IN FINLAND

In a week when the Finnish Ambassador to the Court of St James was visiting Wales, I am returning the favour.

I am currently in Finland, where I have been attending a meeting of the  MBA4PhD international project between Wales, Gothenberg and Turku, as well as exploring ways in which the University of Turku can work more closely with the University of Wales over the next few years.

As the picture shows, Turku is a paradise in the summer although it is hard going at this time of year, with snow still falling yesterday.

I have had some interesting discussions with colleagues about the state of the Finnish economy, with many worrying about Nokia's future, especially given its dominance in such a small country.

However, it would seem that exports are helping the nation to recover from recession. According to the Finance Ministry, gross domestic product will grow by 3.6 percent this year, before growth slows to 2.7 percent in 2012 and 2.4 percent in 2013.

Certainly, innovation remain key to developing the future Finnish economy and the University of Turku, through my old friend Professor Antti Paasio, is reorganising itself in the field of .commercialisation to ensure that academics can make the transition from the laboratory to the market-place. If his initial successes are anything to go by, then the University, and the Turku economy, has a very bright future.

FISCAL FALLACIES

Last week, I was sent a paper written by Tim Morgan of the Centre for Policy Studies. Entitled "Five Fiscal Fallacies",  it articulates, in detail, the need for reducing public expenditure by the current Coalition government.

Most importantly, it debunks some of the myths that have been pushed by the Labour Party and the Trade Union movement over the last ten months, namely that the reductions in public expenditure are “savage” cuts.

For example, “in 1999-2000, government spending totaled £343 billion, which, had it simply moved in line with inflation, have reached £438 billion by 2009-10. In fact, spending in that year was £669 billion, a real-terms increase of 53% over a ten year period in which GDP had increased by less than 17%. By 2014-15, and again expressed at 2009-10 values, aggregate spending will be a modest 3% below the 2009-10 figure, which cannot remotely be described as a “massive” cut. Moreover, spending will remain 48% higher than in 1999-2000”.

So, to deal with the worst financial crisis that any UK government has had to face for generations, public sector expenditure will need to be reduced by 3 per cent by 2014-2015.

The author also makes the critical point about the low levels of public sector productivity in the UK, an issue which very few commentators have picked up upon.

“Research compared the published 3.4% decline in public sector productivity between 1997 and 2007 with the 28% gain recorded in the private sector and concluded that taxation could have been lower by £58 billion had the public sector achieved private-sector levels of productivity improvement”.

Given that the BBC and much of the press has been unswerving in accepting, at face value, the Labour Party’s propaganda, this paper is worth reading if only to get a more balanced view.

THE UNIVERSITY OF WALES: BRINGING THE BEST OF THE WORLD TO WALES

Last week, all of my time was spent managing a major summit of leading academics from some of the world's top universities.

Attended by professors from institutions such as the Massachusetts Institute of Technology (MIT), Harvard University, Oxford University, University of Memphis, Boston University and the University of Central Florida, it discussed key issues in the critically important and growing area of geospatial cyber-physical supply chain, including environmental security, supply chain management and high performance computing.

They were joined by representatives from the United Nations, US Department of Defense, Northrop Grummann, Microsoft, IBM and Sonalysts.

You only have to open a newspaper these days to know that the field of cybersecurity is becoming a major issue for governments and industry around the World.

For example, the US Federal Government recently announced plans to spend more than $13 billion a year within the next five years on protecting its systems. In the UK, cyber crime is costing the economy up to £27 billion every year. In fact, cyber-physical security is now considered the number one threat to national security, being deemed more critical than conventional nuclear attacks. Last year alone, the US logged over 300,000 virus attacks on their networks and noted that organized crime now makes more money from cyber crime than any other activity.

To put it bluntly, in a week where the Minister of Education questioned the role of the University of Wales, the summit has been a tremendous success and showed what a different and innovative higher education institution can do.

What other university in Wales would have been able to put together such a world class summit in less than four weeks? That is the time that it would have taken for most Vice-Chancellors to get the memo about the event!

As a result, it is a major coup for Wales that MIT's Geospatial Data Centre and the University of Wales Global Academy will be working together to jointly develop solutions for cybersecurity leadership and training, a partnership that will place Wales at the forefront of developments in this area.

