there will be less and slightly different, in some respects, bureaucracy, which will then lead to a saving for the public purse. I think that's what taxpayers would want.

Is the logic of that that the enterprise zones' value, primary value, is as a marketing tool, or—? Because the evidence we've just had from the chair of the Deeside enterprise zone is the specific incentives weren't really game-changers.

In some respects, the marketing—. It's different for each of the boards, I think. But, certainly, if you look at Deeside enterprise zone, I think the marketing factor is huge, but I also think the development that's taken place on the Northern Gateway is a massive contributing factor. So, therefore, the infrastructure is significant. In other zones, I think some of the other offers are different. I think what's really worth looking at, actually, is the survey that was conducted, which shows what it was the businesses believed was the main factor within the enterprise zone offer that determined whether or not they would invest and whether or not they would invest themselves as well.

I've currently got David, then Joyce, then Hefin, then Adam. So, David Rowlands.

Cabinet Secretary, I don't want to put you in the position of creating league tables for enterprise zones, so, if you can look at this as questions about enterprise zones generally, the whole group of enterprise zones, can you point out what you feel are some of the best successes of the enterprise zones?

It'd be slightly unfair of me, I think, probably, to identify just one or two enterprise zones, so what I'll do is, if you like, I'll identify some key achievements for each of the enterprise zones. Firstly, Anglesey, in terms of being able to bring together stakeholders to work on game-changing projects, primarily Wylfa, has been really valuable. They've been able to inform the acceleration of regeneration projects and, as I've said, also inform road infrastructure projects that have now come to fruition. In terms of Cardiff Airport and St Athan, I think the obvious win here has been Aston Martin. It's worth saying that the figure of 10,700 jobs supported excludes approximately 709 jobs that will be created. So, that's a huge additional number of jobs that will be added to that sum total. Also, the Cardiff Airport and St Athan board have been crucially important in growing the number of passengers at the airport, which is up almost 50 per cent in three years; it's a huge success story in my view. Central Cardiff has been incredibly impressive as a board and as an enterprise zone.

12:15

Can I just say? I'm just conscious that some of what you're saying is in your paper, so we've got that information.

I appreciate you're answering David's question, but I've just got to—. There are a couple of other questions we've got to get in as well. Do you have any further—? If it's all right, Cabinet Secretary, we'll—

I'll just quickly steam through, then: Deeside AMRI, game-changer; Tech Valleys, with £100 million that's going to be going into Ebbw Vale, again, hugely important, informed by the work of the board; Haven, I think, in terms of Valero and some of the other projects that we've been able to work with the board on to safeguard jobs, has been really important. Port Talbot is in its infancy, and therefore I think it's unfair to identify any particular projects that have been more successful than others. And then Snowdonia, again, this is a slow-burning enterprise zone. Nonetheless, the work that's been done on small modular reactors, I think, has been hugely valuable in giving us a longer term objective for that particular enterprise zone.

Yes, just to flip the coin, if we can, and say: what areas do you think have not achieved in the way that you'd expected them to achieve? Do you have any particular areas rather than actual, you know—?

Areas of concern—. I think other people have given evidence that suggests that we need to allow a little more time before we harshly judge any of the enterprise zones. And I think if we're in a position in four or five years where any enterprise zones have not delivered on the objectives that have been set out then there would be very serious cause for concern.

Just lastly—I think I'm going to play into your hands a little bit here, because Chris Sutton says that there are probably too many enterprise zones in Wales, and we've had some figures: 375,000 of population for each of the enterprise zones, whereas, in England, probably 3 million for each enterprise zone. That sort of figure, I think, came out somewhere along the way. So, I'm sure you're going to be in agreement with that.

