Inward Investment (Wales)

Geraint Davies Excerpts

Thursday 29th November 2012 Westminster Hall

[Geraint Davies (Swansea West) (Lab/Co-op)]

I warmly welcome the decision to extend electrification from Cardiff to Swansea, which we recommended in our report. Does the hon. Gentleman agree that what we need in Swansea, as in Cardiff, is super-connectivity, because we want a level playing field in south Wales, which has one economy? Will he, like me, press the Government to ensure that we are up and running in the Swansea city region, as well as in Cardiff, to achieve economic growth?

[David T. C. Davies]

The Swansea bay region would be an excellent place to invest. The Government are doing a huge amount to support better infrastructure, including IT infrastructure, across the whole of Wales. Although I look forward to developments that will increase broadband speeds in cities such as Swansea, Cardiff and Newport, we have more to do to ensure that people in rural areas such as Monmouthshire are able to get some sort of broadband.

[Geraint Davies]

It is important that we have Swansea city hub super-connectivity before broadband in rural Monmouthshire.

[David T. C. Davies]

I note what the hon. Gentleman says from a sedentary position, but let me turn to the Severn bridge, because that affects all of us in south Wales. Our report shows that little can be done until the original amount that was agreed with Severn River Crossing is paid off, which is expected to happen in 2018. Until then, there will always be inflation-busting increases in charges on the Severn bridge because that is set according to a formula at a certain time of year. There is absolutely nothing that can be done about that because it is a matter of commercial law.

[Geraint Davies]

Will the hon. Gentleman give way?

[David T. C. Davies]

I will, but may I finish my point first, because I think that the hon. Gentleman will be likely to agree with me?

After 2018, all bets are off, and several things could happen when the money is paid off. The Government will no longer have to pay VAT so, at a stroke, 20% could be taken off the charges. They could decide to get rid of tolls and fund the maintenance themselves, although that is unlikely, because I have been given an inkling of the cost of maintaining two large bridges over an estuary—it is phenomenal. I do not have the figures to hand, but we worked out that we would need to charge at least one third of the current toll simply to cover maintenance costs, and the Government might want to take a little more just in case it is necessary to build a third bridge in the future. However, there is no doubt that there could be a huge cut in the tolls after 2018, when Severn River Crossing’s charges have been met.

At the same time, the Welsh Assembly Government are loudly demanding control over both bridges, although one is entirely in England, which seems to have escaped their attention. However, they are being rather silent about what they would do to the tolls if they were put in charge. We need some transparency. There was a lot of anger in my constituency, and probably throughout south Wales, when the latest toll increases were announced, and I believe that some of that anger could be assuaged if we had more transparency about what will happen.

I was disappointed when we were informed by one of the Minister’s colleagues in government that there was unlikely to be any decrease in charges whatsoever because of extra costs—the Committee was told that they were several hundred million pounds, but I believe that they are now around £112 million—that the Government want to recoup. I do not know what those costs are, and the first I heard of them was when the evidence was given to the Committee. We were told nothing about that when the inquiry took place, so we would like to know what those costs are and what will happen when they have been paid off. We cannot find ourselves in the 2020s with the Severn bridge being used as a cash cow to milk the public in Wales and south-west England of money that the Government should not be taking through a toll, so a little transparency would be welcome.

[Geraint Davies]

Does the hon. Gentleman agree that the Government should commission a report from the Treasury to determine whether, if it paid all the tolls that will be due before 2018, all that money would be recovered from higher income tax receipts and lower benefit costs arising from the generation of extra jobs?

[David T. C. Davies]

The hon. Gentleman puts me on the spot. I would certainly support a report from the Government giving more transparency over what will happen. His question seems to be fair and relevant, so perhaps that could be dealt with.

I have entertained hon. Members for a little too long, so let me refer, finally, to how Wales is marketed. Currently, that is done by IBW. I shall have to tell hon. Members that that is International Business Wales, because no one, except a few people in the Welsh Assembly, really knows what “IBW” is. Previously, Wales was marketed extremely successfully by the WDA, and I do not need to tell anyone that that stood for the Welsh Development Agency. The time has come for us to reconsider the way in which Wales is marketed. We have plenty of evidence, some of which is anecdotal, that IBW has not been doing a very good job. It is time for the Welsh Assembly to set up a dedicated promotional body to sell Wales to the rest of the world.

We have a good story to tell, and we still have a highly-skilled, capable and loyal work force. There is a great argument for persuading companies from across the world to come to Wales, and I look forward to working with members of the Committee, and Ministers from the UK Government and the Welsh Assembly Government, to try to ensure that that happens.

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is a pleasure to welcome this report, which I was pressing for. Wales sits within the UK economy and the global marketplace, and we all need to pull together in both the Welsh and the UK Governments to provide the best opportunities for Wales in a changing environment and to give Wales the tools to do the job. I will cover the basic ground of the report and what we should be doing in Wales, including in the councils, focusing primarily, as has been said, on the UK Government’s responsibilities to present Wales as an accessible, adaptable and attractive location for inward investment in a global marketplace.

Obviously, we cannot compete on labour costs as we did in the past with China but we have electronic global market reach and clearly competitiveness is about added value and skills. Emerging markets in China, India and south America should be seen as major opportunities for emerging consumer markets of high value products, whether arts or science-led, for the Welsh economy. We should refocus our efforts in that way.

Following the global financial tsunami in 2008, Wales is particularly vulnerable, because the proportion of people in the public sector is greater, and as the Government begin to reduce the investment in public sector jobs and wages, consumer demand is disproportionately hit. We know that the root of very low or static growth in the UK is the collapse of consumer demand, which was still going up in 2010, albeit with a deficit, but the announcement of 500,000 job cuts deflated that and we are now bouncing along. The issue is to keep money going into local economies, and to target investment in the most productive area.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Does the hon. Gentleman agree that the big headwind in household expenditure has more to do with the huge personal debt bubble and asset bubble built up under the last Labour Government—£1.4 trillion, and 100% of GDP? That is an incredible record and far higher than any other state in the developed world. Is that not why consumer spending is collapsing?

[Geraint Davies]

I was not expecting to hear cries for austerity from Plaid Cymru, but there you go. They come from all sorts of directions.

Very briefly, you will know, Mr Bone, that between 1997 and 2008 Britain enjoyed a period of more rapid growth than had been seen since the war with paid back debt, massive growth in employment, and reductions in welfare costs. After the financial tsunami of 2008, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and Barack Obama got the fiscal stimulus going so that we did not go into a global depression, which the hon. Gentleman seems to be calling for. In 2010, we then had a deficit, which the coalition Government inherited. Two thirds of that was due to the bankers and one third was due to excess investment above earnings to pump-prime the economy and keep it growing. The current Government then decided to focus more on cuts than growth to get the deficit down, ending up with virtually zero growth, and the deficit has been growing ever since. I do not know whether the hon. Gentleman wants to cross the Floor to the Conservative side, but when history is written, it will be seen as a painful place to be.

[David T. C. Davies]

On a point of information, the debt had already gone from £350 billion to £650 billion before the real financial crisis started to strike in 2008.

