Economy, Trade, and Rural Affairs Committee

Hi. So, it's Max Munday. I direct the Welsh economy research unit at Cardiff Business School. I've got a longstanding interest in inward investment, so I'm very interested in some of the questions that the inquiry is asking.

Hi. I'm Janis Richards, and I'm the membership director for Wales for Make UK trade organisation.

Good morning, I'm Jess Hooper. I'm director of RenewableUK Cymru. We're a trade association, representing about 500 organisations with renewable energy interests across the UK, with a specific lens on Wales, where we have about 50 members.

Thank you all. I'll begin the proceedings by asking a general question, if I may, to all three of you: what is your assessment of the inward investment offer that Welsh Government makes to attract companies to come to Wales? If I could start with you first of all, Professor.

I think the nature of the inward investment offer has had to change. If we go back to, I don't know, the 1980s, 1990s, when Wales was very successful in attracting inward investment, so regularly attracting maybe 20 per cent of the inward investment projects and jobs coming to the UK, in spite of just having 5 per cent of the UK employment population, back then the offer was very much based on—. The actual location was very important, because we were one of the closest assisted areas to the ports, to markets in the south-east—three or four hours, five hours by juggernaut to the tunnel. So, the offer then was very much based around infrastructure, fairly competitive labour costs and the assisted areas, and very, very strong—we can't get away from it really—marketing undertaken by the Welsh Development Agency at the time.

Things, I think, now are much more complicated, because, obviously, the inward investors that we're interested in are not just manufacturing companies. I think you're going to hear that there's inward investment by energy companies now, retail and services; fintech inward investment has become more important. Their infrastructure needs are very different; their labour skills needs are very different. So, I think things have needed to change. I think Welsh Government does a fairly good job in terms of your marketing of Wales to inward investors, but, as I say, I think the environment around inward investment has changed a lot since the 1980s and 1990s.

Janis.

I agree with all of that. We have a great heritage of inward investment back some decades ago. We're in a different place now. But I do think, likewise, that the focus that the Welsh Government has—. The investment summit was a fantastic focus for us, but also the focus on priority sectors. It helps to shape the landscape for anyone coming in with investment to spend here in Wales. Our sector clusters, for instance, really strengthen that collaboration that we have here in Wales. But I daresay we're going to go into a lot of depth in these different areas.

Thank you.

I'd agree with both of those statements. I think I'd probably reflect on the nearer term. So, two key things to note, obviously with a focus from a renewable energy perspective: Wales hasn’t built anything onshore, in terms of renewable wind in particular, for five years, and offshore it's been nearly 10 years—or over 10 years now, in fact. A really good case in point to reinforce that is that, of the CFD allocation rounds—so, the contracts for difference, the revenue support mechanism that’s brought through to support renewable energy—according to the LCCC, which is the Low Carbon Contracts Company, the body that administers those awards, up until last week Wales had seen less than 2 per cent of the contract value. Now, that is going to increase from the round that we saw last week, which will probably bump us up to maybe 4 per cent, but I think, in terms of investment made to date, Wales has not got its fair share of this opportunity.

During that period—. I know we are sometimes loath to compare ourselves to Scotland, but they’re a really good case to look to in terms of the renewable energy deployment that they're bringing forward. They secured £18.8 billion in LCCC investment, compared to only £0.9 billion in Wales. That's a really stark difference. Based on population size, Wales could have been expected to secure £3.6 billion. However, if we'd seized the export opportunity presented from renewable energy and were able to match Scotland's performance, it would have been nearer £10 billion to £12 billion, not that £0.9 billion. I think that really sets the scene for reinforcing where Max and Janis have made those remarks about the change in what we see now compared to what we saw 30, 40 years ago. It's a very different environment and we're not performing as well as we probably could. That’s largely due to, I think, conflicts in policy that we are seeing, particularly around planning and infrastructure investment. There are a few key pillars that need to underpin these things. The intent that’s there and the general aura for renewables is positive, but, actually, when you get down into the detail, it's not quite what we need.

Just briefly, if I may, before I open it up to other Members, you've set the scene for what your view is on what the offer is, and the planning situation was highlighted in our evidence last week, but, if you take the overall success or failure, where is Wales compared to Scotland, England and Northern Ireland in attracting inward investment, in your experience? Are we successful in attracting what we should be getting, or are there areas that we could be doing better in? Professor.

That's a difficult one. I think later on you have questions about the data. I think it’s very, very difficult to establish currently where we are competitively with Scotland and Northern Ireland in particular, because we just don’t have the best quality data on inward investment stocks and flows. My feeling would be that we probably do not do as well as Scotland. I think the renewables points made by Jess are very strong. I think we may have lost opportunities there. I think as well—. There's always this issue, and this goes back 40, 50 years, about the quality of inward investment. In particular, I think Scotland, through time—this might be contested, but—I think Scotland may have been more successful in attracting what I would call higher order functions in its inward investors—so, perhaps more headquarters functions—whereas Wales maybe hasn’t done as well there. That would be my view.

Okay. Thank you. Janis, anything to add, or—?

No, it's not my area of expertise, the other nations, but we do have a policy team and, if you wanted information, I could probably provide that to the committee.

Okay, thank you. Jessica.

I think I'd reinforce what Max has said there. We tend to have satellite offices based in Wales, and with those companies where we do have headquarters, we're actually finding that, because the pipeline in Scotland in particular is so much stronger, our Welsh businesses—. So, the Jones Bros civil contractors is a prime example that we come back to every time: 90 per cent of their business is in Scotland. Now, that's a really disappointing state of affairs. We need that business to be in Wales to bring that investment. We need those contractors to be based in Wales, and, indeed, I think we've seen calls for support for substantial companies, so tier 1 contractors, to come to Wales to act as a hub, to then create the spokes that enable those smaller businesses to flourish around them. And we just haven't got that basis to ensure that they locate here as HQs, as Max said.

