The more I write about the ERP, the more I seem to get confirmation from various commentators of the mess that Ieuan Wyn Jones' Department of Economy and Transport (DET) is creating.
The latest comments seem to suggest that not only are staff within DET uninformed about what is going on, but so are most of the businesses in Wales that have previously worked in partnership with WAG to deliver jobs and prosperity to local economies.
"I can confirm that local authorities have been told not to offer grants above £5k with immediate effect (no such thing as phasing in or out in the WAG vocabulary) - it had been possible to offer grants up to £35k in some areas and to certain projects, although this was not common. There was an opportunity to use the Local Investment Fund to lessen the impact of the ludicrous and disastous overnight closure of SIF, but WAG says No. So £5k is the maximum grant now available to business - important help for many at a time when cash and credit is still scarce but inadequate for many others.
This is despite the fact that none of the funding for LIF comes from WAG but is entirely funded by the EU via the Wales European Funding Office (WEFO). It is clear that WAG's intention is to end ALL grant support to business, whatever their size and to re-direct EU funding away from LIF (and other EU funded initiatives) into its new (fleeting?) priorities such as Broadband. Local authorities and other organisations are being squeezed out of access to these funds, which are to become WAG's own piggy bank. WEFO is no more than a department of WAG with no independence and no apparent ability to stand up for Welsh business.
It is definitely the case that almost all SMEs and larger companies are totally unaware of the end of SIF and the scrapping of FS4B after just 18 months and at God knows what cost (not that FS4B was ever more than a massively over complicated and bureaucratic mess). Their reaction is almost universally shock and a real fear of what this means for themselves and the Welsh economy. Where is the Welsh media in all of this? Hardly a peep from any of them.
IWJ could well be out of office next year and will leave behind a legacy that will be catastrophic - what is he thinking of?"
If the commentator is right, there are serious questions to be asked on:
(a) how WAG can influence expenditure by democratically elected local authorities and
(b) why the European funding body WEFO is allowing them to do so?
Does Ieuan Wyn Jones truly understand what his senior civil servants have done to the small business community that have always been supported by his party, Plaid Cymru?
More importantly, is the type of democracy we want in Wales where the parties in power can just do want they to do with little opposition?
Once the ERP had been published, there has been no detailed discussion with the stakeholders being affected (in this case, the businesses of Wales), tight control of the press and other influencers in the business community and a cack-handed attempt to take full advantage of the summer apathy to bulldoze through their economic strategy.
Such actions are what you expect from a banana republic, not the Welsh democracy that was voted for back in 1997.
Comments
One said ‘How can a grant be repayable? It’s either a loan or a grant!’
‘Correct ‘an oxymoron,’ I responded (if it’s called a loan then the FSA regulations have to be introduced, in case you were wondering).
One of my clients (3 directors in their mid 20’s) set their ICT business about 3 ½ years ago from a small office in London. After a short trading period, they recognised they could seize the market, if they could raise substantial funds. They heard about RSA/SIF and applied for it alongside remortgaging their houses and raising a large secured bank loan. Following a successful grant application, they moved their small operation to South Wales.
The company now employs 30 skilled people and sales are nearly £2m. If the directors hadn’t expanded when they did, they would have been blown out the water and lost their market share to an overseas company.
The MD told me straight that if the grant had been repayable they would have ‘bottled it’ because the total borrowings would have been too high. Moreover, he also suspects the bank probably wouldn’t have loaned them the money for the same reason. (they did use some Finance Wales money, but were charged 11% ouch!)
To date, the PAYE and corporation tax payments made by the company have been almost £500k. Grant conditions are still in place for 2 years before the company incurs any penalties from WAG, so add another £400k in future taxes to make a grand total of £900k.
Their grant offer was £290k.
Not a bad return for the public purse, I think!
Of course some projects don’t make it, but that’s economic development.
Following the announcement of ERP I was told all new grant applications under the old scheme would not be considered unless submitted by the end of August. Having advised my client, a week later I was told it had been moved forward by a month to the end of July, rendering it impossible to get the application in on time.
