Inward Investment (Wales)

Jonathan Edwards Excerpts

Thursday 29th November 2012 Westminster Hall

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is a pleasure to welcome this report, which I was pressing for. Wales sits within the UK economy and the global marketplace, and we all need to pull together in both the Welsh and the UK Governments to provide the best opportunities for Wales in a changing environment and to give Wales the tools to do the job. I will cover the basic ground of the report and what we should be doing in Wales, including in the councils, focusing primarily, as has been said, on the UK Government’s responsibilities to present Wales as an accessible, adaptable and attractive location for inward investment in a global marketplace.

Obviously, we cannot compete on labour costs as we did in the past with China but we have electronic global market reach and clearly competitiveness is about added value and skills. Emerging markets in China, India and south America should be seen as major opportunities for emerging consumer markets of high value products, whether arts or science-led, for the Welsh economy. We should refocus our efforts in that way.

Following the global financial tsunami in 2008, Wales is particularly vulnerable, because the proportion of people in the public sector is greater, and as the Government begin to reduce the investment in public sector jobs and wages, consumer demand is disproportionately hit. We know that the root of very low or static growth in the UK is the collapse of consumer demand, which was still going up in 2010, albeit with a deficit, but the announcement of 500,000 job cuts deflated that and we are now bouncing along. The issue is to keep money going into local economies, and to target investment in the most productive area.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Does the hon. Gentleman agree that the big headwind in household expenditure has more to do with the huge personal debt bubble and asset bubble built up under the last Labour Government—£1.4 trillion, and 100% of GDP? That is an incredible record and far higher than any other state in the developed world. Is that not why consumer spending is collapsing?

[Geraint Davies]

I was not expecting to hear cries for austerity from Plaid Cymru, but there you go. They come from all sorts of directions.

Very briefly, you will know, Mr Bone, that between 1997 and 2008 Britain enjoyed a period of more rapid growth than had been seen since the war with paid back debt, massive growth in employment, and reductions in welfare costs. After the financial tsunami of 2008, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and Barack Obama got the fiscal stimulus going so that we did not go into a global depression, which the hon. Gentleman seems to be calling for. In 2010, we then had a deficit, which the coalition Government inherited. Two thirds of that was due to the bankers and one third was due to excess investment above earnings to pump-prime the economy and keep it growing. The current Government then decided to focus more on cuts than growth to get the deficit down, ending up with virtually zero growth, and the deficit has been growing ever since. I do not know whether the hon. Gentleman wants to cross the Floor to the Conservative side, but when history is written, it will be seen as a painful place to be.

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[Geraint Davies]

That is kind of you, Mr Bone; thank you.

I want to mention the issue of city regions. In terms of working together in a critical mass in a global marketplace, one benefit of trying to bring together the four local authorities of Swansea, Neath Port Talbot, Pembrokeshire and Carmarthenshire, plus the universities and industry, to argue the commercial case as well as the social case for electrification of the railway to Swansea was that there was a refocusing on the common interests of that area.

I am very pleased that the Welsh Government have taken the initiative in doing a consultation on city region status and have given the go-ahead for the Swansea Bay city region to move forward. Swansea has always been seen to be, to a certain extent at least, in the shadow of Cardiff, so it is interesting to note that Cardiff itself contains about 300,000 people, but the continuous urban footprint of Neath Port Talbot and Swansea, going to Llanelli, is one of about 400,000 people —the biggest urban footprint in Wales. We can work together within that and within Carmarthenshire, haloing out to Pembrokeshire and, indeed, Ceredigion—there is not really anywhere to go beyond that. The hon. Member for Ceredigion (Mr Williams) is very welcome in the Swansea Bay region. I am talking about working together to have a diverse skills base. Working with the universities and the local authorities to get coherence, focus and value for money is very important.

I have already welcomed the rail electrification. It was regrettable that we had to work so hard to get the Government to agree to an extension from Cardiff to Swansea, but that was very good news. As I have said, the next thing that we want is to be able to say that we have super-connectivity.

Of course, the Swansea Bay brand has been created partly through football. The Minister will know that Swansea won 3-1 against West Brom last night. That sort of news is transmitted to 600 million people in 200 countries. That is important because the name Swansea is then known. Increasingly, people are hearing of Swansea who may not even have heard of Cardiff. That is amazing.