[Geraint Davies]

As the hon. Gentleman knows, the real rise in debt started in 2008 after the financial tsunami, and the previous Labour Government had paid back enormous amounts of debt, partly through the sale of—[Interruption.] I think I had better redirect my argument. We can rehearse those arguments again, but people realise that what I say is, in essence, a factual record of what happened.

[Guto Bebb]

Will the hon. Gentleman give way?

--- Later in debate ---

[David T. C. Davies]

Will the hon. Gentleman give way?

[Geraint Davies]

It is the case that debt is now going up. I give way first to the hon. Member for Monmouth, as he has only a small point to make.

[David T. C. Davies]

May I direct the hon. Gentleman, and anyone else who is interested, to, dare I say it, my website? On the front page, there is a history of the debt and what actually happened, with every figure checked by the House of Commons Library. He will find that what I have put there is rather different from what he is suggesting.

[Geraint Davies]

I have seen the European version of his website—it is called “Mon mouth”. Moving swiftly forward, I give way to the hon. Member for Aberconwy.

[Guto Bebb]

On the specific point about the lack of consumer demand in the economy, we had a consumer-driven economy under the previous Labour Government—a consumer debt-driven economy, based on personal debt and Government debt. Households are now retrenching, which is one reason why there is a lack of consumer demand in the economy, but we need to rebalance the economy and not depend on further credit card-fuelled economic growth, as the previous Labour Government did.

[Geraint Davies]

We do not want a debt-driven, borrowing-driven economy—obviously not. We need people to be given the opportunities to get jobs, create wealth and pay some of that back in tax. Post-1997, we had the transfer of a situation where the previous Conservative Government—history is repeating itself, of course—saw ever fewer people in jobs, paying less tax, and they were forced to cut services and increase debt and borrowing. That changed with Labour getting Britain back to work. Later, post-2008, it was a special situation, with too much borrowing and on the back of that, sub-prime debt. I agree that the sustainable future is about working and paying our way, but it is not about cutting to such an extent that we deflate the private sector so that it cannot invest in new jobs. We need the economy going along, with investment in consumer markets and productive areas. Although there is some level of agreement, we differ slightly on our interpretation of the past.

Moving back to the future, what should the UK and Welsh Governments do to give Wales the best opportunity for economic growth? An area that we touched on in the report was UK Trade and Investment’s role, and I very much agree with the report’s recommendations. UKTI has 83 offices around the world, and they are opportunities to market Wales for inward investment and trade. The coalition Government, in their wisdom, decided to close down all the regional development agencies, so when we went to see UKTI in Berlin, Dusseldorf and so on, we asked what happens now when a German company comes along and says to UKTI, “We want to build a factory, a distillery, or whatever. Where should we go?” That used to be put on a computer platform that was drawn down by the RDAs, which would compete for that investment. As RDAs were abolished, that no longer happens, and clearly, there is an opening for Wales to move in to. Wales has great, ongoing opportunities to use UKTI to maximise the open goals that have been created by the Government taking the players off the pitch.

[Mr Robin Walker (Worcester) (Con)]

I am grateful to the hon. Gentleman for giving way. As he will recall, when we travelled to Brussels as part of the Committee’s investigation—I thoroughly enjoyed working with him on the report—we were shocked when we heard from both UKTI in Brussels and from representatives of the Welsh Government there that they did not see their job as being to work with UKTI and to market Welsh opportunities. Indeed, UKTI said, despite what he has just said about RDAs, that it was getting attention more regularly from some English regions than they were from organisations promoting Wales. I am sure that he would agree that that situation ought to change.

[Geraint Davies]

I am grateful for that intervention. When we saw the Welsh Government office in Brussels, it made its top three priorities clear. The first, as it is in Brussels, was policy in the EU, and in particular where it impacts on Wales—the common agricultural policy, and the rest of it. The second was grants and funding opportunities. Convergence funding has provided billions of pounds of investment in Wales, and that must be a key priority. We have seen it throughout Wales: recently, at Swansea university, £60 million from the European Investment Bank was invested in the second campus, and the £20 million in convergence funding for that is vital. Its third priority was the profile of Wales—to brand Wales. Those are key issues.

As the hon. Gentleman pointed out, we asked whether a fourth priority should be inward investment and trade. I agree that it should, and the response we received was that the office would be happy to work with UKTI. My understanding is that we are moving down that track. The report is helpful in encouraging co-operation with UKTI, which has 83 offices, while Wales has much fewer. However, where Wales does have them, it should work in co-operation.

On the Welsh brand, I understand that the Welsh Government are now looking at a new marketing strategy, which again, I very much welcome. There are big opportunities to push forward the Welsh identity, and I think that castles should be considered. If Members will indulge me for a moment, having a background in multinational companies and global brands, the castles around Wales symbolise romance, history, culture, strengths and endurance, which are all qualities of Wales. It is all part of inward investment and tourism. The dragon tends to be slightly overwhelmed by the Chinese dragon, but there is hope yet. [Interruption.] Okay, let’s keep the dragon—sorry about that.

Moving forward, it is not only about castles; it is about having a unique, clear identity for Wales in the global marketplace. The report referred to the success of the Welsh Development Agency. Some feel that if that brand still existed, it might be able to be re-harnessed in some respect. The report also suggests that we work in co-operation with private sector practitioners on the ground. The report’s basis was to get entrepreneurs, inward investors, multinationals, academics and an array of people in the economic community to give their view on what we should do, and we should be open-minded about taking advice as the global environment changes.

The report is obviously a place in time, and a similar report will be needed downstream, because clearly, things are changing, and the role of the public and private sectors is important in providing the instruments for success in future. Few people know, when they look at some of the great global successes, such as the Apple iPhone, that some of the technology—the touch-screen and voice sensitivities—was delivered by the public sector, by a scientific foundation in the United States. Apple then took that and made it a global brand. Some people seem to think, “Oh well, it’s the private sector. They know what they are doing,” but fundamental science and innovation is vital for commercial success. The issue is to have that link between the academic, and research and development, going through to commercial success.

I mention that because it is mentioned in our report and it is alive and well in our great city of Swansea—in Swansea university, in the first instance. People there are changing the rules. Within Swansea university, instead of having a silo situation, with the engineering department here, medicine there and so on, they mix it up so that the engineers are in with the medics. In terms of life sciences, development of nanoproducts and so on, they are working with inward investors in producing global brands. They have the support of Rolls-Royce, BP and others in relation to the development of a second campus worth £200 million. As I mentioned, the investment in that from Europe has been critical. Those coalition Members—in particular, the Tories, of course—who say yah-boo to the Europeans need to realise that a joined-up approach whereby we are working together to have a strong Europe and a strong Wales within Britain within Europe is vital for the future. We cannot retrench to become fish and chip shop Britain, as many on the Conservative Benches would like to see us.

[David T. C. Davies]

What’s wrong with fish and chips?

[Geraint Davies]

There is nothing wrong with fish and chips—

[Mr Peter Bone (in the Chair)]

Order. Chuntering should not occur at all and should definitely not be heard from those sitting behind the Minister.