To further add to the misery, I've now heard this week that despite being told that applications after this date would come under the new, repayable ERP rules, a decision has been made now that NO new applications will be entertained until the new ERP structure is in place and the sector boards have decided on their strategy - which will be sometime early next year.
WAG has now effectively closed all grant support until 2011.
The obvious way of avoiding this debacle would have been to roll out ERP one sector at a time, whilst maintaining the existing structures in parallel. This would have enabled lessons to be learned and a smooth managable transition.
Possibly a scorched earth policy is exactly what senior civil servants are implementing, dragging this out and delaying implementation until the election next year, hoping that the effects will be so devastating that WAG has a new Economy and Transport Minister. This time, hopefully one that does what they are told by their senior civil servants.
This has manifested itself in the recent denial that there is soon to be a major investment by a large bluechip company.
You cannot hide such matters if you use external people on bodies such as WIDAB as there will be leaks regarding those companies that have been awarded grants.
Why hide such a fact if it is true and when rumours of the arrival of this company has been going around the South Wales business community for the last few months. The major surprise is that the Western Mail took so long to pick up the story.
In a small country like Wales, the strength is that everyone knows each other, but that is also a weakness as everyone gossips.
Trying to hide anything in Wales is impossible, especially if the Director General for the Economy and the Permanent Secretary regularly attend public events to interact with the business sector.
Where else but Wales would you have the Director General of the Economy regularly mentioned in unflattering terms in the business pages of the national newspaper? Sir Humphrey would spin in his grave.
If the Assembly wants to keep secrets, then a lower profile for its top civil servants may be a good place to start as convivial receptions and dinners are not the best places for keeping confidences about assembly policy.
I'm not sure any of my clients are going to get excited about a repayable grant.
I think I might write to the FSA (or its replacement) about the legality of 'repayable grants.' WAG may be able to brand it this way to get round the FSA rules, but then what stops anyone doing it?
One could lend money interest free but charge a massive arrangement fee or something.
If anyone who understands these things cares to comment; it would be helpful.
Anon 2 everyone loves gossip and this blo wouldn't be much use without it.
...and the Liberals too
Anglosaxon - your comments are well made and deserve greater investigation as do others. Let's see what we can do later with this type of information. I can't force political parties to take this up but I think there may well be a debate finally underway.
Your comment about gossip is a tad unfair as the articles are based on my opinion and facts. The comments, however, may be different! However, there should be a forum for those who wish to have their say on what is going on with the ERP and I am happy to provide such a platform. WAG certainly won't.
Next article on ERP be on Tuesday although there will be short piece on the troubles within S4C tomorrow.
Those comments and claims could easily come from staff that are facing the axe, as well as trainers and so-called 'business advisers' who have enjoyed so many years and are now - rightly - been given the boot.
It's an extraordinary position for a Conservative to take. The economic development department is riddled with inefficiency and double jobbing, and you're - what? - against taking steps to deal with that?
In addition, if all these business advisers were worth saving, then where is the evidence in our GDP figures? Where is their contribution? The ones I've dealt with with my company wouldn't have got a job making the tea.
Let's face it - this argument is not backed with your usual meticulous research. You got lucky on IBW, and now you are attempting to make a political point, and not making it very well - unless, of course, the Conservatives do indeed back bloated and ineffectual economic development.
And before anybody asks why this happened before. Well, we've had a recession to deal with. So why don't you give this strategy more than a week to work - unless you are prepared to train your critical eye upon your own government's reform timetable?
This from someone who comments anonymously himself/herself!
"Those comments and claims could easily come from staff that are facing the axe, as well as trainers and so-called 'business advisers' who have enjoyed so many years and are now - rightly - been given the boot."
And so what if they are. Given the paranoic environment within WAG, where else can they comment? If some of the comments made are correct, and I have no reason to think otherwise.
"It's an extraordinary position for a Conservative to take. The economic development department is riddled with inefficiency and double jobbing, and you're - what? - against taking steps to deal with that?"
And what's your point? The ERP is not about dealing with "inefficiency and double jobbing". That could be dealt with easily without cutting support to small businesses in Wales. This is about believing, as I always have, that small firms in Wales should get the support they deserve.
