Good afternoon and thank you for the kind invitation to address you today.
The importance of the Construction Industry in Wales
I don’t think I need to say to this audience that the UK government is committed to and recognises the contribution and importance of the construction industry to the UK economy and of course to Wales.
Despite the challenging economic news elsewhere, and believe you me it is challenging, I would like you to know in the first quarter of this year the Index of Construction for Wales showed a rise of 2.6 percent. You probably all know this very well. That is a testament to the hard work of businesses here and particularly when you compare that figure to the UK wide position which showed a decline of 4 percent. So I think that we did better than average here in Wales.
And I am also incredibly proud that Welsh Architects and builders have been responsible for so many of our iconic Welsh landmarks. Jonathan Adams inspired the Wales Millennium Centre here in Cardiff and I don’t know how many of you have been to, for example, Mostyn Gallery in Llandudno. I visited some time ago and I think it’s lovely. Of course, Hafod Eryri, perched high up on Snowdon, which I have still to visit. Unfortunately I have had to cancel (inaudible).
But I think w have to be confident in bringing forward new, innovative and bold designs. We should not suppress or inhibit creative talent in Wales. I think we have talent in our country here which is to be applauded.
Not only have we got talented designers and builders to our credit but we also have some of the world’s best materials to work with - right on our doorstep.
You only have to look at the roof tops across the country - and some of our iconic buildings, the Millennium Centre and of course the Senedd. You can see the versatility and practicality of fine Welsh slate and that provides a great material for designers, and the construction and building industry.
Our builders of the past are also well recognised. I recently had the privilege of travelling along the Llangollen canal and conducting a very long business meeting in a canal barge over the Aqueduct there.
Welsh waterways are a credit to the built environment history in Wales and I think the aqueduct truly deserves its recognition as a UNESCO world heritage site. And visiting it showed me that innovation, vision and creativity are not new ideals, I think the design and construction industry in Wales has benefited from these specialist skills for many, many years. (inaudible)
A number of you will be involved in projects and programmes that require innovation, vision and creativity. And your contributions have a direct and lasting impact on our towns and cities, and on the infrastructure that links them together. This morning we were talking about roads, bridges, rail networks, ports, airports and everyone in this room represent a vital role, a role that is played in the physical and social development of our society for today and in the future, and in the quality of life that people enjoy.
The Infrastructure underpinning our Society is key. And we need innovative solutions to create new telecommunications and broadband networks, alternative energy hubs, power stations and even alternative transport routes.
Challenges facing the construction industry
But of course there are challenges facing the construction industry right across the country. The economic situation we inherited is well known. (inaudible) Our aim is to ensure however that the private sector grows. And working with the Welsh government, our aim is to lock-in long term economic stability, job creation and prosperity, so that we open up opportunities for individuals and companies.
It is of course the government’s role to create the right environment for your industry to grow. But never make the mistake thinking that the government creates jobs. It is your businesses that create the jobs. We just have to create that more beneficial environment.
And it’s not all doom and gloom.
In the first six months of this year, the UK economy has grown faster than the US economy - despite the latter’s massive fiscal stimulus. The private sector has created over half a million extra jobs. Our borrowing costs have fallen to record lows showing that UK government debt is seen as a safe haven in the global debt storm and saving money for taxpayers, businesses and families.
Despite what you read in the press there has also been record investment. Businesses have invested £91.4 billion across our economy - that’s up 9 per cent on the previous year. Britain’s credit rating, which was put on negative outlook under the last government, has been restored to its highest possible level. Those are all positives.
However, we have acknowledged that the current economic climate risks a shortfall in finance for capital projects, and that there are many conflicting priorities within the sector itself.
At the last Budget we set out measures to improve the environment for business. And so we are cutting tax for businesses and entrepreneurs, and we are scrapping burdensome regulations which hold companies back. All areas I know you have been discussing here at this mornings conference.
But I’ve also heard from private sector businesses that getting access to finance has been an issue for many viable projects. This issue let me assure you continues to be a priority for the government and we are working to improve access to finance through the Business Growth Fund.
The latest lending figures show that the banks are broadly on track to meet the £190billion target we set them for lending.
