Tuesday, 20 September 2011

Edwina blinks - Five enterprise zones announced

It was half expected - Mark Drakeford AM (Lab, Cardiff West) let the cat out of the bag a few days ago - and yesterday, the Minister for Business and Enterprise announced five new enterprise zones for Wales. This comes hot on the heels of the decision by TATA to locate a Jaguar engine plant in a Wolverhampton enterprise zone, when south Wales was (apparently) shortlisted.

This announcement was going to be made regardless, I doubt the Jaguar decision forced it. Despite the headlines, Wolverhampton was a logical choice on a number of factors. We shouldn't beat ourselves up too much that the plant isn't coming our way, even if it is a blow to the Welsh automotive industry.

The Conservatives and Plaid Cymru have already attacked the plans, with Andrew Davies (Con, South Wales Central) - seemingly miffed that he wasn't told sooner - accusing Edwina Hart of making it up "on the back of a fag packet". Alun Ffred Jones AM (Plaid, Arfon) made a (somewhat) valid observation that a vast swath of West Wales - including Edwina Hart's own city of Swansea (surely a prime candidate for a life sciences enterprise zone) - miss out.

I'm skeptical, but not dismissive, of the potential impact of enterprise zones as I highlighted in a post last month. I don't doubt that these new zones will create jobs and wealth, but I don't believe they will do so on a scale that will seriously alleviate unemployment to a significant degree.

The BBC reports that the Welsh Government is going to make £10million available over five years. The zones will also - it's assumed - have relaxed planning regulations and business rate relief. The only major difference between England and Wales is that the Welsh zones will be targeted at specific sectors - an echo of the One Wales Government's Economic Renewal Plan.

Here's a profile of the five enterprise zones:


Sector : Energy

Anglesey currently has the lowest GVA per capita of any local authority in the UK. The presence of several current and future energy schemes - such as the Wylfa replacement, a new biomass plant and several offshore wind farms in the area - has raised hopes of an "energy island" economy. The Welsh Government's decision to prioritise energy industry here is logical and practical.

I do believe that in a seriously under performing areas like Anglesey, "general" enterprise is a better approach than targeting a single sector. With the well highlighted problems in governing the island, and the inevitable future controversy surrounding Wylfa, it remains to be seen whether energy production is going to be just another extractive and low labour intensive stop-gap instead of providing real prosperity.


Sector : Advanced Manufacturing

Wrexham and Deeside is Wales' forgotten second economic engine (excuse the pun). With many of the major employers in this "region" on the Welsh side of the border - including big names such as Toyota and Airbus - advanced manufacturing already has a very big presence here.

The Deeside area is also leading the way in some very high-tech niche industries such as optronics and renewable/advanced materials. Glyndwr University is also very active in post graduate reseach in areas such as materials science. There's potential for some significant higher education – industry cooperation here.

Cardiff Central Business District

Sector : Financial & Professional Services

This was one of the more predictable zones and something of a no brainer. Cardiff Council and the Welsh Government have joined forces to create a "national business district" in and around Cardiff Central station, with the outgoing previous Welsh Government already committing a large sum of funds towards developing it.

Admiral Group are primed to start work on their new headquarters a stones throw from the site while there are long term ambitions to "complete" Callaghan Square and kick start a creative industries cluster at Porth Teigr in Cardiff Bay.

The question remains whether Cardiff can seek to use it's capital status to rival Bristol's enterprise zone. What advantages does Cardiff offer over Bristol?

St Athan

Sector : Aerospace

Another logical choice. However, St Athan has a dogged history with promises of jobs and wealth being broken. The former Labour MP for the Vale of Glamorgan, John Smith, became the face of this, predicting doom in front of the cameras which eventually became a self fullfilling prophecy.

"Project Red Dragon" – a "super hanger" built by the WDA and Welsh Assembly, heavily trumpeted by Rhodri Morgan, became "Project White Elephant" when the UK Government decided to take fast-jet maintenance in-house in 2007.

Then came Metrix, and the proposed military technical training academy. Another false dawn, as once again the UK Government cancels the project (which was never really a goer just like the Severn Barrage) to the protestations of local politicians and Peter Hain.

I have to wonder what the UK Government will do to scupper it this time? Or will it be a case of third time lucky.

Ebbw Vale

Sector : Automotives

This is a bizarre one. Ebbw Vale is primed for an enterprise zone – The Works scheme is a sandbox for small enterprises. Automotives are a big employer in the area but I don't think the area is synonymous with it.

Blaenau Gwent has several long standing problems relating to unemployment and economic inactivity since the closure of the steelworks. Like Anglesey, in such an under performing area, surely any enterprise is better than targeting a sector that has other, better established, centres of employment in Wales.

I would've liked to have seen Ebbw Vale become a focus for smaller, indigenous businesses from all sectors that can - in time - create something of a sustainable valleys renaissance. Instead, and I hate to say this, unless there are some rabbits waiting to be pulled out of hats, this enterprise zone is the most likely to fail.

I'm left to wonder if Jaguar were "encouraged" to set up in Ebbw Vale against other more suitable sites, pushing them into the arms of Wolverhampton?


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