[Jonathan Edwards]

I just want to add to the excellent point being made by the hon. Gentleman. As colleagues know, I have just returned from my honeymoon in Cape Verde, and I actually watched the Swansea game against Liverpool live on TV in my hotel room.

[Geraint Davies]

I bet the hon. Gentleman’s wife was happy about that, with him shouting for a goal, but there we are. I wish him a long and happy marriage while watching Swansea. I thank him for that intervention, which was very welcome.

On a serious note, the Swansea brand is of course a global brand, so there is an opportunity to attach various values to it, including the fact that it is a nice family and business environment by the sea. With internet connectivity, why would people want to be in the expensive congestion of London, for instance, when they could be overlooking Swansea bay? The fact that there are sporting successes, good schools, a good health service and so on is critical to that.

I mention that point partly to move on to the regional pay issue. The Government have been considering the case for regional pay, and I will say two things about that. First, reducing the pay of people in the public services in Wales by some 20%, which is the implicit agenda, would remove even greater amounts of economic power from the consumer markets in Swansea and, again, push down the private sector; but as important or possibly more important, GPs and other public servants would think that they would be better off getting a job in Bristol, where their pay would be higher, and suddenly we would be denuded of some of the best GPs and other public servants. That would have implications for inward investors, who are being taken, for instance, from London.

Let us consider how inward investment works. UKTI promotes the UK. Someone says, “Okay, I’ll go to the UK. That sounds great in terms of stability, environment, access to Europe and everything else, but where shall I go in the UK”—that is the next decision—“and how do we have added value there?” Of course, in Wales, we have environmental opportunities. We want to increase accessibility, skills and research and development. However, if the families going there suddenly do not have the right GP or education services because of wage deflation in Wales, that will be very bad for inward investment.

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[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

It is a pleasure, Mr Bone, to serve under the chairmanship of the star strike bowler of the parliamentary cricket team. I had not intended to speak, so I will keep my speech brief. I will be probably more disjointed than I usually am in my parliamentary contributions.

The report is hugely important—I congratulate the Chair of the Welsh Affairs Committee—and has been well-received, especially by the Welsh media, who gave it significant coverage. As we know, economic growth is driven by four interconnected factors, the first of which is household expenditure, which accounts for 62% of GDP growth in the UK. That is perhaps testament to overdependence on that specific component during the Labour years. The second factor is Government expenditure. We are witnessing more than £80 billion of cuts during the current comprehensive spending review, which is a major head wind for the course of the British state. The third and fourth factors are exports and business investment, in which foreign direct investment—FDI—plays a huge part. The report was very timely.

At one time, Wales was a world leader, or definitely a leader within the UK, in generating FDI. Behind my family home in Capel Hendre is an enormous industrial estate, with companies from Korea, Japan, the US and, indeed, all over the world, which is testament to its success. There have been concerns that we are over-reliant on foreign direct investment and not sufficiently promoting indigenous businesses, but there is now growing agreement that the pendulum has swung too far the other way. Unfortunately, Wales is now among the worse-performing constituent parts of the UK in terms of FDI.

We are living in an age of reductions in Government expenditure and of contraction in household expenditure. Recently, the consumer confidence index was at minus 30 —the lowest it has ever been—showing the huge economic head winds that are being faced. The hon. Member for Swansea West (Geraint Davies) wanted to appoint me as an exponent of austerity, but I assure him that I do not support the experiment of cutting Government expenditure. That policy was set by the Chancellor, so concentrating on the promotion of FDI in Wales is key to our economic well-being, and it is the one element that can help to stimulate the other two components—business investment and exports.

I want to highlight some of the report’s important recommendations. First, we need to work closely with UK Trade and Investment to help promote Wales as a destination for FDI, and I agree with comments made by Members from all parts of the Chamber. I welcome the announcement, following our report, that UKTI has based an official in Wales. We were the only component part of the United Kingdom not to have such a representative, so I am glad that that has been rectified.

I want the Department for Business, Innovation and Skills to instruct UKTI to pursue a similar path to Germany Trade and Invest, which has a remit to set specific targets for directing investment to the poorest parts of the state. That policy does not exist in the UK, but it would help to drive FDI into those areas, such as Wales, that are underperforming. Indeed, we could learn a lot from the example of German economic policy, which has enabled Germany to address huge wealth inequalities following reunification. It is incredible that, following 50 or 60 years of communism, its wealth levels are far more equal than the UK’s, but I shall not go down that road.

