PROFESSOR DYLAN JONES-EVANS

When I got back last night from work, there was a massive package of papers awaiting me, namely the papers sent by the Welsh Assembly Government regarding the public consultation process around the Economic Renewal Programme. Given that the Welsh Assembly Government has failed to post the results on its website, as it normally does with consultations, I had to unfortunately resort to asking the Government very nicely for copies of the submissions from various business organisations and, more importantly, from the various focus groups held with individual entrepreneurs and companies up and down the country. You have to wonder why the mainstream press in Wales has not asked the same questions rather than quietly accepting the press line from the Assembly's myriad collection of "press officers". Hopefully, I will get the opportunity to do some research over the weekend whilst fitting in a trip to the Ryder Cup with two of my best mates from Pwllheli. A cursory glance t...

Following the article on Saturday that examined the role of large firms in the economy, I was unexpectedly sent an email from one of Wales’ leading businesspeople directing me specifically to a recent study by the US entrepreneurship thinktank, the Kauffman Foundation. Entitled “ The Importance of Startups in Job Creation and Job Destruction ”, the study bases its findings on the Business Dynamics Statistics data that tracks the annual number of new businesses (startups and new locations) from 1977 to 2005 in the USA. The study defines startups as firms younger than one year old. The study reveals that, both on average (and for all but seven years between 1977 and 2005), existing firms are net job destroyers, losing 1 million jobs net combined per year. By contrast, in their first year, new firms add an average of 3 million jobs. Further, the graph above shows, whilst job growth patterns at both startups and existing firms are pro-cyclical, existing firms have much more cycli...

The real issue for policymakers in economic development is not how many people are employed by different parts of the economy, but where jobs are being created, especially at a time when we have the worst unemployment of any of the nations of the UK. Given this, one would have expected senior officials within the Department of Economy and Transport, in drawing up its plans for the Economic Renewal Programme (ERP), to have carefully considered all information regarding job creation and then developed their plans accordingly. However, it would seem that someone forgot to read a statistical article, which is ironically on WAG’s website, which examines changes in employment by business size for the period 2003-2006 . Unfortunately, this has not been updated by WAG statisticians but it nevertheless demonstrates the different roles of large and small firms to employment growth within Wales. According to the data, SMEs (small to medium-sized enterprises) accounted for 56 per cent of the...

"...the assurance that I can give all businesses in Wales is that, in the delivery of the programme that I have announced, size does not matter in the sense that we will give support to businesses whatever their size. So, there is no discrimination against small businesses and, indeed, the benefits will be felt by all businesses". Ieuan Wyn Jones, response in the Assembly Chamber, September 22nd 2010 "We agreed with the first minister that Wales largest 'anchor' companies are key to economic growth and prosperity. In fact, Wales is more dependent on large companies than England, as Wales' largest 1.8% of companies account for 69% of national turnover. As a result, we stated that only targeted government action to support these 'anchor' companies will deliver real growth and employment". CBI Wales response to the Economic Renewal Programme

I have just come across an official document that seriously undermines the entire approach by the Welsh Assembly Government to economic regeneration, especially within the poorer areas of Wales. It demonstrates that officials simply have not done their homework in preparing the Economic Renewal Programme, especially with respect to examining how, and where, jobs are created. I need to do undertake bit more analysis and then it will appear in the Western Mail on Saturday and, of course, will appear on this blog later that day. 

Today, an inquiry begins, in the Scottish Parliament, to examine the failure to support more businesses during the recession. The first up at the crease, when the Economy, Energy and Tourism Committee's (EET) begins its review of Scottish Enterprise and the small firms support body Business Gateway (BG) , will be the Federation of Small Businesses in Scotland (FSB). The small business organisation has claimed that the current structure has left a gap in the support of businesses that are struggling in the current economic climate. In the Scotsman on Sunday , Michael Dixon, the FSB's Edinburgh branch chairman noted that, "The vast majority of businesses who are not start-ups or are left outside the elite Scottish Enterprise stable of 2,000 account-managed companies feel that there is no place for them in this set up. Now more than ever, the jobs, services and revenue these businesses provide are crucial to our economic growth and should not be excluded from support ...