[Geraint Davies]

That is kind of you, Mr Bone; thank you.

I want to mention the issue of city regions. In terms of working together in a critical mass in a global marketplace, one benefit of trying to bring together the four local authorities of Swansea, Neath Port Talbot, Pembrokeshire and Carmarthenshire, plus the universities and industry, to argue the commercial case as well as the social case for electrification of the railway to Swansea was that there was a refocusing on the common interests of that area.

I am very pleased that the Welsh Government have taken the initiative in doing a consultation on city region status and have given the go-ahead for the Swansea Bay city region to move forward. Swansea has always been seen to be, to a certain extent at least, in the shadow of Cardiff, so it is interesting to note that Cardiff itself contains about 300,000 people, but the continuous urban footprint of Neath Port Talbot and Swansea, going to Llanelli, is one of about 400,000 people —the biggest urban footprint in Wales. We can work together within that and within Carmarthenshire, haloing out to Pembrokeshire and, indeed, Ceredigion—there is not really anywhere to go beyond that. The hon. Member for Ceredigion (Mr Williams) is very welcome in the Swansea Bay region. I am talking about working together to have a diverse skills base. Working with the universities and the local authorities to get coherence, focus and value for money is very important.

I have already welcomed the rail electrification. It was regrettable that we had to work so hard to get the Government to agree to an extension from Cardiff to Swansea, but that was very good news. As I have said, the next thing that we want is to be able to say that we have super-connectivity.

Of course, the Swansea Bay brand has been created partly through football. The Minister will know that Swansea won 3-1 against West Brom last night. That sort of news is transmitted to 600 million people in 200 countries. That is important because the name Swansea is then known. Increasingly, people are hearing of Swansea who may not even have heard of Cardiff. That is amazing.

[Jonathan Edwards]

I just want to add to the excellent point being made by the hon. Gentleman. As colleagues know, I have just returned from my honeymoon in Cape Verde, and I actually watched the Swansea game against Liverpool live on TV in my hotel room.

[Geraint Davies]

I bet the hon. Gentleman’s wife was happy about that, with him shouting for a goal, but there we are. I wish him a long and happy marriage while watching Swansea. I thank him for that intervention, which was very welcome.

On a serious note, the Swansea brand is of course a global brand, so there is an opportunity to attach various values to it, including the fact that it is a nice family and business environment by the sea. With internet connectivity, why would people want to be in the expensive congestion of London, for instance, when they could be overlooking Swansea bay? The fact that there are sporting successes, good schools, a good health service and so on is critical to that.

I mention that point partly to move on to the regional pay issue. The Government have been considering the case for regional pay, and I will say two things about that. First, reducing the pay of people in the public services in Wales by some 20%, which is the implicit agenda, would remove even greater amounts of economic power from the consumer markets in Swansea and, again, push down the private sector; but as important or possibly more important, GPs and other public servants would think that they would be better off getting a job in Bristol, where their pay would be higher, and suddenly we would be denuded of some of the best GPs and other public servants. That would have implications for inward investors, who are being taken, for instance, from London.

Let us consider how inward investment works. UKTI promotes the UK. Someone says, “Okay, I’ll go to the UK. That sounds great in terms of stability, environment, access to Europe and everything else, but where shall I go in the UK”—that is the next decision—“and how do we have added value there?” Of course, in Wales, we have environmental opportunities. We want to increase accessibility, skills and research and development. However, if the families going there suddenly do not have the right GP or education services because of wage deflation in Wales, that will be very bad for inward investment.

[Guto Bebb]

I share many of the hon. Gentleman’s concerns in relation to regional pay. Certainly, in an area such as north Wales, part of which I represent, it is a real concern—Chester is within 45 minutes of my constituency. Was there anything specific, therefore, about people working in the Courts Service that meant that the Labour Government were quite happy to see those working in Mold paid less than those working in Chester, even though there are only 10 miles between them?

[Geraint Davies]

That is a very well rehearsed intervention—“How can you have this, that and the other?” Obviously, there is a case for London weighting, for example. There are some cases at the margin for differentials, but in the main what we do not want is suddenly to have a free market approach to regional pay, as the hon. Gentleman’s colleagues seem to want to promote. That would undermine inward investment in areas such as his own, because people would not be paid the right rate for the job.

In a global environment, regional pay becomes even less relevant. I hope that over time the average pay in Swansea will escalate quite phenomenally because of the emergence of the second campus at the university and of satellite industries—SMEs and global companies locating beside that centre of excellence and moving forward from that. I am talking about international links from Swansea university and, indeed, the other university in Swansea, Swansea Metropolitan university, which delivers the highest proportion of SMEs that last for three years or more in Wales. It is building up digital clusters in interactive technology, animation and modern manufacturing design. If we can move to a level at which the community of people around that intellectual base evolves, so that people can get a number of jobs in the same place, the average pay may go up. What does that mean for regional pay in the public sector? We might stop that through the moves that have been set out.

We have already mentioned bridge tolls. My view in a nutshell is that the Severn bridge toll is a tax stranglehold on the south Wales economy. We should eliminate the toll sooner rather than later. The reason why I want the Government to evaluate immediately whether, if they paid that toll themselves, they would get the money back in jobs, in income tax from new jobs and in benefit cuts from people going off the dole is that the toll is undermining inward investment in south Wales.

The Welsh Government recently produced a report that said that £107 million was being lost from the Welsh economy because of the tolls. I suggest that that is an underestimate. Let me give a simple example. A small builder from Newport, who wants to retile roofs and do extensions, would not go across to Bristol to look for that work now because of the toll, but if there was no toll, he or she would do so. I therefore believe that we should look at that again.

As we see other city regions, such as Manchester, emerging, it would be unbelievable for the person or the group that is leading Manchester city region to suggest a toll on the M5 to build some infrastructure. That would be unheard of. Similarly, we must look carefully at the economic impact of removing tolls. The removal of the Forth bridge toll, which was only £1, increased traffic by 13%. The Select Committee report is about what the UK and Welsh Governments can do to stimulate inward investment and growth. Getting rid of the tolls is clearly an option.

The Silk report talked about borrowing powers and so on, but frankly, the first issue to get right is ensuring that Wales has its fair share of the UK cake—though I do understand that it is a squeezed cake. We have had something like 2.5% of the transport investment in recent years, but proportionally we should get about 5%. There is a plan to spend £32 billion on High Speed 2 to connect north and south England. Our fair share would be £1.9 billion, and unless we also have a spur off the line, inward investment that would otherwise go to Wales will end up in the north of England.

Is the Silk report just a way of saying, “Actually, we’re not going to give you any more money. We don’t want to know the arguments about a fair share and Barnett and all that. If you want more money, raise it yourself from a lower tax base.”? Wales’s gross value added is about 70% of the UK average however, so it is less capable of doing that. We do not need new tax raising powers and a lot of uncertainty about the future for inward investors; we need a fair share of British investment in our services, capital investment in our transport infrastructure and to deflate the costs of entering south Wales by bridge.

