Choices facing the Welsh Government’s economic policy

What is the best way of helping Wales’s 180,000 businesses? Is it through forms of direct business support, now organised through the Welsh Government’s Flexible Support for Business initiative? Or is it through putting more emphasis on enhancing the business environment, such as improving education and skills, communication links, and simplifying procurement processes and the regulation and planning systems?

These are the fundamental questions being considered by the Government’s current consultation on its Economic Renewal programme which will be launched in the early Autumn. They were posed at a Carmarthen meeting of the IWA’s West Wales Branch this week by Tracey Burke, Director of the Programme. As she put it, “Are the wider levers we have available to influence the economy that are more important than direct support?”

How this question is resolved will directly impact on the Department of Economic Development and Transport’s £240 million budget. Currently this is split between about £140 million spent on business support, with the balance spent on regional selective assistance to capital investment projects in industry. Tracey Burke made clear that part of the budget in this financial year is being held back to leave more headroom for new initiatives in the second half of the 2010-11 financial year. As she put it, “Maybe we should disburse some of the £240 million to tackle some of the more systemic problems affecting the business climate. But she added, “We need a strong rationale for government intervention.”

She was addressing an IWA West Wales Branch meeting attended by over 30 representatives of west Wales businesses and people from the public and third sectors. Their responses to what she had to say raised key issues for economic renewal in the region and for Wales as a whole:

• Business advice is best provided on a business to business basis. Mentoring schemes or business networking initiatives that link owner managers to share practice and expertise were quoted as useful examples of support mechanisms. Most west Wales companies are run by owner managers who have a passion for something which they can make a profit from but who can gain most from shared business experience.

• Energy is a key issue – both the increasing cost of energy and the impacts on the manufacturing sector in a rural region, and the potential for large and small scale renewable energy development. The exploitation of this potential together with the existing energy centre in Milford Haven must be central to the economic renewal of the area

• Access to finance is another key issue post recession. New financial models should be encouraged, such as the expanded role of credit unions as providers of local finance, for example on the USA model. Pressure should be put on the banks to provide more local presence.

• The Welsh Government’s whole business ‘grant culture’ should be reconsidered. There was a strong view that the concept of government grants should be replaced by ‘investment’, with clear expectations of return for society. Return on investment should include increased productivity and tax returns – not simply jobs created. There needed to be a more positive attitude to risk, as investment should focus more on innovation.

• There should be a much broader and integrated approach to the agri-food sector in west Wales. There are issues over inter-departmental working within the Welsh Government. For example, how integrated is the Rural Development Programme within the Government’s Economic Renewal strategy? There also needs to be greater consideration of the role of the service sector in the economy and maximising specialist opportunities.

• Infrastructure is a key issue facing west Wales, with slow east-west train links and the lack of a limited stop fast train service from Cardiff to Carmarthen and Haverfordwest. Broadband, which is an essential prerequisite for business growth, continues to be poor in west Wales.

• Research and development and the role of higher education are critical but there are weaknesses in their relationship with business. In west Wales it is important to look at the potential of the new University of Trinity St David’s and developing spin-outs from research capacity in Swansea and Aberystwyth that assist the region as a whole.

• It will be important to set out what makes us different and where we can gain comparative economic advantage. We should benchmark our policies and their outcomes against approaches in other areas. A prime example should be the English South West which has set out its vision as ‘leading the way in sustainable energy and a low carbon economy’.

The idea of developing a Welsh Way which combines the strengths of brand Wales and utilises the strength of common values and vision was seen as critical to the Economic Renewal programme This should include putting greater emphasis on mutualism in finance, promoting links between our landscape and culture, and stressing the importance of clean technology.
The Economic Renewal Programme consultation process ends on 11 May. The outcome will be presented by the Ieuan Wyn Jones, Deputy First Minister and Minister for Economic Development and Transport to the National Assembly in early June, with recommendations being implemented from the Autumn.
• Peter Davies is Chair of the west Wales branch of IWA and is the Sustainable Development Commissioner for Wales.

Response
Chris Slader, retired GP, Llangennech

The meeting was mainly focused on the manufacturing side of things, the interest of most of the members. However, I would like to add to my comment about service industry, which seems to me to be under-represented in Wales.

There are many things like care of delinquent kids which seems to be exported to England. other examples are other caring situations. These are presumably population based and Welsh Government investment could repatriate some of these. The services can be run in the private sector once started.