The signature recommendation in the report and the one most trailed in the press was the need to reuse the Welsh Development Agency brand. As a Plaid Cymru politician, I should take some credit for the original creation of the WDA, because it was the Plaid Cymru economic commission in the 1960s and 1970s—under Dafydd Wigley, Phil Williams and Eurfyl ap Gwilym—that first had the idea of the dedicated economic investment arm that later morphed into the WDA. I am not talking about reconstituting the WDA as it was when it was swallowed by the Welsh Government, but about reusing the brand. It is a global brand that, to this day, everybody recognises. The reality is that the successor bodies set up by the Welsh Government have nothing near the recognition of the WDA, so I want them urgently to reuse the brand.

[Paul Flynn]

I admire the skill of the Select Committee in choosing a day for this debate when there is no other subject to distract the media. One abiding impression of the report is that it is part of the begging bowl psychology in which we have one dominant partner in a relationship with another subservient partner, and we know which one is which. As it has come from the party, would not a more accurate title for this report have been, “One Hundred Shades of Blue”?

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[Jonathan Edwards]

As always, the hon. Gentleman makes a fantastic contribution.

When I close my remarks, I should like to talk about recent announcements in relation to the Silk report and borrowing powers, but before I get to that point, let me just say that another important element of this report was the need to use convergence funding appropriately. Wales is a net recipient of EU funds, and I am wary of some of the discussions under way at the moment about real-term cuts in British contributions to the EU pot and in the EU expenditure pot, because that will have a direct impact on cohesion funding for some of the poorest communities in our country.

Finally, one of the key elements of the report relates to transport. Wales is at the heart of one of the major trading routes within the European Union. We export more to the Republic of Ireland than we do to all the BRIC countries put together, so Wales is not some sort of marginal geographical location; we are at the centre of one of those trading routes.

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[Jonathan Edwards]

Diolch yn fawr, Mr Rosindell. First, may I apologise to Members for rudely interrupting proceedings to perform my telling duties in the series of close votes we have just had in the main Chamber?

Before the Divisions, I was remarking on the importance of transport links, which is clearly emphasised in the report. Wales is located at the centre of one of the most important trading routes in the European Union, so it is vital, with the ongoing negotiations among our partners at a European level, that there is at least a southern link running through south Wales and linking the Republic of Ireland with Britain and Europe. Personally, I would also like to see a northern link going through north Wales, which would then fund the improvement of transport infrastructure there. I welcome the fact that the Government are actively looking at that, and I am glad to put that on the record.

I want to touch briefly on the bilateral negotiations on funding for the Welsh Government and on the recent Silk commission, which reported as I left on my honeymoon. Both those things impact directly on the Committee’s report. First, on the bilateral negotiations, I was disappointed that there was no reform of the block grant; there was not even a Barnett floor, let alone reform of the housing revenue account subsidy scheme. On the borrowing powers that were announced, the reality is that we could not buy a packet of crisps using the current powers. The Welsh Government Finance Minister has been completely outfoxed, yet again, by the Treasury.

The conclusions of the bilateral negotiations might, however, come into play if the recommendations of the Silk commission are implemented, so their full implementation could be of value. To access the borrowing powers announced in the bilateral agreement, we need fiscal levers to raise revenue, so the more tax-sharing arrangements there are between the Welsh Government and the UK Government, the better. That is why it is imperative that we do not stick just to the minor taxes preferred by the Welsh Government—stamp duty, the aggregates levy and the long-haul airport tax—but devolve sharing arrangements for income tax, which would enable the Welsh Government to have far greater leverage in terms of their borrowing powers. Given that their capital budgets are being cut by 42%, they need those borrowing powers, not only so that they can level out peaks and troughs using fiscal levers, but so that they have power to invest. The current position of the First Minister is therefore completely bizarre, and it is a huge let-down to the people of Wales.

Fiscal powers are important with regard to political accountability, which is something that finds favour with Conservative Members, but the main reason we should have fiscal powers is that they would incentivise the Welsh Government to turn the Welsh economy around. At the moment, given that they get a block grant, there is no incentive for them to develop it. If they were responsible for raising their own revenue, there would be an incentive to generate wealth to invest in public services.

[Geraint Davies]

Is the hon. Gentleman’s position that Wales should have devolved power over income tax, and that a proportion of that could be used as a revenue stream to pay back borrowing, but that Wales should not use tolls to pay back borrowing which, as I said, is a tax on inward investment and trade?