Thank you. Alun.

I'm interested in what you were saying there, Max, about the data and the comparison. I'm interested that the data doesn't exist, because my understanding is that there is some significant data that explores all of these different areas. So, I'd be interested to know exactly what you meant by the quality of that.

But then, going on to why—. I don't necessarily disagree with the conclusion that Wales isn't batting in quite the way it should be, but what I'm interested in is your understanding as to why that is the case.

Shall I answer that?

Please do.

With respect to data, in the olden days, we used to have information from the Invest in Britain Bureau, so your data would be telling you about new projects, planned new jobs, planned investment. There was always an argument—. Again going back to the 1970s and 1980s, when an inward investor announced something, IBB would say, 'Well, look, it's going to create x thousand jobs.' Well, immediately, you'd multiply that by about 0.6 to get to the real outturn.

But there are more subtle issues than that. There's a lot of inward investment—. We can pick up for KLA, Vishay—you can see it, it's quite easy to see. And they'll announce it. It's good for their public relations, and it's important for Wales. But there's a lot of inward investment that we don't so readily see. So, for example, in retail, many of our retailers are foreign owned. They might invest in you. Energy companies: energy inward investment, historically, has been very poorly picked up in the statistics. Construction companies, inward—. So, we're very good, historically, at picking up on the stuff that you can easily see. I think we struggle much more, particularly where Welsh Government is not directly, perhaps, involved, in picking up on things that are more under the surface.

And if I could add just one more point here. It's not clear to me always what we mean by inward investment. Are we talking about from overseas, or are we talking about from the rest of the UK? Because, as far as Welsh economic development is concerned, it doesn't really matter whether that inward investment is coming from the rest of the UK or overseas, provided there's no displacement. So, those would be the data issues.

I'm sorry, you're going to have to remind me of the second part of your question.

The second part of the question was at the heart of where I wanted to be, because if there is a differential performance in Governments, then I'm anxious to understand what that is. Why is it—and Jessica spoke about Scotland as well—why is it then that one Government of the United Kingdom is able to outperform the other? What are they doing well, and what are we not doing so well?

If I could use the example of energy, for example, energy inward investment, perception is important. I wouldn't want to mention the names of companies, but I've heard first-hand from some large multinational energy companies that based on their prior experience of investing into Wales, they would tend not to do it again.

Why?

Because of layers of bureaucracy and problems in planning.

Give me examples of that.

If I gave you an example, I'd—

Okay. But, 'layers of bureaucracy', what do you mean by that?

So, it could be, for example, once you've invested hundreds of millions of pounds, you have sunk costs into the system, then there are extra, perhaps, environmental hurdles that one has to overcome, extra investment has to take place, things that stop you moving from construction—. You know, you've constructed it, but you want to commission it. There could be a gap between construction and commissioning the infrastructure. I think it's a perception. I think those problems are equally there, possibly, in other parts of the United Kingdom, but I have heard managers say this, that they'd not tend to repeat: they would not tend to repeat in Wales.

Thank you. Jenny.

I want to go back to Jessica, first of all, because the picture you paint is very disturbing in terms of us not getting the investment we need in renewables. As somebody who was involved in the Infrastructure (Wales) Act 2024, which has now been implemented, why is planning still being cited as a barrier, given that we've set really clear timelines? And the Ministers will have to come to the Senedd to explain themselves if they don't meet the timelines within the 12 months from start to finish.

Thank you, Jenny. I think there's a little bit of story weaving I can do here. So, to pick up on some of the points that Max has made there, renewables is a really good example to draw on for this. If you look to Scotland and the appetite that they've had, and the policy environment that they've created, it has been incredibly clear. So, 10 years ago, they set out a very clear ambition. They provided very clear technology-specific targets. They said they wanted, I think it was, 9 GW of onshore wind built by 2035. They created a policy statement of about 76 pages, which was in support of, basically, how you would build and achieve that onshore wind figure.

They then created underpinning bodies that support that, and that has had a ripple effect in then ScotWind coming forward, so shifting from the onshore market to the offshore market and the ScotWind leasing that they've done. Because they had those very strong and robust foundations, they've been able to build on those. So, they've created bodies that specifically look to offshore wind to support the development, and specific models and investment mechanisms to support businesses coming into Scotland.

For an inward investor, I think, and there have been multiple international companies looking to Scotland, 'What have you got that supports that?', and the mechanisms that are there are so robust that when somebody—Chinese companies, for example; I think there's French as well—they're looking to the UK and they're comparing country by country. They're saying, 'Okay, these mechanisms that are there are so supportive, so robust.' And the historical delivery is so undeniable that they've sort of said, 'Okay, this is the place to be.'

It's actually the same very much in the north-east. We went up to the Port of Tyne and saw there where similar cluster relationship—Janis mentioned clusters before—how those mechanisms support businesses as they come in. They create a network. There's a very easy access to skills, to grant support, to the local planning authorities. So, that's one aspect. I know, Jenny, I'm not necessarily answering your question here.

So then, to take it to the planning side of things, I think, credit to Welsh Government, we have seen a lot of change, and you specifically mentioned the infrastructure Act coming through. But it's worth bearing in mind that that was only enacted in December, so we're not yet seeing the benefits of that streamlining of consenting.

In the last two years, we've seen around 15 to 20 development of national significance applications come through. Prior to that, in the six years previous, we probably only saw two or three. That gap is where the problem lies; that sort of hiatus in projects being realised, being consented and determined really speaks to the bureaucracy that Max touched on. And that bureaucracy is multilayered: it's there being quite high hurdles in Wales that make us, potentially, less attractive, but it's also there not being adequate investment during that time period to support the pipeline that was there, and the ripple effect of that being that things tended to back up. We've seen them coming through in the last couple of years. I would anticipate now that we'll have a period of uncertainty as the infrastructure consent Order beds in, but credit to Planning and Environment Decisions Wales and Natural Resources Wales—and Welsh Government's investment in those—I think we're in a much better place now to be supported with those projects coming forward.

