MAXIMISING THE WELSH POUND?

Last week, the public sector borrowing requirement for the UK was announced at a record £15 billion for September.

On the same day, and seemingly oblivious to this news, the Welsh Assembly Government (WAG) announced that £120 million of taxpayers’ money was being spent on a number of public sector projects across the nation.

Certainly, one cannot argue with funding of £8 million for a new children’s hospital for Wales, although why WAG has waited so long to support this critical project remains a mystery.

However, one has to question whether, at a time when we should be doing everything to bolster our economy, any of the other projects receiving public money will really help to deal with worst recession since the Second World War?

Is it really a priority for WAG to back projects such as £35 million for the Ebbw Vale Learning Works (which includes a sports, leisure and arts centre); £15 million on an arts and science centre at Bangor University; £3.5 million for the Glyn Vivian Art Gallery, Swansea; and nearly £1 million for eco-lighting at 17 monuments?

According to WAG, resources need to be used effectively and efficiently to ensure value for the Welsh pound.

Therefore, why has the Assembly not partnered with the private sector to deliver key projects that can make a difference to the economy? Surely that would have ensured that public money, matched with the private sector, would have gone a lot further.

As it stands, most of the additional funding for the projects approved will come either from other public sector pots or from European funds.

You also have to ask why not one single proposal to boost the business performance of the Welsh economy was funded by WAG?

For example, Wrexham Council submitted a bid for a Western Gateway "green" business park project and Flintshire for offices, warehouses and workshops in Sealand.

Neither were supported and yet a £15 million bid from Bangor University to build a replacement for Theatre Gwynedd and a new students’ union nightclub was approved?

Of course, WAG has argued that the projects funded "will create or support over 3,000 jobs during the construction process".

As this works out at roughly £40,000 per job, it is a very expensive way of getting people back to work, especially as it is nearly four times the cost of a job created by grants to business. There is also no guarantee that any of the capital projects funded will go to local Welsh companies, given the procurement rules operated by WAG.

With the current restrictions on public funding, one would wonder where WAG has managed to find an additional £120 million for these projects.

Well, it would seem that the answers lie in the details of next year’s WAG budget, which shows a reduction in capital expenditure for the economy and transport portfolio of £60 million and for education and learning of £82 million.

For the last couple of years, WAG has been advocating 'a bigger bang for the Welsh buck'. If that is the case, how can it approve a tranche of public sector projects that will do little to support Welsh industry and bring down the 130,000 currently unemployed in Wales? How can WAG support a £142 million cut in expenditure in the main areas that can help to build up Welsh business, namely economy, transport and skills?

That is hardly "maximising the benefit of every Welsh pound for the people of Wales". Worst still, with estimates of 160,000 people being unemployed in Wales by next year, it seems that the future of Welsh business is being mortgaged for the sake of a number of pet projects that could, and should, be delayed until the economy recovers.

WALES FAST GROWTH 50 2009

Tonight, we celebrate the best of Welsh business at the annual Fast Growth 50 award dinner, which will be attended by 400 entrepreneurs and supporters.

The official results will come out next Wednesday in the Western Mail and the Daily Post and I am pleased to say that there will be some real positive surprises in store for the Welsh economy.

In the meantime, the Western Mail has published a taster of the results which, in the middle of a recession, are more important than ever as a sign of the entrepreneurial potential that could take us out of the economic downturn.

TOO POSH FOR BUSINESS?

A very pertinent article appeared on BBC business on Monday which questioned the sectoral approach that many regional development agencies have undertaken to attract high technology jobs to a region.

As a result, expanding businesses in other sectors were being excluded from support.

Interestingly, the article also referred to the situation in Wales and suggested that the Welsh Assembly Government is using both domestic and European Union funding to build new business parks, even when existing developments are at best half-full, and at worst, completely empty.

It quoted the example of the Bryn Cegin business park on the outskirts of Bangor that has received £9.5m of public subsidy and yet remains empty.

According to a local chartered surveyor, "local businesses think it's a waste of money because it's empty ever since it was built and they think it's a waste of money because it's not for them".

The article also refers to the situation 20 miles away in Holyhead where new roads, roundabouts and a high speed broadband internet network have been put in place at another new site - Parc Cybi. This time, more than £17m has been spent and, according to the article, neither park has a single company signed up wanting to move in.

As the surveyor notes,

"It's perfectly understandable that there should be a political aim to bring high-grade employment to a university town like Bangor. The problem is that's been the aim for the last 50 years and it's never worked. Can we just look at what the local market is, instead of dreaming of a large spaceship coming here from Japan and giving us some hi-tech employment."

Whilst the last point is made more in jest, there is a serious side to it. WAG has decided that it needs to compete in a few key sectors, like every other RDA in the UK, and yet as any businessperson will tell you, opportunities can arise in any industry.

Tomorrow night, we will have proof of this during the annual Wales Fast Growth 50 dinner, where 50 of the fastest growing firms from all parts of Wales and, more importantly, from all sectors of the economy, will have generated over half a billion of sales during the last two years.

The simple lesson from eleven years of the Fast Growth 50 is that Government should be backing winners, not picking them.

40,000 WELSH FIRMS FACE AN INCREASE IN BUSINESS RATES

Finally, some good news on the business rates front, especially after the thousands of words I have written on the subject over the last month.

As I had predicted on Saturday, the Welsh Assembly Government (WAG) has followed England and reduced the multiplier which helps to calculate business rates.

However, this will still mean that 40,000 businesses across Wales are still facing an increase in their bills next April at a time when they need every penny they can get.

Therefore, there is still much that needs to be done to deal with these higher bills and I remain concerned that the Assembly still denies that it does not have the power to delay the property revaluation exercise, which runs every five years, and so help those small firms which are facing increases in their rates.

