The Economic Summit II

Following the economic summit on Thursday, which this blog called for nearly 10 months ago, the business sector should be grateful that the Assembly Government is finally engaged in some sort of dialogue.

However, it is extremely disappointing that the only two new schemes to emerge from the summit were an extension of credit unions across Wales and the release of government-owned land for development.

Much of the rest was rehashed policy, including the creation of a financial services forum, a body that was originally set up by the WDA in 2003. It also refused to do anything about cutting or freezing business rates in Wales, as it did when the foot-and-mouth crisis hit rural Wales a few years ago.

At least the business community in Wales seems to have finally got its act together, although it too should have pushed the Government for action at a much earlier stage.

The joint submission by the CBI and the TUC reflected much of what was discussed in this blog last week, and their call for positive discrimination in procurement for local firms is something which, as the blog entry yesterday notes, is something I have been calling for some time.

One can only hope that each and every one of the action points at the summit is taken on board by politicians and acted upon immediately.

The current mess should be a real wake-up call for everyone involved in economic development in Wales and yet I suspect that there continues to be a general state of denial in government about whether the economy is in recession and what we do to deal with this crisis.

Clearly, we need to ensure more cash is made available to maintain the financial viability of our business sector at a time when banks are pulling out. The Minister for Economy and Transport is absolutely right in saying that Finance Wales should be doing more to help, although he must make it absolutely clear that any loan to a business in Wales must not, as has happened in the past, be at punitive rates which are three times that offered by high street banks.

It is time that Finance Wales realised that it is a public-owned bank whose job is to help Welsh business and not only to make a return on public funds, as it has seemingly forgotten over the last few years.

Crucially, we also need to ensure that we are starting to put the building blocks in place for a time when the economy begins to pull out of recession. That means supporting business to invest in technology and skills at a time when they must continue to compete for a slice of dwindling markets.

To ensure that happens, the Assembly must ensure that the £1.5bn of European funds is working for Wales and, most importantly, that the private sector is fully involved in developing and managing projects.

As the Western Mail reported last week, there is a growing suspicion that the Assembly Government, in awarding itself the vast majority of European funds distributed to date, is merely filling in holes in its own economic budget and financing business support initiatives that they should be undertaking anyway. As a result, even the best projects do not get the support they require.

For example, the Optic incubator in St Asaph was recently presented with an award from the First Minister for being the best regional development project in the whole of Europe, with Rhodri Morgan stating that: “Innovation and R&D are vital to Wales’ future as a dynamic region at the cutting edge of sustainable development in an increasingly competitive, global economy and are central to our plans for Wales’ new structural funds programmes.”

I wonder if he is aware that plans for an extension to Optic have been on hold for well over a year due to government bureaucracy and a reluctance by his officials to make any sort of decision on further support.

Similarly, there are rumours that Opportunity Wales – one of the real success stories of the last round of Objective One funding – has been pushed out of consideration for support in favour of a government-led project

These two examples alone should clearly be an embarrassment for politicians who want a small clever nation. Surely, they should be crying out to support a research centre which is at the leading edge of its scientific field and a scheme that has brought e-commerce to thousands of new businesses. Yet due to a combination of red tape and bloody-mindedness, such initiatives that can bring well-paid, sustainable employment to one of the poorest areas in Europe are being starved of funding.

It is not as if we don’t have the basic ingredients for success in place. We do and there is potentially nowhere better to do business than in Wales. If any politicians doubt that, then just ask the companies appearing on this year’s Fast Growth 50 list published in 10 days’ time.

However, we need better partnership between government and business and a change in attitudes so that we have a Civil Service that worries less about what a minister will think of any action and more on what that action will do to create jobs and prosperity.

If we can work together and a “can-do” culture can be engendered within economic development which, ironically, the bonfire of the quangos was intended to achieve, then when Wales plc comes out of recession, we could be in a position as an economy to take on the world.

If not, then the best we can hope is that the recession treats us kindly.

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