But the key thing that sort of ties back to my initial point is that we need robust underpinning policy and that's not necessarily there in that case. We do still have some conflicts. I mean, it would be remiss of me not to mention peatland. You have very sort of stringent biodiversity targets, then you have climate targets being addressed by, you know, a desire to have 100 per cent of demand met by renewables by 2035, yet there's a jarring between those two departments. And it's something we've been trying to deal with for three years; three years is a very long time—

Okay—

—in the context where you're up against Scotland, who are delivering at pace. And even now, the UK, you know, the Department for Energy Security and Net Zero have really pulled all the stops out in the last decade—in the last year, sorry—to support wind.

Okay. So, we're not going to pursue the biodiversity versus industry here; we haven't got time, unfortunately. But there was a major policy decision made last week, announced by Ed Miliband. So, mega offshore wind, enough to heat a million homes. What are these barriers, the high hurdles that we need to eliminate, to ensure that we get the investment we need to have the battery storage, so that we can actually use this energy here in Wales?

Are you talking about the CFD there? The announcement that he made around the—

The announcement around Awel y Môr and—

The contract for difference.

—the floating wind off Pembrokeshire.

So, we're in a relatively strong position. So, Awel y Môr, and indeed Erebus, coming forward as part of that allocation round is very positive. I don't think we should underestimate what they mean in terms of Welsh opportunity. The challenge that we've got is that we don't have a particularly consistent pipeline. So, the next round of projects that we're likely to see—. I'm sorry. There's the Mona project, which was also, I believe, probably bidding in that round; we don't know for sure. But if you see—. This week, EnBW have actually announced that they're withdrawing their support for the two projects, Morgan and Mona, that were being progressed off the north coast of Wales. That's quite a blow to the sector and quite a blow to Wales. What's positive is that they're still taking Mona forward. So, we do have a robust foundation of opportunity there; the challenge being, that's one additional project that will probably bid into allocation round 8 and be looking to deliver. We've then got quite a gap until the next offshore wind projects and the pipeline that's available comes through, and those are the floating wind opportunities in the Celtic sea.

Not to understate the positive announcements from leasing round 5, we've got three inward international investments coming forward there, which are very positive for the region, but they're not going to be building until 2035. So, we really need to be thinking about how onshore wind plugs that gap in terms of pipeline. We need a drumbeat of projects. And that support needs to be, you know, triple armed. It needs to think about the infrastructure that supports all of these technologies and then it needs to think about onshore and offshore wind, and how supply chains can be supported in investing to support those three different streams of technology. So, investment in grid, making sure that the steel that's used for the pylons is sourced in Wales, how can we do that? We've got a real need to invest in our infrastructure here in Wales and if we can ensure that local content supports those, that's a really basic underpinning that we can do in terms of economic growth and opportunity.

Secondly, then, in terms of offshore wind, there's a really good drumbeat of projects. I think we've estimated that there's a 7 GW pipeline that could be built out. If we can secure—. I think there's 60 per cent of the contract value that could potentially land from civil contracts and indeed steel to support that. If we can secure that in Wales, then it's a robust foundation for those subsequent contracts that then come through for offshore wind. But we have to ensure that we're supportive of those businesses in investing in that supply chain and in skills and in the growth that they need to make that happen.

Thank you. Janis, how important are clusters as a mechanism for bringing these things together? I mean, just accept—. I mean, push back against Jessica if you disagree, but it sounds like a plan.

No, I don't disagree with Jessica, not at all. Clusters form a really integral part of our ecosystem within manufacturing, which is what I deal with, and from an inward investment point of view, it does make that a lot easier. So, let's look at the compound semiconductor cluster—highly successful.

Okay. We'll come on to semiconductors in a minute. If we need to get the steel made in Wales in order to make this a coherent step forward, rather than just somebody using our seas and all the benefit going to somewhere else.

Yes, absolutely. And that's where, for instance, in Tata, what's coming now is—. I mean, I don't think there's actually a named cluster there, but it is acting in the same way. They are pulling together. Hydrogen is another one. You've got the new hydrogen hub being developed down in Pembroke.

Is it happening fast enough, though? I mean, we're going to need the steel quite quickly. These contracts have been awarded last week.

I agree. Possibly not, and especially with the news in Sheffield, where they're bringing in steel from outside to build in a region where they've actually got the steel there. Possibly not.

Okay. So, what is the role, then, of clusters more broadly, just moving away slightly from the steel conundrum?

I think that the role of the clusters is where businesses are able to support each other, not just from outside. I think it also helps the Welsh Government in coming into those clusters and being able to tap into many businesses, all with a similar interest. They all have the same skills needs. They have a similar supply chain. It makes doing business that little bit easier, and it gives them that support network to help them to develop and grow.

So, taking the example of Jones Bros Civil Engineering, obviously a very important multinational player, what role have they played in enabling other businesses to grow around them in north Wales?

I'll be honest, they're construction, so I don't really deal with them. Sorry.

Okay. Fine. Professor Munday, perhaps you have a view on that.

Clusters in key sectors—we started to go down this wormhole, I think, in about 1991, as a policy area.

You're obviously not a fan.