There is simply no reason why, under the powers it has through the Local Government Act, why it could not suspend the payments by companies which are being hit hard by the revaluation exercise for at least one year, given that such support could essentially be classed as a rate relief, and I hope that pressure will continue to be exerted on Ministers to re-examine this critical issue.

I suspect this prevarication over revaluation has more to do with political cowardice and a reluctance to admit the truth rather than doing what is right for small firms.

However, let's get one thing clear about this before any politician decides to be disingenuous with the truth about how much WAG is helping small firms. In this case, there has been no additional support from WAG for Welsh business.

As the Valuation Office stated recently, the fact that this was not an income generating exercise meant that WAG had to reduce the multiplier to a point where the business rates scheme was cost neutral. Therefore, it is not WAG that will be paying for the decrease in business rates for 64,000 businesses across Wales but the 40,000 firms which will be getting an increase in their business rates as a result of revaluation.

Therefore, unlike Scotland, the fight for a fairer business rates system for Wales goes on and I hope that the FSB, the IOD, the CBI, as well as politicians across Wales, will continue to pressurise WAG for a fair deal for our small business community and to follow the lead of Scotland in ensuring that the majority of our small firms pay no rates at all.

LARGE FIRMS BENEFIT MOST FROM PRO-ACT

Whilst I have had my suspicions, I had always wondered whether Pro-Act had been geared towards large firms or small firms.

Finally, we have the answer, that to a roundabout reply given by John Griffiths to a written question from David Melding.

According to the Deputy Minister, “a total of £5.7m has been committed to companies in Wales with under 250 employees. This is around 63% of the total companies who have been approved for ProAct and 32% of the funding.”

In other words, 68 per cent of the funding allocated under Pro-Act has gone to companies employing more than 250 people i.e. over £12 million has gone to large firms - most of whom can afford to pay for the training themselves.

Indeed, Corus has received £1.1. million to train workers which it admitted were not under threat of redundancy.

Therefore, large firms in Wales have received over twice as much support as SMEs (small to medium enterprises) under the Assembly’s ‘flagship’ programme against the recession.

Compare this with the £7 million which the Assembly Government decided to pay out to extend rate relief in Wales last September.

So much for supporting the small firm sector in Wales during the recession.

WALES GB RALLY - ECONOMIC BENEFIT OR EMBARRASSMENT?

The Times reports on the highly embarrassing situation regarding the Wales Rally.

"The future of the rally — a fixture in the World Rally Championship for 65 years — was in doubt after the Welsh Assembly decided to pull out of its five-year contract to base the event in Cardiff. The decision was said to have cost the rally more than £2 million in sponsorship cash this year, forcing the MSA to step in with a financial package to ensure the race went ahead. But the rift was visible to spectators as banners were stripped of the former Wales Rally GB title and replaced with the simple Rally GB name.

"Negotiations produced a face-saving deal for the Welsh authorities, which means the rally will be back in Cardiff next year. But that will be the last, with hopes high that it will find a new and more adventurous home in the North East. A delegation of authorities from Newcastle travelled to Cardiff on a fact-finding mission yesterday and they are understood to be keen to launch a new-look Rally of Great Britain.

"The event certainly looked unloved and unwanted last weekend, with the service park sited next to a recycling centre and the ceremonial start from a waterside plaza watched by a few hundred people — a big contrast with the more glorious days of the event when thousands lined the streets of Cardiff to watch the competitors roar by".

As I am not a fan of rallying at all, I cannot for the life of me comprehend the original decision to support this event with millions of pounds of taxpayers' money.

It is clear that legal wranglings, which are a direct consequence of WAG's decision to allegedly break its contract with the organisers of the rally, have resulted in considerable unfavourable news coverage for Wales as a sporting location. However, one has to wonder who in WAG would decide to give such an event £2.2 million of public funds every year, especially given that the Assembly Government has recently admitted that three years ago:

"an independent report carried out in 2006 by the Welsh Economy Research Unit for the Assembly Government found that there is evidence to show that the Wales Rally GB has had a positive impact in showcasing Wales as a destination through global broadcast and media coverage. However, the report also stated that the event has only had a marginal impact on the development of the Welsh motorsport/advanced engineering sector, and in terms of repeat visitation generates a modest tourism spend of circa £1 million per annum. The report confirmed that the 2006 Rally generated £3.3 million of gross value added, which represents a return on investment of less than 2:1. In comparison, Event Scotland, the national events agency in Scotland aim for a return on investment of 8:1 across their portfolio of supported events".

Such a decision makes the furore over IBW's expenses look like a storm in a teacup and I would suggest that someone within the Welsh Audit Office needs to look at this whole fiasco in greater depth.

It certainly begs the following questions:

• Why did WAG enter into an agreement to pay millions of pounds of taxpayers' money on an event that, according to an independent analysis, brings a very modest return on investment compared to other sporting events?
• Why hasn't WAG pushed forward with greater support for the motorsport industry given that it has a near-empty Auto Technium which was built at a cost of £8.5 million to support the industry in Pembrey?
• Despite stating that there its decision to pull out was legally sound, why is WAG going to fund one more year of the event, presumably at a cost of £2.2 million to the Welsh taxpayer?
• Why does the Secretary of State for Wales continue to suggest that the event brings in "over £10 million extra spending on hundreds of local businesses from hotels to restaurants to garages" when an independent report from Cardiff Business School suggests otherwise?

If the Welsh Audit Office is unpalatable, perhaps Glenn Massey can be persuaded to do one more review for the First Minister before he retires?

BUSINESS RATES - HOW THE ASSEMBLY CAN SOFTEN THE IMPACT

Last week, I wrote about the issue of revaluation and how it will hit many small businesses hard next year.