And I can only re-emphasise to you in this room that the message is if the banks are not meeting agreed targets then we will take further action to bring this lending about. So I would be interested to hear if the lending situation (inaudible).
Our ‘Plan for Growth’ sets out a new wave of reforms to restore Britain’s competiveness. And from the very first days of the coalition government, our strategy for the economy I think has been quite clear; growth must come from the private sector, and we have identified the construction industry as a key part of our Plan for Growth.
Now, Phase 1 of the plan which we announced has over 130 reforms all aimed at making life easier for businesses to recruit and grow. Phase 2 is more ambitious - and particularly relevant to you today. It’s going to specifically look at infrastructure: how to eliminate barriers and encourage infrastructure investment across the UK. And I would encourage you to participate.
I am keen that the measures we announce as part of the Growth Review benefit Wales from the start. Where responsibility lies with the UK Government, I can ensure you that will happen. I can ensure that it happens. But, where the responsibility lies with Welsh government we will always offer to work with them. But you as an industry must also participate by providing feedback to all of our consultations.
Major infrastructure projects
Looking briefly at energy.
My vision for the future Welsh economy is of a forward looking, innovative Wales that is open to new ideas and takes them out to the rest of the world. And putting Wales at the centre of the green economy I think is at the heart of that and the Green Investment Bank itself will bring new types of investor into infrastructure development.
I think there are significant opportunities for investment in our energy infrastructure that will help tackle climate change and secure our country’s energy supplies.
Wales is already playing a major role in this, with schemes such as the offshore wind energy development at “Gwynt-y-Mor” and of course the potential for Anglesey. I has been dubbed the energy island and we must never forget that Anglesey has a tremendous amount to offer.
The energy sector I believe has a strong future in Wales and I think that we do need a unified planning system that takes account of the needs and demands of the local communities. When it comes to major energy (inaudible)
Government funded projects
The UK government is making significant investment in major infrastructure projects here - with nearly £60million of funding to help deliver super fast broadband, something which I am very keen on, we are now challenging the Welsh government to match this to ensure that we reach as many areas as possible with match funding. I believe this to be one of the new highway for business growth in the 21st century.
We have also committed to investing over £1 billion to electrify the Great Western Mainline into the south and are currently working with the Welsh government to develop the business case for the electrification of the busy commuter routes along the Valleys lines north of Cardiff which I know will be of great interest to some of the delegates today. When we announced the electrification of the line to Cardiff earlier this year we were also sending a very clear message. A message that Wales is open for business and that it is very much a focus of attention of the UK government.
And I am sure that you will also have seen the announcement last week that we are developing proposals for a new rail hub which will provide an essential link between Wales and Heathrow opening up further opportunities for businesses and industries in Wales.
Now, my office - both in London and here in Cardiff, plays an active role in ensuring that Wales receives its fair share of the available investment, and it is always working on future plans. And I’m not averse to Wales getting more that its fair share.
The case for electrification of the rail line to Swansea remains open, and so I am continuing to work with the Secretary of State for Transport.
But that particular element isn’t only a decision for the government in Westminster. I actually believe that at all levels of government, including the Welsh government and the European Union, we must look at what role they have to play in such a project. I think we’ve got to look at the options. Indeed, as we progress with the discussions on the future of the EU Trans-European Networks programme, we will explore whether that would be a viable option for a contribution to a project such as this in future.
Now dare I go on to planning? I think you’ve had a good session on planning this morning.
I am constantly being told by businesses and industry that governments need to work together, and that planning systems need to be more closely aligned.
We are making changes to the National Planning Policy Framework in England which has introduced a powerful new presumption in favour of sustainable development.
I will share with you that I have concerns that the changes we are making to the planning regime in England will not be replicated in Wales but it is of course now a devolved matter.
‘Working together’ is one of the main messages that I get from business and industry contacts. I think I can safely say to this and any business audience that you want government to be seamless. You don’t care where the rules you abide by come from as long as they are the right ones.
So I have done what I can. I have established regular meetings with the First Minister and continue to seek a joined up partnership to secure the best interests of Wales.
However, many of the growth policies we are putting in place are devolved to the Welsh government and of course our plans must respect the devolution settlement. The Welsh government must make the decisions in devolved areas which it considers to be right for Wales.