When we think about original cluster thinking, starting with people like Marshall, when he was looking at Sheffield steel industry, things like the Birmingham jewellery quarter, Marshall coming here, coming in and having a bus tour around Wales today, would probably not see any clusters as he understood them. We have bits. We tend to have bits of value chains here, not clusters. We do have some; I don't want to dismiss the idea completely. We do have some genuine clusters of interrelated activity. But it's not like the Dutch flower sector, it's not like the champagne sector. In fact, we just don't have that in Wales. And there are good reasons for that—we're a small economy. We've got to get real on that. I mean, we're 3 million people, and the supply side here is quite limited. We were talking about offshore wind, well, there are going to be limited economic effects in Wales, because we don't have a supply side. We have some little bits. But the high-value components will always tend to be imported in. That's the lesson of history.

So, having said that, where we do have those pieces of the value chain, it is important to build upon them. We've spoken a little bit about the semiconductor sector. Yes, we do have some interesting manufacturing parts of the value chain. We have those higher education institution linkages. We have the compound semiconductor catapult. That's good. People are looking at that now. There's a term we use, a 'triple helix': we've got the companies, we've got the higher education institutions, we've got the devolved Government as well, working together to get results. So, from that point of view, I think that cluster of activity, that is noticed by new inward investors. But there is—I hate the term—a positive vibe, I think, around the sector.

Yes. Certainly, we had very strong evidence last week from CSconnected, that they were attracted in by the skills, the 'world-class skills', he said, from both Swansea and Cardiff universities. So, how are we going to get the people who've come in because they like the pipeline of skills, to enable those inward investors to then use local suppliers rather than bring in stuff from somewhere else? How do we get that virtuous growth out of what is, clearly, local success? Perhaps I can come to Janis while you're thinking about it.

I think that's already happening. In the OpTIC cluster in north Wales, for instance, around St Asaph, a lot of the businesses around that area are in a similar type of manufacturing. What that's done is provided the supply chain for those businesses coming in. It is already happening. Semiconductors are the same. There are so many businesses that have grown over the last five to 10 years around that Cardiff to Newport area. Of course, we also have Vantage coming in with the data centres. I'm sure it's not insignificant that they've got these large energy-intensive—electricity-intensive, I should say—businesses around them that they will then be feeding. So, I think it's a bit of a magnet that's already doing its work.

Good. So—

Unfortunately, the time is going to beat us. I'm sorry to say it's such a rush, but we've only got an hour allocated, we have. If we can follow up with written questions, that would be helpful. Sam.

Thank you very much, Chair. Good morning, panel. We've talked about some of the delivery of projects, but, taking a step back in terms of how effective different layers of Government are working to attract business and investment in the first instance, what's your analysis of that, and where do you think the improvements can be made, starting with you, Professor Munday?

I'm going to upset a few people now.

Please do.

We need to hear it.

Okay. I think, looking back, it was a bit of an own goal getting rid of the WDA, in terms of fleetness of foot. I'm not denying that there may have been elements of their activity that were perhaps a little unwise, but I think the distance between a strong inward investment authority with a very, very strong brand, which is still recognised internationally today—. I accept that we're in a different inward investment environment. I accept as well that resources are a lot, lot tighter now than they were in the 1970s and 1980s. But I think, in terms of marketing Wales overseas, having one strong organisation—. We used to talk in the olden days—. I'm talking like a dinosaur, aren't I, buthe team Wales approach, organised through the WDA, was very, very effective. As I say, with the benefit of hindsight, I think losing that type of organisation was a loss. I think we'd be doing a lot better today if we had some sort of structure from that distance—giving a little bit of distance between Ministers and the marketing, if you like.

Okay. Thank you. Janis.

I do feel that the layers are challenging. It's often difficult to have clarity on exactly what direction you're going. It doesn't help—. As you know, we've got 22 unitary authorities. They work independently. Many of my members have sites on more than one authority, so they're up against different bureaucracy within those. I suppose I don't want to labour on the WDA model, but there was clarity then as to exactly where you went for any support you needed. It is more difficult now. Funding, especially, is quite difficult to navigate.

As in access to funding?

And knowing what's out there. So, I can be on calls with my colleagues across the border, talking about funding opportunities, and I'm Googling to see if we've got it in Wales, or, if we've got it, is it called something else? So, it's quite difficult. I've even tried mapping out funding for myself, but I lost track of that very quickly. So, it's just challenging, and some sort of clarity on that would really help all businesses, of any shape and size.

Okay. Thank you. Jess, you used the term earlier, in terms of delivering a project, of 'jarring' between two departments. In terms of attracting that investment in the first instance, would your analysis be the same for that?

I think so. Slightly going against what Max said, on team Wales, I've had experience of working with team Wales overseas, and there is a strong cohort of individuals that are out there representing Wales and what we can do. I think part of the challenge is that we don't necessarily understand our own strengths and capabilities that well in a cohesive picture. As I think Max alluded to earlier, we have a lot of SMEs—I think it's something like 95 per cent of the businesses in Wales are SMEs. We don't fully understand their capability and their capacity to support a lot of the things that we're talking about, and I think that's part of the challenge.

RenewableUK—so, my parent company—actually did an investment prospectus last year, and they did an analysis of the financial institutions that are available to support. And to support Janis's statement there, it was quite challenging pulling that together, because there are so many different bodies that you can call on and so many different applications of the funding. As Janis alluded to, is it present in Wales and, if so, what does it look like, what's it called? That's a really big challenge, particularly around some of the more nascent technologies that we also represent—tidal being the case in point. They're looking for grant funding to support more. So, potentially, the test and demo projects would be going down the same line, and universities to support these technologies—where can they apply to? And it's not that clear.

I think Max's point around the WDA is a really robust one. We—it was actually in my previous role at Marine Energy Wales—were part of the Celtic sea cluster and working quite extensively with companies in the south-west, and the difference in their ability from having a local enterprise partnership to support them in securing funding and applying to the UK Government for funding pots was stark. There's I think probably in excess of about £20 million that's been directed to regions in the south-west where Wales is missing out. And it's not through, I think, a lack of desire to secure it; it's just not co-ordinated enough—there are gaps that we fall down, there are potential misunderstandings between departments, and there's a lack of resource within those departments.