Given that this is an issue that affects every part of Wales, I am astounded at how, despite eight economic summits, it has been ignored by the Welsh Assembly Government.


In the middle of a recession, government should be reducing the financial burden on small firms, and an increase in business rates through revaluation is the last thing that the Welsh economy needs at this time.

So what can be done?

First of all, WAG could follow the lead shown by the Northern Ireland Executive and look to postpone the revaluation exercise for 12 months until the economy picks up again.

This should be possible as all powers for business rates contained within the 1998 Local Government Act were transferred to Welsh ministers in 2006. So WAG should, according to the terms of the Act, be able to “include such supplementary, incidental, consequential or transitional provisions as appear to be necessary or expedient” to deal with this issue.

Secondly, I would urge ministers to drastically reduce the multiplier which is used to calculate business rates.

For example, if the rateable value of a property is £10,000, then to calculate the 2009-10 business rates bill you would multiply the value by the current multiplier of 48.9p to get a total annual bill of £4,890.

In my opinion, this should be reduced to around 40p in the pound if a significant proportion of businesses are not to be hit by any increases in the revaluation of their property.

It would also mean that, despite a higher revaluation of business, the impact of the business rate revaluation would be cushioned in the short term.

WAG could also introduce transitional rate relief for those businesses hardest hit by the revaluation, as it is designed to reduce the impact of significant changes in rateable values. This would mean that any increase for businesses would be phased in over a number of years. While such transitional relief is available in England, WAG has, to date, refused to bring in such a measure.

Finally, and most importantly, WAG needs to examine its overall policy towards business rate relief for small businesses.

In Scotland, business rates have been abolished for all properties with a rateable value of £8,000 or less, a scheme that has benefited 120,000 Scottish businesses. To date, WAG has not even considered such a move here.

Will any of this happen?

Apart from the fact that the multiplier will probably come down this year (but rise in subsequent years), it is unlikely that WAG will take the issue of reform of business rates seriously until it is too late. But don’t take my word for it.

Ieuan Wyn Jones said last week that he was “not persuaded currently that [business rate relief] is the best use of the limited resources that we have. We still think that they are best used for things like ProAct and ReAct”.

Such a statement is essentially saying that large foreign-owned firms – which have been largely targeted by the ProAct funds to date – will be given additional support during this recession while the thousands of small firms across Wales facing an increase in their business rates will not.
How can WAG claim with any credibility that the era of offering large grants to multi-national companies is over when its entire focus during this current recession has been on providing £48m of taxpayers’ money to help a couple of hundred firms through the ProAct scheme?

At a time when we have 130,000 unemployed across the country there could, and should, have been a balance between supporting large manufacturers and the general small business community, and yet this has not happened.

At the very least, half of the sum allocated to ProAct could have extended business rate relief, even if for only one year, thus pumping £24m into supporting thousands of small businesses across Wales.

Worst of all, politicians have shown that devolution does not lead to a better deal for Welsh business, only a few weeks before Emyr Jones Parry’s Commission is to report on further powers for Wales.

Indeed, our government in Wales has disappointingly failed to show the ambition shown in Scotland on an extended business rate relief scheme, or the pragmatism of the Northern Ireland Executive in postponing the revaluation exercise.

Instead, our political leaders appear to be content to allow this tax hike to go ahead without any support for the thousands of small firms that will be affected by it.

Given this complete failure to support the needs of Welsh businesses up and down the land, I certainly hope that no minister will have the audacity, in the future, to utter their usual line that “small firms are the backbone of the Welsh economy”, when they continue to do little to help them out of this recession.

TOTALLY CONFUSING AND TOTALLY CLUELESS

On one of my favourite blogs, Mike Smithson of 'political betting' posed the question whether "officially moving out of recession would turn the tide for Labour".

Unfortunately for Labour and for the UK as a whole, our economy contracted by 0.4% between July and September and it is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.

And what is the Assembly Government doing?

Well apart from the usual mantra about how ProAct is saving the Welsh economy, it would seem that there is total confusion about economic policy in Wales?

For example, when 900 jobs are threatened at Bosch, what does Ieuan Wyn Jones do?

He announces that "there had to be a radical shift from offering large grants to multi-national companies."

All well and good but if that is the case, why did we then get the statement yesterday that "The First Minister and Deputy First Minister met Bosch senior management today to discuss the way forward. The company was offered support and assistance to come to a decision on potential new business".

Totally confusing and totally clueless.

If I was one of the senior management of Bosch, I wouldn't even bother to meet with this bunch of clowns who can't even agree their policy on how to support business in Wales.

So much for having a Welsh Assembly Government with any strategy at all for getting this nation out of recession. No wonder we have 130,000 people unemployed in this country when we have such people in charge of our economy.

Is it any wonder that the numerous plaid cymru blogs we have in Wales have nothing whatsoever to say about the state of the Welsh economy.

Sugar Ray, Joe and IBW

At the risk of being accused of being too 'Daily Mail' again with the title and posting, I thought it was worth highlighting this story about how International Business Wales (IBW) has been helping our very own undefeated Joe Calzaghe with his unique training system - the Calzaghe Counter-Punch-developed by the Newbridge boxer and his former coach Kevin Davies.

According to the story from Reuters - which has yet to be picked up properly in the Welsh press - the invitation for a private preview was extended to Sugar Ray (who has a range of business interests in the USA) after he read about the Counter-Punch and wanted to size up its commercial potential in his home market.

The Counter-Punch has already been widely recognized by the boxing fraternity in the UK as a leading fitness and boxing training system. Joe is promoting the equipment as a unique conditioning and cardio-workout system and is currently working with the IBW team to raise its profile overseas.