"In addition, if all these business advisers were worth saving, then where is the evidence in our GDP figures? Where is their contribution? The ones I've dealt with with my company wouldn't have got a job making the tea.
Well, why don't you let us know your company's name so that these "advisers" can judge for themselves whether they can deal with PG Tips - what have you got to hide if you feel so strongly about the issue as I do?
"Let's face it - this argument is not backed with your usual meticulous research."
Nor is the case for the ERP, as many commentators have pointed out. I am not the government. It is their job to convince me and other taxpayers, not the other way round. However, if you want me to quote statistics on the importance of small firms to job creation, happy to do so.
"You got lucky on IBW, and now you are attempting to make a political point, and not making it very well - unless, of course, the Conservatives do indeed back bloated and ineffectual economic development."
That is your opinion but if I am not making my case, then why do you bother comment on what I have written on a Sunday afternoon? Given that the official Welsh Conservative line is currently quite different to mine on the ERP, how can this be a political point? As for "getting lucky" with IBW, I think their success has more to do with the hard work of the staff than any "luck".
I am glad that you believe that there has been bloated and ineffectual economic development for the last eleven years under Labour and now Labour-Plaid. Some of us have been saying that for years. That does not mean that supporting small businesses is wrong - it is just the way that government goes about it that has been wrong.
"And before anybody asks why this happened before. Well, we've had a recession to deal with. So why don't you give this strategy more than a week to work - unless you are prepared to train your critical eye upon your own government's reform timetable?"
You were doing so well until you made this a political point. "We" have had a recession to deal with have we? So what have "we" done to deal with that apart from the large firm orientated ProAct? As my gran would have said, sweet fanny adams.
In my opinion, the ERP strategy is deeply flawed and I have been explaining my reasons for this over the last couple of weeks and will continue to do so. In the end, it is merely my opinion and if you don't like it, that's up to you.
By the way, if IWJ, Gareth Hall or any other of your friends want a debate on the ERP, they can name the time and place and I am more than happy to turn up and make the case for an alternative strategy.
This from someone who comments anonymously himself/herself!
"Those comments and claims could easily come from staff that are facing the axe, as well as trainers and so-called 'business advisers' who have enjoyed so many years and are now - rightly - been given the boot."
And so what if they are. Given the paranoic environment within WAG, where else can they comment? If some of the comments made are correct, and I have no reason to think otherwise.
"It's an extraordinary position for a Conservative to take. The economic development department is riddled with inefficiency and double jobbing, and you're - what? - against taking steps to deal with that?"
And what's your point? The ERP is not about dealing with "inefficiency and double jobbing". That could be dealt with easily without cutting support to small businesses in Wales. This is about believing, as I always have, that small firms in Wales should get the support they deserve.
"In addition, if all these business advisers were worth saving, then where is the evidence in our GDP figures? Where is their contribution? The ones I've dealt with with my company wouldn't have got a job making the tea.
Well, why don't you let us know your company's name so that these "advisers" can judge for themselves whether they can deal with PG Tips - what have you got to hide if you feel so strongly about the issue as I do?
"Let's face it - this argument is not backed with your usual meticulous research."
Nor is the case for the ERP, as many commentators have pointed out. I am not the government. It is their job to convince me and other taxpayers, not the other way round. However, if you want me to quote statistics on the importance of small firms to job creation, happy to do so.
"You got lucky on IBW, and now you are attempting to make a political point, and not making it very well - unless, of course, the Conservatives do indeed back bloated and ineffectual economic development."
That is your opinion but if I am not making my case, then why do you bother comment on what I have written on a Sunday afternoon? Given that the official Welsh Conservative line is currently quite different to mine on the ERP, how can this be a political point? As for "getting lucky" with IBW, I think their success has more to do with the hard work of the staff than any "luck".
I am glad that you believe that there has been bloated and ineffectual economic development for the last eleven years under Labour and now Labour-Plaid. Some of us have been saying that for years. That does not mean that supporting small businesses is wrong - it is just the way that government goes about it that has been wrong.
"And before anybody asks why this happened before. Well, we've had a recession to deal with. So why don't you give this strategy more than a week to work - unless you are prepared to train your critical eye upon your own government's reform timetable?"