So, another case in point: last year, the Welsh Government commissioned the task and finish group to look at offshore wind and how we could realise it. An action plan was created in June, I think it was, and an implementation team was promised. We still don't have that implementation team—so, it's the lack of resource that goes behind delivering these things. We're up against it a little bit in terms of time. I know I talked about a 2035 deadline. It seems like it's a decade away, but, fundamentally, we need to be laying the robust foundations to support these businesses now because the contracts—. As Jenny mentioned, allocation round 7 has been allocated. Those contracts and final investment decisions, the contracts that will be let to support those businesses, they'll be in the next couple of years. Those businesses need to be ready to support them.

There's a really interesting example of a collaboration that's come together quite organically in the south-west of Wales called Celtico UK, which I think is 16 to 18 manufacturing companies who've recognised that individually, as SMEs, they probably don't have the clout to apply to some of these big projects, but together they can support some of these contracts. The challenge that they've been up against is securing the funding to support that. They've ended up doing it through quite a convoluted route. Rather than there being a one-stop shop that they could go to that would say, 'This is where that can apply.This is how you can secure that funding', they've had to scrap about a little bit and find little pockets of money to support what they're doing, with contributions from those companies. But, fundamentally, you need to be able to leverage some of that public funding to support that private investment, and that's been really hard to come by.

I've met with Celtico, and I attest to that. Thank you, all three of you. Your answers were so all-encompassing, I've got no further questions.

Thank you. Luke.

Diolch, Gadeirydd. I think, throughout the session, we've alluded to some of those infrastructure problems, whether they're some of the more bureaucratic ones or physical ones. So, I suppose this is building on much of what Alun was asking, and others: what's the solution here? What do we need to do in terms of infrastructure to make Wales more attractive for inward investment? Janis.

I think if you asked my members that, they'd probably say put an M4 relief road in, which is a barrier. The M4 is a barrier. It does make it difficult for people coming in and out of Wales at those key times. There's not a lot we can do about Wales as the geography it is, we know that, but there are things we can do within the communities around Wales. In mid Wales, we can't be spending billions of pounds when there aren't that many people, but what is there needs support, and it's just finding those areas of support. I do think we do it quite well, because, again, you've got a cluster there that work really well together. They support each other. Also, the data connection—we are tackling those problems. It's taking time, but we will get there. It is happening, and the investment is coming in to assist those technologies.

Coming back to what you said around an M4 relief road, that physical road infrastructure, is that something you are seeing as a barrier for inward investment in actuality? I know there are a lot of people who say that it is, but are we actually seeing it having an effect?

I wouldn't have any proof of that, not at all. I can only say what I hear from people. I think a lot of what we've talked about here is those perceived barriers. Yes, we do have planning loopholes that we have to get through, but for people outside of Wales, it's that perceived difficulty. We just make it more difficult, and we need to break all that down. We know there are planning changes happening. We know it's going to get better, but somehow, we need to get that message out there, because I do believe—and Jess just alluded to it there—with the south-west working with the local enterprise partnerships, people outside of Wales just see it as a difficult place to do business. It is getting better. We just need to get that message out so that wider communities see that, actually, Wales is a great place to do business.

Many of the economic studies historically have always flagged up roads as important, but I think those were in the days when the dependent variable, if you like, was manufacturing inward investment, and it's not now. With the best will in the world, the extra, I don't know—. You might save 10 or 15 minutes with a relief road. I don't think that's going to be of interest to a lot of inward investors now.

I think the challenges we have now with infrastructure, it seems to me, are in terms of very basic things like access to electricity. We know that on some industrial parks in Wales, there are not grid connections. That could start to stymie new investment. People have got to wait a long time to get a grid connection in.

I think that's going to become more acute when, as Janis alluded to, we have these new Vantage data centres. They use an awful lot of electricity. Okay, they can generate power, but they use a lot of electricity. They don't create many jobs directly. They're important for us technologically. They don't perhaps have the economic development outcomes for Wales we might always want, but they use a lot of electricity. If we're talking about industrial parks with more conventional manufacturing companies, and we have data, who gets the electricity?

I'm going round the houses a bit, but I think the road infrastructure debate is very 1980s, 1990s. I think it's more about electricity and digital infrastructure now. That is more important.

You definitely see, in the case of the steel industry, some of the challenges around electricity pricing as well, and that being a potential incentive for some companies to move elsewhere, when you’re paying less for energy in France or Germany. It really is something to consider now. Jess, if I could turn to you.

I wholeheartedly support Max's statements around grid there. Grid is one of the major infrastructure challenges that we're up against as a sector, and it's been woefully underinvested in in the last 20 years, to be completely frank. To weave in with what Janis has said as well, those mid Wales areas where we're seeing potential for businesses to flourish then being met with challenges for increasing their grid demand, because grid connections can't be offered in a timely way, is suppressing the economic opportunity of those regions, but it does go so much further than that. In our sector, we've produced reports in the last year that essentially say that the renewables investment opportunity for Wales could be up to £46.7 billion. About 20 to 25 per cent of that could be secured by Welsh businesses, but that is entirely dependent on those businesses being able to upscale, and to do that, they're going to need grid.

At the moment, quite a misunderstood position for Wales—we've done a number of focus groups and testing—is people think that Wales has got a far greener electricity network than we actually have. The UK as a whole is supported by about 50 per cent green electrons; in Wales, it's only 30 per cent. That's a stark difference. We're definitely falling behind in that regard. Luke, you mentioned there the cost of electricity being less in some of our European nations. We are so dependent on the gas price for setting that electricity basis that it is costing us dear. It means that those businesses are relocating. Investment in our grid to support projects coming forward, renewable energy projects coming forward, and stabilising and creating energy security for ourselves is fundamental.

