Earlier this week the UK Government announced a list of eleven projects in Wales that had qualified for £208m from its Levelling Up Fund. As would be expected with only half of the local authorities in Wales receiving this funding, the decisions were seen as controversial to say the least.
Some have argued that headlines such as “new cycle routes and historic monuments will benefit from a multi-million pound Levelling-Up boost” suggest that it is difficult to envisage how the majority of the projects will make a real difference to the Welsh economy going forward.
Yes, all the projects are worthy in their own ways, and one cannot blame local authorities for putting forward projects they believed could win under the narrow criteria set for the fund.
But does the refurbishment of a theatre or the creation of a cultural centre really make a step change to the Welsh economy which, like many other parts of the UK, is struggling through a combination of high inflation, labour shortages and increased costs?
As readers of this column for the last twenty years will know, I have been consistent in my view that any economic development projects should be examined through the prism of one simple question, namely what are the key opportunities and challenges within Wales and do they address this?
And in my opinion, as with the rest of the UK, the main challenge to levelling up the economy is addressing low productivity which has been a drag on the Welsh economy for years.
As the economist David Smith recently pointed out in his excellent Sunday Times column, productivity should be a priority for UK economic policy given that British businesses have fallen behind our main competitors in Germany, France, and the USA, with productivity in America being almost 50 per cent higher than the UK.
Worse than that, Wales has one of the lowest levels of productivity in the UK and this has not improved significantly for the last two decades.
Given this, productivity must be at the heart of levelling up in Wales resulting in better skills, higher wages and the jobs of the future, and every project funded by both UK and Welsh governments should show how it will improve productivity in the future. Unfortunately, very few of the levelling-up projects funded this week will do that and it is a lost opportunity to make a real difference to the Welsh economy.
Another key concern over the Levelling Up Fund is how decisions were made to award the funding. I will not add to the controversy of how and where the money was allocated, but one of the anomalies is that if there is devolved responsibility for economic development, then devolved administrations and other regional economic bodies must clearly have an input into decision-making in this area.
Those who have read this column over the last twenty years will know that I have never been shy in being highly critical of the Welsh Government when it has failed to grasp the opportunities to make a real difference to the Welsh economy.
Yet whatever you may think of the Welsh Government and those who run it, there should at least have been a broader discussion on the priorities for the Welsh economy and how the levelling-up funding could have complemented these priorities.
Indeed, one of the mantras that I have heard time and time again in developing new entrepreneurship programmes globally is that there is no competition in collaboration. As a result, there could have been greater dialogue between UK Government, the Welsh Government and the City and Growth Deals in identifying how to transform the Welsh economy together in partnership. Certainly, if there can be constructive discussion over the development of freeports in Wales between the two governments, then why was there no real discussion over levelling-up priorities?
Another key opportunity that has been lost in the levelling up process is to get buy in from Welsh entrepreneurs and businesses for the development of the levelling-up agenda. Businesses are the wealth creators in any nation and most of the success in terms of developing the economy will be driven by the private sector. Yet, as with most of the policymaking that goes on in this country, they have been largely excluded from input into major policy decisions such as the Levelling Up Fund and it has been an opportunity that has been lost to change this process and to get businesses in Wales to feel they can contribute to the levelling up agenda.
And whilst I have no problem with civil servants managing the process for the Levelling Up Fund, the final decision on projects could and should have been made via a panel of those who understand how the economy works on the ground and the priorities needed to kick start it at a difficult time.
Finally, and most importantly, there is a need to communicate the challenge of levelling-up the UK economy especially here in Wales. To be blunt, this has been poor to date and there has been little effort to engage the public and local businesses about what the levelling-up agenda is about in an engaging way that drives the important message that we must boost economic prosperity in every part of the UK economy.
Billions of pounds of taxpayers’ money will have been spent on a range of different initiatives including the Levelling-up Fund, the Community Renewal Fund, and the Shared Prosperity Fund, and yet most people have no idea at all of what is happening and how those projects are making a difference in their local communities.
That needs to be addressed urgently and whilst any additional money such as the levelling-up funds are to be welcomed in Wales, much remains to be done to ensure that businesses and communities are fully involved in such initiatives and, more importantly, that such funding makes a real and tangible difference to the Welsh economy in the future.
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