Read the exchange below from a recent plenary and weep for the future of the Welsh economy and, for that matter, the Welsh Assembly's credibility with business.
As someone who believes passionately in Welsh devolution, I despair that those in power are doing little to help the businesses of this nation and are dragging down the reputation of the Assembly at the same time.
Whilst we are spending £1 million on determining whether there should be another referendum, the necessary instruments are already in place to give higher levels of support for Welsh businesses, yet little has been done to deal with the main issue, namely credit to businesses.
What is the point of having two billion pounds of European funding if it is just sitting there doing little to support those businesses in trouble?
What is the point of the Assembly having its own 'bank' - Finance Wales - if it does nothing to help businesses such as Preseli Construction?
What is the point of having an Assembly that is happy to showboat over broadcasting and yet its committees have had no major discussion over the state of the economy and seems afraid to drag in the heads of Welsh banks to ask them what the hell they are doing to our businesses?
I have already written on the imperative of changing the current European strategy and focusing funds towards supporting businesses through the recession, yet nothing is being done to address this.
As for Finance Wales, it is 100% owned by the Assembly Government and yet has not appeared before any Assembly Committee to explain its actions over its extortionate interest rates.
Finally, the Assembly should drag in the bank managers now to explain what they are doing (or not doing) to help Welsh firms through the current crisis. If it is good enough for Westminster, as yesterday's session in Parliament with the UK's leading bankers showed, then it is good enough for the Assembly.
If certain banks choose not to support Welsh firms, then our Government should act more directly with those that seem to be doing little to support Welsh firms. After all, the Assembly must keep its funds somewhere and the removal of £15 billion from key accounts is a big incentive for certain banks to act more responsibly.
Today, unemployment in Wales is set to rise to over 100,000. We cannot wait any longer for our devolved government to step up to the mark and actually help Welsh businesses survive the recession.
Angela Burns: Jobs are hard to come by and, on Monday, in Pembrokeshire, a company called Preseli Construction Ltd had to shut its doors with the loss of 70 jobs. It will also affect a further 20 sub-contractors who depend on it. The reason it had to shut its doors was because its bank turned around and said that it no longer wished to support companies in the construction and building industry and therefore wanted to withdraw the company’s £350,000 overdraft facility with immediate effect. Preseli Construction tried to negotiate paying it back over a couple of months, but the bank was not having any of it. That is one company.
Another company in my constituency, which I am not at liberty to name this afternoon, employs more than 100 people and has exactly the same problem, so those jobs are also in jeopardy. There is also another company that employs 25 people that is in the same position. That is more than 250 people who all work in Pembroke or Pembroke Dock. There is one common denominator and that is the bank: HSBC. In my opinion, it is just using the credit crisis as an opportunity to rationalise its books. It has not been affected by the sub-prime market in the same way as other banks, it is fairly fireproof, and it still has an excellent rating with Standard and Poor’s.
I will tell you exactly what I would like you to do, Deputy First Minister: ask the Wales leader of HSBC to come to your office to have a meeting with you. I would be delighted to attend such a meeting. I have asked the bank for a meeting myself, but it will not even bother to return my telephone calls—I cannot get through its call centres. People’s jobs are being lost. I know that you are holding economic summits and that everyone is concerned about this issue, but these banks are riding roughshod over ordinary people who will find it exceptionally difficult to get another job. This affects about 250 jobs in Pembrokeshire that will be pretty impossible to replace in the next few years. I urge you to call that bank in to see you, and I would be delighted to provide you with all necessary information to enable you to do that. Its arrogance is beyond belief.
The Deputy First Minister: Thank you for your question and for the passion with which you expressed the feelings of your constituents, which is commendable. We were extremely disappointed to hear of the difficulties experienced by Preseli Construction Ltd. As you said, the construction industry has been particularly affected by the global economic downturn. We have measures in place and we have brought forward capital projects to assist the sector, but I understand your point that one of the major problems facing such companies and others is the lack of liquidity. That is a major drawback. We have had a dialogue with the banks in Wales to try to get them to lend more. It is important that we continue that dialogue, and I will draw your comments to the attention of the particular bank that you mentioned. If we feel that its response is not sufficient, we will consider your request to hold a meeting.