This followed the conclusion of the summit, namely that a multidisciplinary team is necessary to address the problems of cybersecurity and that the UK and the US would need to produce many thousands of experts in this field over the next few years.

We have also signed an agreement to set up a new research centre which will utilise the new £40 million High Performance Computer in the area of cybersecurity, bringing world experts together in Wales to examine the key issues in this area.

As I have said many time on this blog, part of the mission of the Global Academy, which we only established just over two and a half years ago, is about bringing the best of the World to Wales, and we have had a wonderful event over the last two days that will make a real difference to the discourse on the growing importance of cybersecurity in all aspects of our lives.

We hope to work closely with many of the participating academics to take forward the agenda identified by the summit and to advance relations between MIT and the University of Wales as we now plan to develop a joint training programme for taking forward educational developments in the field of cyber-physical security, an area that the summit agreed was the overriding issue for government, business, and universities.

Indeed, as the influential ComputerWorld UK magazine noted,

"The University of Wales could become one of the UK’s foremost cybersecurity education and training centres after a recent conference produced a deal to work with the prestigious MIT Geospatial Data Centre in the US.......Currently in the UK, cyber security training happens in a piecemeal fashion through a scattering of university courses across the country, or through computer science engineers who change tack professionally later on in their careers. Tie-ups like this bring in some outside expertise and training experience, which the UK still lacks, though there is a shortage of trained people in the US as it stands."

A number of academics at the event also linked up with Geolang Ltd, where we have our first Prince of Wales Innovation Scholar. This builds on previous links with MIT which have resulted in the company submitting bids for major contracts on both sides of the Atlantic,

As well as academic developments, the University of Wales was delighted to be able to show the best of Wales to the delegates - nearly all of the visiting academics had never visited Wales before. By showing them some of the best that Wales has to offer, including The Celtic Manor 2010 Club House (weher Simon Gibson gave a tour de force speech), the Wales Millennium Centre and Cardiff Castle, we hope they gained a great impression of Wales and will look forward to future visits as we develop this joint project.

We also had two pre-summit events in London, including a reception at Gwydyr House, hosted by the Secretary of State for Wales (above) and a tour of the House of Commons, both of which delighted the delegates.

Finally, the two day summit has been filmed by award-winning director Professor Thomas Levenson from MIT. Not only will the material will be used as part of the global training programme, but it is hoped that it will be turned into a  documentary and submitted to the Sundance Festival next year. Yes, you read it right - Wales will be represented at one of the World's premier film festivals.

So if anyone asks you what the University of Wales does for Wales, point them to this blog entry for starters.

REFLECTIONS ON THE BUDGET

For the last few days, I have been slightly out of the loop hosting a conference in Cardiff for the University of Wales.

The World’s first summit on the geospatial cyber-physical supply chain brought together leading scientists from some of the world's top universities to discuss key issues in this critically important area.

It was a fantastic event with professors from institutions such as MIT, Harvard University, Oxford University, University of Memphis, Boston University and the University of Central Florida creating an international masterclass of discussion and dialogue with other representatives from the United Nations, US Department of Defense, Northrop Grummann, Microsoft and IBM.

Needless to say, the outcome of the conference, apart from creating sixty new ambassadors for Wales, could create significant opportunities for the Welsh economy over the next few months.

As a result of spending time at this successful event, it was only yesterday that I finally got the chance to examine the effect of the Chancellor’s budget on the Welsh economy.

Given that George’s Osborne’s ability to make any major changes to spending or taxation was severely hampered by the requirement for reducing the large deficit run up by the previous Labour administration, it is worth noting some of the positive measures that could help the Welsh economy to grow during the next few years.

First of all, the decision to reduce the main rate of corporation tax to 26 per cent from April will be welcomed by many of the medium-sized and larger companies in Wales. However, I would like to see the Chancellor indicate that there will be a similar decrease to the small business rate as well during the next few years, given that we keep hearing from politicians that small businesses are the “backbone of the economy”

Many small businesses will be glad that this is a government that is finally tackling the mountains of regulations that bedevil entrepreneurs every year and are introducing a moratorium that will exempt micro-and start-up businesses from new domestic regulation for three years. Along with the move to drop existing proposals for specific regulations that would have cost business over £350 million, this is long overdue, especially as some surveys suggest that owner managers of smaller firms spend up to three days per week dealing with government bureaucracy.