The other point around infrastructure that hasn't been mentioned is our need to invest in our ports and to do so rapidly. Leasing round 5 has seen that pipeline come through. There are a number of ports on the south coast that have potential to offer in those respects. What's challenging is that pipeline of certainty coming through. Is 4.5 GW in the Celtic sea enough? Probably not. We need to be pushing the Crown Estate to see a longer, more sustained pipeline, but we also need to be supporting those ports in making that investment in how they bring it through, ensuring that consent is delivered rapidly.

I think when you start to do that—. I mentioned, I think, in my first response, the need to attract a tier 1 contractor. If we can create the right environment with a WDA equivalent, which is a one-stop shop for understanding where investment comes to, create that hub and spoke in, let's say, Port Talbot—part of the free port, really good advantage that we've got there, linked with Milford Haven—that whole region is coming into itself in terms of the opportunity. But we've got to have the foundations to realise that, and I think that's where we're missing. What we can't do—and I think there is a risk of this at the moment—is introduce more hurdles in Wales that make us even more unattractive in the UK setting. We've compared ourselves to Scotland quite a lot in this conversation. They're already streets ahead. We cannot put in place more hurdles that make us more difficult.

There's quite a discussion at the moment around community energy projects. As a sector, we wholeheartedly support the need to bring those forward, but recognition of the commercial-scale projects and the role that they have to play, not only in delivering cheap power but also in delivering economic growth to us, is fundamental.

Just quickly on the ports bit, what would be your assessment on where investment in ports in Wales is at the moment? We know we have the task and finish group that was set up by the Welsh Government to look at this amongst other stuff as well. And again, I come back to thinking about the continent, and some places on the continent being far ahead of us on that port investment to take advantage of offshore wind. It would be interesting just to get your views on where we're at with that investment.

We've got quite a significant challenge there in that I don't think it's necessarily within the Welsh Government's gift. I think as the Welsh Government you need to create an attractive minimised-risk location within our devolved powers. The reserved matters that sit with the UK Government probably dictate this more—the amount of funding that's required, and probably the support mechanisms, and, indeed, that link through to the Crown Estate and, indeed, GB Energy. They are going to be the fundamental fulcrums that enable us to realise that port.

There is, however, still a role for the Welsh Government in saying, 'This is what we want, this is how we're going to support it.' I know you mentioned the task and finish group there. The intent there was very good, but it's sort of dwindled a little. As I mentioned before, we're six months down the line and there isn't an implementation team. Not very many of those actions have been brought forward, and I think that's due to a number of reasons. First, I think it's resourcing within the Welsh Government civil service team. We need to see more and more bums in seats to support the sector, to support those decisions, to create that cohesive team that's pulling it all together. That's missing, to some extent.

One word of caution, I would say, is that we don't need any more reports on these things, and that goes for both grid and for infrastructure investment. We've got a really robust evidence base. We know what the problems are. We need to be thinking about not only how we resource it, but how we fund it, and how we realise that funding to the best possible impact in the time frame that we've got.

It's the land of song, committees and reports, as someone told me previously. I'm conscious of time, so I'll very briefly, if we can, just look at the skills part of this puzzle. We heard earlier that there are certain areas of Wales where our skills offer is seen as world class—semiconductors being one of them. That's certainly, coming back to the perception point, not the messages that we're getting from other sectors, where there are massive shortages. I know this is quite a big, broad question, but, thinking about how we can address some of those skills shortages, where do you think we need to go? Is it more joined-up thinking? Is it too higgledy-piggledy at the moment, all over the shop? What would be your general views? Janis.

I would say consult with industry. Skills should be based on what industry needs. We welcome the consultation that Medr are currently doing on apprenticeships. It's in our gift to produce world-class, highly skilled jobs, highly paid jobs, but we need to involve industry in that so that the courses, the apprenticeships, whatever the programmes that are being developed, are fit for purpose and fit for future as well, with all new technologies coming on board. We've got 14 colleges all doing engineering apprenticeships, and that needs to double. We need to double the number of bums on seats doing apprenticeships, because these are highly paid jobs. We need to engage those youngsters at a younger age, bringing in schoolchildren into industry to see, get them excited about it. It's not a dirty factory, these are really highly paid, highly technical, often, jobs that can excite children. We need to get them excited early on, and show them just what career paths are out there for them.

Thank you. Any additional comments, Professor Munday or Jess?

I would just underline that comment about pushing STEM at a very young age and giving those youngsters, probably from the age 11 onwards, access to see what engineering jobs are, what contemporary industry looks like, what the opportunities are. I still think, because of parents, grandparents, we're not very good, very often, at communicating the nature of opportunities to our kids and our grandchildren, because of how different industry is from when we were younger.

Alun Davies.

I was listening to that conversation, and I'm thinking we're doing all of these different things, but we started off this conversation talking about some of the impressions gained and lessons learned from the 1980s and 1990s and the rest of it. One of the other characterisations, if you like, of that period of inward investment was that the Welsh Government, or the WDA, or whoever it was at the time, would give people a slug of money, they'd turn up, they'd use that grant, and then they'd go off again. That was both true and not true, of course, but we learned these lessons. You've all, in different ways, been quite critical of the Welsh Government this morning. How does the Welsh Government change to root inward investors in a community and a local economy in Wales for the long term, and not simply the short term?

Think about Sony. Sony came in 1972 or 1973, so they've pretty much been there 50, 52, 53 years now. What did you have? You had colour television production, and then they moved to tube production. And yes, okay, after 2000, it's gone down, but it's still there and they're still doing digital cameras; they're making the Raspberry Pi as sub-contractors. Why are they still there? I would argue that one of the reasons they're still there is because both the WDA, and Welsh Government, in more contemporary times, have worked very, very closely with them all the way through. So, I shudder to think how many thousands of equivalent job years we've had out of the Sony corporation, but a lot of that is down to the good, we could call it, 'after-sales' service, if you like, where officials have worked very, very closely and have supported them.

