Government Intervention in the Welsh Economy: 1974 to 1997. By Leon Gooberman Submitted in accordance with the requirements for a PhD. Cardiff University i Acknowledgements I would like to thank my supervisors, Professor Scott Newton of the School of History, Archaeology and Religion, and Professor Derek Matthews of Cardiff Business School for their advice and support. Also, thanks are due to my interviewees, who generously gave of their time, knowledge and experience. Most importantly, thanks to Mari. This thesis would never have been completed without her constant support and encouragement. ii Summary This thesis provides a description and analysis of government intervention in the Welsh economy between 1974 and 1997. During this period, Wales underwent rapid and far-reaching economic upheaval on such a massive scale that few avoided its impact. The scale of these changes was dramatic, as was the intensity of attempts to deal with their consequences. Wales acted as a laboratory for the development of approaches to government intervention in the economy. This thesis defines government intervention in the Welsh economy, before identifying activity, expenditure and (where possible) outputs across categories including land reclamation, factory construction, attraction of foreign direct investment, urban renewal, business support and the provision of grants and subsidies. It also places such interventions in their political and economic contexts, highlighting the dynamics that evolved between policies developed in Cardiff and London. By doing this, it asks and answers three questions relating to the changing dynamics of government intervention; namely, what was done, why was it done and was it effective? The thesis draws on primary sources including interviews with politicians and those formerly holding senior positions within governmental organisations, records held by the National Archives, personal and organisational archives held by the National Library of Wales, records held by other archives, newspapers and government publications. Secondary texts are discussed and drawn upon, with this study adding a history of government intervention in the Welsh economy to the literature for the first time. iii DECLARATION This work has not been submitted in substance for any other degree or award at this or any other university or place of learning, nor is being submitted concurrently in candidature for any degree or other award. Signed ………………………………………… (candidate) Date: 30 October 2013 STATEMENT 1 This thesis is being submitted in partial fulfilment of the requirements for the degree of PhD. Signed ………………………………………… (candidate) Date: 30 October 2013 STATEMENT 2 This thesis is the result of my own independent work/investigation, except where otherwise stated. Other sources are acknowledged by explicit references. The views expressed are my own. Signed ………………………………………… (candidate) Date: 30 October 2013 iv STATEMENT 3 I hereby give consent for my thesis, if accepted, to be available for photocopying and for inter- library loan, and for the title and summary to be made available to outside organisations. Signed ………………………………………… (candidate) Date: 30 October 2013 STATEMENT 4: PREVIOUSLY APPROVED BAR ON ACCESS I hereby give consent for my thesis, if accepted, to be available for photocopying and for inter- library loans after expiry of a bar on access previously approved by the Academic Standards & Quality Committee. Signed ………………………………………… (candidate) Date: 30 October 2013 v Contents List of abbreviations List of maps, graphs, plates, tables and chart 1: Introduction 1 2: Literature review, theory and evaluation 16 3: Context 51 4: The end of traditional regional 90 economic policy (1974 to 1979) 5: Change and continuity (1979 to 1987) 156 6: A new Wales (1987 to 1993) 234 7: The end of the age of factories 295 (1993 to 1997) 8: Wales’ economic performance 350 (1974 to 1997) 9: Expenditure 368 10: Conclusion 392 Annex 1: Secretaries of State for Wales, 1974 to 1997 Annex 2: Interview subjects, consent form and example of questions Annex 3: Regional data tables Annex 4: Activity tables Annex 5: Bibliography vi List of abbreviations BSC British Steel Corporation BTA British Tourism Authority CAP Common Agricultural Policy CBI Confederation of British Industry CEGB Central Electricity Generating Board DBRW Development Board for Rural Wales DRIVE Development of Rural Initiative, Venture and Enterprise DTI Department of Trade and Industry DVLA Driver and Vehicle Licensing Agency ECSC European Coal and Steel Community EEC European Economic Community EIB European Investment Bank ERDF European Regional Development Fund ESF European Social Fund FDI Foreign Direct Investment GDP Gross Domestic Product GVA Gross Value Added IMF International Monetary Fund LAW Land Authority for Wales LG Lucky Goldstar NCB National Coal Board NEB National Enterprise Board NUM National Union of Mineworkers PAC Public Accounts Committee (of the House of Commons) Quango Quasi Autonomous Non-Governmental Organisation RDG Regional Development Grant REG Regional Enterprise Grant REP Regional Employment Premium RSA Regional Selective Assistance SMEs Small and Medium Enterprises TEC Training and Enterprise Council vii TUC Trades Union Congress WDA Welsh Development Agency WIDAB Welsh Industrial Development Advisory Board WIEC Welsh Industrial Estates Corporation WINtech Wales Investment and Technology WINvest Wales Investment Location WTB Wales Tourist Board WTUC Wales Trades Union Congress viii List of maps, graphs, plates, tables and chart Maps 3.1: Economic regions, Wales, 1980. 