Policy briefing - Wales

New First Minister gets down to business

The current Welsh First Minister, Prof Mark Drakeford, took over from Carwyn Jones in December. A few months in, we’re beginning to see his approach to government. The collaborative nature of his approach allows for a stronger range of views to be expressed around the cabinet table but his government’s view of ‘what good looks like’ is more closely aligned with Jeremy Corbyn than his predecessor. As a result, issues prioritised have tended to be more social than economic in nature. In economic policy, this has led to a greater emphasis on indigenous businesses, and firms must now demonstrate a stronger commitment to their workforce if they are to improve quality for business support. In transport policy, the government has shifted its support from large infrastructure projects to smaller ones that deliver localised benefits.

M4 relief road cancelled by First Minister

After several years, the First Minister took the decision to cancel the M4 relief road. The £1.4bn road had the potential to transform the south Wales economy and had been repeatedly called for by business and commuters for over 20 years. The Welsh Government now plans to create an M4 Commission to outline alternative solutions to the congestion around Newport. The CBI believes the M4 Black Route, funded by a toll, is the best option, but we will also be identifying additional measures that could encourage non-car use. We'd love to hear from members on this issue. If you'd like to contribute your views, please get in touch.

Mandatory recognition of trade unions and collective bargaining recommended by fair work commission

While employment policy is not devolved, the Welsh Government welcomes an independent report that recommends mandatory trade union recognition as a pre-condition for any firm in receipt of government funding. The Fair Work Commission report is a response to the UK government’s Taylor review. The CBI is working closely with the TUC as the Welsh Government embeds these recommendations into legislation. While we support fair work, we believe employers and employees should retain flexibility and voice in the workplace. The government has committed to enshrining a ‘Wales fair work standard’ in law before the next assembly election in May 2021. This standard is yet to be defined, but will include the following key fair work characteristics: fair reward; employee voice and collective representation; security and flexibility; opportunity for access, growth and progression; safe, healthy and inclusive working environment; and legal rights respected and given substance and effect. These standards will be applied proportionately to firms according to the sector, size and level of government support.

Income tax devolved to Welsh Government

The Welsh Government has now taken control of Welsh income tax. From this tax year the Welsh Government can vary existing income tax bands by 10p in the pound. It will apply to all those living in Wales – regardless of where they work – and will raise £5bn annually for devolved public services. As members of the ministerial Tax Advisory Group, the CBI is monitoring this issue closely and leads the engagement between business and government. Initial feedback indicates the new tax system is operating smoothly, but we welcome views from members on their initial impressions of the new system.

CBI launch Net Zero report for Wales

The CBI launched the Committee on Climate Change’s report for Wales at a joint event in Cardiff. The committee outlined how Wales could reach a reduction of 95% of CO2 emissions by 2050. Wales has a higher proportion of emissions from industry than the UK as a whole (30% of Welsh emissions came from industry in 2016 compared to 22% in the UK). That emphasises the importance for Wales of appropriate supportive policies for decarbonising these industries to mitigate any potential impacts on competitiveness and jobs. The Welsh and UK governments need to work closely together in order to provide business with support across devolved and non-devolved areas. It is important for government interventions not to undermine the UK internal market.

Forthcoming events

20 June, CBI dinner with Welsh Minister for Brexit

27 June, CBI North Wales Dinner

11 July: CBI Economic Briefing with Welsh Minister for Finance.