From productivity gap to delivery gap: What Wales needs next
By Dr Fari Aftab, Wales Productivity Forum Research Associate
Wales’s productivity challenge is often described through gaps, rankings and regional comparisons. At the Party Plans for Business and the Economy event at Cardiff Business School, the discussion showed that the issue is also closely connected to the everyday experience of firms and workers. Bringing together representatives from across the Welsh political spectrum, a week ahead of the Senedd election, the event highlighted that productivity is not only a question of economic ambition. It also depends on whether businesses can find skilled workers, access appropriate support, secure timely planning decisions and invest with confidence.
In doing so, the discussion echoed the gaps and priorities set out in the Wales Productivity Forum’s 2025 Insights Paper, Wales’ Productivity Challenge: A Focus on the Future, particularly the need for long-term investment in people and infrastructure, effective business support, and stronger collaboration between government, business, public services and individuals.
Wales’s productivity challenge is therefore not only about the size of the gap, but also about the practical conditions needed to deliver improvement.
Setting the productivity challenge
Professor Melanie Jones opened the event by situating the discussion within the work of the Wales Productivity Forum. As she explained:
“The Wales Productivity Forum brings together business leaders, policy makers and academics, with a shared mission of trying to address Wales’s productivity gap.”
This emphasis on delivery ran throughout the event. There is now broad recognition that Wales faces a productivity and growth challenge. The more difficult question is no longer simply whether the problem exists. It is whether Wales has the systems, institutions and policy mechanisms needed to respond to it.
In this sense, Wales’s productivity challenge is also a delivery gap. This is not to suggest that productivity can be solved through process alone. Rather, it points to the distance between recognising the scale of the problem and building the practical conditions needed to address it. It means looking beyond headline commitments to growth and asking how policy is translated into the everyday realities of firms, workers and places.
Institutions, coordination and accountability
One of the most revealing parts of the discussion concerned whether Wales needs a dedicated productivity commission or productivity commissioner. This was not only a technical question about institutional design. It opened a wider debate about how productivity should be embedded in Welsh economic policy.
The responses revealed different views of how economic delivery should work. Welsh Labour’s Shavanah Taj emphasised social partnership, noting:
“When we are making decisions in Wales, you have business representatives, government and trade unions around the table together.”
Plaid Cymru stressed institutional coherence and argued for a National Development Agency. Reform UK warned against creating additional layers of government, while the Welsh Conservatives were more sceptical of a commissioner advising businesses and placed greater emphasis on scrutiny of public sector efficiency.
The Welsh Conservatives’ David TC Davies placed considerable emphasis on the conditions needed for business confidence and investment, arguing that the UK retains important foundations that can support economic activity:
“We have a corruption free country, a stable currency and a good legal system. These are three things we should hang on to.”
His wider contribution linked productivity to tax, business rates, apprenticeships, infrastructure and planning reform, suggesting that firms are more likely to invest where the business environment is stable, competitive and predictable.
Reform UK’s Jason O’Connell framed productivity through the need to place the Welsh economy more centrally within government decision-making, arguing:
“Reform is the party that will put the Welsh economy at the heart of everything we do.”
His contribution emphasised the pressures facing businesses, including taxation, regulation, infrastructure and confidence, and argued that stronger economic performance would support wider public priorities, including health and education.
This debate matters because productivity policy cannot rely only on recognising the gap. It has to be organised, coordinated and delivered. If responsibility is dispersed across skills, planning, business support, infrastructure, regional development and public services, then Wales needs a clear sense of who is responsible for improving productivity, how different parts of the system connect with one another and how progress will be assessed.
Skills and workforce capacity
The delivery challenge is especially visible in the skills system. Audience questions about apprenticeships and further education brought the productivity debate down to earth. If Wales needs more homes, better infrastructure, stronger local firms and better-paid jobs, then shortages in trades such as plumbing, bricklaying and electrical work are not narrow education issues. They are productivity constraints.
