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4.12 pm

Mr. Mark Prisk (Hertford and Stortford): I commend the hon. Member for Gower (Mr. Caton) not least for identifying the importance of perceptions. We of all people should understand that, in the information age, perception is often more important than reality. The same applies when one is trying to promote a country, a nation or a city. I therefore also want to pick up the theme that he began—trade and investment—and to consider the position of Wales in the economic world.

The Select Committee, of which I am now a member—I was not a member when it prepared the report—received a wide variety of evidence about the characteristics of the Welsh economy. Those characteristics represent both strengths and weaknesses. Among comparative strengths, the most important items were a very skilled work force who have high productivity, and, in tandem with that, good industrial relations and few strikes. In addition, Wales has now developed centres of excellence in several different business sectors—the one that comes to mind is the information technology and telecommunications sector. Since 1990, £3 billion has come to Wales, involving 200 companies, in that sector alone. People in Wales can take considerable pride in that.

In terms of weaknesses—there must be two sides to any argument—one of the worries highlighted in the report is the relatively low level of research and development investment in Wales. Sometimes, that can be a symptom of inadequate innovation. Secondly, there seemed to be low levels of entrepreneurial activity.

Chris Ruane: The hon. Gentleman has a point—there has been a lack of research capabilities in Wales in the past. Is he aware, however, of a £10 million project, the Opto Electronic Incubation and Research Centre, which will be based in my constituency in north Wales? It is tied in to Aberystwyth university, Bangor university and the North East Wales institute of higher education. I hope that it will fill that gap in my part of north Wales.

Mr. Prisk: The hon. Gentleman brings good news to the House, which I am more than happy to support. It is a good example. We must hope, however, that it is not merely an example in isolation, and that there are more projects of that nature. I suspect that there will be many more.

Huw Irranca-Davies rose

Mr. Prisk: As the hon. Member for Ogmore (Huw Irranca-Davies) is an even newer Member than me, I shall generously give way again.

Huw Irranca-Davies: I thank the hon. Gentleman for his courtesy. The centre to which my hon. Friend the

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Member for Vale of Clwyd (Chris Ruane) referred is not an isolated example. I am sure that the hon. Gentleman would also welcome the Technium centre in Swansea.

Mr. Prisk: I am always happy to allow an advertising intermission. I shall now resume my speech.

The third aspect of the evidence to the Committee that worried me was the relatively low profile of Wales in the business world. The hon. Member for Gower referred to that. There was another allied weakness: an over- reliance, which is perhaps historical, on low-value products. That is not totally true—as Labour Members have demonstrated, there are always good examples to bring to the fore—and Ford's investment in the Premier Automotive Group in Bridgend is an encouraging sign that what might have been thought, historically, to be lower-value manufacturing products can be turned into higher-value products. That is a welcome trend.

In considering strengths and weaknesses, the Select Committee has recognised that the Welsh economy is undergoing a long-term fundamental transformation from an economy based on primary and manufacturing industry into a genuinely mixed economy. That transformation is, of course, still under way. If I may, I shall therefore focus on two aspects of the report's findings—inward investment and indigenous businesses.

The Welsh Development Agency has an excellent record on inward investment. Although the Welsh population is approximately only 5 per cent. of the United Kingdom population, inward investment in Wales throughout the 1980s and 1990s was pro rata far higher. In 1991, inward investment was 19 per cent. and, even last year, despite a considerable fall, it was 11 per cent. of total UK inward investment. That is still double the inward investment that we might expect were we to relate it to the population size of Wales. That is tremendous testimony to the work of the Welsh Development Agency and other Government agencies in the late 1980s and the 1990s.

Equally, we should not underestimate the value of signature projects such as the development of the Millennium stadium in Cardiff to which hon. Member for Montgomeryshire (Lembit Öpik), who is not here at present, referred. These projects help to attract international attention and to change perceptions—as the hon. Member for Gower said—about the attractiveness of a city and its qualities as a business location. That is why I was happy to lend my support to Cardiff's bid to be European city of culture in the future. It was encouraging that that was supported across the House.

As the Secretary of State highlighted when he opened the debate, inward investment from international business has helped the Welsh economy change and has provided much-needed jobs. As he also accepted, however, it is not a panacea. In some ways, inward investment raises as many questions as it answers. For example, is there not a danger of merely replacing one big company with another, thus perpetuating a community's dependency on one employer? Can we rely on footloose multinationals to create jobs, given their collective record? Furthermore, is it not a fairly expensive way of creating jobs?