This is a great story which demonstrates what IBW is doing to help Welsh products and it is a shame that this story was clearly lost amongst the expenses furore last week.

As a big boxing fan, I think Sugar Ray is only slightly behind Ali, Sugar Ray Robinson and Jack Dempsey in the list of great boxers and I remember staying up well into the night to watch his epic fights with Roberto Duran and Thomas 'the Hit Man' Hearns during the 1980s.

If anyone can help to sell Joe's products in America, then Sugar Ray is the man.

WAG PRIORITIES DURING A RECESSION NO 1 - FUNDING A NIGHTCLUB

Good to know that WAG Ministers have got their priorities right during the worst recession since the Second World War.

Today, the Finance Minister Andrew Davies announced £15 million of taxpayers funding for the arts and innovation centre at Bangor University which, according to the marketing blurb, "will include a replacement nightclub and Students’ Union for the University".

So there we have it.

With 130,000 unemployed in Wales, WAG has decided to give millions of pounds of public funds for a nightclub in Bangor.

You couldn't make it up even if you tried.

WELSH BUSINESS FACES MASSIVE TAX RISES

Could anyone believe that politicians, during the middle of the worst recession since the Second World War, would have the audacity to impose a tax increase on businesses across Wales?

Yet, it would seem this is what has happened over the past couple of weeks, as 100,000 Welsh businesses have received notification from the Valuation Office Agency, an executive agency of HM Revenue & Customs, of the new rateable value of their business property.

As a result of this change, many will be facing crippling increases in their business rates bills at a time when they can least afford it. This is because, every five years, the VOA carries out a revaluation of all rateable values in England and Wales, and the next one is due to come into effect on April 1, 2010.

While this year’s business rates are based on valuations of 2003 property prices, business rates for next year will be based on an assessment of property values on April 1, 2008, and, as we all know, there was a boom in property prices over this five-year period.

This is compounded by the fact that during the past two years, the UK has suffered the worst slump in commercial property prices since records began.

Therefore, not only will the new higher business rate bills not reflect the value of the property, the business owner will now have to pay higher rates on a valuation that, in some cases, is based on a value that is around 50% higher than what the property is currently worth.

Of course, this has not stopped the Government from pushing ahead with its plans for revaluation during the current economic slump, despite the fact that business rates are 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.

When the revaluation exercise started, the VOA made the case that “the revaluation would not raise extra business rates and was designed to redistribute the same total amount among ratepayers”.

To check the veracity of this statement, I examined two typical shopping streets in North and South Wales to see whether business rates, as the VOA claimed, had been redistributed.

The results, dare I say it, did not support their case at all.

On Cowbridge Road East, Cardiff, only one business along Canton’s main shopping street will not be facing a bigger business rates bill in April 2010. The rest will be facing an average increase of around £1,520, or a 23 per cent rise on this year.

A similar situation was found in North Wales where businesses based on Mostyn Street, Llandudno’s main shopping area, will be paying, on average, an extra 15 per cent on their business rates next year, which equates to more than half-a-million pounds in additional revenue for the Government.

Therefore, there seems to be little evidence of any redistribution within some of the main shopping streets in our towns and cities.

So could this differ in the poorer areas, especially when an Assembly Government spokeswomen pointed out that businesses in generally less affluent areas will have rental values that have dropped and, as a result, will be helped by a reduction in their rates bill?

If that is true, how come more than 80 per cent of the businesses on the High Street in Merthyr will face an average increase of 16 per cent in their rates bill?

How is it the case that, on the West Parade in Rhyl, in the most deprived community in Wales, only two businesses are receiving a cut in their business rates?

Given what the VOA and the Assembly Government has stated publicly, there must be some “redistribution” somewhere but I cannot for the life of me find any real evidence of it in Wales. Indeed, it would seem that the vast majority of Welsh businesses will be facing a rise in their bills next year. If that is the case, then is this yet another stealth tax on business when they can least afford it?

And it is not only small businesses that will suffer.

Corus will have recently received notice of an increase in its rates bill of £3.5 million for the steelworks at Port Talbot and Llanwern, while Airbus at Broughton faces a £250,000 increase in business rates for its aircraft plant.

So when WAG announced that the Pro-Act scheme was giving Corus a grant of £1.1 million pounds (even though the company didn't qualify), did they know that the rates would then by going up by over three times that amount

So what can be done?

Apart from the Daily Post, the Western Mail, BBC and HTV have completely ignored the biggest rise in taxes that businesses in Wales have faced in years.

Therefore, in my opinion, business groups like the IOD, CBI, FSB and Chambers of Commerce need to lobby the Welsh Assembly now to put this at the top of the agenda of the next economic summit to ensure that the implementation of any revaluation is postponed indefinitely.

The One-Wales Government is burying its head in the sand over this issue, as seen by Rhodri Morgan' s performance on Tuesday at Plenary where he was totally clueless about what was going on.

Thanks to Plaid's broken promises to take 50,000 firms out of business rates altogether, many of those will now be facing additional tax bills as a result of thie re-evaluation. How do they explain that to the local butcher's in Aberystwyth, the pub landlord in Holyhead and the shopkeeper in Llandudno?

Clearly, things are not going to change because Ieuan Wyn Jones said in the economy debate on Tuesday that "We are not persuaded currently that it (business rate relief) is the best use of the limited resources that we have. We still think that they are best used for things like ProAct and ReAct".

I would therefore urge each and every one of the 100,000 business ratepayers in Wales to urgently check their new rates bill on www.businesslink.gov.uk/estimatemyrates and, if it has gone up, to write and let their local AM know that any tax rise on any business is completely unacceptable during an economic downturn.

Business has always been an easy target for governments wishing to raise money, but this is a step too far during the worst trading conditions in a generation.

