About two weeks ago, new statistics were released by the DTI’s Small Business Service which showed that the number of new businesses across Wales is continuing to decline. These results demonstrated that in the period 2003-2005, the number of VAT registrations – which is used as the primary method for measuring the health of the start-up market – had gone down by 10 per cent.
This follows a steady increase in new registrations in the previous three years, mainly as the result of specific support strategies for increasing the number of new firms, especially amongst groups such as women, young people, ethnic minorities, and older people.
This result was the second worst decline in the UK, marginally behind the South West of England. However, what is most interest is that this is in complete contrast to another devolved UK region – Northern Ireland – which demonstrated a 12.6 per cent growth over the same period. Indeed, only five out of the twenty six areas in Northern Ireland had shown a decline in start-ups. One area – Moyle – had a 175 per cent increase in new businesses since 2003.
If we examine the data by county in Wales, only four local authority areas have showed any increase in start-up activity in the last two years. More worryingly, the counties which have the largest decline in new starts are all rural, namely Pembrokeshire, Conwy, Ceredigion, Monmouthshire and Powys, with all five having a slowdown in new businesses that is twice the Welsh average. This is a trend that should be of concern to policymakers given that, outside of the public sector, small businesses often offer the only employment opportunity for many young people within the more sparsely populated parts of Wales.
The only good news from this data is that fewer firms are deregistering for VAT, which seems to suggest a greater survival pattern amongst smaller businesses in Wales, although critics could argue that given the amount of support that has been given to young firms through various business support programmes, this is not surprising. Given the recent budget cuts in new business start programmes, it will be interesting to observe whether this trend in increased survivability continues over the next couple of years.
Therefore, the data on start-ups clearly suggests that drastic action needs to be taken to ensure that entrepreneurship is again kickstarted across Wales, following the excellent work of the WDA’s Entrepreneurship Action Plan in recent years. In particular, this data - in conjunction with other recent statistics - seems to suggest that efforts to support new business start-ups have stalled and may need a major rethink.
Of course, this depends on whether entrepreneurship is seen as a priority for a future Welsh Assembly Government of any political colour. In particular, there will need to be a greater policy debate on focusing the development of new businesses within specific areas of Wales to ensure that not only is the decline in new business start-up rate arrested but, more importantly, we begin to create more entrepreneurs that will, over time, turn into the wealth creators and employers of the future.
Having spoken to a number of business support practitioners over the last few weeks, many are worried that the majority of Welsh counties will continue to see a decline in the number of small businesses unless drastic action is to address this issue.
This cannot be allowed to happen as we all appreciate that small firms are the backbone of the Welsh economy and it is not acceptable that we have seen a decline in start ups that is higher than the UK average, especially given the millions we have available to us through European funding that has been focused specifically on new business support.
This follows a steady increase in new registrations in the previous three years, mainly as the result of specific support strategies for increasing the number of new firms, especially amongst groups such as women, young people, ethnic minorities, and older people.
This result was the second worst decline in the UK, marginally behind the South West of England. However, what is most interest is that this is in complete contrast to another devolved UK region – Northern Ireland – which demonstrated a 12.6 per cent growth over the same period. Indeed, only five out of the twenty six areas in Northern Ireland had shown a decline in start-ups. One area – Moyle – had a 175 per cent increase in new businesses since 2003.
If we examine the data by county in Wales, only four local authority areas have showed any increase in start-up activity in the last two years. More worryingly, the counties which have the largest decline in new starts are all rural, namely Pembrokeshire, Conwy, Ceredigion, Monmouthshire and Powys, with all five having a slowdown in new businesses that is twice the Welsh average. This is a trend that should be of concern to policymakers given that, outside of the public sector, small businesses often offer the only employment opportunity for many young people within the more sparsely populated parts of Wales.
The only good news from this data is that fewer firms are deregistering for VAT, which seems to suggest a greater survival pattern amongst smaller businesses in Wales, although critics could argue that given the amount of support that has been given to young firms through various business support programmes, this is not surprising. Given the recent budget cuts in new business start programmes, it will be interesting to observe whether this trend in increased survivability continues over the next couple of years.
Therefore, the data on start-ups clearly suggests that drastic action needs to be taken to ensure that entrepreneurship is again kickstarted across Wales, following the excellent work of the WDA’s Entrepreneurship Action Plan in recent years. In particular, this data - in conjunction with other recent statistics - seems to suggest that efforts to support new business start-ups have stalled and may need a major rethink.
Of course, this depends on whether entrepreneurship is seen as a priority for a future Welsh Assembly Government of any political colour. In particular, there will need to be a greater policy debate on focusing the development of new businesses within specific areas of Wales to ensure that not only is the decline in new business start-up rate arrested but, more importantly, we begin to create more entrepreneurs that will, over time, turn into the wealth creators and employers of the future.
Having spoken to a number of business support practitioners over the last few weeks, many are worried that the majority of Welsh counties will continue to see a decline in the number of small businesses unless drastic action is to address this issue.
This cannot be allowed to happen as we all appreciate that small firms are the backbone of the Welsh economy and it is not acceptable that we have seen a decline in start ups that is higher than the UK average, especially given the millions we have available to us through European funding that has been focused specifically on new business support.
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