We talk about embedding, and I know that part of this is going to be talking about supply chains, but we often think about embedding, or, yes, okay, we want to make sure that our electronics producers, our semiconductor, that they try and buy things locally. Yes, that is one element of embedding, and that is important for gaining the multiplier impacts from inward investment, but there is another area of embedding in terms of how Government officials can actually help subsidiary management to embed themselves better in their own corporate cultures, to make those subsidiaries critical to their corporations. And it's on record with Sony that that operation has become more important to Sony internationally, and I think the Welsh Government, and the old WDA, can take credit; that is down to good after-sales service, good support. So, embeddedness is a two-pronged thing.

Does anyone else wish to comment, or are you content?

I do agree. I completely agree, and I think it's using the likes of and using Sony as the example, as a good example for someone coming into Wales from outside of the UK, perhaps. The community that they have there, and the work they do within the community—. It's not just about them being part of a corporation that is actually owned in another country; it is not about that at all. Without Sony there, there is a lot of—. There's, obviously, the supply chain, but the community around Pencoed—. If you have ever been to the site itself, it's fantastic. Their schools engagement is fabulous, and it is a credit to them. We need to replicate that.

Okay. I'm content.

Just on that point, about companies coming into the Welsh market, you raised in the earlier session—just before I ask Hannah to ask the final set of questions—skills. One of the things we learned last week is that skills is a really important after-sales, if you like, commitment that companies seek, from Welsh Government in this instance. Today, for example, Medr have come out and said that there is a £25 million shortfall in the further education budget for next year, and, basically, there aren't going to be the skills courses for people to go on. Would you say that that has been mirrored over successive years, where there hasn't been the opportunity for companies, once they locate here, to get apprenticeship courses going at local colleges and ultimately build up that skills base, and that we need to invest more in the apprenticeship sector? Janis.

Yes, we need to invest a lot more in apprenticeships, absolutely. However, I will say that the larger companies, many of the larger companies in Wales, have their own academies, so they kind of tick their own boxes. It's the SMEs that require those apprenticeships, because they are the supply chain. So, we can't be without them. But, as I say, when you look at a lot of inward investors, if they're big-name investors, they will bring their own academies with them, they will train the people themselves. Then we come back to: where are they going to get the people from? That is another bag altogether. But definitely apprenticeships—we do need to invest a lot more money in apprenticeships. We need it to be an attractive option for children leaving school to go into an apprenticeship.

Thank you. Professor Munday.

Yes. I concur very much. I think there's too much of a willingness, sometimes, in the private sector to blame the state, if you like, for lack of skills. I think that, with some of our bigger inward investors, they have a responsibility to develop their general and specific skills. I think there are plenty of examples in Wales of companies that have done that very, very successfully, in as much as they've taken the initiative with FE colleges, for example, to develop courses. So, I think the private sector should be taking the lead—or sharing the lead, perhaps, would be more appropriate.

Briefly, Jessica.

I think, from my point of view, that there are three things that underpin this. So, pipeline I've talked about already—having that drumbeat of opportunities that come through supports all aspects of this. There are two particular examples across the UK that I'd draw on, and they're both in the north-east. So, Green Port Hull—Siemens invested there in a blade manufacturing facility. The set-up that underpins that is extraordinary. It's two local planning authorities working together, there's university involvement, there's local school involvement, there's a specific cluster being set up to support that. And then similarly in NOF—so, again, in the north-east, based around Tyne—a similar sort of pattern. You've got specific academies that have been set up that work both at school level with STEM subjects for 13 to 18-year-olds and then where they can go subsequently, and specific training academies that support them.

I think where you get that core business located, everything else tends to flock to it, and that's what we're missing in Wales, that kind of fulcrum that pulls it all together, which I've mentioned before already. The other challenge I think we've got across Wales, and I said this about mapping our SME capability, but it's similar for our skills capability—I don't think we have a particularly strong story that speaks to what our skills capacity is.

RWE is a prime example of a company that matches the profile Max was talking about there. They're training their own apprentices; they invest specifically in what they need. Part of the challenge I see there is that a lot of those individuals are then taken out of Wales and they go and work, particularly, on the east coast, where all the projects are. So, it comes back again to that pipeline story. What is our pipeline of projects? What does it look like? How are we supporting them? How then do we tell that story to those businesses and to those universities and to those schools and those children that we're going to be bringing through?

But I think there's also a point here to make that children are our skills force of the future, but there's also the here and now. How do we look to do that skills transfer and decarbonisation, the green skills story, that transition element? We're working within RUK with the military, but also the oil and gas sector. How do we transition people who have a lot of the expertise in other areas that is probably quite transferable into the sectors that we're talking about?

I just think we, overall, need to map that a little bit better in Wales and do it more cohesively. It often feels a little disparate, I think. I get asked to attend a lot of meetings, and a lot of them seem to be along a similar theme, but in different regions. How do we make sure that picture is as cohesive and as connected as possible?

Diolch, Cadeirydd. I'm conscious that I'm in stoppage time.

We're in injury time, but please ask the full slate.

Yes, I'll do my best to get a couple of final questions in to witnesses, if they enable me to. We've touched, I think, briefly on this in previous questions around the importance of the supply chain. So, we want to attract inward investment in Wales—what does that look like? We want to benefit the broader economy, but we also want to make sure those benefits are felt not just across communities, but also within businesses that might already be based here or used to attract other businesses and organisations to Wales. So, just very briefly, do the witnesses have any suggestions in terms of what works well now and what could be done better by both the Welsh and UK Governments? I'm going to go to Jessica first, just because I'm looking at you on the screen where I'm sat.

