5. What steps is the Welsh Government taking to diversify the economy of South Wales West? OAQ55127

The Welsh Government's priorities are set out in the economic action plan. We are currently working with a wide range of partners in the region on the emerging regional economic framework, as well as supporting the Swansea bay city deal.

Thank you, Minister. Our past reliance on a handful of large employers has left the economy of South Wales West vulnerable. The closure of the Port Talbot steelworks would be devastating for the region, and we face huge challenges in diversifying. But we can also seize the opportunities, if we can think ahead. The biggest challenge we face as a nation is decarbonisation, which also offers us great opportunities. Electric arc furnaces can be used to recycle the tonnes of cars that will be scrapped as a result of electrification. New fuel sources must be found for heavy goods transportation, and there have been promising developments in ammonia fuel cells and conversion of carbon dioxide to methanol. But, in order to capitalise on the opportunities, we have to invest in research and development. Minister, will your Government commit to invest in alternative fuels R&D and work with higher education to ensure Wales leads the way? After all, Swansea was the birthplace of the hydrogen fuel cell. Thank you.

Can I thank Caroline Jones for her question? I can assure her that we already are investing heavily in R&D, that we're working with higher education institutions in the region. Swansea University have taken a lead in many respects in regard to industrial energy solutions, and we are absolutely determined to chase after every penny that is on offer through the UK Government's industrial energy transformation fund and the clean steel fund. They amount to something in the region of £500 million of investment over several years, but I'm afraid to say that that investment pales into almost insignificance next to the Netherlands' £5 billion annual investment that is being made in decarbonisation.

Decarbonisation offers an enormous opportunity for businesses in Wales, for research and development organisations, for higher education institutions, and I'm keen to make sure that, within south Wales, the industrial cluster that has been established is used as a pathway to draw down as much UK industrial strategy funding as possible, but also to access Welsh Government funding. Okay, our bags of money may be smaller than the UK Government's, but, nonetheless, we are able to make strategic investments that assist businesses in decarbonising, and I could identify a number in the Member's region, such as Keytree, where they were able to access £0.5 million and create 38 highly skilled jobs in a software hub within the region. Approximately 33 per cent of our calls to action money has gone to projects relating directly to decarbonisation programmes and, as a result of that, we have seen an employment rate in mid and south-west Wales that has increased by 7.1 per cent between 2011 and 2019. But our determination is to build on that by investing in those industries of tomorrow, and, clearly, decarbonisation is at the very heart of the industries of the future. 

Minister, the Swansea bay city deal, of course, is founded on the commercialisation of innovation, not least in decarbonising energy sources west of my region, but I'm pleased with progress within my region. I've raised the prospects about the national steel innovation centre with you before, so I am pleased to hear that Neath Port Talbot's projects for that and tackling climate change have now been signed off by the joint board—any new jobs are going to be welcome, although there are more factors than just that. But I do remain nervous about delays within the system that we've seen from both Governments interrogating previous projects. Can you tell me what you've learned from those processes in testing the viability of projects brought before you already that help you speed up the process of deciding when money can be released?

I think it's fair to say that the key lesson that we've learned from recent history in regard to the deal and the projects contained within it is that Governments need to be more heavily involved in assisting the development of projects to ensure that they can reach the point of approval sooner. There are hugely ambitious projects contained within the deal. We wish to see the deal become a great success, but we have to be thorough in our interrogation of each and every project contained within it. That doesn't necessarily just need to be challenging in a critical way; as I say, I think we can assist more proactively in ensuring that those projects can reach conclusions—positive conclusions—sooner. 

Further to Suzy Davies's question about the national steel innovation centre and the Swansea bay technology centre at the Baglan energy park, can I just push you further on that point about funding and can you outline exactly when the Welsh Government is likely to make a decision on this important funding bid? Furthermore, do you also recognise that current broadband provision at the Baglan energy park is less than optimal, with many businesses complaining about connectivity locally? Therefore, what action is the Welsh Government taking to remedy that situation, mindful of the potential development of this key city deal project at that very location?

Can I thank Dai Lloyd for his questions? The issue relating to broadband provision at Baglan I will ask my colleague Lee Waters to respond to in writing. If there are issues there, then clearly we need to address them.FootnoteLink 

In terms of the other projects contained in the deal, we will approve them as soon as we are entirely satisfied that they deliver against their intentions and that the due diligence does indeed stack up. 

Information further to Plenary

What I was going to talk about is the university sector. We've got two outstanding universities in the Swansea bay city region and the ability to use them in order to grow major new industries and to build on some of those that are coming out of it. You have a choice, really, with economic policy, to prioritise low-wage areas to try and bring branch factories in, but actually developing within your own area, building up, the skills of your own people, who aren't going to be footloose and fancy-free, as Dawn Bowden has discovered with some of those companies that have come into her area, then you've got a chance of keeping them; they're going to grow in your area. What is the Welsh Government doing to work with universities to get more success out of some of these things coming out? I know 'technium' has a bad reputation, but that's because the Welsh Government used it to brand—they gave the name to every branch factory they opened in Wales. The idea of techniums, of spinning out of universities and developing skills and making their way into high-quality and high-value companies, is something that can work, has started to work in Swansea, but what more can be done? 

I'm sure many lessons were learned from techniums, and we were able to apply several of those lessons in the development of the enterprise hubs, which are proving to be incredibly successful across Wales—six enterprise hubs that are boosting prospects for young entrepreneurs and leading to many, many new start-ups flourishing sooner than they would do if they were to survive in their own existence. Now, we've provided—. I think the Member is absolutely right that higher education has a critical role in ensuring our long-term prosperity. Further education skills offer incredibly important technical tools, and higher education offers the strategic tools in which to have the best possible fighting chance in a competitive world. And so we have been investing heavily in higher education institutions and research and development. For example, we provided £3 million to the Higher Education Funding Council for Wales just last year, and a further £5 million this year to develop degree-level apprenticeships, which will make a significant contribution, I believe, to the development of high-level skills that our economy needs. 

Now, so far, work has gone ahead in relation to digital and engineering and also in advanced manufacturing, and I await the results of those pilot schemes with keen interest. It's worth saying as well, Llywydd, that European structural funds have helped universities play a really important role in helping to meet the higher level skills needs of Welsh industry over many, many years, with in excess of £70 million of EU funds having been utilised during the 2014 to 2020 period.