Angela Burns: Thank you very much for that, Deputy First Minister; I appreciate it. I wish to add one more point, namely that I have looked at the books of the three companies that I mentioned, and I know that they have assets that outweigh their liabilities. By anyone’s standards, that makes them okay to deal with. All three have been dealing with HSBC for over five years, and the other common denominator is that the bank manager, who knew them all well, retired last year. The companies now have to deal with a bloke in a call centre, either in Carmarthen or Swansea. It is almost as though the bank were issuing a fatwa on these types of businesses as well as businesses in the transport industry. The time has come for some tough talking with the banks, because I do not think that they are listening.
The national papers report the same. Alistair Darling and Gordon Brown say that they have lent the banks all these moneys, but they are not listening, although I appreciate that HSBC has not had much in the way of Government funding. These banks want to do business in Wales, but if they want a long-term future, it is about time they put some commitment into social enterprises and the people of Wales, and not treat us in this way. At some point in the future when times are good, they will want us to bank with them, to have our money, but we want them to support us now when times are bad. I urge you to be ultra tough with them, because I think that their behaviour is despicable.
The Deputy First Minister: Thank you again for putting your comments on behalf of your constituents in the way that you have. I will undertake to contact the bank about the particular issues that you have raised. I give you that undertaking. If we feel that that action is not sufficient, we will arrange a meeting with the bank. However, it is a wider issue. You mentioned a particular bank, but it is more widespread than that. We will need to have discussions with the representatives of the whole banking sector in Wales, because the issue of businesses’ liquidity has to be addressed.
As someone who believes passionately in Welsh devolution, I despair that those in power are doing little to help the businesses of this nation and are dragging down the reputation of the Assembly at the same time.
Whilst we are spending £1 million on determining whether there should be another referendum, the necessary instruments are already in place to give higher levels of support for Welsh businesses, yet little has been done to deal with the main issue, namely credit to businesses.
What is the point of having two billion pounds of European funding if it is just sitting there doing little to support those businesses in trouble?
What is the point of the Assembly having its own 'bank' - Finance Wales - if it does nothing to help businesses such as Preseli Construction?
What is the point of having an Assembly that is happy to showboat over broadcasting and yet its committees have had no major discussion over the state of the economy and seems afraid to drag in the heads of Welsh banks to ask them what the hell they are doing to our businesses?
I have already written on the imperative of changing the current European strategy and focusing funds towards supporting businesses through the recession, yet nothing is being done to address this.
As for Finance Wales, it is 100% owned by the Assembly Government and yet has not appeared before any Assembly Committee to explain its actions over its extortionate interest rates.
Finally, the Assembly should drag in the bank managers now to explain what they are doing (or not doing) to help Welsh firms through the current crisis. If it is good enough for Westminster, as yesterday's session in Parliament with the UK's leading bankers showed, then it is good enough for the Assembly.
If certain banks choose not to support Welsh firms, then our Government should act more directly with those that seem to be doing little to support Welsh firms. After all, the Assembly must keep its funds somewhere and the removal of £15 billion from key accounts is a big incentive for certain banks to act more responsibly.
Today, unemployment in Wales is set to rise to over 100,000. We cannot wait any longer for our devolved government to step up to the mark and actually help Welsh businesses survive the recession.
Angela Burns: Jobs are hard to come by and, on Monday, in Pembrokeshire, a company called Preseli Construction Ltd had to shut its doors with the loss of 70 jobs. It will also affect a further 20 sub-contractors who depend on it. The reason it had to shut its doors was because its bank turned around and said that it no longer wished to support companies in the construction and building industry and therefore wanted to withdraw the company’s £350,000 overdraft facility with immediate effect. Preseli Construction tried to negotiate paying it back over a couple of months, but the bank was not having any of it. That is one company.