I shall move swiftly on, because I know others want to speak. The tax regime leads to a tax on inward investment. One small example, which leads to a significant example, is that in recent days Tata Group has announced 900 job losses in Britain, 600 of which are in Port Talbot in the Swansea bay city region. The job losses are largely due to a fall in demand in Tata’s core markets in Europe, which accounts for two-thirds of its sales. I have had discussions with Tata, and part of its decision is about a level playing field on tax. In Britain, Tata pays 50% more tax than it would in its European operations, due to the additional carbon pricing that the coalition Government have introduced.

I worked for five years in the Environment Agency Wales on flood risk management and adapting Wales to climate change—incidentally, the Government have cut investment in those areas, despite the flooding. Although I am a great supporter of investment in green technology and a sustainable future, we need a level playing field. We cannot have a situation in which steel production moves from south Wales to South America, for example, and we end up with dirtier steel production, because taxes are too high here. We all share the same environment. The European tax regime, which has carbon taxing built in to it, is the right way forward. Adding a huge amount to UK prices, which drives down jobs and clean production in Britain, is not the way forward.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

The hon. Gentleman is wrong to suggest that there is any link between Tata’s sad announcement of job losses in Wales last week and its concerns about energy prices. Companies that are intensive energy users, such as Tata, face a real issue. The Government are looking at it, and we have made £250 million available to help intensive energy users. Tata’s announcement last week had everything to do with changes in international steel markets globally and nothing to do with what he is saying about the challenge of green energy.

[Geraint Davies]

I do not accept that at all. Certainly, the main driver of the Tata job reductions was, as I mentioned, the reduction in demand, particularly in the European market. Someone running a business clearly looks for ways to reduce costs. There are two drivers for a business—the revenue that it gets and the costs that it pays. Revenues are going down because demand is down due to the global environment, but if expenditure is going up due to excessive costs, that will also form part of the choice over how many job cuts are made. In the business mix, energy prices have an impact, and if they did not, Tata would not be talking to me about them. It is clearly also talking about the wider marketplace and the structure of the market.

I should say that a great deal of great work is going on in Tata. With Swansea university, it is developing multi-layered steel—six layers of different steel—that produces its own electricity and heat when clad on a building. It reduces carbon footprints and may become a global game changer. In addition, Tata are investing £185 million in a second blast furnace—increasing capacity production from 4 million tonnes to 4.7 million tonnes a year—alongside the Margam pit, which has particularly good coal for the production of coke for steel production. There is a strong future for Tata, but we have to get the right balance to protect our environment, while protecting competitiveness for the steel industry in Britain, and south Wales in particular.

We have had long discussions about to what extent we should cut expenditure, as opposed to grow revenue, to get the British economy back on track. The Minister will know that the International Monetary Fund suggested that for every 1% cut in expenditure, growth would go down by 0.5%. More recently, it suggested that for every 1% cut, growth goes down by 1.7%, so expenditure cuts do not seem to be as good an idea as they used to. Our focus should be on revenue. A business person who runs a small business in Uplands, in Swansea, came to me recently and said, “I have a business, and if it makes a loss, the last thing that I am going to do is sack all my workers and sell my tools. I have to tighten my costs and focus on selling more.” That is what the Select Committee report should be about—increasing the productive capacity and commercial success of Wales in the global marketplace.

Other changes are being made that impact on consumer demand and the opportunities for people to get jobs, help themselves and help their local economy. I should say in passing, as I did in the main Chamber yesterday, that some changes to the welfare system that are designed to reduce the costs of the welfare state are likely to do the opposite, by preventing people from accessing work. I am thinking particularly of under 25-year-olds having their housing benefit cut, because 45% of such people have children. I know of a woman who has been made redundant and a man who worked for nine years—from the age of 15—but was made redundant six months ago; they have two children and could face homelessness. If they are homeless and of no fixed abode, they will not be able to apply for jobs. That does not make sense.

Under the other housing benefit change—the empty bedroom tax—a couple with two children and, therefore, three bedrooms will be suddenly charged £7.50 a week for each empty room if one child goes to university and the other has a job or goes to live with their boyfriend or girlfriend. They might say to their son or daughter, “It’s going to cost me this money, so you don’t really want to go to college, do you?” That is wrong; some people simply will not be able to pay.

People have come to me with disposable incomes of about £20 a week, after utility bills and so on. I am particularly thinking of a man with medical problems, who told me, “I use my spare room for painting. If I have to pay the £7.50 for it, I will end up with £12.50. A council tax benefit cut of 20%, will mean another £5. I will be down to £8 a week for my food, clothing and leisure.” That does not make any economic or social sense. That person will end up homeless.

I have been a local authority leader, and local authorities historically built two and three-bedroom houses for families. There is a shortage of one-bedroom properties. Everyone is supposed to go into such properties, but there are not enough, so they have to pay to go to the private sector, which costs more. It does not add up on a simple balance sheet, and it does not add up in terms of access to jobs and providing an environment for people to work in, and we want people to work. If people are not available to work for inward investors, because we have under-occupation and empty houses on the one hand and homelessness on the other due to the housing benefit changes, the system will not make sense.

We have also seen cuts to the working families tax credit. If a small company in Wales can afford to pay someone £12,000, or whatever, and that person can only afford to work for £15,000, it makes sense for the Government to provide the £3,000 difference, because we get someone a job in a growing business. People who work part-time will lose nearly £4,000, with the move from 18 to 16 hours. People will not have jobs and we will not have growing businesses, so there will be problems. We therefore need to think about the architecture of the welfare state in relation to boosting jobs and job access.

On banks and finance, there is a problem in Wales. I do not know whether the Chair of the Welsh Affairs Committee will agree, but we have discussed the possibility of doing a report on access to finance for small business. Since I last spoke to him about that, more and more businesses, some of them quite big, have told me that they have the bookings and can do the work, but they need the money and the banks are letting them down. Of course, that is not an issue only for Wales, but the proportion of small businesses is higher there than in England.

Wales has great opportunities for tourism. If we get the branding right, it is a great place to visit, particularly for environmental health or historical trips. Many mature people, particularly from north America, do not want to get skin cancer from lying on beaches, but speak English and want fine food, so there are lots of opportunities to build up the Welsh brand and encourage inward investment.

That naturally leads me to the Dylan Thomas centenary in 2014. He was from Swansea, of course, and there is now a great opportunity to market the Dylan Thomas festival, which runs from 27 October, his birthday, to 9 November, which was the day of his death. Not enough is known about that festival—it is not like the Hay and Edinburgh festivals—but there is an opportunity next year to gear that up for the following year and to internationalise it. The Swansea bay beer festival might be moved into that week; of course, Dylan Thomas had a few drinks and enjoyed himself, as well as writing fine literature and poetry. We should celebrate that, and during that week we want Swansea to be the place to be. We need to learn from the Hay festival and others, and I am already involved in trying to make international links, perhaps without getting people from Bollywood to go. We want that to be the place to be, as a great celebration for the whole of Wales, as well as for the Swansea bay city region.