With the Welsh Assembly Government looking to boost innovation across a number of technology-based sectors such as biosciences, advanced manufacturing and the creative industries, the increase in tax relief from 175% to 200%, with the aim to increase it further in 2012, could have a significant effect on businesses in these critical industries. Medical companies clustered around the Institute of Life Sciences in Swansea will also be boosted by proposed improvements and simplification to the regulation of medical research to shorten approval times for clinical trials.

Access to finance is key to developing the small firm sector in Wales and initiatives such as the Enterprise Investment Scheme are critical tools in enabling funding to be raised for businesses. It is therefore great news that not only is the income tax relief on the EIS being increased from 20 per cent to 30 per cent, but the amount that any individual can invest to gain this relief has also doubled.

Of course, some measures introduced by the Chancellor will apply only in England although the Assembly Government will be given the funding, under the Barnett formula, to do the same. The question, of course, is whether they will use that funding to make a real difference.

For example, will they follow the lead of the UK Government and develop enterprise zones with simplified planning rules, superfast broadband and tax breaks for businesses. Certainly many parts of the South Wales Valleys would benefit enormously from such a proposal and I urge the First Minister not to ignore the potential of this new policy out of political intransigence.

I also hope that the Welsh Assembly Government will extend the small business relief scheme as has happened in England, given that many small firms in Wales have been severely disadvantaged by having higher rates bills than Scotland or England during the last 12 years.

To me, the most radical proposal in the entire budget relates to the right for Northern Ireland to consult on reducing corporation tax below that of the UK, a result that is due to intense lobbying by the business community in Northern Ireland.

As Chairman of the Welsh Conservatives’ economic commission, I have already made the case that if Northern Ireland’s argument revolves around their poverty relative to the rest of the UK, then Wales, as the poorest of all the UK regions, should also be given the opportunity to consult on such changes.

Whilst all the other measures in the budget are clearly to be welcomed, that, to me, would be the most important decision that could be made by any Chancellor in modern times and would help transform the Welsh economy. Let us hope that at least one party will take up the call for this radical change during the forthcoming Assembly election.

THE CIVIL SERVICE CODE

I thought it would be pertinent to post the civil service code of conduct on this blog.

Recent events have made me think that some individuals have, unfortunately, forgotten some of the key elements of this code.

Perhaps this will help them review their position when considering their response to Ministers.

Civil Service values

1. The statutory basis for the management of the Civil Service is set out in Part 1 of the Constitutional Reform and Governance Act 2010.

2. The Civil Service is an integral and key part of the government of the United Kingdom. It supports the Government of the day in developing and implementing its policies, and in delivering public services. Civil servants are accountable to Ministers . They are in turn accountable to the National Assembly for Wales.

3. As a civil servant, you are appointed on merit on the basis of fair and open competition and are expected to carry out your role with dedication and a commitment to the Civil Service and its core values: integrity, honesty, objectivity and impartiality. In this Code:

• ‘integrity’ is putting the obligations of public service above your own personal interests;
• ‘honesty’ is being truthful and open;
• ‘objectivity’ is basing your advice and decisions on rigorous analysis of the evidence; and
• ‘impartiality’ is acting solely according to the merits of the case and serving equally well Governments of different political persuasions.

4. These core values support good government and ensure the achievement of the highest possible standards in all that the Civil Service does. This in turn helps the Civil Service to gain and retain the respect of Ministers, the National Assembly for Wales, the public and its customers.

5. This Code sets out the standards of behaviour expected of you and other civil servants. These are based on the core values which are set out in legislation.

Standards of behaviour


Integrity

6. You must:

• fulfil your duties and obligations responsibly;

• always act in a way that is professional and that deserves and retains the confidence of all those with whom you have dealings ;

• carry out your fiduciary obligations responsibly (that is make sure public money and other resources are used properly and efficiently);

• deal with the public and their affairs fairly, efficiently, promptly, effectively and sensitively, to the best of your ability;

• keep accurate official records and handle information as openly as possible within the legal framework; and

• comply with the law and uphold the administration of justice.