Other services are on a selected basis, One thinks of language schools in the Brighton area for example. We have a very successful private school in our village (not that I favour private education). Specialisation creates brand image, competition and spread of expertise, Hay on Wye is a good local example.

In general the Welsh Government should focus more on promoting the service sector.

What is the best way of helping Wales’s 180,000 businesses? Is it through forms of direct business support, now organised through the Welsh Government’s Flexible Support for Business initiative? Or is it through putting more emphasis on enhancing the business environment, such as improving education and skills, communication links, and simplifying procurement processes and the regulation and planning systems?

These are the fundamental questions being considered by the Government’s current consultation on its Economic Renewal programme which will be launched in the early Autumn. They were posed at a Carmarthen meeting of the IWA’s West Wales Branch this week by Tracey Burke, Director of the Programme. As she put it, “Are the wider levers we have available to influence the economy that are more important than direct support?”

How this question is resolved will directly impact on the Department of Economic Development and Transport’s £240 million budget. Currently this is split between about £140 million spent on business support, with the balance spent on regional selective assistance to capital investment projects in industry. Tracey Burke made clear that part of the budget in this financial year is being held back to leave more headroom for new initiatives in the second half of the 2010-11 financial year. As she put it, “Maybe we should disburse some of the £240 million to tackle some of the more systemic problems affecting the business climate. But she added, “We need a strong rationale for government intervention.”

She was addressing an IWA West Wales Branch meeting attended by over 30 representatives of west Wales businesses and people from the public and third sectors. Their responses to what she had to say raised key issues for economic renewal in the region and for Wales as a whole:

• Business advice is best provided on a business to business basis. Mentoring schemes or business networking initiatives that link owner managers to share practice and expertise were quoted as useful examples of support mechanisms. Most west Wales companies are run by owner managers who have a passion for something which they can make a profit from but who can gain most from shared business experience.

• Energy is a key issue – both the increasing cost of energy and the impacts on the manufacturing sector in a rural region, and the potential for large and small scale renewable energy development. The exploitation of this potential together with the existing energy centre in Milford Haven must be central to the economic renewal of the area

• Access to finance is another key issue post recession. New financial models should be encouraged, such as the expanded role of credit unions as providers of local finance, for example on the USA model. Pressure should be put on the banks to provide more local presence.

• The Welsh Government’s whole business ‘grant culture’ should be reconsidered. There was a strong view that the concept of government grants should be replaced by ‘investment’, with clear expectations of return for society. Return on investment should include increased productivity and tax returns – not simply jobs created. There needed to be a more positive attitude to risk, as investment should focus more on innovation.

• There should be a much broader and integrated approach to the agri-food sector in west Wales. There are issues over inter-departmental working within the Welsh Government. For example, how integrated is the Rural Development Programme within the Government’s Economic Renewal strategy? There also needs to be greater consideration of the role of the service sector in the economy and maximising specialist opportunities.

• Infrastructure is a key issue facing west Wales, with slow east-west train links and the lack of a limited stop fast train service from Cardiff to Carmarthen and Haverfordwest. Broadband, which is an essential prerequisite for business growth, continues to be poor in west Wales.

• Research and development and the role of higher education are critical but there are weaknesses in their relationship with business. In west Wales it is important to look at the potential of the new University of Trinity St David’s and developing spin-outs from research capacity in Swansea and Aberystwyth that assist the region as a whole.

• It will be important to set out what makes us different and where we can gain comparative economic advantage. We should benchmark our policies and their outcomes against approaches in other areas. A prime example should be the English South West which has set out its vision as ‘leading the way in sustainable energy and a low carbon economy’.

The idea of developing a Welsh Way which combines the strengths of brand Wales and utilises the strength of common values and vision was seen as critical to the Economic Renewal programme This should include putting greater emphasis on mutualism in finance, promoting links between our landscape and culture, and stressing the importance of clean technology.
The Economic Renewal Programme consultation process ends on 11 May. The outcome will be presented by the Ieuan Wyn Jones, Deputy First Minister and Minister for Economic Development and Transport to the National Assembly in early June, with recommendations being implemented from the Autumn.
• Peter Davies is Chair of the west Wales branch of IWA and is the Sustainable Development Commissioner for Wales.

Response
Chris Slader, retired GP, Llangennech

The meeting was mainly focused on the manufacturing side of things, the interest of most of the members. However, I would like to add to my comment about service industry, which seems to me to be under-represented in Wales.