In conclusion—[Hon. Members: “Shame!”] I know, but it had to happen. A bright future is possible if emerging markets work together. We can use our insights, as team UK and team Wales, to build a more exciting, productive, richer and fairer future for Wales. The UK Government need to think again about several issues, and I have already mentioned enabling people to work, providing easy access to markets, inward investment and encouraging success. It is important that the Welsh Government work in partnership on that and take forward their own successful initiatives, so that there is mutual learning and respect in the interests of having a strong economy for all our people.

[Several hon. Members]

rose—

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[Mr Mark Williams (Ceredigion) (LD)]

It is a pleasure to serve under your chairmanship in this rather intimate and select gathering, Mr Rosindell. There are important issues to be raised, but I will resist the temptation to talk about future inquiries and previous inquiries. I do not seek to emulate the lengthy contribution that we heard earlier in any way.

I am pleased that the Select Committee undertook its inquiry, and I congratulate its Chair, my hon. Friend the Member for Monmouth (David T. C. Davies), on the way in which he introduced this topic, as well as, of course, his chairing of our Select Committee. He has a knack for choosing the issues of the moment.

Inward investment is critical because the circumstances in which Wales finds itself are different from those of the glory days of inward investment that we saw in the 1980s and early 1990s. On the global stage, the background of the Select Committee’s inquiry is that, since the 1980s, world trade in goods and services has increased more than sevenfold, while the emerging economies have seen their share of trade quadruple and there has been a fourfold increase in the effective supply of global labour. That is a continuing trend for China and India, which are expected to add more than 30 million workers to the world’s labour pool by 2030.

As the Committee’s inquiry identified, Wales can no longer assume that overseas companies will be tempted to invest by the traditional inducements of grants and low labour costs. We have to adapt continually to challenging and consistently changing domestic and global conditions to attract new inward investment, which means working smarter and more flexibly to find more innovative ways to encourage inward investment into our country.

I will focus specifically on two issues that we investigated in the inquiry: the importance of higher education; and infrastructure. First, let me address the importance of the knowledge economy. As emerging economies move up the value chain to compete with Western companies in the manufacture of high-tech products and attracting research and development investment, the OECD has stated:

“If developed countries are to remain competitive in the global economy, they will have to rely more on knowledge, technology and intangible assets.”

In practice, that means that today’s students and graduates will have to provide cutting-edge research—not just research for research’s sake, but research that has a commercial edge—that will ensure our nation’s prosperity.

Our inquiry shows that there needs to be far greater partnership working between the higher and further education sectors, and industry, as well as closer engagement with business. In that spirit, I welcome one of the things that the hon. Member for Swansea West (Geraint Davies) said in his long speech: the developments in Swansea bay and Swansea university’s second campus. The university’s vice chancellor has met many Members of Parliament to celebrate the work he hopes to achieve at the second campus. I hesitate to say this, but in the new budget agreement between the Labour party and Plaid Cymru in the Assembly, there was a commitment of some £10 million for a science park. That will largely be in Bangor, but I hope there will be significant rub-off on Aberystwyth university, too, because that is also important.

At Aberystwyth university in my constituency, there has been meaningful partnership for a long time with the commercial sector and developing economies in other parts of the world. For a medium-sized university, it punches well above its weight. There is investment in research that seeks solutions to many global issues, and over the next five years, the university’s world-leading research will address the major challenges faced across the world. I have repeatedly talked about the Institute of Biological, Environmental and Rural Sciences over the past seven years, for which I make no apology, because excellent, world-leading research is being undertaken in fights against famine, climate change, loss of biodiversity and disease. Collaboration between researchers in Aberystwyth, Africa and India is already leading to breakthroughs in the fight against famine with the development of climate-resistant crops. Such excellent research, which is often talked about, is happening, so the challenge is to market it overseas more effectively and rigorously.

Recently, to commercialise its intellectual property, Aberystwyth university has been developing cutting-edge smartphone technology—that is not unique to Swansea; it is happening in mid-Wales, too—and it is leading the way in developing mobile apps. In recognition of the university’s innovative approach to exploiting its intellectual property and expertise through smartphone platforms, it was awarded funding for those developments by the UK Intellectual Property Office.

The good work that is happening across higher education not only benefits my local economy in Ceredigion and those places where partnerships have been formed, but encourages students to identify and develop commercial ideas, which is a key role. In other words, that is exactly the sort of creative entrepreneurial activity that needs to be encouraged and supported in the HE sector.

Our report highlighted research funding. We also noted that in a report on inward investment during the previous Parliament, but Wales has not been successful at securing its fair share of research funding, which remains a problem, so that battle needs to be waged.

One idea we heard in evidence was for business angels to come in and help to develop products more quickly and get them to market. That is the sort of idea that could be picked up by a local firm, academics or students, and spun out into a company. For a company to develop in those early stages, it needs the right facilities, and that might be a role for the emerging science park that the Administration in Cardiff are pursuing.

We are some way off facilitating such ideas at any great size. We need more joined-up thinking from the Welsh Assembly Government to offer support to such facilitators of enterprise. Support needs to be tailored to skills and the innovation that is happening at any one time, rather than divided into prescriptive sectoral targets, as the Assembly Government have done. There was a debate about whether those sectoral targets are right and what additional targets should be added. For example, the absence of tourism is a key issue affecting my area, and it was subsequently added. That was welcome, but it took some time for the Assembly Government to reach that conclusion.

We have heard about reinforcing the Welsh brand, and it makes sense that Welsh Government overseas offices should be co-located with UK Trade and Investment offices so that the Welsh Government can efficiently utilise the strength and capabilities of UKTI. Wales does not have sufficient resources to work alone in attracting inward investment to Wales, and we must make every penny count. I concur with the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), whom I welcome back from Cape Verde, on the welcome addition of a UKTI official in Wales. The partnership between those two groups, which was not always evident in the discussions and inquiries we had, both in Germany and here, needs to mean something practical if things are to be achieved.

Finally, on connectivity, we asked UKTI about its checklist of motivators to attract people to invest in Wales. The hon. Member for Swansea West was constant in pushing for the recognition of the quality of life in Wales, and we can all empathise with the life experience of living in Wales. The list of motivators also included the transport network and broadband. I welcome the announcement on electrification for south Wales, and I applaud what the Wales Office and my hon. Friend the Member for Aberconwy (Guto Bebb) have been doing to highlight electrification for north Wales. I am not yet going to launch a campaign for electrification for mid-Wales, but I will reiterate—despite the lack of an audience, because of events elsewhere in the Palace—the case for an hourly service on the Cambrian line between Aberystwyth and Shrewsbury. The hon. Member for Newport West (Paul Flynn), who is no longer in the Chamber, might not appreciate that, and this is technically a devolved matter, but it impinges on my area’s capacity to develop economically.

Aberystwyth might well be perceived by many to be at the end of the line—and not only in the physical sense—but we have the highest proportion of small businesses per head anywhere in the United Kingdom. Aberystwyth is also a strategically important university town with a large skills base in a county whose huge tourist opportunities have been recognised by the Wales Tourism Alliance. That is one reason why we will be looking to mid-Wales, rather than taking up the captivating invitation to join the city region in Swansea bay—it is pushing it a bit for us in Aberystwyth to join the hon. Member for Swansea West down there. Aberystwyth is a strategic town of significance—that is our focus, and it has been recognised by the National Assembly—and we want that recognised in our transport infrastructure as well.