7. You must not:

• misuse your official position, for example by using information acquired in the course of your official duties to further your private interests or those of others;

• accept gifts or hospitality or receive other benefits from anyone which might reasonably be seen to compromise your personal judgement or integrity; or

• disclose official information without authority. This duty continues to apply after you leave the Civil Service.

Honesty

8. You must:

• set out the facts and relevant issues truthfully, and correct any errors as soon as possible; and

• use resources only for the authorised public purposes for which they are provided.

9. You must not:

• deceive or knowingly mislead Ministers, Parliament or others; or

• be influenced by improper pressures from others or the prospect of personal gain.

Objectivity

10. You must:

• provide information and advice, including advice to Ministers, on the basis of the evidence, and accurately present the options and facts;

• take decisions on the merits of the case; and

• take due account of expert and professional advice.

11. You must not:

• ignore inconvenient facts or relevant considerations when providing advice or making decisions; or

• frustrate the implementation of policies once decisions are taken by declining to take, or abstaining from, action which flows from those decisions.

Impartiality

12. You must:

• carry out your responsibilities in a way that is fair, just and equitable and reflects the Civil Service commitment to equality and diversity.

13. You must not:

• act in a way that unjustifiably favours or discriminates against particular individuals or interests.

Political Impartiality

14. You must:

• serve the Government, whatever its political persuasion, to the best of your ability in a way which maintains political impartiality and is in line with the requirements of this Code, no matter what your own political beliefs are;

• act in a way which deserves and retains the confidence of Ministers while at the same time ensuring that you will be able to establish the same relationship with those whom you may be required to serve in some future Government; and

• comply with any restrictions that have been laid down on your political activities.

15. You must not:

• act in a way that is determined by party political considerations, or use official resources for party political purposes; or

• allow your personal political views to determine any advice you give or your actions.

MISDIRECTION AND HIGHER EDUCATION

In magic, they say the most important skill is that of misdirection – which is the act of taking advantage of the limits of the human mind in order to give the wrong picture and memory.

As the mind can concentrate on only one thing at a time, the magician uses this to manipulate the "victim's" idea of how the world is supposed to be.

Take, for example, the announcement yesterday on the review of governance in higher education.

Driven by one journalist’s obsession and another man’s petty desire for revenge, one of the week’s main stories on the BBC was about the University of Wales’ validation provision in Singapore.

Yet, around the same time, HEFCW were announcing a cut of nine per cent in the budget for higher education in Wales, which would see funding cut by £65 million for 2011-2012, undoubtedly resulting in at least a thousand job cuts across the university sector unless further efficiencies can be made.

Did the education minister play on the fact that anything that his department could throw towards a compliant BBC on the future of the University of Wales would take precedence over any other news on higher education in Wales?

In fact, when was the last time the BBC passed up an opportunity to highlight such large-scale job cuts in the public sector?

Indeed, why focus on one case of student complaint when other instances  have been largely ignored by BBC Wales (such as Clarke vs Cardiff University where a law student won an extraordinary three-year legal battle with Cardiff University to prove she should have passed her exams).

In fact, student complaints have risen by 37% in the last two years and yet no-one at BBC Wales has bothered to examine this in any detail in relation to higher education institutions in Wales.

In magic, the observer's attention will be grabbed with a coin, or another small and shiny object as a shiny object captures more attention and seems less likely to disappear or to be manipulated.

Then attention is directed away from the object  through a combination of comedy, sleight of hand or an unimportant object of focus, thus providing just enough time for the magician to do whatever he or she wishes to do with the original object.

In the case of the BBC and higher education in Wales, you have to wonder whether they are the victims of misdirection or are, instead, just willing assistants in the show.

THE DEPARTMENT OF ECONOMY AND TRANSPORT - AN INSIDER'S VIEW PART 2

As mentioned yesterday, there are five key reasons, according to the "insiders" who sent me their critique report, as to why DET isn't working. As you will see, most of is to do with the civil service set-up within the department although some will argue that this is due to a lack of political leadership. 

This is what they had to say - judge for yourselves. 

1. The ERP is politically driven.

It is owned by the Deputy First Minister, not by business and certainly not by senior management within the department. It may or may not stick after the next Assembly elections, depending on the election result.

