Wales politics

MPs told Wales must target young companies

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Image caption Admiral's chief said Wales should target businesses which could move 'lock, stock and barrel'

Wales should attract young businesses instead of chasing big international firms, insists one of Wales' most successful businesses.

Car insurers Admiral told MPs that start-up enterprises were more valuable.

The company's chief operating officer was speaking to a parliamentary inquiry on inward investment.

MPs were also told that the Welsh Government intended to set up enterprise zones.

Admiral chief operating officer and executive director David Stevens told the Commons' Welsh Affairs Committee that Wales should target businesses that could move "lock stock and barrel".

He said companies with their headquarters and senior management teams in Wales were more valuable than "off-shoots of big companies based elsewhere".

"Businesses with only 'muscle' in Wales are more likely to withdraw in hard times or if cheaper location options emerge," he said.

Aiming "glossy" adverts at attracting "sexy sectors" of industry was not the best strategy for boosting investment, he said.

He pointed out that Admiral set up home Cardiff in the early 90s around the same time as one of Wales' biggest inward investment projects to bring electronics giant LG to Newport.

LG has since left the site, while Admiral, which received a start-up grant of £1 million, has grown from 50 staff to employ just over 4,000 people in Cardiff, Swansea and Newport.

"In my view the right strategy is finding 25 Admirals," Mr Stevens said.

Start-up companies that establish their headquarters in Wales "tend to be cheap to move and when they come they bring the whole kit and caboodle".

But he said the company encounters some barriers when trying to recruit highly-skilled staff. There was a perception that Wales was "further away than it really is" and was "grimmer than it really is".

He highlighted the importance of good infrastructure, including railways, saying he supported the electrification of the Great Western rail line to Swansea. The UK government is currently only planning to electrify the line as far as Cardiff.

MPs took evidence at the assembly in Cardiff Bay, despite the absence of the Welsh Government minister for economic policy.

Businesses Minister Edwina Hart refused to accept an invitation to give evidence, saying the economy was "my responsibility".

'Enterprise'

MPs heard from backbench Labour AM Mark Drakeford, who said the Welsh Government would "deploy" enterprise zones - where businesses are offered financial and regulatory incentives - to help the economy.

First Minister Carwyn Jones has previously pledged £10m to create themed Welsh zones while officials looked at options.

Prof Drakeford said the Welsh Government was taking its time "so they (zones) do the job we want them to do".

He said there was anxiety in case zones merely "suck activity from one area to another".

Conservative shadow business minister Nick Ramsay said: "It's good to hear this movement from the Welsh government's perspective.

"While I don't think enterprise zones are a panacea that will solve everything - if you are going to have zones just across the border, we need something similar here, even if it's not the English model."

Liberal Democrat business spokeswoman Eluned Parrott said she was "disappointed" that Mrs Hart did not attend the meeting.

She welcomed the creation of enterprise zones in Wales, saying there was a danger of zones near the border in England "leeching" investment.

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