In his evidence to us, Professor Stuart Cole said this is not about the headcount on the train between Aberystwyth and London, but much more about interconnectivity. There are few peripheral areas of the United Kingdom where people cannot get a direct service to London. As a student, 27 years ago, I could get the seven o’clock inter-city train from Aberystwyth to London, and freight came into Aberystwyth as well, but that has long since gone and we do not even have an hourly service. Having such a service is important, because it could re-energise parts of mid-Wales, from Welshpool, through Newtown, Machynlleth and Caersws, and along the infamous route to Aberystwyth.

[Geraint Davies]

Having been on holiday every year of my life to Aberystwyth, I would concur that there is a great opportunity for cultural, environmental and all sorts of other tourism.

[Mr Williams]

I am grateful for that endorsement. Of course, there are Dylan Thomas connections, as well, if we go a bit further down the coast to New Quay—Cei Newydd—in my constituency. I thank the hon. Gentleman for that intervention.

I was disappointed when the Select Committee went by train to Aberystwyth a couple of weeks ago. I was grateful that the Chair encouraged the Committee to go, but when the Welsh Government Transport Minister, Carl Sargeant, came to see us, he confirmed that we would not see the hourly service until 2015, despite the fact that we had been promised it for 2014, and despite the fact that all the infrastructure has been done.

On broadband, I very much welcome the £425 million agreement between the Welsh Government and BT to deliver next-generation broadband to 96% of Welsh homes and businesses by 2015. I am glad that my hon. Friend the Member for Monmouth mentioned that rurality is important. This is not just about the M4 corridor or the A55. There is a bigger picture, which some of us will not stop talking about. There is real potential across Wales to attract businesses, but the proof of the pudding is in the eating. We need hard, imaginative, bold targets, but we also need to see the reality.

Finally, the inquiry clearly identified that the Welsh Government need a dedicated trade promotion agency. The evidence shows that, since 2004, investment opportunities have been missed because of this omission, and Wales branding has taken a knock since the days of the Welsh Development Agency and the loss of the Wales Tourist Board. Branding Wales is hugely important; it is tough out there, but we have a strong product that makes Wales stand out from the crowd. I am thinking particularly of culture, outdoor pursuits, tourism, the creative industries, and the potential jobs and wealth created by holding events such as the Ryder cup. There are huge opportunities for us and, in that context, the Select Committee report was highly valuable. In particular, the sections on infrastructure and higher education resonate strongly in terms of the future development of my area.

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[Jonathan Edwards]

Diolch yn fawr, Mr Rosindell. First, may I apologise to Members for rudely interrupting proceedings to perform my telling duties in the series of close votes we have just had in the main Chamber?

Before the Divisions, I was remarking on the importance of transport links, which is clearly emphasised in the report. Wales is located at the centre of one of the most important trading routes in the European Union, so it is vital, with the ongoing negotiations among our partners at a European level, that there is at least a southern link running through south Wales and linking the Republic of Ireland with Britain and Europe. Personally, I would also like to see a northern link going through north Wales, which would then fund the improvement of transport infrastructure there. I welcome the fact that the Government are actively looking at that, and I am glad to put that on the record.

I want to touch briefly on the bilateral negotiations on funding for the Welsh Government and on the recent Silk commission, which reported as I left on my honeymoon. Both those things impact directly on the Committee’s report. First, on the bilateral negotiations, I was disappointed that there was no reform of the block grant; there was not even a Barnett floor, let alone reform of the housing revenue account subsidy scheme. On the borrowing powers that were announced, the reality is that we could not buy a packet of crisps using the current powers. The Welsh Government Finance Minister has been completely outfoxed, yet again, by the Treasury.

The conclusions of the bilateral negotiations might, however, come into play if the recommendations of the Silk commission are implemented, so their full implementation could be of value. To access the borrowing powers announced in the bilateral agreement, we need fiscal levers to raise revenue, so the more tax-sharing arrangements there are between the Welsh Government and the UK Government, the better. That is why it is imperative that we do not stick just to the minor taxes preferred by the Welsh Government—stamp duty, the aggregates levy and the long-haul airport tax—but devolve sharing arrangements for income tax, which would enable the Welsh Government to have far greater leverage in terms of their borrowing powers. Given that their capital budgets are being cut by 42%, they need those borrowing powers, not only so that they can level out peaks and troughs using fiscal levers, but so that they have power to invest. The current position of the First Minister is therefore completely bizarre, and it is a huge let-down to the people of Wales.

Fiscal powers are important with regard to political accountability, which is something that finds favour with Conservative Members, but the main reason we should have fiscal powers is that they would incentivise the Welsh Government to turn the Welsh economy around. At the moment, given that they get a block grant, there is no incentive for them to develop it. If they were responsible for raising their own revenue, there would be an incentive to generate wealth to invest in public services.

[Geraint Davies]

Is the hon. Gentleman’s position that Wales should have devolved power over income tax, and that a proportion of that could be used as a revenue stream to pay back borrowing, but that Wales should not use tolls to pay back borrowing which, as I said, is a tax on inward investment and trade?

[Jonathan Edwards]

The hon. Gentleman has a long-standing position on this. He has explained my position on the importance of the devolution of income tax quite adequately. The reality is that if we devolved an income tax-sharing arrangement, we would, even if we did not change the level, have huge leverage to borrow far more. Personally, I would like the Welsh Government to have responsibility for setting tax bands, but the reality is that we are nowhere near getting into that debate.

On the tolls, I would like the Welsh Government to have responsibility for the Severn bridges, because they are the major access route to the south Wales economy. There would be a leverage potential on the revenue, but that is not my primary reason for supporting this. I would like the Welsh Government to have responsibility for the tolls and to set them at a rate that would enable them, on top of maintaining the bridges, to have money to reinvest in wider Welsh infrastructure, but that rate would be far lower than at present.

I look forward to next week’s autumn statement, and plenty of progress on the bilateral negotiations and the Silk commission.

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[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

It is a pleasure to serve under your chairmanship, Mr Rosindell, and a privilege to round off this important debate on inward investment into Wales.

I pay tribute to the Chairman of the Select Committee, my hon. Friend the Member for Monmouth (David T. C. Davies), not just for his eloquence in setting out the terms of the debate, but for the way that he chairs the Committee. As the hon. Member for Ceredigion (Mr Williams) said, he ensures that the Committee focuses on the important issues facing our constituencies and businesses in Wales, making the Committee’s work relevant at this time.