Sorry, could you—? The connection broke up ever so slightly there.

In terms of support for, basically, enabling supply chains and for those benefits from inward investment to be felt across communities, rather than in one fixed location, are there things that Governments are doing well now, or things that could be done better?

I think there are regional examples we can call on. So, I mentioned already the south-west and the role of the LEP in bringing people together. I know Max was a little bit sceptical about clusters, but I do think some of the cluster models that we've got are incredibly effective at joining people up at skills level, supply chain level, business investment level, to create as cohesive a picture as possible. I think we can learn from countries and companies and areas and regions that have already done that. We don't need to recreate or reinvent the wheel, for want of a better phrase. Let's just ensure that we are consistent in how we're doing it and that we're using a cross-region approach for it, because there's a real risk, I think, of duplication if we don't.

Thanks. Before I come to the witnesses in the room, I'll just follow up with you, Jessica, if I may. I think we touched on the skills opportunity. I've heard already about the recent announcements around contracts for difference in Pembrokeshire and Erebus, and also Awel y Môr, which is quite close to where I live in north Wales. Do you think the foundations there are in place to make sure, again, that we have those local supply chains and the workforce to take advantage of those opportunities? I go back to something that Max said earlier in terms of the responsibility, perhaps, of some of these big companies to also invest in the skills agenda too, because I know there's a good example, which I use, in Coleg Llandrillo in Rhyl in north Wales, where they've got their centre of engineering excellence, where they've worked in partnership with RWE. So, are there other things that you think we can be doing and we need to be doing now to make sure, once those projects are on stream past the construction phase, that, actually, supply chains are benefiting local businesses, but also that we can be upskilling that workforce for the future and providing those opportunities close to home?

It comes back to pipeline. Those two examples are brilliant examples, Awel y Môr being an RWE project, and I already touched on RWE's apprenticeship scheme and what they're doing. They're very well embedded in the north Wales region; the work that they do is critical. I think similarly for Erebus. Now, Erebus is a 100 MW test and demo project. It is a critical project for the region in demonstrating what the capability requirement is. It's a relatively small project in the context of things, but we cannot underestimate just what that means for the region. We need to work with our skills providers, and there are a number of activities already under way in the region that have been supported by the companies behind that. So, Blue Gem Wind have been a key player in something called Destination Renewables, which has been going into schools and thinking about those STEM subjects that we've touched on already. They've done, I think, a number of supply chain analyses around the area, and I think this is supported by the Crown Estate's activities, particularly around the supply chain accelerator and looking at businesses. The challenge we have got with Erebus is, as I say, it's relatively small. It needs to be delivered by 2030. That allocation round 7 has a cut-off date of 2030, so it will be operational by then. In terms of creating an aspiration and inspiration, it's phenomenal. What it can deliver for the region will be visibility of what the requirements are, what sorts of people will be involved in it. We do have reports that already speak to that, and Awel y Môr is an extension to Gwynt y Môr; that project has been built out.

There are examples that are following through and we're continuing to deliver on, but what we need beyond those two projects is a pipeline that fills the gap out to 2035. So, I am reiterating a point that I made before, I'm sorry. But I do feel that onshore wind can, to some extent, help to plug that. Some of the expertise that you're going to need will be around electricians, engineering, welding. It goes from every level. It's your blue-collar workers right through to your white-collar workers. We can draw on that as long as that pipeline is a constant drumbeat, well understood, and we are mapped to how we deliver that. And it's not easy to do and I think Welsh Government has a fundamental role in doing that, and the task and finish group looks at offshore wind in its entirety, but it needs to gel a little bit more, I think, with the onshore wind opportunity and what that looks like.

Thanks. Max, any reflections?

It is the supply chain. Yes, we're very, very interested in our multinational inward investors buying as much as they can in Wales, but I think, increasingly, particularly with high technology companies, with supply chain and embeddedness, we may need to think more in terms of a UK plc view. So, when we attract an inward investor, when we work with them in after-sales service, I think, yes, we point them to opportunities in Wales, but I think, with some of our industries, we have to take a UK plc view, and I think that would involve Welsh Government working with UK Government to identify supply chain opportunities—so, perhaps a bit less parochial.

Thanks. And Janis, finally, to you.

Yes. Going back to an example that Max used earlier, we've got a great example in KLA, who work, obviously, closely with as many Welsh suppliers in their supply chain as they can. But, through their academy, they're training people from their supply chain. They train people from local businesses, coming into their site for the training, and they're also working really closely with Swansea University and have recently launched semiconductor-specific courses. So, we have some really good examples in Wales, and I think inward investors need to know that these things are going on, that they can tap into them.

Sorry, could I add one more point? Sorry, Janis, had you finished?

Yes.

It was just something that occurred to me, and I've been incredibly guilty of it throughout this session—I think we've got to stop thinking about Wales in isolation as well. There are opportunities that are beyond our borders. We have capability that could deliver into that. We've got to think about how we work with those other regions. So, there will be specialisms that we potentially don't have here in Wales that are present in Scotland, or, indeed, in the south-west, and I think mapping to those—. They're well understood; they probably have more advanced clusters than we do. What gaps can we plug and how can we use those in the context of supply chain opportunities, SMEs, to make sure that, if there is a lull in the Welsh market, we can pick up an opportunity that goes beyond our borders?

Okay. Thank you. We've gone into penalty shoot-out time now, we have. [Laughter.] We've done extra time. Thank you very much for your evidence this morning. It is greatly appreciated. A record will be sent over to your good selves to have a look at of the evidence that you have given. If you have any issues with it, please raise it with the clerking team, otherwise that will form the official record for our report. Thank you all very much. We'll now go into private session while we change the witnesses for the next panel.