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 than 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.