If the tax bill for one small part of Wales - Mostyn Street - has seen its overall tax bill go up by half a million pounds, then the overall tax bill across the country must be running into tens, if not hundreds, of millions of pounds of extra to be paid by business.

Therefore, if the new valuation of business property is implemented, then thousands of firms will face a crippling bill next year. That will not only knock back the confidence of businesses across the land, but it will be a disaster for the Welsh economy and, more significantly, will hold back any recovery from the current recession.

THE MASSEY REPORT INTO INTERNATIONAL BUSINESS WALES

Earlier this week, Glenn Massey produced his report into the performance of International Business Wales (IBW).

This, of course, is quite separate to the forensic examination carried out by KPMG on behalf of the Welsh Assembly Government into the expenditure of its international division.

Rather than rushing to judgement, as most politicians did last week, I have taken time to read the Massey review, and perhaps if others had done the same, their comments would have been more tempered, especially towards hard working staff who were operating within the constraints imposed by politicians.

Key points emerge from the report which shed some light on the approach that has been taken under two Economic Development Ministers – Andrew Davies and Ieuan Wyn Jones – towards foreign direct investment (FDI).

The first, and probably the most important point is that staffing in IBW has been reduced from about 200 to 137 since 2005 – a cut of 32 per cent.

Thirteen staff have been lost at the ‘frontline’ offices, the inward investment presentations team in Cardiff has been closed down and there has been a significant downsizing of inward investment research & analysis team. There has also been a reduction in IBW’s annual budget of 31 per cent since 2005, equivalent to £7.3 million every year, with a reduction of nearly £2 million per annum in the vital area of marketing, lead generation and support.

Therefore, IBW has had to do the job it did five years ago with roughly a third less of the resources. Yet, if we examine IBW’s record on new jobs being brought into Wales in 2009 as compared to 2005, then the numbers are approximately the same, and equates to 6.2 per cent of the UK figure – higher than the proportion Wales would be expected to bring in.

Does this look like failure? Actually, IBW has done exactly what would be expected of it under such conditions, namely deliver the same results with a vastly reduced budget.

In the context of targets, what I find most mystifying is the claim made by politicians that “IBW has left Wales at the bottom of the 12 UK regions when it comes to safeguarding jobs”. Yet, within the report, Massey makes the point that “IBW has no direct responsibility for reinvestment by foreign owned companies in Wales. Given that there are over 500 foreign owned companies in Wales with many of them being major players, this is a major concern in the light of recent reinvestment trends and the current economic crisis likely to reinforce this trend”.

Therefore, politicians are blaming IBW for the failure of the rest of DE&T to look after companies once they have arrived here. That is not IBW’s job under the current approach developed by WAG, where an enormous amount of money organising its support for business into so-called ‘account managers’ to look after companies in Wales, including foreign investors.

Whilst I totally agree that this is the wrong approach to such relationship management, you can hardly blame IBW officials for decisions made by their political superiors to go down this route? As a result, and as Massey points out, “IBW appears to operate in a silo along with other parts of DE&T”.

Whilst much of the focus of the press has been on IBW itself, there has been little, if any criticism, of those in charge of economic strategy. Indeed, if you read this report very carefully, it shows that the primary reason for the lack of branding, a silo approach across DE&T and the focus on RSA as a tool for inward investment are not due to operational failings, but strategic failings issues that are decided at the highest levels of government.

Rather than blaming IBW, the press and politicians should have turned their attention directly onto those in charge of the economy in Wales as this report is more of an indictment of the overall leadership of DE&T by the Ministers and those at the very top of the civil service rather than IBW as a whole. Indeed, one would argue that the First Minister himself set the ball rolling when he abolished the quangos without a thought to how the new world of economic development would function in Wales.

One has to wonder if there are strategic failings regarding IBW - which makes only a very small part of the overall DE&T portfolio - what about the rest of the economic development and transport divisions of the Welsh Assembly Government?

Ieuan Wyn Jones, in his haste to pre-empt the Massey report, has indicated that there will be a review of the economic development function in Wales following this report. It cannot come soon enough, although that review must surely examine his own role and that of his senior civil servant in setting the economic direction for Wales.

UNEMPLOYMENT IN WALES

Having left Cardiff first thing this morning for various meetings in London, I haven't had the chance to catch up with any news until about half an hour ago.

Of course, the biggest story of the day, at least for me, is that of rising unemployment in Wales, which has risen more than any other region for June-August 2009.

The headline data is that there are now 130,000 unemployed people in Wales, a rise of 24,000 on Mar-May 2009. This rise accounts for 29 per cent of the increase in unemployment across the UK and means that 45,000 more people are out of work as compared to a year ago – a rise of 53.1 per cent.

Will it continue to rise? Probably, because figure this doesn’t even include the recent losses at Anglesey Aluminium, for example.

Only a few months ago, we had government politicians lining up to claim that unemployment was falling in Wales and there was nothing to worry about because ProAct was the solution to all this country’s ills. As this blog has argued time and time again, ProAct is a one trick pony that can help but cannot, and will not, solve this recession.

So what could and should have been done?

Rather than repeat myself again, read the article I wrote on Wales Home on this issue.

More importantly, tune in on Saturday when I will reveal how the Assembly Government is threatening thousands of more businesses in Wales with another ill-guided policy decision (or lack of one).

ABANDONING YOUNG PEOPLE IN WALES

A report came out yesterday which warned that a generation of young people face being left on the jobs "scrapheap".

Therefore, at a time when youth unemployment has risen to its highest levels for a couple of decades, why has the Welsh Assembly Government agreed with the European Commission to move 41 million euros of Convergence funding from supporting young people to pay for its ProAct Scheme?

We know that at least a million pounds has gone to a large company that didn't even want the money in the first place? How much more has just gone to firms that basically didn't need it when it could have been spent on getting young people in education or training?

