Vikki makes case for the Foundational Economy

Along with Labour AMs Lee Waters, Jeremy Miles and Hefin David, Vikki Howells AM tabled a motion for discussion in the Senedd on 8 March on the need to develop the Foundational Economy. Vikki spoke to close the debate, and her speech in full is repdocued below:-
Diolch, Ddirprwy Lywydd. Thank you to all the Members who have contributed to today’s debate. For my closing remarks, I want to start by outlining a few reasons why the foundational economy is so different. In contrast to what has been described as ‘the monoculture of mainstream economics’, where growth and innovation have been constrained within a one-size-fits-all policy, a refreshed focus on the foundational economy will allow us to develop bespoke solutions that meet different needs across different parts of Wales, including, critically, in my own constituency and the rest of the northern Valleys. A foundational economy would, instead, be built around innovative policies that engage the specifics of activity, time and place. It also challenges us to review, reappraise and re-evaluate the activities already going on all around us, moving away from a blinkered rejection of the everyday to instead embrace their benefits and importance. This is a point well made by David Melding when he talked about aspects of our workforce feeling undervalued.
In an excellent seminar here at the Senedd yesterday, Professor Julie Froud noted the need to build, grow and develop grounded firms. By doing so, the foundational economy offers Wales a chance to be a world leader. Growing internationally recognised brands, which can be exported around the world, is one area that has been identified as a key challenge for us as we strive to grow our foundational economy. I’m very proud to be able to say that Penderyn whisky, which is distilled and packaged in my constituency before being sold around the world, is perhaps one of our best examples of a recognisably Welsh international brand. Its success shows us that by thinking outside the box, having confidence and accessing appropriate business support, as referred to by Russell George, it is possible for us to access niche markets and to become a world leader.
But, aside from these more glamorous high-end niche sectors, there are powerful economic arguments in favour of the foundational economy. Professor Karel Williams has highlighted what should be a self-evident truth: the Welsh economy is dominated by the foundational economy, producing the mundane basic goods that we all rely on. Nearly 40 per cent of Welsh jobs are located in the foundational economy. In the Cynon Valley, enterprises like furniture makers Ashwood Designs and dairy producer Ellis Eggs are key local employers. In Mountain Ash, Rocialle provides essential consumable items to healthcare, employing just under 400 people to make things like bandages, bowls and cotton-wool balls.
Carpet Fit Wales, another very successful firm based in my constituency, boasts well-developed horizontal supply chains, and highlights the way in which local procurement networks can be used to grow and stimulate the Welsh economy. During my preparation for this debate, I spoke to Carpet Fit Wales and was impressed by the way they are connected to neighbouring businesses. Their suppliers are based in Swansea, Cardiff and Bridgend, they use a local floor manufacturer based in Caerphilly, and their human resources, information technology, design and garage services are all provided within the Cynon Valley.
As this example shows, the foundational economy benefits all of Wales, not just hotspots that can leave other swathes of Wales feeling isolated and left behind, providing localised goods and services that communities can be proud of. An additional strength is provided by its longevity and resilience, with the businesses, services and infrastructure within the sector having proved remarkably resilient to external crashes over time—a point stressed by Lee Waters.
Cresta Caterers in Aberdare has been in business for over 50 years, and Welsh Hills Bakery for over 60 years—still a family owned business in Hirwaun that exports across Europe, America, Australia and the middle east. Both of these are examples of the food sector so well referenced by my colleague Jenny Rathbone. In addition, my colleague Hefin David drew on examples from his constituency and his academic background to powerfully reinforce the message of social capital being used as an asset.
In addition to the powerful economic arguments for focusing on the foundational economy, there are also strong moral arguments in its favour, too. The manifesto for the foundational economy persuasively argued that a rebalancing of economic and well-being gains will enable us to aim at a Wales with a reinvigorated social franchise that has a stronger focus on reciprocal social relations. In this model, economic needs and quality of life would go hand in hand, so that employers cannot impose unacceptable working practices and bigger businesses cannot ride roughshod over smaller suppliers or local concerns.
This is very necessary, because, as the Bevan Foundation has rightly pointed out, many of the industries and occupations associated with the foundational economy have a real problem with low pay and poor working practices—a point well made by Rhianon Passmore. We must take action to improve problems like work insecurity, zero-hours contracts and inadequate pay. One area to focus on, as Karel Williams notes, is the opportunities and challenges provided by the growing adult care sector. We must consider these elements not just as economic determinants but as providers of invaluable social benefit, and value them accordingly.
Jeremy Miles used care as one example where strengthening the foundational economy will bring long-term returns to the public sector and huge local economic and well-being gains to the community. I welcome the work the Welsh Government is doing around this, and also similar initiatives like the childcare pilot. When this policy is fully implemented, there is the potential for significant growth in the childcare sector, providing additional jobs in the foundational economy, and it is another area in which Wales can again take a lead. It is vital that the employment opportunities provided by this policy are well planned on a local and regional basis, with the Welsh Government overseeing the process to ensure that the jobs created are secure and fairly paid.
To conclude, today marks a call for action in a renewed focus on the foundational economy. As Members have pointed out, many of the businesses and activities that make up the sector have been with us for years, but have never been properly integrated into our economic vision. I hope the Welsh Government will fully integrate support for the foundational economy into its forthcoming economic strategy. As Julie Morgan stated, it would be beneficial for us to consider this in our existing and current economic plans. And I am very pleased with the commitment that the Cabinet Secretary has made here today in his response to the debate, focusing on aspects of the foundational economy and issues such as procurement.
At the heart of the economic strategy must be a focus on developing grounded firms. I have cited some excellent examples from my own constituency but they tend to be exceptional in a Welsh economy that is defined as possessing a missing middle—a point well-made by Adam Price—where we lack the medium-sized enterprises that adapt and thrive within, for example, the German economy, by building on first-class reputations and exemplary brand presence. There are clear challenges here around access to finance and succession planning, and I hope that we can meet these.
Additionally, we must look again at how procurement works in Wales. I know the Welsh public sector spends £5.5 billion on goods and services, and although moves have been made to strengthen local procurement, they haven’t always gone far enough. There are opportunities around local government reorganisation and regional working to really get this right, but we need to get public sector and our foundational economy enterprises together to make sure conversations can be had. This can, in turn, then be used to strengthen and protect working conditions and really build a prosperous Wales that works for all of its citizens. I commend this motion today.