All hon. Members recognise that inward investment remains a significant driver of economic growth in Wales. As the Committee’s excellent report stresses, we must do all we can to enhance the contribution that inward investment can make to the economy in Wales. I think that the Labour Member, the hon. Member for Newport West (Paul Flynn), who is no longer in his seat, was being deliberately provocative when he suggested that the Committee’s report was trespassing into areas where it should not go. Inward investment into Wales is exactly the kind of area that the Committee should be considering. It should be looking at how the UK Government and the Welsh Government collaborate. The hon. Member for Clwyd South (Susan Elan Jones) mentioned the rail electrification project, which required collaborative working between the two Governments. If we are going to achieve anything significant in Wales to achieve the step-change in economic growth that we all aspire to, the two Governments will need to work together over a wide range of areas, and inward investment is one such area. I am delighted that the report makes specific recommendations not only to Ministers at the UK Government level but to Welsh Ministers in Cardiff.

Several Members this afternoon have mentioned Wales’s impressive track record in securing inward investment. The Committee’s report rightly highlights the central role that the Welsh Development Agency played in winning new investment and jobs. During the late 1980s and early ’90s, Wales was regularly gaining around 15% of the inward investment and associated jobs coming to the UK each year. The WDA had an incredibly strong brand and, when I have the opportunity to travel overseas, I continue to meet business people abroad who still think the WDA exists. Such was the strength of the WDA brand globally, its disappearance was a loss, but we all need to look forward to new models of working.

Several hon. Members talked about the glory days—or the boom years—of inward investment in Wales, but we are in danger of sounding as if we are talking about the Welsh rugby team. They are great to talk about, but we cannot go back to those days. The entire global environment in which inward investment occurs has changed, which was recognised very much in the Committee’s report. Over the past decade, the inward investment figures for Wales have been declining. The growth in the knowledge economy and increased competition from developing economies around the world have changed the nature of inward investment in Wales. The Committee makes it clear that we are in a new environment for inward investment.

While we recognise that new environment, we must also remember that Wales still hosts major global companies that year on year continue to make significant and substantial capital investment in Wales. Companies such as RWE, Airbus, Ford and Valero show that Wales remains a good place in which to invest and make that capital expenditure. Members in all parts of the House will join me in welcoming last month’s announcement that Hitachi had bought Horizon Nuclear Power, which represents a £20 billion investment throughout the UK, potentially creating up to 6,000 construction jobs and 1,000 permanent positions in north Wales alone.

The UK economy is ever more dependent on external economic conditions, and we operate in an increasingly globalised economy. The effect of new entrants to the EU from eastern Europe, major developing economies such as China, Brazil and India, and many other countries means that Wales cannot compete on low labour costs, which were an important component in attracting the high levels of inward investment of previous decades. The growth of those developing economies, however, cannot be seen only as a threat to Wales, but as offering real opportunities that Welsh businesses must take advantage of. It is worth putting on record that Wales now exports more goods to countries outside the EU than it does to those inside the EU, and that diverging trend is continuing. Over the past year, Welsh exports to EU countries fell by 7.4%, compared with an increase of 6.8% to countries outside Europe.

Wales needs to be more global facing. As my right hon. Friend the Prime Minister highlighted in his recent Guildhall speech, Britain is in a “global race”. Winning in that global race means that we need to show that the UK is open for global business. The United Nations world investment report shows that the UK remains No. 1 in Europe for foreign direct investment, and the Financial Times fDi Intelligence report for 2012 ranks the UK as the primary FDI location in Europe. Britain remains a great place for international companies to invest in, and our challenge in Wales is to ensure that Wales captures its fair share of that inward investment coming to the UK.

The global economic environment is difficult, but the Government have done a huge amount to ensure that the UK remains the top location for inward investment. Our plan for growth sets out a programme of reforms across the whole economy to meet the UK Government’s four headline ambitions: to create the most competitive tax system in the G20; to make the UK the best place to start, finance and grow a new business; to encourage more investment and exports; and, finally, as the Select Committee report picks up on powerfully, to create an educated work force that is the most flexible in Europe.

[Geraint Davies]

Does the Minister agree that the UK, and UKTI in particular, are in a position to do a lot of the heavy lifting, in terms of promoting the UK as a place to invest, for some of the reasons he is outlining? The opportunity for Wales is to focus and build on that benefit and to get people to go to Wales within the UK, as opposed to Wales doing the whole thing over again, given that it has fewer resources overall.

[Stephen Crabb]

I agree with the hon. Gentleman. UKTI is the agency that is best placed, given its network of relationships around the world, personnel, expertise and acquired knowledge. The challenge is for Welsh Government initiatives to dovetail with what UKTI is doing to ensure that we leverage the maximum opportunity from the available resource.

[Stephen Crabb]

With the significant action of the UK Government to rebalance the economy geographically, we recognise the specific needs of peripheral areas, of which Wales is one. We recognise the extra assistance that Wales needs, which is exactly what is driving the additional investment that the UK Government are giving to the Welsh Government for broadband roll-out, for example, or the rail electrification projects that we talked about. Those are big capital investments, over and above funding through the Barnett formula, about which the hon. Gentleman likes to speak a lot. That demonstrates the UK Government’s real commitment for Wales to receive a greater-than-proportionate share of capital investment, which reflects the fact that we want to see the economy geographically rebalanced. Our ambition is for Wales to share the benefits of all the UK-side measures we are taking, while also showing that Wales is a great place to invest.

The Committee’s excellent report and today’s debate highlight the importance of attracting inward investment with regard to transport infrastructure, skills and promoting Wales abroad as a brand. The Government are delivering for Wales in all those areas. On transport infrastructure, we have discussed the electrification project on the Great Western main line, but it does not stop there. My hon. Friend the Member for Aberconwy (Guto Bebb) asked about the potential electrification of the north Wales line, which we are actively looking at. We want the business community in north Wales to help to work up the economic case for electrification, and hon. Members should be aware that my right hon. Friend the Secretary of State for Wales hosted an important strategic meeting of business bodies, local government and public agencies in north Wales last Friday. They got their heads around the table to think seriously about how we go about building up the economic case that will hopefully convince the Treasury that north Wales electrification is the right next project for railway infrastructure in Wales.

Further investment in Wales will not come from the Government alone. We need to find ways to accelerate major infrastructure investment further, and I hope to see Welsh projects bidding for and benefiting from the £50 billion UK guarantees scheme that we introduced.

In the important area of skills, it is vital that we do all that we can to enhance the skills of the work force in Wales. Wales has a lot to offer, but further up-skilling of the work force will not only attract more inward investment, but support indigenous business. It is excellent that the big companies in Wales such as Airbus continue to run their effective apprenticeship programmes, and the UK Government certainly put a lot of emphasis on increasing the number of apprenticeships. Welsh Government Ministers are also looking at the importance of apprenticeships in Wales.

Higher education institutions in Wales have a world-class track record, as my hon. Friend the Member for Ceredigion touched on in his important contribution, and the reputation of the Welsh HE sector is recognised around the world. Members might be aware that, in Wales, there is a higher proportion of foreign students among the total number of students than in Scotland or in England. Our higher education institutions are also working with several of our major inward investors. I very much welcome the news that Swansea university will team up with BP and Tata Steel to create an energy safety research institute, which was mentioned by the hon. Member for Swansea West (Geraint Davies). Tata Steel is also working in partnership with a number of other Welsh universities to develop a project supported by the Engineering and Physical Sciences Research Council and the Technology Strategy Board.