[Jonathan Edwards]

The hon. Gentleman has a long-standing position on this. He has explained my position on the importance of the devolution of income tax quite adequately. The reality is that if we devolved an income tax-sharing arrangement, we would, even if we did not change the level, have huge leverage to borrow far more. Personally, I would like the Welsh Government to have responsibility for setting tax bands, but the reality is that we are nowhere near getting into that debate.

On the tolls, I would like the Welsh Government to have responsibility for the Severn bridges, because they are the major access route to the south Wales economy. There would be a leverage potential on the revenue, but that is not my primary reason for supporting this. I would like the Welsh Government to have responsibility for the tolls and to set them at a rate that would enable them, on top of maintaining the bridges, to have money to reinvest in wider Welsh infrastructure, but that rate would be far lower than at present.

I look forward to next week’s autumn statement, and plenty of progress on the bilateral negotiations and the Silk commission.

[Susan Elan Jones (Clwyd South) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I congratulate the hon. Member for Monmouth (David T. C. Davies), the Chair of the Select Committee on Welsh Affairs, on securing this important debate, and on the work that he and the Committee have carried out on the inquiry into inward investment in Wales.

I agree with the Committee Chairman’s grave disappointment that the debate clashes with the statement on Leveson, and I hope that the topics that we are discussing will be revisited, as they are important. The hon. Gentleman reiterated eloquently the arguments that he has made in the past, together with my hon. Friend the Member for Newport East (Jessica Morden) and others, about the Severn bridge and the importance of Government transparency in that respect. There was a little bit of the knockabout partisan stuff that I do not much like; but there were social democratic tinges to the speech too—and I dare the hon. Gentleman to put that on his website. The point that it would not be desirable to compete with China on labour costs was a good start, as was the fact that he mentioned the importance of education and Government-funded infrastructure and transport. He is developing a bit more of a social democratic tinge, and that is to be welcomed.

My hon. Friend the Member for Swansea West (Geraint Davies) made an eloquent and wide-ranging speech about, among other things, the importance of electronic global market reach; economic growth under the previous Labour Government of the United Kingdom; the pitfalls of regional pay and the tragic situation of Tata steel, with the related unemployment. He also spoke eloquently about the Welsh brand and tourism, and the importance of the Dylan Thomas festival, which I too welcome.

The hon. Member for Ceredigion (Mr Williams) spoke about emerging economies and made an important point about links with universities, and working in partnership with them. I also want to add a plug for Glyndwr university, and its links to Airbus. He also spoke about the importance of tourism, and we would all welcome the fact that that is now a priority sector for the Welsh Government, and for all of us. He discussed the fact that it is important for Wales to work alongside UKTI, and the importance of infrastructure and rural broadband.

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) was, again, a bit partisan, but I suppose that is his job, really. It was nice to see him back all suntanned from his honeymoon, and I do not want to be too partisan on this occasion. I am sure it is good to see him back with us. However, I want to make one small partisan point. The hon. Gentleman spoke of the importance of promoting Wales and of openness about how that is done, and mentioned foreign direct investment and changed attitudes to it. The tiny point I want to make is that I seem to remember the main opposition to that in the 1980s—it might have been in the ’70s too, but I am too young to remember—tended to come from the Welsh nationalists. As for the discussions on funding arrangements, Silk and the like, I am sure that we shall have that debate. I hope that it will be on the Floor of the House, where it deserves to be.

I shall try to be relatively brief, because I know that there are one or two other matters that hon. Members would like to participate in today. As the Government response to the inquiry says, the Committee’s report is comprehensive and wide-ranging. I will not respond to every one of the recommendations, but I hope to touch on the key themes. I want first to talk briefly about why inward investment is so crucial to the Welsh economy.

At the moment, at the aggregated UK level, it is difficult to see where a potential source of significant future economic growth lies, given the austerity agenda being pursued by the UK Government. Despite an Olympic-driven injection of 1% growth in the last quarter, yesterday’s—albeit slight—downward revision of previous quarters’ figures is a reminder that the Government’s economic policies have massively under-achieved. Two years ago, the Chancellor forecast growth of 4.6% but, in reality, in that time, the UK economy has grown by 0.5%. None of us can rejoice at that. Tellingly, the economy is the same size now as it was a year ago and it remains more than 3% below its pre-global financial crisis peak. The reason is clear to the Opposition: it is that Government spending is being cut too far and too fast, and household spending is being squeezed by the increased cost of living, thanks largely to the Government’s decision to increase VAT, as well as the impact of high inflation and rising energy bills.

