The response from WAG was predictably one of denial, and reflecting its current strategy that if its spokespersons keep stating that the Economic Renewal Programme (ERP) will be helping small firms in Wales often enough, the rest of us may start to believe it.
However, it is interesting what the WAG spokesperson has noted in the article, namely that "The FSB were consulted extensively during the formation of this policy”.
In other words, the FSB agrees with the ERP and shouldn't now be complaining about its implementation.
Of course, the FSB, like all other organisations across Wales, was consulted over what should be in the Economic Renewal programme. However, as far as I am aware, no further consultation took place regarding the actual contents of the ERP published back in July, which was a closely guarded secret until the launch ‘party’ at Panasonic.
If that isn’t the case, then it would seem that WAG is now essentially stating that the FSB – the main business representative body in Wales – actually supports
- limiting soft loans to a “picking winners” sectoral approach
- getting rid of business support for thousands of small firms
- spending hundreds of millions of pounds of taxpayers’ money on ultra fast broadband that the vast majority of its members neither wants nor needs
To date, small businesses up and down the land have had no opportunity to respond properly to the new published strategy from WAG. Given this, perhaps the best thing to do is for the FSB to put the ERP to the test and fully consult their 10,000 Welsh members on whether the strategy will benefit small firms in Wales.
Then we can find out whether the FSB membership does agree with WAG over the future direction of the Welsh economy or whether they believe that the small firm sector in Wales has been sold up the river by a government that simply does not understand the entrepreneurs of this nation.
Comments
The much better option is to find ways to help all businesses by changing the environment for business - especially by doing what only governments can do. High up on that list would be the planning system, red tape & regulation, SME friendly public sector procurement, infrastructure development, strengthening the skills base, labour market flexibility, tax reform - and much else that determines whether it is good and easy to business in Wales.
The Economic Renewal Programme appears to heading in this direction, at least on paper. The real question is whether they can and will actually do much in these areas. I think that is where they need to be pressed and commitments monitored. I notice that in the Western Mail article you cite: Small businesses blast WAG over roads-upgrade funding, that the FSB didn't actually echo your repeated call for for more subsidies - but complained about the funding of infrastructure. The right complaint! FSB seems to want WAG to focus on the right business environment... good for them.
Given your apparently undiminished support for the idea of subsidies to small businesses as an economic strategy, you might be interested in this McKinsey report: "How to compete and grow a sector guide to policy" (see Exec summary pdf). This suggests a sectoral approach to intervention... recognising that the appropriate policy response is sector-specific.
There is very little support for direct subsidy even to 'tilt the playing filed' an approach they reserve for R&D and resource intensive sectors. McKinsey cautions against expecting too much growth from 'new' tech industries - they are just too small. The authors suggest growth will come largely from the service sector (much will be SMEs) - for which they suggest focussing on the the wider business environment ('setting the ground rules and direction', and 'building enablers').
You could criticise ERP for not adopting this sectoral approach strongly enough and for continuing subsidies to industries where there is no case for it...
Beware All readers: Is Big Brother watching you reading/posting on this blog?
Obviously, if you ask businesses whether they would like FASTER BROADBAND from the government, few will say 'no' - why would they?
Don’t give up your day job down in Cardiff Bay.
We consulted widely with our membership on the ERP and have raised countless concerns with WAG. Many of which have been discussed on this blog.
We are now calling on WAG to engage with us on the ERP as the consultation with ourselves has been wholly inadequate. We have made this point very clear to WAG and whoever their spokesperson was stating that "The FSB were consulted extensively during the formation of this policy”, is completely mistaken at best!
Even IF we were consulted, it does not mean that we agree with the ERP.
We were completely in the dark about the outcomes of the ERP and were as shocked as anybody with its contents. As the biggest business organisation in Wales, this is unacceptable and not a consultation process!
I hope the WAG engage with us from now on to try and salvage something from the ERP. We thought that DE&T were doing a good job before the ERP. Yes, a few things could have been done better and we didn’t agree with everything, but now the ERP has thrown the baby out with the bathwater and left a lot of uncertainty.
Yes I think ERP is flawed and if it has credibility then it should have been kept on ice until the Welsh economy got strong again. It's too soon.
There are 132,000 people unemployed now i.e. the issue needs addressing now not 3 years from now.
My consultancy business has turned away 4 projects since 5 July 10 that would have created 110 jobs by Xmas.
If a factory closed today in Wales with the result of the loss of 110 jobs; the press would be all over it.
The sectoral approach they suggest is completely different to that suggested by the ERP.
In fact, it suggests different degrees of intervention for different sectors, but recognises that government has a role to play across the whole economy.
As you seem to have time on your hands, read, for example, the case of tourism in Mexico or the R&D sector in Oulu in Finland. Do you think that government didn't, in some way or another, support both industries?
The crude approach of the ERP certainly does not contain the sophisticated approach discussed within the McKinsey report and, worst of all, contains no evidence to support its conclusions, which are going to have a major effect on the Welsh economy.
Is the ERP the best that Wales can come up with for the future of this economy? I certainly don't think so.
McKinsey's sectoral approach classifies the whole economy, it isn't just choosing quite small subsets for special treatment as WAG has done. But it is clear that in their four tiers of government intervention of increasing intensity, most business, employment and potential growth in Wales is covered by McKinsey's lower intensity "Setting the ground rules" and "Building enablers" categories - the first two levels of intervention. These are the ones I favour most strongly and should be the heart of any programme for economic development - the conditions that affect all businesses. In McKinsey's view, the more interventionist 'Tilting the playing field' is reserved for a limited subset of manufacturing and resource intensive industries, like steel.
I thought the McKinsey analysis was quite a good way of taking a more nuanced approach to the government's role in the economy - but what they advocate is very far from an undifferentiated subsidy regime open to all SMEs.
(I work in a different kind of ERP, the enteroprise resource planning variety, and i think these systems could teach WAG a little lesson or two!)
Jane
I would also like to see what happens when businesses are eventually allowed the opportunity to respond to WAG.
Thank you
Charlotte