[Geraint Davies]

On the Minister’s slightly earlier point about foreign connections and foreign students, does he agree that most foreign students from places such as India and China have links? Their parents have businesses and so on, so there are opportunities for both inward investment and tourism. When his colleagues in government consider visas for tourists and so on, will he urge them to have due cognisance of prospective inward investors and links to valuable commercial networks in emerging markets?

[Stephen Crabb]

The hon. Gentleman makes an important point. We as a Government were elected with a mandate to bring down immigration into this country, but we recognise the importance of foreign students to the UK. We do not want anything to diminish that, but they must be bona fide students at bona fide institutions studying for real degrees.

When I have had the opportunity to travel overseas—I was in Africa this year—I have been impressed by the people I have met who have master’s degrees or PhDs from Welsh universities, some of whom have been Ministers in foreign Governments. The Finance Minister of Sierra Leone, whom I had the privilege of meeting this summer, has a degree from a Welsh university. There are Ministers in Rwanda who studied at Welsh universities. We have a great track record, and that means that we have a network of relationships around the world with people in significant positions. If we leverage those relationships correctly, that should help to create export opportunities for Welsh companies.

It is vital that Welsh universities forge partnerships with the private sector. Only last week, my right hon. Friend the Secretary of State for Wales and my fellow Wales Office Minister, Baroness Randerson, met Welsh higher education institutions. We put private sector partnerships and promoting Welsh higher education institutions abroad at the top of their agenda.

On promoting Wales abroad, I believe that this Government’s investment will ensure that Wales can continue to offer inward investors a world-class package based on high-quality infrastructure, a skilled work force and HE institutions with the knowledge to convert innovation into commercialised solutions. Through the global brand of UKTI, that package is being marketed around the world. One key theme running through the Committee’s report is the need for the Welsh Government to develop the brand of Wales. I believe that that can be achieved by working with the UKTI, and I am pleased to report progress.

UKTI is supporting the Welsh Government’s efforts by sharing access to its overseas network and national inward investment services. I am delighted that UKTI’s relationship with the Welsh Government has been strengthened through a joint memorandum of understanding that clearly sets out the responsibilities of the Welsh Government and UKTI on co-operative working and information sharing. Several hon. Members mentioned that one member of UKTI personnel is embedded with the Welsh Government, but actually two key UKTI officials have been seconded to work with the Welsh Government to ensure that the Welsh offer is as strong as possible and that the Welsh Government sector teams are linked into the UKTI sector teams. Through the work of Lord Green and UKTI’s chief executive, Nick Baird, the Government strongly support that key working relationship with the Welsh Government. The ability to draw on UKTI’s global reach is critical in promoting the Wales brand.

The work of the Wales Office is also vital. Since June 2010, we have met and made representations to delegations from Taiwan, China, Turkey, Japan and Russia. During this summer’s Olympic games, we held a reception complementing the work of the British Business Embassy and highlighting the benefits of investing in Wales. Afterwards, my right hon. Friend the Secretary of State for Wales met the chief executive and chief operating officers of the UK India Business Council to promote Wales as a location for inward investment from one of the world’s fastest growing economies. Earlier this year, the previous Secretary of State also visited south-east Asia to promote trade, tourism and governmental links, as well as opening the new UKTI office in Cambodia and signing a $10 million contract between the Thai Treasury and the Royal Mint.

Several hon. Members talked about the decline in the number of inward investment projects in Wales in recent years. Last year was particularly disappointing, as I think we all recognise. Early reports from UKTI suggest that 2012-13 will be a better year for inward investment in Wales. This year’s figures are much improved from the same time last year: 27 foreign investment projects have been recorded to date, including a £36 million investment by the American-owned automotive company Meritor, as well as the £7 million investment by a Turkish manufacturing company in Cardiff. However, there is obviously still much more to do. Closer working between the UK Government, UKTI and the Welsh Government is essential so that best practice is shared and to ensure that Wales is effectively marketed as an ideal location for inward investment. The Wales Office ministerial team is committed to achieving that.

Our debate included a wide-ranging contribution from the hon. Member for Swansea West, who made numerous good points. He also discussed public sector job cuts in Wales, and I would like to come back to him on one point. Private sector job growth in Wales during the past two and a half years far outstrips the decline in the number of public sector jobs, as an estimated 60,000 new private sector jobs have been created in Wales since this Government was formed. We should back the private sector in Wales and have more faith in it. Yes, times of austerity and difficult decisions about public finances make this a more challenging environment in which to achieve economic growth, but we should have faith that Welsh companies can go out there, grow their businesses and jobs in Wales, and take our economy forward.

[Geraint Davies]

The Minister is probably aware that Hewlett-Packard is the biggest computer company in the world and that its two hubs are in Swansea and Bristol. HP is currently bidding for a contract with the Department for Transport relating to contracted-out financial work and back-room work. HP supports a major skilled computing cluster in south Wales. Will he bear that in mind, and perhaps talk with the Department for Transport about its valuation of whether to bring in a German company or use one that provides an enormous skills base in south Wales? It is a factor that should be borne in mind. I appreciate that the Department must make rational decisions about cost-effectiveness, but strategic considerations should also be taken into account. I feel that the public sector and the Government should do everything that they can to encourage local indigenous private sector job growth.

[Stephen Crabb]

I thank the hon. Gentleman for his remarks. I will follow that up outside this debate.

My hon. Friend the Member for Ceredigion spoke powerfully about the role of the knowledge economy, mentioning the important work being done at Aberystwyth university and the potential of that university and all the Welsh HE sector to attract inward investment. I encourage him to speak to my hon. Friend the Member for Mid Norfolk (George Freeman), who has been appointed by the Prime Minister as this Government’s life sciences representative and who is developing an exciting strategy that he wants to be UK-wide for developing the life sciences sector in this country and bringing in new investment through that route.

The hon. Member for Clwyd South was the first Member to mention Cardiff airport. Wales deserves and needs a growing, thriving, attractive airport to welcome inward investors. I think that we all share the concern of the First Minister and his team that Cardiff airport is underperforming. I leave the hon. Lady in no doubt about the priority that the Wales Office places on the issue. We will be holding discussions with Ministers at the Department for Transport and in Cardiff.

I thank Members for their contributions. There are reasons for us all to be positive about inward investment in Wales. It is vital that we continue to attract new investment to drive economic growth. The challenge that we face is to continue to develop Wales’s fantastic offer and to take every opportunity to promote it in the ever-increasing global market. We talked a lot about the role played by UKTI and Welsh and UK Ministers, but we can all play a role. Lord Green, the Minister responsible for inward investment and exports overseas, says that he wants to hear from individual Members of Parliament from all parties about companies in their constituencies that should be linking up with our trade missions.

There is a role for us all in speaking to firms in our constituencies that are looking for export opportunities overseas. There might be initiatives and projects that could host greater inward investment. There is a challenge for all Members of Parliament to fit in with the programme that is being developed UK-wide and at Welsh Government level. I hope that we can all play our part in attracting new inward investment to Wales and driving forward economic growth.