There was broad agreement across the panel that skills and apprenticeships matter. However, the proposed routes differed. Some emphasised further investment in colleges and trainers. Others argued for redirecting resources from higher education towards vocational routes, while others focused on employer incentives, regional funding or stronger links between businesses, schools, colleges and universities.
The policy detail differs, but the underlying point is shared. Wales cannot raise productivity without a workforce strategy that is better connected to the economy it wants to build. A skills system that does not have sufficient capacity to train people in areas of clear demand will limit growth, even where businesses are willing to invest and expand.
Business support and firm-level productivity
The same point applies to business support. Several contributions highlighted the difficulty firms face in knowing where to go for help. Plaid Cymru’s Luke Fletcher captured this clearly, arguing:
“What they continuously come up against is a lack of understanding about who they are to approach when they need support.”
This is a productivity issue in its own right. Support that is fragmented, difficult to navigate or slow to access is unlikely to help firms invest, innovate or scale. A productive economy requires not only schemes and programmes, but also a system that businesses can understand and use.
Different parties offered different versions of that system. Plaid Cymru’s proposed National Development Agency was framed as a clearer point of contact for firms. Welsh Labour emphasised social partnership and coordinated decision-making. The Welsh Liberal Democrats’ Julie Goodfellow stressed small-business support, skills and collaboration, arguing:
“We need to incentivise our local businesses, our small businesses, with opportunities to grow. And that means working with colleges and schools, and particularly universities, to actually form a partnership.”
Reform UK argued for easier access to government and commercial property, while the Welsh Conservatives emphasised reducing government obstacles and allowing businesses greater freedom to make their own decisions.
These differences reflect a deeper divide over the role of the state. Yet they also point to a shared concern. Businesses in Wales need a clearer, faster and more predictable operating environment if they are to invest with confidence.
Planning, business costs and investment conditions
Business rates and planning reinforced this point. Rates were repeatedly described as a serious cost pressure, while planning delays were presented as barriers to investment, premises use, town centre renewal and job creation. These may sound like familiar business concerns, but they are also central to productivity.
A firm facing high fixed costs, uncertain approvals and slow decision-making have less room to invest in people, technology, processes and growth. Productivity is therefore shaped not only by innovation policy, but also by the everyday conditions under which firms operate.
Regional productivity and place-sensitive policy
The regional dimension is equally important. Wales’s productivity challenge is not evenly distributed. The discussion returned several times to the need for economic growth that reaches beyond the strongest areas of the Welsh economy. The Valleys, rural areas, post-industrial communities, coastal towns and Cardiff do not all face the same barriers. A Welsh productivity strategy must therefore be place-sensitive.
This was one of the strongest messages from the event. Productivity cannot simply be administered from the centre. It requires an understanding of local labour markets, infrastructure, business bases, skills needs and institutional capacity. A policy that works for one part of Wales may not be sufficient for another.
Targets, living standards and policy delivery
The discussion on economic aspirations also showed why productivity cannot be separated from living standards. Targets and metrics can support accountability, but they are not a substitute for delivery. Plaid Cymru’s Luke Fletcher captured this point clearly, arguing:
“The economy is all about people.”
Productivity matters because it shapes wages, household security, public services, opportunity and the quality of everyday life.
That is why the debate should not be reduced to targets alone. The more important question is whether Wales can connect economic ambition to the systems that shape daily business decisions and working lives.
Conclusion: from recognition to delivery
The event showed that political parties differ substantially in their preferred solutions. Some emphasised public investment, fair work and social partnership. Some focused on institutional coherence and regional development. Some placed greater emphasis on tax, business rates, regulation and infrastructure. Others stressed collaboration, small-business support and speed.
However, beneath these differences was a striking degree of agreement about the practical obstacles Wales faces: skills shortages, planning delays, business-cost pressures, fragmented business support and uneven regional growth.
Wales does not lack awareness of its productivity challenge. The next stage is to translate this awareness into the institutions, partnerships and practical systems needed to support long-term economic development. This requires productivity to be built into every aspect of economic policy: skills provision, business support, planning processes, regional development, infrastructure and the conditions that allow Welsh firms to invest, grow and create better jobs.
