1. CLOSING THE PROSPERITY GAP KEY POLICY AREAS

2. THE REGIONAL DIVIDE Greater London GVA- 171% of UK West Wales and Valleys- 72.6% of UK 41000 jobs to be created in the Square Mile by 2023 40000 jobs needed in Valleys to reach average employment rate Most geographically unequal nation in the EU

3. THE WIDENING GAP Inner London West GVA/head £136k Forecast growth of 36% by 2023 Gwent Valleys GVA/head £13.29k 3.5% annual growth rate needed just to maintain the gap

4. OUTPUT PER HEAD UK £23394 England £24091 Scotland £21982 Northern Ireland £17948 Wales £16893 West Wales & Valleys £14763

5. LABOUR PRODUCTIVITY Nominal GVA/hour worked – UK =100 England 101.5 Scotland 97.4 Wales 85.2 Northern Ireland 82.8 Complex reasons – low business investment, infrastructure, low rates of innovation and relatively low skills etc.

6. WHOSE ECONOMIC RECOVERY ? UK Increase in Employment 2009-2013 6.7% Caerphilly Increase in Employment 2009-2013 2.0% Impact of Welfare Reform on Caerphilly £73m pa UK Average Loss per Working Age Adult £470 pa Caerphilly Average Loss per Working Age Adult £640 pa

7. RE-BALNCING THE ECONOMY Growth will not close the gap – need redistribution of economic activity Developing regional dimension to economic policy Maximizing the impact of City Regions/City Deal Devolving powers to local authorities Reviving industrial investment and production Targeting places and creating resilient economies

8. A PROACTIVE REGIONAL POLICY Move Away from unsustainable South East - centric mentality Target Investment on under-utilized assets in the regions such as land, labour, property and infrastructure Include Regional Benefits Test in Government decision making Build on the manufacturing base in the regions Improve inter and intra regional connectivity

9. CARDIFF CAPITAL REGION Need for labour market realism Develop poly-centric approach Role of infrastructure – Valleys Metro & M4 Relief Road City Deal – opportunity to re-balance infrastructure spending? Need to address governance & accountability issues Needs versus opportunities

10. DEVOLVING POWER TO LOCAL AUTHORITIES Combined Working Fiscal devolution – flexibility over spending and borrowing Building economic resilience through investment in skills, infrastructure and business support Remove uncertainty Promote strong leadership

11. REVIVNG THE MANUFACTURING SECTOR Caerphilly – 22.5% jobs are in Manufacturing – almost 3x GB average Maximize potential of Tier 1 Assisted Area Status with the balance in favour of grants rather than loans Target business support finance on projects that improve productivity Support successful companies as well as target sectors Address skills mismatch and under-employment Develop Anchor Companies

12. CREATING BETTER JOBS UK has a higher proportion of lower skilled jobs than any other OECD country, except Spain Low skilled jobs contributing to productivity gap & increasing in-work poverty 21 % of workers over-qualified for their jobs, up from 13% in 2011 40% of Welsh companies failing to invest in workforce Need to build on WAG’s Employer Pledge Enhanced role for anchor companies WAG’s apprenticeship programme & UK Futures programme

13. ROLE OF ANCHOR COMPANIES Global companies have a significant presence in Wales 38 Anchor companies identified by WAG Less than 1% of all companies but provide 40% of private sector employment Tend to invest more in R&D and training Generate more GVA that can be shared through the supply chain Potential across all sectors to support diverse economy

14. Targeting Places and Creating Economic Resilience Geography and decision making Using procurement as a development tool – supply chains and SMEs EU Funds – need for balance between large projects and local needs Target Jobs Growth Wales on weaker labour markets Re-focus Work Programme on skills, health, intermediate labour markets and local delivery

15. Some Final Thoughts Move beyond simple employment numbers Commuting can widen job choice – but needs to be accompanied by raising skills and earning potential Understand that where money is spent rather than where it is earned is just as important to local economies Avoid over-dependence on particular sectors Be better informed on local labour markets and the local business environment Plan for all eventualities in a fast moving world No quick solutions – 1923 Special Development Areas!