Another company in my constituency, which I am not at liberty to name this afternoon, employs more than 100 people and has exactly the same problem, so those jobs are also in jeopardy. There is also another company that employs 25 people that is in the same position. That is more than 250 people who all work in Pembroke or Pembroke Dock. There is one common denominator and that is the bank: HSBC. In my opinion, it is just using the credit crisis as an opportunity to rationalise its books. It has not been affected by the sub-prime market in the same way as other banks, it is fairly fireproof, and it still has an excellent rating with Standard and Poor’s.
I will tell you exactly what I would like you to do, Deputy First Minister: ask the Wales leader of HSBC to come to your office to have a meeting with you. I would be delighted to attend such a meeting. I have asked the bank for a meeting myself, but it will not even bother to return my telephone calls—I cannot get through its call centres. People’s jobs are being lost. I know that you are holding economic summits and that everyone is concerned about this issue, but these banks are riding roughshod over ordinary people who will find it exceptionally difficult to get another job. This affects about 250 jobs in Pembrokeshire that will be pretty impossible to replace in the next few years. I urge you to call that bank in to see you, and I would be delighted to provide you with all necessary information to enable you to do that. Its arrogance is beyond belief.
The Deputy First Minister: Thank you for your question and for the passion with which you expressed the feelings of your constituents, which is commendable. We were extremely disappointed to hear of the difficulties experienced by Preseli Construction Ltd. As you said, the construction industry has been particularly affected by the global economic downturn. We have measures in place and we have brought forward capital projects to assist the sector, but I understand your point that one of the major problems facing such companies and others is the lack of liquidity. That is a major drawback. We have had a dialogue with the banks in Wales to try to get them to lend more. It is important that we continue that dialogue, and I will draw your comments to the attention of the particular bank that you mentioned. If we feel that its response is not sufficient, we will consider your request to hold a meeting.
Angela Burns: Thank you very much for that, Deputy First Minister; I appreciate it. I wish to add one more point, namely that I have looked at the books of the three companies that I mentioned, and I know that they have assets that outweigh their liabilities. By anyone’s standards, that makes them okay to deal with. All three have been dealing with HSBC for over five years, and the other common denominator is that the bank manager, who knew them all well, retired last year. The companies now have to deal with a bloke in a call centre, either in Carmarthen or Swansea. It is almost as though the bank were issuing a fatwa on these types of businesses as well as businesses in the transport industry. The time has come for some tough talking with the banks, because I do not think that they are listening.
The national papers report the same. Alistair Darling and Gordon Brown say that they have lent the banks all these moneys, but they are not listening, although I appreciate that HSBC has not had much in the way of Government funding. These banks want to do business in Wales, but if they want a long-term future, it is about time they put some commitment into social enterprises and the people of Wales, and not treat us in this way. At some point in the future when times are good, they will want us to bank with them, to have our money, but we want them to support us now when times are bad. I urge you to be ultra tough with them, because I think that their behaviour is despicable.
The Deputy First Minister: Thank you again for putting your comments on behalf of your constituents in the way that you have. I will undertake to contact the bank about the particular issues that you have raised. I give you that undertaking. If we feel that that action is not sufficient, we will arrange a meeting with the bank. However, it is a wider issue. You mentioned a particular bank, but it is more widespread than that. We will need to have discussions with the representatives of the whole banking sector in Wales, because the issue of businesses’ liquidity has to be addressed.
Comments
I see nothing worth while coming from Cardiff Bay - yes why aren't Finance Wales being given direct instructions to be more user friendly?Staff with some business acumen would be good too!
We have so few people who have been in business in the Assembly, as AMs and civil servants. I have to say that Nick Bourne needs to sharpen up and listen more to his advisors and not go off into blind alleys.Why isnt Alun Cairns taking more of a front role on this, and where is your economic commission, have they been put out to grass.
Talk about Nero fiddling while Rome burns , our AMs are harping on while Wales goes down the tubes.
http://www.iwa.org.uk/blog/2009/02/bring-bank-of-wales-home.html
Excellent post D.J-E
Trouble is - they are actually being responsible to their own business in a way that other failing banks have not been.
This is what the future looks like, 'sound' business models and 'easy' credit do not always mix.