3.2: Major areas of resource extraction during the eighteenth and nineteenth centuries. 4.1: Assisted areas, Wales, 1976. 4.2: WDA and DBRW boundaries. 5.1: Assisted areas, Wales, 1982. 5.2: Assisted areas, Wales, 1984. 7.1: Assisted areas, Wales, 1993. Graphs 3.1: Numbers of pits and employees, South Wales, 1946 to 1974. 4.1: Destinations of redundant Ebbw Vale steelworkers. 8.1: Wales’ GDP/GVA relative to the UK, 1974 to 1997. 8.2: VAT registrations per 10,000 people as a percentage of the UK, Wales, 1980 to 1997. 8.3: Wales’ share of the UK FDI market, 1984-5 to 1996-97. 8.4: Gross weekly wages-full time men as a percentage of the UK average, Wales, 1974 to 1997. 8.5: Gross weekly wages-full time women as a percentage of the UK average, Wales, 1974 to 1997. 8.6: Household/ personal disposable income in Wales as a percentage of the UK average, 1974 to 1997. 8.7: Claimant count rate of unemployment in Wales and the UK, 1974 to 1997. 8.8: Employees and self-employed in Wales, 1974 to 1997. 8.9: Annual change in workforce jobs in Wales and the UK, 1974-75 to 1996-97. 8.10: Regional ranking of economic indicators. 8.11: Regional ranking of income indicators. 8.12: Regional ranking of labour market indicators. 9.1: Expenditure on regional economic development, Wales, 1974–75 to 1996-97. ix 9.2: Expenditure by category, Wales, 1974–75 to 1996-97. 9.3: Industrial subsidies, Wales, 1974–1975 to 1996-1997. 9.4: Government support for development agencies, Wales, 1974–75 to 1996-97. 9.5: Support for agriculture, Wales, 1974-75 to 1996-97. 9.6: European loans and grants, Wales, 1974–75 to 1996-97. 9.7: Support to nationalised industries, Wales, 1974–75 to 1996-97. Plates 3.1: Big Pit and Coity tips, Blaenavon, 1973. 4.1: The Ebbw Vale steel works, 1972. 4.2: Parc Mine, Llanwrst, before reclamation. 4.3: Parc Mine, Llanwrst, after reclamation, 1978. 5.1: Cambrian colliery site, Clydach Vale, Rhondda, before reclamation, 1974. 5.2: Cambrian colliery site, Clydach Vale, Rhondda, after reclamation, 1987. 6.1: Ebbw Vale steelworks site, before reclamation, late 1980s. 6.2: Ebbw Vale steelworks site, after reclamation, post 1992. 7.1: Barry Docks, prior to reclamation, 1980s. 7.2: Barry Docks, after reclamation, 1996-1997. Tables 4.1: Employment change by sector, Wales, 1974 to 1979. 4.2: Categories of derelict land, Wales, 1975. 4.3: WDA factory construction programme, Wales,1977 to 1979. 4.4: DBRW factory construction spatial priorities. 4.5: Allocations of factories constructed by Welsh Office agencies, Wales, 1978. 4.6: Regional economic development expenditure, Wales, 1974-75 to 1978-79. 5.1: Expenditure on UK regional economic policy, 1982-83 to 1986-87. 5.2: Employment change by sector, Wales, 1979 to 1987. 5.3: FDI projects and jobs, Wales, 1984-85 to 1986-87. 5.4: Japanese plants in Wales, 1986. x 5.5: Regional grant expenditure and allocations, Wales, 1979–80 to 1986-87. 5.6: WDA return on investments, 1981–82 to 1986-87. 5.7: Regional economic development expenditure, Wales, 1979-80 to 1986-87. 5.8: Welsh Office support to economic development bodies, 1979-80 to 1986-87. 6.1: Employment change by sector, Wales, 1987 to 1993. 6.2: WDA press releases 2 to 8 May, 1989. 6.3: DBRW spatial priorities, 1989. 6.4: Toyota’s stated location reasons, 1989. 6.5: FDI in Wales, 1988-89 to 1992-93. 6.6: FDI in Wales, 1991-92. 6.7: The Valleys Programme. 6.8: Regional grant expenditure and allocations, Wales, 1987–88 to 1992-93. 6.9: WDA return on investments, 1988–89 to 1989-90. 6.10: WDA return on investments made after 1989-90. 6.11: Regional economic development expenditure, Wales, 1987-88 to 1992-93. 6.12: Welsh Office support to economic development bodies, 1987-88 to 1992-93. 7.1: Employment change by sector, Wales, 1993 to 1997. 7.2: Regional economic development bodies in Gwynedd, 1996. 7.3: FDI in Wales, 1992-93 to 1996-7. 7.4: Wales’ share of the UK FDI market, 1993-94 to 1996-97. 7.5: Regional grant expenditure and allocations, Wales, 1993-94 to 1996-97. 7.6: Regional economic development expenditure, Wales, 1993-94 to 1996-97. 7.7: Government support to economic development bodies, 1993-94 to 1996-97. 9.1: Regional economic development expenditure, Wales, 1974-75 to 1997–97.