Innovation must be our mantra as Brexit draws near
Chairman of CBI Wales Mike Plaut discusses the Budget, the implications of Brexit, growth deals and city deals
LAST week was exceptionally busy for the CBI team in Wales. It began with the Chancellor’s Budget – and International Women’s Day – and ended with a two-day visit by our UK director-general Carolyn Fairbairn. Taking a break from making the business case on Brexit to Theresa May and Greg Clark, Carolyn visited some of Wales’ most forward-thinking and innovative firms and took questions from an invited audience of senior executives from right across Wales.
Last Wednesday’s Budget did not deliver the promised “workmanlike”, even “boring”, Budget that had been predicted. Instead we saw quite significant changes. For me there were three takeaways for Wales.
First, the Chancellor’s words of encouragement for a successful North Wales Growth Deal and Swansea City Deal are very welcome. Business needs a robust and effective deal for both Swansea and North Wales and we are hopeful a conclusion will soon be reached. Welsh city deals have spurred new thinking and have potential to deliver tens of thousands of new jobs in innovative new fields if meaningful public-private sector collaboration is maintained. We need real partnerships from the public sector, and not just lipservice. New ways of working, new ideas and outcomes that help transform the Welsh economy.
Secondly, like the Welsh Government, CBI members value apprenticeships but see the UK Apprenticeship Levy as a blunt tool for the job. The Chancellor confirmed plans for a 0.5% levy for all companies with an annual pay bill of more than £3m.
Firms in Wales will be looking for ongoing partnership with the UK and Welsh governments as they try to make the levy system work. This is especially the case for firms that have a UK-wide footprint, as they will be required to administer two, three or even four separate apprenticeship systems. These firms will need flexibility and understanding as they get to know these new arrangements.
Finally, the £270m Industrial Strategy Challenge Fund will bring together business and higher education in a joint effort to forge the industries of the future. With Research Council spending not devolved to the Welsh Government, this is a critical opportunity for firms and universities in Wales to collaborate and create new and exciting innovations. The Welsh Government must ensure we fully capitalise on this fund’s potential.
On Thursday, Carolyn Fairbairn visited Principality Building Society and Welsh Water, and on Friday she visited SPTS and the University of South Wales’ National Cyber Security Centre in Newport. These firms are from a range of sectors but they have one thing in common – innovation. Whether it was providing mortgages, clean water or etching in the global semiconductor industry, all of these firms not only invest in innovation but foster cultures of innovation. With Wales continuing to languish at the bottom of the UK’s productivity league table – some 17 years after devolution – it is clear that firms like these have something to teach both our private and the public sectors. We need to be proud of, and learn from, these Welsh success stories.
And on Thursday evening I was delighted to open a Q&A with Carolyn, kindly hosted by the University of South Wales and compered by ITV’s Carole Green.
Unsurprisingly, given that this is one of the most important issues facing Wales in a generation, questions were dominated by Brexit and its implications for Wales.
With the EU the destination for 44% of all the UK’s exports, continued access to skilled workers and to European markets are crucial to the future prosperity of the UK.
I am very concerned about Brexit and the implications for the Welsh economy if we get this wrong.
Too many commentators and politicians do not yet fully understand that a successful Brexit depends on resolving a myriad of detailed and specific issues – simply walking away without a deal is not an option for an export-based economy such as Wales.
If we leave the single market and customs union, the UK needs a comprehensive, wide-ranging free trade agreement negotiated to give the UK and EU sustained access to each others’ markets. Nobody is saying it will be easy but if we fall back on the World Trade Organisation rules, we should be under no illusion about what that would mean. It would result in tariffs on imports, regulatory hurdles and almost inevitable border delays for exporters and importers which in turn would have a far-reaching impact on a great many firms in Wales.
With Theresa May predicted to trigger Article 50 before the end of March, the Welsh Government must do all it can to ensure that the voice of Welsh business is at the forefront of their discussions on Brexit with the UK Government – and at the same time use its considerable devolved powers to carve out a progrowth strategy that makes Wales the best place to establish and expand a business. If we do anything less, future generations will not forgive us. The future of Wales belongs to the courageous, not the fainthearted.