Do something - three ways to help Welsh firms now

There are still those who believe that the Welsh Assembly Government can do very little to help the Welsh economy which, given the way that the current lot in power seem to have given up on devolved powers, is not surprising.

However, as pro-devolutionist and an optimist, here are three suggestions as to how the Welsh Assembly Government could help the business sector tomorrow if they so wished to:

Business Rates

First, it must urgently re-assess the current business rate regime and reduce the burden on small firms across Wales.

It seems to me that, while the Assembly currently has devolved responsibility for this form of taxation, it has yet to realise that it is exactly the worst sort of tax during a recession. This is because, unlike other forms of taxation on firms, business rates remain the same regardless of the performance of the business as it is based on the property occupied by the business and not on turnover or profitability.

To many businesses it is a fixed cost that must be paid regardless of the success of the business and is one that becomes disproportionately higher for many small firms as their income reduces. I would therefore suggest that if the Assembly Government wants to ensure that owner-managers remain solvent during the current crisis, it should examine whether it could suspend business rates for our smallest firms during the next twelve months.

While a couple of thousand pounds of rate relief may not seem much to a civil servant, it could mean the difference between survival and failure, especially for many small shops up and down our high streets

European funding

Second, we need to start spending European funds quickly and get them out to businesses. As many of you are aware, Wales qualified for an additional £1.5bn of European funding in 2006 and, as the Western Mail has pointed out during the past few weeks, there are fears being expressed by business groups there is very little spend being undertaken on the business sector and, more critically, projects to help develop businesses across Wales are being swamped under through an over-exuberance of unnecessary bureaucracy.

Of course, the governance and accountability of the use of such funds is important but even more critical is the need to get this funding, which other UK regions do not have, out to businesses, universities and communities.

Certainly, if this situation does not improve in the next couple of months, then there may well be a danger that the Welsh business sector may not be in the position to provide the necessary matched funding to support key projects with the consequence that these projects will fail and, worst of all, the funding will need to be returned to Europe.

Welsh Loan Guarantee Scheme

Finally, and most importantly, is the need to get cash flowing within businesses again and I reiterate my call again the establishment of a Welsh National Loan Guarantee Scheme which, by working alongside banks, would be used to underwrite a significant percentage of new loans to business, particularly on short-term credit lines, overdrafts and trade credit.

Whether this funding comes from the Assembly itself or from European funds is irrelevant. What is critical for Welsh businesses is that they can secure their cash position during the next few months and this must be something that Welsh ministers should consider urgently as probably the most effective way of ensuring that funding flows into the small firm sector.

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