Tuesday, 4 April 2017

The Foundational Economy

Column published in Llanelli Herald on March 17th 2017

Karel Williams grew up in Goring Road in Llanelli. He is now a Professor at Manchester Business School, and he has come up with some interesting ideas about how we can breathe life back into towns like Llanelli which have been left behind after the heavy industry that inspired their creation has gone.

Rather than chase after big foreign investment, look after what you’ve got on your doorstep, he’s argued. The mundane, unglamorous everyday stuff - what he’s called the ‘Foundational Economy’: the industries and businesses that are there because people are there. The food we eat, the homes we live in, the energy we use and the care we receive.

This isn’t a small part of our economy. It accounts for four in ten jobs, and £1 in every three that we spend.

Our focus has been on so-called ‘anchor companies’ employing more than 1,000 people in one place, but more than 3,000 people are employed in making sofas across Wales and they do not feature in any economic strategy.

We’ve looked the other way as local producers have been crowded out of the market by foreign owned subsidiaries - who often pressure Welsh suppliers to drop their prices and ship the profits overseas.

This needs to change.

If we get it right, the Foundational Economy approach offers the chance to reverse the deterioration of employment conditions, stop the leakage of money from our communities and reduce the environmental cost of extended supply chains.

There are big hurdles that stand in our way, but they can be overcome.  As a start local businesses need help to bid and deliver public sector contracts, and we’ll need to invest in higher skilled staff in local government with specialist procurement skills to direct more of the £5.5 Billion the public sector in Wales spends every year to local firms.

This week in the Senedd I joined up with a group of new Labour AMs to persuade the Welsh Government to focus on the Foundational Economy in the new economic strategy for Wales that they are developing.  I was very pleased that the Cabinet Secretary, Ken Skates, agreed and said it will form a central part of the Government’s plans.

Having been at the vanguard of the Industrial Revolution Llanelli could well be inspiration for an idea that helps us cope with the impacts of de-industrisation. And if we pull it off there’ll be a blue plaque to be erected in Goring Road.

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