I have just been sent this a copy of this note, which has been circulated to all Assembly Members by someone who works on a daily basis with businesses. It demonstrates that there are some serious issues related to the process of implementing the Economic Renewal Programme, problems that could seriously affect the economic recovery. "Following some correspondence with the ERP team in which I pointed out that WAG officials felt forced to meet companies and were even cancelling appointments, ERP issued guidance to WAG staff concerning how they should deal with contacts from industry and commerce. I have attached this note for your information. You will see that it is concerned with staff continuing to maintain the pretence that WAG is still open for business. However, despite this guidance, staff still continue to refuse to meet with promoters of prospective projects, because they have no details of how the new scheme is to operate and what it is to offer. When I recentl...

I begin this week with various apologies to the CBI in Wales. I apologise for expecting the CBI to speak up on behalf of small firms in Wales when the list of their new council members show that over three quarters represent large businesses in Wales. I also apologise for criticising the CBI for supporting grants only to inward investors when 40 per cent of the membership of their council represent businesses which are headquartered outside of Wales. Finally, I apologise for having an expectation that the CBI would truly be the voice of business in Wales, as their byline suggest. Even when continuing to push the argument that large firms represent 55 per cent of all turnover in Wales , the fact that it has less than 25 per cent of its council membership emerging from the small firm sector demonstrates that the best it can hope for is to be “the voice of big business” in Wales. Sorry!

Having been busy with moving office late last week, I have had little time to catch up with the news around Wales. On reviewing various articles, one caught my eye more than any other, namely plans by Aberystwyth University which could see a non-Welsh speaker appointed as its new vice-chancellor.  This follows the decision by Bangor to do the same earlier this year. Whilst the Welsh Language Society is again objecting to this development, I doubt if the University will take any notice of their objections. To be fair to Aberystwyth, their response is quite different to what happened in Bangor, stating that "The language requirements for the post (and that of any deputy vice-chancellor) need to be considered in the context of the capacity of the senior management team of the university who must have, and do have, full capacity to be able to deal and communicate fluently and effectively in both Welsh and English". More importantly, it was noted that "a non-Welsh spe...

One of my favourite reads every day is Vaughan Roderick's political blog. Written in Welsh, the political insights of his articles, peppered with just the right amount of insider gossip, puts it streets ahead of many other similar sites across the UK. Yesterday's article - a "what if" piece on what would have happened if Plaid Cymru had led a rainbow coalition - was yet another brilliant piece of writing. However, the best discussion was saved until last. Translated, it reads as follows: "And that brings me to a story that I have heard from various sources. There is now way of knowing whether it is true or not but the fact that so many people from various political colours are relating it. The story is that the first meeting between David Cameron and Carwyn Jones was a total disaster. Carwyn, according to the story, was acting in a passive aggressive manner, as they say in English.  The First Minister was frowning and staring at the new Prime Minister. He a...

Today, we finally get an admittance from the CBI which supports the claims, made on this blog last week, that the grant culture in Wales has not ended. In the Western Mail today, its director for Wales, David Rosser suggests that not only will WAG continue to with grant aid for inward investors, but that there is nothing wrong in supporting large firms over small companies in Wales.  As he notes, "The inward investment market has its own rules which we cannot rewrite here in Wales. If we wish to participate in this market we have to play by these rules, and that means financial inducements to attract footloose investment. We can certainly decide that if we are moving away from grant aid then this should also apply to inward investors, but we must accept Wales’ intrinsic attractions are not yet sufficient to bring in these companies without inducement. We may get there, but we are not there yet. And if we opt out of grant aid for inward investors then we had better unde...

As the TUC conference starts today, there are increasing calls for militant action to stop any job cuts in the public sector.  Compare this to what happened during the last Labour Government under Gordon Brown. As  a paper from the Office for National Statistics  recently demonstrated, over a million jobs were lost in the private sector across the UK between the first quarter of 2008 and the first quarter of 2010. Given this massive blow to employment within the engine of the UK economy, were there motions for co-ordinated industrial action to stop job losses in the private sector during the TUC Congresses of 2008 and 2009?  Were there calls for days of protest and national demonstrations against the failure of the UK Government to stop the loss of over 4 per cent of all jobs in the private sector during the last two years? Of course there weren't. Rather than lobbying Government to implement policies that will benefit people at work regardless of whe...