Couldn't 41 million euros be buying extra university places, college courses and apprenticeships for the thousands of young people who have little or no future in Wales?

Yet another example of how WAG simply haven't got a clue about real economic priorities and, worst still, how the Welsh press simply isn't holding them to account.

PATRICK HANNAN

Having been stuck in meetings most of the day, I have only just read that Patrick Hannan passed away over the weekend.

Betsan Powys gives an excellent eulogy to one of the foremost Welsh political commentators, and I can't do justice in the same way as one of his colleagues.

Indeed, to give a measure of the man himself, read the piece he wrote recently to celebrate Cardiff University's 125th Anniversary.

Nevertheless, I would like to say that Patrick always greeted me with friendship, even though mine was a passing acquaintance, and always had something thought provoking to say about the events of the day.

A gentleman, scholar, and a voice of reason who shall be missed on our airwaves.

BROWN TO SELL OFF ASSETS - IN A DEPRESSED MARKETPLACE

An announcement has been made that Gordon Brown is to give details of an initial round of sales of government assets that could raise £3 billion - including the Tote, the Dartford crossing, the channel tunnel rail link, and the Student Loan book.

This forms part of plans to sell a ''portfolio of non-financial assets'' held by Whitehall and local authorities for some £16 billion.

As we are in a very depressed market place, I doubt if the public will get the right price for these assets and the vultures will already be circling for a bargain.

You also have to consider the Prime Minister's previous record regarding the disposal of other assets, such as gold, which is reputed to have cost the taxpayer billions of pounds.

More like Steptoe and Son rather than a considered decision on the nation's financial future.

NEVER PICK ON A DRAG QUEEN

Cardiff Blogger has a great clip on how someone totally deserving got their come uppance by picking a fight with a black belt.

Difficult to top that, but I think I have done it with the clip of the two yobs in Swansea who picked on a pair of drag queens and got a shock when the men turned out to be cagefighters out on a fancy dress stag night.

Enjoy!

FAIR PLAY FOR ALL PARTS OF WALES

The post on Tuesday seems to have ignited some comments about the differences between North and South Wales. If those who have commented read the post carefully again, the aim of the article was to ask for fair play for those counties which have not received their fair share of European funding and to highlight the differences in European funding across the nation.

I raised the same issue two and a half years ago at the beginning of the current round of Convergence Funding, when I wrote a detailed analysis of how the previous round of Objective 1 spending had been distributed during the period 2000-2006.

It showed that instead of ensuring that all parts of West Wales and the Valleys fully benefits from European Structural Funding, the process has been more of a lottery with very little effort to ensure that funds are distributed equitably across the poorest regions of Wales.

Due to the absence of any strategic allocations, the process became one of ‘first come first served’ which did not take into account the differences in relative prosperity or population amongst the fifteen counties qualifying for Objective 1 funding. As a result, some local authority areas managed to secure a greater share of European funds for activities within their locality, despite the fact that this funding is there to increase the prosperity of all the deprived parts of Europe.

The distribution of European funding to boost competitiveness and increase economic prosperity within Wales should not be a lottery which is decided by factors such as whether organisations have a strong and proactive European office that submit applications quickly to WEFO to satisfy the needs of the programme.

Given the large inequities in the current provision of European funding across the different counties within West Wales and the Valleys, Convergence funding should have been distributed proportionately per capita amongst the different local authority areas of West Wales and the Valleys. This would guarantee that all parts of the region receive a significant amount of funding that can make a real difference to prosperity and employment within each local community.

However, it is clear that this has not been the case and, as with the previous round of European funding, parts of Wales which should, by right, be getting millions in additional funding are again losing out.

With half of the European Convergence programme already having been allocated to various projects, it is time that the Assembly Government re-examined the way that funding is distributed and ensured that all fifteen counties within West Wales and the Valleys benefit equitably from the remaining £1 billion of funding and that prosperity is spread not in one or two areas but across the Welsh economy.

THE IMPORTANCE OF UNIVERSITIES TO THE ECONOMIC WELL-BEING OF WALES

Yesterday, I drove over the Severn Bridge to attend the annual AURIL Conference in Bristol.

AURIL - the Association for University Research and Industry Links - is the membership organisation for those within the university sector which are responsible for the so-called 'third mission' i.e. creating links with businesses and the wider world.

It was well-organised event and the presentations were excellent, most notably the paper from Professor Alan Hughes of Cambridge University which provided some critical insights on how the relationship between government and industry should be managed. Hopefully, we can Professor Hughes over here soon to present his findings to Welsh politicians and policymakers.

It was timely event to attend, following the report of the Assembly's Enterprise and Learning Committee into the Economic Contribution of Higher Education in Wales, which was launched at the University of Wales Newport on Wednesday.

This was an excellent report, filled full of recommendations that anyone would have difficulties in disagreeing with.

The real question though is whether any of them will be implemented by the Assembly Government. For example, one of the key recommendations is :

"that entrepreneurship needs to be embedded more effectively both in the higher education curriculum and within the professional development of research staff: programmes should be established so that Masters and PhD graduates and research staff receive training on commercialisation and on handling relationships with business".

Yet, nearly seven years ago, in evidence to the then Economic Development Committee, I recommended that

"a major step forward would be for all Masters courses to require students to take a module on entrepreneurship. Students might also be required to include a section on commercialisation in all theses."

Of course, despite this being backed by all members of the committee, nothing was done to implement this or most of the other recommendations from this earlier report.

One can only hope that bodies such as the CBI, FSB, HEW and all the universities which took part in this exercise will now press WAG for real actions that can make a real difference to the Welsh economy and maximise the benefits accruing from our higher education sector.