There are many things like care of delinquent kids which seems to be exported to England. other examples are other caring situations. These are presumably population based and Welsh Government investment could repatriate some of these. The services can be run in the private sector once started.

Other services are on a selected basis, One thinks of language schools in the Brighton area for example. We have a very successful private school in our village (not that I favour private education). Specialisation creates brand image, competition and spread of expertise, Hay on Wye is a good local example.

In general the Welsh Government should focus more on promoting the service sector.

What is the best way of helping Wales’s 180,000 businesses? Is it through forms of direct business support, now organised through the Welsh Government’s Flexible Support for Business initiative? Or is it through putting more emphasis on enhancing the business environment, such as improving education and skills, communication links, and simplifying procurement processes and the regulation and planning systems?

These are the fundamental questions being considered by the Government’s current consultation on its Economic Renewal programme which will be launched in the early Autumn. They were posed at a Carmarthen meeting of the IWA’s West Wales Branch this week by Tracey Burke, Director of the Programme. As she put it, “Are the wider levers we have available to influence the economy that are more important than direct support?”

How this question is resolved will directly impact on the Department of Economic Development and Transport’s £240 million budget. Currently this is split between about £140 million spent on business support, with the balance spent on regional selective assistance to capital investment projects in industry. Tracey Burke made clear that part of the budget in this financial year is being held back to leave more headroom for new initiatives in the second half of the 2010-11 financial year. As she put it, “Maybe we should disburse some of the £240 million to tackle some of the more systemic problems affecting the business climate. But she added, “We need a strong rationale for government intervention.”

She was addressing an IWA West Wales Branch meeting attended by over 30 representatives of west Wales businesses and people from the public and third sectors. Their responses to what she had to say raised key issues for economic renewal in the region and for Wales as a whole:

• Business advice is best provided on a business to business basis. Mentoring schemes or business networking initiatives that link owner managers to share practice and expertise were quoted as useful examples of support mechanisms. Most west Wales companies are run by owner managers who have a passion for something which they can make a profit from but who can gain most from shared business experience.

• Energy is a key issue – both the increasing cost of energy and the impacts on the manufacturing sector in a rural region, and the potential for large and small scale renewable energy development. The exploitation of this potential together with the existing energy centre in Milford Haven must be central to the economic renewal of the area

• Access to finance is another key issue post recession. New financial models should be encouraged, such as the expanded role of credit unions as providers of local finance, for example on the USA model. Pressure should be put on the banks to provide more local presence.

• The Welsh Government’s whole business ‘grant culture’ should be reconsidered. There was a strong view that the concept of government grants should be replaced by ‘investment’, with clear expectations of return for society. Return on investment should include increased productivity and tax returns – not simply jobs created. There needed to be a more positive attitude to risk, as investment should focus more on innovation.

• There should be a much broader and integrated approach to the agri-food sector in west Wales. There are issues over inter-departmental working within the Welsh Government. For example, how integrated is the Rural Development Programme within the Government’s Economic Renewal strategy? There also needs to be greater consideration of the role of the service sector in the economy and maximising specialist opportunities.

• Infrastructure is a key issue facing west Wales, with slow east-west train links and the lack of a limited stop fast train service from Cardiff to Carmarthen and Haverfordwest. Broadband, which is an essential prerequisite for business growth, continues to be poor in west Wales.

• Research and development and the role of higher education are critical but there are weaknesses in their relationship with business. In west Wales it is important to look at the potential of the new University of Trinity St David’s and developing spin-outs from research capacity in Swansea and Aberystwyth that assist the region as a whole.

• It will be important to set out what makes us different and where we can gain comparative economic advantage. We should benchmark our policies and their outcomes against approaches in other areas. A prime example should be the English South West which has set out its vision as ‘leading the way in sustainable energy and a low carbon economy’.

The idea of developing a Welsh Way which combines the strengths of brand Wales and utilises the strength of common values and vision was seen as critical to the Economic Renewal programme This should include putting greater emphasis on mutualism in finance, promoting links between our landscape and culture, and stressing the importance of clean technology.
The Economic Renewal Programme consultation process ends on 11 May. The outcome will be presented by the Ieuan Wyn Jones, Deputy First Minister and Minister for Economic Development and Transport to the National Assembly in early June, with recommendations being implemented from the Autumn.