Infrastructure and the economy

This is the fifth in a series of pieces exploring infrastructure priorities in Wales, guest edited by Ed Evans. 

 

Whether you’re catching a bus to work in the morning, sending an email to a client through your smart phone or accessing vital public services within your community; the quality of our local and national infrastructure has a major bearing on the quality of our day-to-day lives.

 

While this is true for everyone, it’s particularly important to Wales’ 250,000 micro, small and medium-sized businesses. Much of economic policy in Wales (as elsewhere) centres on a small number of very large firms, however we often forget around 99 per cent of businesses aren’t in this category –  despite employing 676,800 people in Wales and generating around three times the Welsh Government’s annual budget in turnover (£47.4bn).

 

For a company like Amazon, if you’ve got a basic infrastructure problem – let’s say you need a new £3m road paid for – then there’s a good chance Welsh Government will come to the rescue. But smaller firms are far more reliant on the general infrastructure that sustains us all.

 

Where there are gaps in that infrastructure the hurdles to growth can too often become insurmountable, leading to areas where certain types of firms simply cannot survive, let alone prosper. That’s a major problem if we’re serious about not replicating the UK in having a prosperous city in the south east dominating opportunities for growth.  

 

The last time we surveyed businesses on physical infrastructure, over 80 per cent said their car or van was ‘crucial’ to their business, with around 70 per cent saying their number one infrastructure priority was to invest in roads. In comparison, public transport was only seen as crucial for around 10 per cent of businesses showing how utterly dominant private forms of transport are to the Welsh economy.

 

This undoubtedly has a chicken and egg feel about it. Anyone who has tried to get a bus in a rural part of Wales like Pembrokeshire or even tried to get a train from the ‘relatively’ well-served valleys to a business park on the outskirts of Cardiff will quickly find it impractical, time-consuming and expensive.

 

This story is replicated in towns across Wales where bus routes have been declining and access to town centres by public transport is in retreat. Without a viable alternative, for most businesses the car will always be king.

 

Whilst I use the example of roads above, infrastructure can and should be about so much more than that. As Welsh Government’s new National Infrastructure Commission for Wales sets about its work it needs a clear view of infrastructure in the round including physical, digital and social infrastructure in Wales.

 

One solution to the problems of physical infrastructure is to make the switch to digital. If 80 per cent see their car as crucial, it will come as no surprise that 99 per cent of businesses say the internet is highly important to their business.

 

Many firms have succeeded in embracing home-working as digital infrastructure has made new ways of working possible. Indeed, as recent work by the Economy, Infrastructure and Skills Committee in the Senedd has shown, digital innovation and issues such as automation and artificial intelligence are currently high on the political agenda.

 

In parts of this area, Wales has a good story to tell. Superfast broadband was once a minority sport in Wales until Welsh Government invested significant amounts. According to Ofcom we now have 92 per cent of premises connected to superfast broadband. Although this masks the devil in the detail, with Ofcom also reporting a much lower figure – 81 per cent – for SMEs in Wales with 11 per cent saying they cannot even get decent broadband.

 

However, infrastructure in this area is a moving target. 4G connectivity (and very soon 5G) is almost as important as fixed broadband was 5 years ago and in that area Wales falls far behind with only 56 per cent of our geography covered versus 76 per cent in Northern Ireland and 81 per cent in England.

 

It’s important that we don’t neglect social infrastructure in this conversation also. Building physical and digital infrastructure is not an end in itself, rather a means to create better interactions between people. We know that many small firms form a part of what is now being recognised as the ‘infrastructure of everyday life’ i.e. the foundational economy.

 

Conversations about physical and digital infrastructure can’t take place in a vacuum. We need to know if improving infrastructure will improve our social infrastructure, opening up access to new places, and helping people to access new services both public and private.

 

We’ve recently undertaken a programme of research on towns in Wales, looking to understand what the future holds. Three key trends emerge; demographic changes leading to ageing towns and youthful cities, a shift towards online retail and services detracting from towns and a focus on economic development based on ‘agglomeration’ or more simply put the idea that all the best stuff happens in cities not towns.

 

All three of these trends are undoubtedly linked to infrastructure and perhaps more importantly how infrastructure is used. If we’re serious about addressing the long-term challenges of infrastructure then it’s through the lens of these three megatrends that we’ll need to look.

 

So what would our advice be to the nascent National Infrastructure Commission for Wales? Firstly, it must think long-term and join the conversation up with the Economic Action Plan. We have the Well-being of Future Generations Act; let’s use it and share the evidence upon which decisions are made. Secondly, it needs to work out how we can spend more money on infrastructure and ensure greatest bang for our buck. Chronic underinvestment is a problem that has plagued Wales’ economy and we need to be bullish in making the case for investment where the powers aren’t devolved.

 

Third, it should ensure everybody is included in the conversation and that Wales’ infrastructure priorities can move forward on the basis of buy-in from across the political spectrum. Recent experience with the M4 Relief Road shows how a lack of buy-in to priorities leads to poorly considered actions and eventually no action at all. Finally, be ambitious. The Commission has an opportunity to kickstart a national conversation on what our infrastructure could be like in the longer-term. While it has to be anchored in reality, the Commission should be forward thinking and ambitious for what Wales can achieve.

 

Photo by Clint Adair on Unsplash

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