Wales: Economy

Lord Rowe-Beddoe Excerpts

Monday 7th April 2014 Grand Committee

[Lord Rowe-Beddoe (CB)]

My Lords, I, too, thank the noble Baroness, Lady Morgan, for this debate. I wish to place on record my regret that at times it lapsed into political partisanship. In my opinion, the topic that we are debating is far too important to have snide political fights about. I declare three interests that have significant economic impact. One is the Welsh Millennium Centre, the second is the Royal Welsh College of Music and Drama and the third is Cardiff Airport.

In Wales, as we have heard, unemployment is lower than the UK average, at 6.7% versus the UK average of 7.2%. The private sector is growing, youth unemployment is falling and the Welsh economy as a whole is growing. However, there is still much ground to make up because, as has been mentioned today, what we are seeing is all coming off an unacceptably low base. Wales is still bottom of the UK GVA table and, given my passion and commitment to our country—and the same goes for all noble Lords in this Room today—I say that we have to climb that table, and fast. Let us not forget that we have done so in the past.

In many ways, the opportunity and challenge at the macro level is mirrored at Cardiff Airport, which will be the focus of my contribution today. In my current role there, I have witnessed over the past 12 months the enormous potential that exists at the airport as part of a strong and vibrant aerospace enterprise zone, and it will play a significant role in the economic recovery in Wales. We have seen growth in passenger numbers—a mere 9% in the first 12 months but, like the Welsh economy, that started from a low base.

The impact of the airport on the regional economy is multifaceted and complex. First, the airport is a major employer in its own right. Taking into account the world-class British Airways maintenance, repair and overhaul facility, the airport supports over 1,600 full-time equivalent posts. Incidentally, that decision by British Airways to locate in Cardiff was taken in the early 1990s by the late Lord Marshall of Knightsbridge, and British Airways has never regretted it. Yet this direct employment is just the first part of the story. The second is that with the indirect and induced employment across a range of sectors, when combined with the direct employment, evidence now suggests that the airport has a total operational impact of 2,600 jobs. This equates to an overall GVA impact in excess of £90 million.

There is a third part of the story. When we look beyond the perimeter of the airport fence, we can see that it has a wider, catalytic effect on the regional economy. While this is much harder to quantify, the evidence suggests that inbound tourism alone adds a further £50 million to the Welsh economy when its own indirect and induced factors are taken into account. All this from an airport that carries only 1.1 million passengers—fewer than 10 years ago, when it carried over 2 million.

The final part of the story is where there is potential for the airport, as it grows, to contribute significantly more: the enterprise zone. We have already seen examples across the UK, such as in Manchester and Newcastle, of airports now serving as mini-cities and economic hubs in their own right. This potential exists in Wales. We are fortunate to have the St Athan-Cardiff Airport Enterprise Zone, which is already attracting investment and new jobs. The zone has a vision for Wales to truly establish itself as a global leader in the aviation and aerospace sectors. This is no pipe dream. Many noble Lords know about BAE, GE engine maintenance, BA avionics and so on. We have a vital supply chain in the aerospace industry but I never hear anyone talk about it. It is a very strong part of Wales, and these are not low-paid jobs. In the north and the south, this industry is operating and growing effectively and there is much more to be done.

I will say two more things before I sit down. I am sick to death of the Barnett formula. I sat on your Lordships’ Select Committee under the previous Government. We have underfunded Wales for 30 years. The noble Lord, Lord Barnett, if he came into this Room, would say exactly the same, but it is always kicked off into the long grass. Now we wait for something else. Whichever Government are in power, we never get our fair share.

Finally, war has a few outcomes: victory or defeat. Do we want to have war? Would it not be better to have a truce and move towards real partnership—partnership between Cardiff and London?