A GRANT TOO FAR?

Many will have read about the announcement yesterday that Corus/Tata will be receiving over a million pounds from the Welsh Assembly Government under the ProAct scheme.

What on earth is going on?

Both WAG and Corus have essentially admitted that they are stretching the criteria by which the company qualifies for the funding, especially as the money will pay for training for workers in jobs that are not under threat.

As a limited fund, every pound that is given to a large firm under Pro-Act means one pound less to a small firm. Therefore why give the money to a large multinational company that doesn’t qualify for the scheme and, more importantly, has recently received a £500 million loan from various banks?

So far, ProAct has spent £17.3 million on helping 129 companies in Wales. How many of those supported were large firms who just took the money because it was available and how many were small firms in serious financial difficulties?

How many more large firms have been treated ‘flexibly’ by civil servants to get the money out to companies? Certainly, given that this is a European scheme, there are normally limits on the amount of funding that goes to support large firms.

Given the impression that Corus actually didn’t need the money in the first place, the question is whether this is a grant too far and brings the whole process of supporting businesses into disrepute?

Certainly, one prominent satirical website seem to think so.

DAVID CAMERON: SUPPORT OUR ENTREPRENEURS

I have just caught up on the speech by David Cameron at the Conservative conference in Manchester this afternoon.

From first reactions, the speech was well-received, steady but not spectacular, and should finally lay to rest the issue of what the Conservative Party stands for.

Naturally, I am exceptionally pleased that David made his support for the UK's entrepreneurs absolutely clear as they will be the ones who lead this country out of recession, as they have done during the last two downturns in the 1980s and 1990s.

They will need every backing they can get and I am sure that every potential and existing entrepreneur will take heart from his speech, as shown below.

A QUESTION OF PRIORITIES

Three weeks ago, this column pointed out that Anglesey remains the poorest county in the whole of the UK and suggested that the Welsh Assembly Government (WAG) should adopt an exceptional approach in dealing with such an exceptional situation.

I went on to propose that £100 million of European funds should be given to Anglesey over the next five years and that WAG should match that directly from its economic development budget.

Since then, I am glad that the local authority has taken up this call for ‘special status’ for the island and has directly approached WAG for financial aid.

Given this situation, many on the island would have been astounded that, on the same day that Anglesey Aluminium closed its doors, WAG was providing tens of millions of pounds for regeneration in another part of Wales.

Last Wednesday, a £38 million project to transform and revitalise Swansea's city centre and its waterfront was approved for funding by the Assembly. This follows the approval for other European funded projects in the city including £100 million for a range of initiatives at Swansea University, an £11 million scheme to replace the existing bus station, £6 million towards a new office development and £6 million towards supporting vulnerable adults in Swansea Bay.

Clearly, Swansea has made the most of the opportunities presented to it by European funding and good luck to those who have developed those projects.


Despite this, the question needs to be asked as to why £160 million has been given to Wales’ second city (seen above) when its poorest county has received just £5 million of European funds for one specific project?

That question becomes even more pertinent when you compare the relative prosperity of each county.

Anglesey is the poorest county in the whole of Britain, with an average prosperity of 56 per cent of the UK average. In contrast, Swansea’s wealth is at 81 per cent of the UK average, which means it wouldn’t even qualify under normal European rules for funding if it was considered as a county alone. However, because of the way we define our regions in Wales, Swansea benefits financially because it is grouped with other much poorer Welsh areas.

This has led to a situation where Anglesey County Council now has to go cap in hand to an Assembly Government that had no hesitation whatsoever in approving £160 million of funding to another more prosperous county that would not even meet the criteria for European support on its own.

As a gog born and bred, I find such a situation intolerable and make no apologies for demanding that North Wales is treated equitably when it comes to supporting wealth and employment creation.

Papers such as the Daily Post has pointed out, on numerous occasions, that there have long been suspicions that South Wales is given preference when it comes to support from politicians and policymakers in Cardiff Bay. This latest and unwarranted bias in the granting of European funds demonstrates that, at best, there is little appreciation or understanding of the problems facing the North Wales economy.

It is completely unacceptable that the poorest parts of this region are being short-changed when there seems to be no hesitation in approving hundreds of millions of pounds of spending for the rest of Wales.

The time has come for all of us to unequivocally demand that our elected representatives, from all the political parties wake up to this reality and do everything in their power to make sure that enough is enough. When it comes to economic and political support within both Westminster and Cardiff Bay, North Wales deserves ‘chwarae teg’.

CONSERVATIVE PARTY CONFERENCE - SIR JAMES DYSON CALLS FOR A FOCUS ON TECHNOLOGY

Sir James Dyson, one of the UK's most successful innovative entrepreneurs, has been appointed the Conservative Party's new 'technology tsar' and has called for better support for scientists and engineers.

Sir James told the Conservative conference in Manchester that scientists needed better financial support and a change in culture to encourage science and technology. He went on to say that:

"For every engineer trained in Britain, China trained 22 and Iran and the Philippines produced twice as many as Britain. Britain has 58,000 engineering vacancies but produces just 20,000 engineering graduates every year. What do we do? We close down engineering faculties - over 40 in the past decade".

Readers of this blog and my various newspaper articles will know that I have constantly and consistently called for greater support for science and technology.

It is great news that there is finally someone like Sir James Dyson who will hopefully get this message across to ministers when the next government is formed.

ANGLESEY - IS WYLFA B THE ONLY ECONOMIC OPTION LEFT?

A few weeks ago, I posted on the economic problems of Anglesey and the fact that the island is currently the poorest county in the whole of the UK. Given such an exceptional situation, there needs to be an exceptional approach.

Other bloggers, notably Alwyn ap Huw and A Change of Personnel have also taken up the call.