With consumption—which accounts for around two thirds of the quarterly GDP figures—being held back, we need significant levels of investment if there is to be growth in the economy. However, the Office for Budget Responsibility has slashed its forecasts for growth in business investment over the past two years. They are down this year to a predicted 0.7%, which is a huge drop from the 8.6% predicted two years ago. We all hope that when the Chancellor gives his autumn statement next week he will give a far brighter forecast for growth in business investment for the years to come, because, with more than 700 international companies having located in Wales over the past forty years, the securing of inward investment is vital for Wales’s prosperity. I believe that the Welsh Government are acutely aware of that. In 2011-12, foreign direct investment into Wales created and safeguarded 3,706 jobs, which represents an increase of almost 5% on the previous year. For Ministers in the Welsh Government, who have had real-terms cuts to their capital budget of more than 40% imposed on them, but who are none the less tasked with offsetting the economic damage, the promotion of inward investment to Wales provides a vital economic lever.

The Committee’s report rightly acknowledges that it is down to both Governments to work together to boost inward investment, but it is also right to say that the Welsh Government’s role is pivotal. Hon. Members will know that only this week the Welsh Government presented their budget for 2013-14—a budget for jobs and growth, which reflects an unwavering commitment to attracting investment to Wales as a means of boosting the Welsh economy.

The Committee focused its investigation on three key areas that are central to inward investment, and in those vital areas highlighted by the inquiry the Welsh Government have already put in place policies that will boost inward investment. I am sure that hon. Members will welcome the fact that Ministers in Cardiff Bay have also found additional funding in those areas, as revealed in this week’s budget announcement. The areas in question, recognised by both the Welsh Government and the Committee’s inquiry, are infrastructure, promoting Wales abroad, and education and research and development.

The ambitious Wales infrastructure plan will invest about £15 billion over the next decade in capital priorities. It sets out a sectoral and targeted approach to infrastructure investment that will help to create a Wales with modern transport, IT and energy networks. It outlines for the first time in Wales a list of existing schemes that are being delivered now and schemes that are in the pipeline to be delivered but have not yet started. That approach will enable the private sector to ensure that it is well placed and adequately skilled and resourced to support the infrastructure delivery that Wales needs over the next decade. The plan also features opportunities to lever in additional funds to finance infrastructure delivery, and in this week’s final budget announcement the Finance Minister Jane Hutt revealed additional capital investment of nearly £50 million to support the plan further. The plan exemplifies the Welsh Government’s vision for attracting sustainable economic growth in Wales and should be welcomed by Members on both sides.

Of course, another massive boost to Wales’ infrastructure—and, we all hope, also to long-term levels of inward investment in Wales—is the confirmation we had in July that rail electrification to Swansea and the south Wales valleys is to go ahead. Agreement for this £350 million direct investment is a good example of the two Governments working together in the best interests of Wales. In the context of austerity measures at UK level, it is a remarkable achievement.

[Jonathan Edwards]

The hon. Lady mentioned that it was important to increase investment in infrastructure and we agree with that. The UK Government have announced an infrastructure investment plan of £30 billion, comprising £5 billion from public funds and £25 billion to be financed—different from funding—from the private sector. The Welsh Government get a Barnett consequential on the £5 billion, but not on the £25 billion. Can the hon. Lady explain what mechanisms the Welsh Government have put in place to access that £25 billion of potential investment finance?

[Susan Elan Jones]

I will be honest with the hon. Gentleman. I am not able to give him the total details and I am not prepared to flaff and speak generally, but we will provide him with an answer.

This budget will bolster Wales’s economic competitiveness, generate jobs, increase mobility and, in the context of today’s debate, strengthen Wales’s bid for future inward investment.

Another way that the Welsh Government are going about improving transport infrastructure is by continuing to forge a close relationship with Cardiff airport. Ministers are determined to work towards modernising the airport and increasing its connectivity.