“We have hundreds of thousands of very good small companies in Britain, but they are going to have to grow rapidly in order to absorb people and keep the economy growing. If it doesn’t happen, the economic strategy simply won’t work.” Vince Cable, Secretary of State for Business “We need to give the guys who have survived this recession far more support....If you have just got through the last two years, congratulations. You have showed some mettle and will have learned a lot. Why are we not supporting them to get to the next stage?” Lara Morgan, founder of Pacific Direct

The latest statistics on exports do not bode well for the Welsh economy. According to data released by the Welsh Assembly Government, the value of exports for Wales for the last twelve months fell by £1,602 million compared to the previous four quarters. There were decreases in exports to EU countries and in exports to non-EU countries, down £480 million (9.0 per cent) and £1,122 million (22.8 per cent) respectively. Wales had the largest percentage decreases in the value of exports over these twelve months (down 15.6 per cent) followed by Northern Ireland and the East Midlands (down 14.5 and 9.1 per cent respectively). The largest increases were in London, the West Midlands and the East of England (up 8.2 per cent, 8.1 per cent and 6.5 per cent respectively). Given such depressing data. especially in comparison to the rest of the UK, there needs to be a concerted effort to ensure greater support for exporters in Wales. If it is possible for the USA, the free market centre of the...

An internal document that is circulating around WAG seems to be suggesting that grants may not be ending after all, although it seems to be bad news if you are an indigenous Welsh business. Let’s first examine the issue of the provision of growth capital, which will affect Welsh businesses. Its purpose is to provide growth capital for businesses in Wales and is aimed solely at businesses in key sectors or key-sector supply chain. The finance offered by WAG, as discussed in the ERP, will be subject to an agreed repayment profile up to seven years (or the minimum term necessary to deliver the project) from completion of project. The offer may include a payment holiday option of up to one year at the beginning of the repayment period. So, no surprises there. There will be a repayable grant system that was trailed heavily within the ERP. However, what about those projects that are ‘mobile’ and wish to come to Wales? These are the very projects that Plaid Cymru AMs said we should ...

Last week, a story emerged that the villagers of Erbistock, near Wrexham, had been informed by British Telecom that it would cost £550,000 to provide them with a broadband internet connection. Fortunately, they had the good sense to shop around and were subsequently given an estimate of £50,000 by another company, Rutland Telecom, to upgrade the copper wire line from the telephone exchange with fibre optic cable to receive super-fast broadband. The new broadband scheme for rural Wales, funded by the Welsh Assembly Government (WAG), is aimed at giving each household or business a grant of up to £1,000 to assist with the installation of a broadband. Therefore, if every home in Erbistock comes on board, the cost will be covered and the village will be fully online by October. With many other rural areas in Wales being in a similar position, this model demonstrates how a demand-led approach can empower communities to find solutions for themselves and supported, on a case by case basi...

Interesting to see that Jonathan Edwards, the Plaid Cymru MP for Carmarthen East and Dinefwr, has finally caught up with some of the recent discussions regarding lower corporation taxes for Wales. In the current political climate of public sector cuts, this makes easy headlines but it seems that Mr Edwards, in his interviews with the Western Mail, always seems to constantly and conveniently forget to ask some key questions, particularly about his own party's role within the Welsh Assembly Government. For example, if corporation tax was devolved to Wales, would it necessarily be reduced by the Welsh Assembly Government that was dominated by the Labour Party? Currently, Plaid Cymru is wedded to a Labour Party that, during the last Brown administration, actually raised corporation tax for small firms across the UK. Given the ambivalent attitude of many Labour members towards wealth creators, there is simply no guarantee that Assembly Government control over corporati...

During the last decade, a new business phenomenon has emerged which has the potential to change the economic fortunes of many nations. Known as global start-ups, these are generally defined as new ventures that sell their goods or services in international markets through taking advantage of new technologies and changes in consumer behaviour. Amazon, the online retailer, is probably the best example of such a business, having been determined, from its first day of trading, to be a major global player . Not surprisingly, global start-ups are particularly attractive to governments as they grow quickly to create employment and turnover from high value added international activities. They do so by leveraging their global knowledge of business in their chosen niche market to expand internationally over a short period of time, adapting their business model as they develop. Some policymakers make the classic mistake that such global businesses are only related to emerging sectors suc...