I will be making a further impassioned plea in my column in the Daily Post on Monday and demonstrate that there has been a total failure by WAG to provide the right level of resources to support the development of the poorest part of Wales with funding being directed to other more prosperous regions.

As a result, it is not surprising that the local authority is now making the case for “special status” to be accorded to the island so that it can benefit from additional funding in the way that the South Wales Valleys did after the coal and steel closures.

In the absence of any support from WAG, the best hope for the island seems to be the energy strategy of the UK Government.

Following Anglesey Aluminium’s demise, the only significant private sector employer is Wylfa Nuclear Power Station, although that is to be decommissioned soon. However, there are indications that the UK Government wishes to build a second nuclear power station next to the existing one and there are rumours locally that energy companies have already started buying land in preparation for such a decision.

Such a project could be the saviour for the island, especially given the way that most developed nations are now looking to nuclear as part of their low carbon solution over the next 50 years. Not only would such a development provide well-paid and highly skilled jobs, there could also be significant spin-offs through the creation of a new science park focused on supporting the nuclear industry and the energy-generating sector as a whole.

Given the scale of the project, the decision to build the station rests ultimately with the UK Government, although WAG is the main player in developing the infrastructure around the power station, especially as it has responsibility for skills and business support. However, this seems to be going nowhere as the position of ministers within the current Government seems to be, to put it bluntly, in a mess.

Whilst the Economic Development Minister supports the building of a new power station within the constituency he has represented for the last 22 years, the Environment Minister is diametrically opposed to such a decision and even recently called for a public inquiry into any new nuclear facilities in Wales.

Such a confused message from the Cabinet certainly doesn’t help the development of the energy sector within Wales and could jeopardise the potential of billions of pounds of investment into our poorest county.

At the very least, those living on Anglesey deserve to know whether ministers will fully back a bid for a new nuclear power station or, if not, whether they will provide the necessary resources to create badly needed jobs.

Given the way that it has been largely ignored by policymakers during the past decade, it is the least that this island deserves.

Update: Good piece from Valleys Mam as well on this subject and she raises an issue that I will discuss in more depth on Monday

CARDIFF ACADEMICS BANNED FROM DRINKING

According to this week's Times Higher, Cardiff University has just imposed a new policy on the use of alcohol and drugs which states that "Individuals are reminded that they should not behave outside work in a way that might bring the university into disrepute and bring into question suitability for the particular role held."

Fair enough, but it then goes on to state that not only is drinking at work is forbidden but, unbelievably "employees' homes will be considered part of the workplace when they work there".

There remains a ray of sunshine for those who imbibe as "alcohol consumption is allowed on university premises only on specific named events, such as the last working day before Christmas and "retirement recognition".

However, the catch is that "prior approval must be obtained, and staff must not return to work afterwards".

Similarly, staff need "express permission to drink at lunch-time events; those who do may not return to the office for the rest of the day". According to the rules, failure to abide by any of these terms "may result in the termination of working arrangements" i.e. the sack.

If there is an alcoholism problem among some members of staff, then certainly it needs to be addressed but this seems to be using a sledgehammer to crack a nut. Instead of solving the problem, this will merely exacerbate it, especially amongst the small minority who have serious alcoholic problems that should be dealt with in a sensitive and personal manner.

Given the ban on drinking at home, how will this be monitored by Cardiff's human resources department? Will staff be encouraged to shop their colleagues who are marking first year scripts over a glass of chardonnay?

Will every single employee going to their departmental Christmas parties now have to sign a form in HR? Will academics now have to gain permission from the Vice Chancellor before attending conference dinners on behalf of the University?

I think I need a drink.

GROWTH FIRMS BUCK THE RECESSION TREND

Despite the recession there are still a significant number of companies in Wales driving profitability and market share.

That is the message from the 11th Wales Fast Growth 50 list, the barometer of the state of the entrepreneurial sector in Wales.

The full results will be published in a Western Mail supplement, sponsored by the University of Wales Global Academy, on November 4th.

During the past decade, the Fast Growth 50 project has become the list to which every growing Welsh firm aspires to.

Since the project was started in 1999, 317 firms have appeared on the ten lists published in the Western Mail, creating more than 15,000 jobs and generating £3.8 billion of turnover into the Welsh economy, much of which is spent on local goods and services.

To qualify for the Fast Growth 50 2009 competition, firms should be independent and privately held, have had sales of at least £250,000 in 2006 and be based in Wales.

Rankings are based on percentage growth of revenues from 2006 to 2008 and, for the first time, the list is open to all qualifying Welsh companies, regardless of size.

As the person responsible for managing the entries, I can honestly say the companies that have entered this year have outperformed all expectations. The response to the competition has been tremendous, despite the fact that we have suffered one of the worst recessions in living memory.

All the companies on this year's list are worthy winners and demonstrate, unequivocally, that despite some of the toughest trading conditions for a generation, Wales still has the entrepreneurs that can grow successful businesses and make a real difference to the economy.

Overall, the 50 firms have more than doubled their turnover during the last two years, created jobs at a time of high unemployment and have demonstrated growth across all sectors of the economy.

I believe many will be surprised by the performance and resilience of this year’s Fast Growth 50 firms when their success stories are announced in the Western Mail in November. These companies, their founders and their staff are a tribute to the business talent that exists in this great nation of ours and beacons of hope to all Welsh firms.

The achievements of the winning companies will be celebrated at the annual Fast Growth 50 Gala dinner, hosted by BBC Wales newsreader Siân Lloyd. With awards sponsors including Enlli Associates, HSBC, Newport Business School, the University of Wales, the Welsh Assembly Government, MediaWales and the Welsh Built Environment Forum, the event is sold out with more than 400 businesspeople attending.

It should be another great night to remember!