And when it comes to the economy, however, I truly believe the interests of Welsh businesses are strengthened if governments work together, not against one another.
If any of you have heard me speaking before. I have spoken in the past about the dangers of a ‘slate curtain’ along the border between Wales and England. I think people in Business and Industry can not operate successfully in isolation from other markets. Certainly not from the market quarters as close as England is to Wales. For our governments, our future should be about co-operation and collaboration and not about competition and confrontation.
So I think engagement between our two governments is the only way to strengthen the Welsh position. Working together in the national interest to deliver more jobs, more investment and better services and better infrastructure.
Let me give you an example. You will be aware that in the Budget in March we announced Enterprise Zones, that we were creating Enterprise Zones in England. Now we are setting up 21 New Enterprise Zones and Businesses will benefit from those zones. We announced not one trial (?) but two. In these zones there will be super fast broadband, there will be lower taxes, low levels of regulation, and the business rates collected will be held and used locally.
Now I have encouraged the First Minister to use the money that has been passed to the Welsh government to introduce something similar for Wales.
I don’t think we can afford to have investment drain out across the border and I was therefore pleased to hear the First Minister’s statement that he would work with us on this and I hope he will make his proposals public very soon as areas of Wales need the same competitive advantages as their English counter-parts - especially, and I cannot reinforce this too strongly, especially where businesses are sited so close to the border. Especially when those Enterprise Zones are so close to the border.
Commission on Devolution in Wales
And now shall I say, to the more obscure part of my job.
While getting the economy back on track will always be one of the biggest challenges we face, I also need to ensure that the constitutional relationship between Westminster and Cardiff is the right one.
Following the ‘Yes’ Vote in the Referendum in March, I’m sure you are all aware that the Welsh government will be able to make laws in all twenty of the areas devolved to Wales. The people had their say in that referendum and I believe that now is the right time to consider how to make the devolved institutions - both the Assembly and the Welsh government - more accountable to the people they represent.
So in July, I announced the government’s plans to set up an independent Commission on Devolution in Wales and I am working to establish the commission this autumn.
The commission will examine the issues of fiscal devolution and accountability and will look to build a consensus around the recommendations it makes. It will of course take into consideration the work that was carried out on the Holtham Commission, that was carried out on behalf of the Welsh government. We will aim to report on the fiscal and accountability settlement by the end of the autumn 2012.
Once we have considered the commission’s recommendations on financing, we are going to move on. The commission is going to turn its attention to looking at the boundary between what is devolved and non-devolved in Wales, how well it is working and specifically to consider whether we need to make recommendations to change those boundaries. The commission will aim to report on that by the end of 2013. And there will be a report (inaudible) in letting people know what works and what doesn’t work. The tidying up of devolution so that we have a better (inaudible).
I am consulting the Welsh government and all parties in the Assembly and trying to move forward and I will be announcing more details on the commission shortly.
Now I have only been able to touch on some of the things that you will get from government:
- chiefly, we are going for growth - our plan for growth we hope will bring sense and sustainability to the public finances
- but can I also assure you that whilst I’m Secretary of State for Wales, I will always provide an open door to listen to what business and industry, particularly your industry needs
- I undertake to ensure that Welsh interests are represented at the heart of our government and at the heart of our plans to re-balance the UK’s economy
But having said that I am a realist.
And yes - politics can sometimes get in the way but we will work with the Welsh government to ensure that Wales thrives and prospers. Our economic prospects are too fragile to be messed about by political rhetoric and rigid dogma. I am convinced that continued engagement between our two governments is vital for economic success.
We are striving to be the most pro-growth government in living memory. And we will drive forward a programme with one main purpose - the purpose of creating jobs.
The economy is our focus and we will continue to deal with the huge deficit we inherited in our steps towards recovery and growth.
But let me also tell you that we are on the side of enterprising business and enterprising people - and there are no ‘forgotten areas of our nation when it comes to growth.
Thank you so much for inviting me here today.
I hope I have left you with some strong messages from government. But I very much hope that this will be the start of the (collaboration) between your organisation and my office and if there is anything you need but bring to my attention please do so.
Thank you very much.