Those questions lead to a realisation that inward investment on its own will not produce the long-term structural changes to the economy that are so important. To do that, we need to address the needs of indigenous

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businesses, large and small. The Select Committee's report found that, by comparison with England and other European Union countries, entrepreneurship in Wales, sadly, lags behind: a low number of start-ups; poor levels of research and development, despite some good examples; a lack of key marketing skills; and too few Welsh small businesses engaged in international trade. Those are all symptoms of what I might term an entrepreneurial deficit.

The Select Committee's report identified objective 1 status and funding as offering perhaps the greatest hope of reversing that deficit. Although I am not opposed to objective 1 and similar projects, as a former small business man, I am sceptical about the genuine quality and opportunity that top-down government schemes offer. There is certainly much activity and many schemes, initiatives and funds. However, to date, the results do not bode well. What is lacking is a clear understanding of why people become their own boss—their motives and aspirations. We therefore need to be realistic about the environment in which enterprise operates in Wales.

First, many sole traders and husband—and—wife partnerships have no wish to grow. They run the local shop or pub, and they want simply to be independent and make their own way in the world. The prospect of radical growth and driving into new markets—together with all the bureaucracy that inevitably comes with that—holds little appeal for them. Given that many small businesses and self-employed firms already spend up to four working days a month filling in Government forms, is it any wonder that they are hesitant to embrace the ideology of growth?

Secondly, many Welsh and Cornish communities— I say this as a Cornishman—are naturally small and self-contained, and others may have known only one large employer throughout the history of the community. The employer might have been a mine or a steelworks, and that is how it has always been. The danger is that there is no entrepreneurial role model in those communities and no culture of making it by oneself. That is why I said that there is a sense in which inward investment does not necessarily tackle the root of the problem. The danger is that it will merely reinforce the problem. We move from one steelworks in a town to one call centre. I cite the example of call centres because of the sad news of the job losses at Pembroke dock. In some ways, that underlines the danger of relying simply on inward investment.

The third characteristic that shapes the environment for enterprise is the fact that, in the communities that have relied on the jobs of one employer, the people who want to get on often move on. The danger is that they will move to the bright lights of Cardiff or London. Therefore, the single most important thing that any Government can do to focus on changing the culture is to raise people's aspirations.

I would like to consider several practical ways in which we can make a difference in Wales and raise people's aspirations. First, in education, the emphasis has been on teaching business and enterprise in schools. That is fine, because teaching has its role. However, the real need is not to instruct but to inspire. How do we do that? A good example—I had the privilege of being part of it in the past—is the Prince's Trust, which was founded by the Prince of Wales. The trust supports budding entrepreneurs, and many Members will be familiar with its work. At the heart of its work is the role of the mentor.

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I was self-employed and I had the opportunity to help other youngsters to come through the process and get involved in becoming their own boss. It is important to provide hands-on experience or to act as a role model. Such a direct approach is highly successful.

The other aspect of the issue is to educate not just youngsters but members of the public sector. That means trying to help civil servants, who may not have direct experience of enterprise, to understand the practical realities of running a small or large business. In particular, the Industry and Parliament Trust does wonderful work to help civil servants and big business to work together. I am also aware that a fellowship for small businesses enables parliamentarians to gain experience. However, we need to go a step further. In Cardiff and Whitehall, we need to consider extending the scheme so that civil servants and small businesses can gain experience from one another. I do not know whether the new head of the civil service will embrace that suggestion, but the noises that he has made so far are encouraging.

Another practical suggestion that I wish to make relates to the removal of barriers to growth and enterprise, and I will give three brief examples. First, the report refers specifically to objective 1, and the Committee is engaged in further discussion of how that is working. However, the report shows that the process is too slow and that many enterprises find it too time consuming. The barriers are too high and the worry is that the administrative process is reactive and not proactive. We need change in that regard.

The second barrier that concerns people is the discrimination in the United Kingdom and Wales against the self-employed. We need to remove such discrimination in a legal and taxation sense and then go on to consider how we can end the discrimination against the self-employed when it comes to bank loans and mortgages. Both sides of the House can engage in that agenda.

The third barrier relates to regulations. Although I am sure that Labour Members would be only too thrilled to hear me wax lyrical on the subject at length, I will merely say that last year 4,642 new regulations were introduced. For many small business men—we return to the question of perception—that is 4,642 new reasons why they do not want to grow the business, take on a new employee or, for that matter, come into business at all.

Investing and doing business in Wales has much to commend it. A skilled and productive work force lie at the heart of Welsh competitiveness in what is an increasingly mobile and cost-conscious world economy. However, the root problem of changing the entrepreneurial culture in both towns and villages is not being addressed fully by the Government or by the Assembly's policies and schemes. Drawing in inward investors and multinationals has its place but, in the end, the future of the Welsh economy and enterprise lies in the hands of the Welsh people. They have raised their skills and their productivity; we now need to help them to raise their aspirations to be their best.

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