Are there too many? Well, I'm sympathetic to that argument. That said, the two enterprise zones that probably have been, in terms of the jobs supported, the most successful, that I think the board chairs would suggest could be wound up, would be Central Cardiff and Deeside, but they are both, I think, probably recognised as jewels in the crown of the Welsh economy. And so, whilst we will be shifting focus to other areas, through a number of interventions in the EAP, I don't think we should simply go on to polish the crown. We need to maintain the glittering jewels in place as well, and that means ensuring that Deeside and Cardiff are still seen as centres of excellence on the global stage.

We all know that the jewel in the crown for energy is, of course, Haven, and it can't be denied; the tax receipts will tell you that is the case. And the challenges that are coming, in terms of—you mentioned it—the free port, and Brexit; I didn't quite catch if there was something else. So, how's that going to look for the future?

Well, I said a few moments ago that I've asked the board to look specifically at the potential of free ports and also look to develop a distinctive, strong offer in the post-Brexit context. Now, they're working on that at the moment. I think it's essential that the focus should remain on energy, and I think that will form part of the work that is carried out by the board. I'm pleased to be able to extend the board a further three years in order to not just put together a strategic case for the future but also to deliver it.

And in terms of the messages that are coming out, and they are really quite challenging, from the UK Government, in terms of Pembrokeshire, with coming out of the customs union, maybe, for example, and the sea border, that—. It was mentioned yesterday. It will undoubtedly be mentioned when they're looking forward for the next three years in Pembrokeshire. And the possibility that the trade that exists there now might not even come to the UK at all, but could go to France, could go—. I think France and Italy were named yesterday. Do you expect the board to be looking at opportunities as well as challenges, should that boundary, that real threat, come into being?

12:20

Yes, and I'd expect, actually, them to focus more heavily on the opportunities than on the challenges. I think many of the challenges were well rehearsed. We're aware of the issues that could arise from the various scenarios, but of key concern to the board is what it can do to inform development on the ground that will futureproof the local economy, not just in terms of energy and other forms of economic activity—I think tourism is hugely important to the region as well. If you look at the tourism figures, the number of cruise visits that have come into Fishguard, you'll see that there's been a massive increase in recent years: the numbers have almost doubled. In a post-Brexit context, whilst there may be challenges, there are also opportunities, and I wish to see the board work on what it is that we can do to take advantage of those opportunities.

One of the issues that seems to have emerged from the evidence we've received is that there is a chronic shortage of grade A industrial units across Wales.

That's true. That's in part as a consequence of the success of the last five years, I think it's fair to say, isn't it, Mick?

Job creation has been quite extraordinary, but we're bringing forward, and we have been bringing forward, a large number of property development grant opportunities. The announcements that we've made on Tech Valleys, I think, in particular, are important—

But also I think there is a very significant role for local authorities as well, and within the city and growth deals as well there needs to be some work done, I believe, in ensuring that there is suitable space. I'm aware that there are efforts in this regard in north Wales. I've heard that there are also efforts across local authorities elsewhere, but it's absolutely crucial that it's not just Welsh Government that is developing properties that are suitable for industrial and business use—that it's local authorities as well. 

Well, that brings me to my question. How do you ensure that boards like the Tech Valleys board would co-operate with the Valleys taskforce, with the Cardiff capital region and with the Welsh Government's economic strategy? How do you make sure that all those things interlock? Because at the moment, I don't get the impression they do.

That was one of the reasons why I was keen to make sure that we appoint chief regional officers to act as the glue, but also why I'm keen to ensure that local authorities and boards for enterprise zones—regardless of whether they continue in their current guise or whether they're going to morph into something else—that those boards also have local authority representation on them so that the boards themselves can inform local authorities what's required in their respective zones.

One of the simple approaches would be to ensure that they meet coterminously, but, actually, they seem to be meeting at the same time as each other, they don't seem to communicate very well in my experience, although that's my feeling. Would you say that that's possibly the case?