The second of our Committee’s central issues is Wales’s international standing and efforts by the Welsh Government to promote Wales abroad. Since the Committee’s inquiries, there have been significant developments on this front, which I am sure that hon. Members from all parties will welcome. In July, for example, the Welsh Government officially opened their new London headquarters, based on Victoria street, focusing specifically on promoting Wales to the world, attracting greater inward investment and boosting international trade. I welcome the fact that the office will be home to permanent staff with inward investment a large part of their remit. As our First Minister, Carwyn Jones, said when unveiling the new office,

“it will create an important base for the Welsh Government, and businesses from Wales, to influence decision-makers in the foremost financial and commercial centre in the world.”

Since then, the First Minister has also revealed plans to co-locate Welsh Government staff with UKTI, to forge an even closer relationship with staff there, which is most important, and to maximise their vital contacts and resources. At the same time, the Welsh Government have placed important emphasis on trade delegations, including recently welcoming a delegation from India, led by the country’s high commission, as well as two delegations from China in September. Just two weeks ago, the Welsh Government supported their largest ever delegation to an international trade event.

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[Stephen Crabb]

I agree with the hon. Gentleman. UKTI is the agency that is best placed, given its network of relationships around the world, personnel, expertise and acquired knowledge. The challenge is for Welsh Government initiatives to dovetail with what UKTI is doing to ensure that we leverage the maximum opportunity from the available resource.

[Jonathan Edwards]

The UK Government, to be fair, have the laudable aim of rebalancing the economy geographically and sectorally. I know of one of their initiatives—the national insurance holidays for new employees—but what other measures are the UK Government intending to introduce to rebalance the UK economy geographically? The reality is that the UK—the British state—is the most unequal state in the whole of the European Union.

[Stephen Crabb]

With the significant action of the UK Government to rebalance the economy geographically, we recognise the specific needs of peripheral areas, of which Wales is one. We recognise the extra assistance that Wales needs, which is exactly what is driving the additional investment that the UK Government are giving to the Welsh Government for broadband roll-out, for example, or the rail electrification projects that we talked about. Those are big capital investments, over and above funding through the Barnett formula, about which the hon. Gentleman likes to speak a lot. That demonstrates the UK Government’s real commitment for Wales to receive a greater-than-proportionate share of capital investment, which reflects the fact that we want to see the economy geographically rebalanced. Our ambition is for Wales to share the benefits of all the UK-side measures we are taking, while also showing that Wales is a great place to invest.

The Committee’s excellent report and today’s debate highlight the importance of attracting inward investment with regard to transport infrastructure, skills and promoting Wales abroad as a brand. The Government are delivering for Wales in all those areas. On transport infrastructure, we have discussed the electrification project on the Great Western main line, but it does not stop there. My hon. Friend the Member for Aberconwy (Guto Bebb) asked about the potential electrification of the north Wales line, which we are actively looking at. We want the business community in north Wales to help to work up the economic case for electrification, and hon. Members should be aware that my right hon. Friend the Secretary of State for Wales hosted an important strategic meeting of business bodies, local government and public agencies in north Wales last Friday. They got their heads around the table to think seriously about how we go about building up the economic case that will hopefully convince the Treasury that north Wales electrification is the right next project for railway infrastructure in Wales.

Further investment in Wales will not come from the Government alone. We need to find ways to accelerate major infrastructure investment further, and I hope to see Welsh projects bidding for and benefiting from the £50 billion UK guarantees scheme that we introduced.

In the important area of skills, it is vital that we do all that we can to enhance the skills of the work force in Wales. Wales has a lot to offer, but further up-skilling of the work force will not only attract more inward investment, but support indigenous business. It is excellent that the big companies in Wales such as Airbus continue to run their effective apprenticeship programmes, and the UK Government certainly put a lot of emphasis on increasing the number of apprenticeships. Welsh Government Ministers are also looking at the importance of apprenticeships in Wales.

Higher education institutions in Wales have a world-class track record, as my hon. Friend the Member for Ceredigion touched on in his important contribution, and the reputation of the Welsh HE sector is recognised around the world. Members might be aware that, in Wales, there is a higher proportion of foreign students among the total number of students than in Scotland or in England. Our higher education institutions are also working with several of our major inward investors. I very much welcome the news that Swansea university will team up with BP and Tata Steel to create an energy safety research institute, which was mentioned by the hon. Member for Swansea West (Geraint Davies). Tata Steel is also working in partnership with a number of other Welsh universities to develop a project supported by the Engineering and Physical Sciences Research Council and the Technology Strategy Board.