You were doing so well until you made this a political point. "We" have had a recession to deal with have we? So what have "we" done to deal with that apart from the large firm orientated ProAct? As my gran would have said, sweet fanny adams.
In my opinion, the ERP strategy is deeply flawed and I have been explaining my reasons for this over the last couple of weeks and will continue to do so. In the end, it is merely my opinion and if you don't like it, that's up to you.
By the way, if IWJ, Gareth Hall or any other of your friends want a debate on the ERP, they can name the time and place and I am more than happy to turn up and make the case for an alternative strategy.
ANON: In addition, if all these business advisers were worth saving, then where is the evidence in our GDP figures? Where is their contribution? The ones I've dealt with my company wouldn't have got a job making the tea.
In every profession you get good and bad, so it’s unfair to tarnish everyone with the same brush. However, I agree most (not all) don’t really understand financials or are unable to offer real marketing advice. Many marketing plans that I have read lack substance and tend to be straight from a template. These people tend to come from government or enterprise agencies; the ones that are any good don’t tend to stay very long.
The Relationship managers that were appointed 18 months ago were really information providers and not supposed to be practitioners. Unfortunately, some took the role too seriously and ended up interfering with grant applications and becoming a pain in the neck i.e. a little knowledge is more dangerous than none at all.
I believe Wales will always need a business support system backed up by a substantial grant scheme, I think now and again its worth driving around the valleys to remind oneself see that things are not going to change.
Business needs to be near its market and that’s mainly over the bridge.
Why because each plays a significant part in the jigsaw that is the Welsh Economy. If we created one job per smaller enterprise we would have no jobless problem. Go figure. What you can put on the M4 you cannot put in Abercraf or Brecon.
Some business does need to be nearer its markets as one person said. But we do have a vibrant internal market and we do export .What does it say in the ERP about the pathetic state of our docks. We lost that battle a while ago – Avonmouth and Bristol won that race hands down. Are we trying to redress this in the ERP?
One contributor talks about the quality of marketing advice or strategy in Business Plans. May be it's the government and civil service we need to be training. What triangulated research have they done to inform the ERP? What recognised strategists have they had to discern and analyse the needs. This is not a skill found in DET anymore. Did they buy any big name English consultants who know nothing about Wales other than what they read to do it? Spatial and Cultural knowledge is essential dealing wit a multi dimensional country like Wales
The poor patient that is the Welsh Economy is now only going to have maybe two out of 8 symptoms treated. The patient may well die.
Let's keep the comments - the ones I can publish - coming in.
I wouldn’t agree Wales has a vibrant market, most business people I speak to are struggling to breakeven and carrying large and very aged debtor books. It seems this time round (this recession) businesses have been more sympathetic and less quick to take people to court and wind them up.
‘One contributor talks about the quality of marketing advice or strategy in Business Plans. May be it's the government and civil service we need to be training. ‘
Definitely no, no, no! Business advisers should be subcontracted or tendered from the commercial sector. Clients need to relate to people who understand their needs and have been through it themselves. i.e. people who’ve done it and not just read about it in a book.
I’m not sure why you have to quote ‘Did they buy any big name English consultants’ the policy was decided long before the consultation. IWJ October interview on the Politics show indicated where this was going.
Also the PM gave Wales & Scotland another year before they needed to make their austerity cuts which makes the timing of this policy even more odd. Do these people want to get re-elected, next summer?
I understand the staff don't know what is going on. The clients don't know if their grant application made the cut, so to speak. There are good propositions out there which were being prepared at no small cost which are now scrapped or on hold at best. There are consultants who relied on the complexities of the grant system for a business themselves who are wondering what to do. There are businesses shying away from coming to Wales, not only because they can't get a grant but because of the chaotic business environment now apparent. I could go on but you all know what I am talking about. The last i heard is that WAG are expecting some decisions to be made by the New Year!
I am joining a small campaign that is growing which is to personally email ieuan.wynjones@wales.gov.uk and ask him why this situation has been allowed to develop, to let him know about clients I have that will probably go elsewhere to a more professional environment where they can organise 2 paper bags.