I think it's variable, but I think I would agree with your central premise that there needs to be a greater degree of co-ordination and coherence as well. I think we need to note there is finite resource out there and it needs to be used in a way that will lead to economic development spreading prosperity across Wales, and we can't have different organisations, different bodies, different layers of Government doing things differently where we're not co-ordinating, because that will not achieve what I think we all—

Right, so, the CRO is going to be really important in this regard. The CRO is going to be hugely important in bringing together key partners and in bringing together and co-ordinating and integrating policy at different levels, and I think, also, the boards—whether they're going to be the newly arranged boards for the enterprise zones or existing boards that are extended—they're going to be important in ensuring that they fully inform not just me, but also local authorities as well.

You mentioned the role of local authorities. Local development orders don't seem to have had much impact within enterprise zones at all. They don't seem to have been used.

They've not been used so far, but they've been available. They are—

I wouldn't wish to rule them out because they are available for consideration. Just because they haven't been used to date doesn't mean that they won't be used tomorrow, and I think it's important to maintain them as an option.

12:25

Just on the issue of financial incentives and the additional—the extended capital allowances; I've got it in Welsh here, so whatever the—. They're coming to an end in 2020. Will you be lobbying the UK Government for it to continue for those enterprise zones that will continue?

Yes, we lobbied hard for the four enterprise zones that have them to secure them, and I've been reflecting on the views of board chairs, and I've decided that we will be lobbying the UK Government to extend them.

Just on the wider question of financial incentives, are there others that we could be making the case for? You can look round the world at special economic zones. There is actually a wide array of financial incentives—obviously, some are related to business taxes. Interestingly, some of them are more on the personal taxes side, so employer national insurance contributions, sometimes income tax, actually, for key workers in research and development sectors et cetera et cetera. So, there's a wide toolbox of financial incentives. Is this something that maybe the Welsh Government could do some scoping work on to see whether there are additional zone-based financial incentives that we should be trying to deploy?

Yes, we are going to be carrying out a review, I think as Duncan said, of the enterprise zone offer, and as part of that review we're keen to learn from best practice around the globe, so we'll be looking at all available options. What I would add to that though is that we're equally keen to avoid some of the adverse impacts of the enterprise zone initiative in the 1980s where we saw a lot of displacement. I wouldn't wish to see that happen again.

There's one thing I could add to that: one of the areas where the UK Government are providing considerable potential funding, which enterprise zones are, in some measure, being successful in and in other measures still bidding to acquire, is the industrial challenge funding and the sector deal funding. Four of the enterprise zones are already benefiting or are applying and intend to benefit from funding from the UK Government, targeted at trying to create excellence within enterprise zones that improves productivity at an international level.

Can I ask, Cabinet Secretary, whether you can provide us with a breakdown of Welsh Government expenditure on each zone to date—I see in your paper that you've provided that—but perhaps extracting the infrastructure spend, if you like, so we can see how much is spent on each enterprise zone, extracting infrastructure spend? Is that possible data that you could provide the committee with?

Yes. We'll endeavour to get that data to you as soon as possible.

On that, the only thing to be mindful of is that it might end up identifying individual projects, so I just put a slight caveat on that: provided you can't link it through to an individual commercial decision. So, certainly at programme level, but I just need to check it through because I think you might be able to identify commercial data, basically, if we do that.

Okay, well if you could consider what you can provide us with; you know what we're after.

I know what you're after, absolutely.

We try to be as co-operative as possible. Some of the data that we've been able to provide is being provided for the first time to you. We'll do whatever we can to give you the data that you require.

You've told us as well that your decisions will be informed as a result of our piece of work, but I'm just conscious that many of the decisions are already made. So, I'm just wondering how our report is going to actually be able to influence your decisions, given that you've made such firm decisions announced today.

If you make a compelling case, I will consider the recommendations.

I thank you, Cabinet Secretary, for your time—and your officials as well. We're very grateful for your time with us this morning.

That brings us to the end of our public session this morning.

Daeth y cyfarfod i ben am 12:29.

The meeting ended at 12:29.

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