The view from the ground internally is that senior management appears not to care much either way as long as it gets the department to the next election line. What happens after is up for grabs.

Rather than being treated as a real strategic approach to using public sector economic development as a tool in Wales to get alongside business and create robust structure for wealth creation, skills development and business prosperity, when you scratch the surface of the ERP the gloss comes off, leaving it looking weak and lacking in coherence.

Unfortunately,  as far as the Deputy First Minister is concerned and the election only months away, the ERP is now the only game in town and like a Soviet style 5 year plan, the exercise now is to talk it up rather than allow critical questions about its durability. Timing, they say, is everything. The problem for the ERP is that by May, there will be little evidence proving that the plan is working but what political opponents won’t be able to prove is that it isn’t.

2. Top management within the department lack leadership qualities and substance, particularly around vision and strategy.

People understand that opportunity in DET is achieved by loyalty to the person that promoted you, not because of merit.  Consequently, in the last three years of WAG survey, the SCS (Senior Civil Servants) team within DET has scored the lowest across WAG (somewhere in the 35% range) on questions about belief in their leadership quality and the staff’s trust in their ability to lead. Needless to say, nothing of note has occurred in the department to change these perceptions. 

The ‘leadership’ problem is not unique to this department of WAG but appears most pronounced here and the problem for the ERP is that the people who will be most engaged in delivery do not believe that senior management have much of an idea about what they are doing. “Making it up as they go along” is the commonly heard complaint. 

Senior WAG management have said rightly that they are not in post to be liked, but the ability to be believed and respected by staff would be an advantage.

3. There is no ability within the department to understand, lead and manage change.

Since the merger with the WDA there has been constant change within DET. The problem is that this has been imposed and top down with no critical understanding of ‘emotional intelligence’ or the business techniques that can make a large change management process work. 

Consequently, change hasn’t taken effect and people still talk about how things were done ‘better' in the WAG or the WDA. This comes back to the inability to think critically about leadership across the SCS team and also to the ‘cloning’ characteristic across senior management. 

There is little evidence of management’s ability to learn from failure. The leadership and senior management team within DET have been the same team who were charged with getting both the WAG-WDA merger and then the implementation of FS4B (the business support structure) right and they failed on both. Why then should anyone believe them when they say they have learned from the past and will get the ERP right? 

No one thinks that driving change in the public sector is easy but with a bottom up approach and managed with modicums of respect and emotional integrity for existing skills and experience, effective change can be made to happen.

4. DET is supposed to be open for business, it is not.

If we were an actual business we would be bankrupt. There is no vision, no strategy and crucially no viable product range.  If you are an indigenous business looking for help or an inward investor enquiring about good reasons to come to Wales, the majority of staff would probably telly you to come back in a few months when things are clearer. This has been the situation in the department for nine months, will remain so until the new sector team are selected and then go on through and beyond the next assembly election. The reality is that the department, despite protestations and formal lines to take’, will effectively be on hold for 12 months whilst teams bed down, new policies develop and practices rolled out. 

However, the betting is also that in three years or less, the ERP will be gone and some cynics suggest that it will be replaced by a new split between policy and implementation and the revolutionary re-establishment of an agency, charged with driving economic development in Wales. Because policy was better driven when the WAG had charge of it and the WDA had a range of business focused products that they could deliver. Reality check time perhaps but the fault is the leadership’s strategic and intellectual inability to deliver transformation.

5. Staff morale within the department is on the floor. 

Since the merger was mismanaged, there has been a continued  cycle of failed change. The consequence is that people are both demoralised and very unmotivated.  Staff also see poor performance at senior management level rewarded or, when a policy fails, get moved sideways to far less critical roles. The main drop in headcount numbers in the new department are in IBW and relationship management. Here not only will many lose their jobs but hard working staff who have built up years of skills, experience and contacts in relationship management, trade development and inward investment are competing for far fewer customer facing roles in the new structure. 

So, at a stroke, the department will move from having a strong outward facing economic development expertise to one that is driven by inward thinking and by the imperative to make the politically driven ERP work. 

Yes, perhaps a focus on sectors is sensible but at the cost of one sector competing with another for resource and support as opposed to a division dedicated to bringing in inward investment. Staff certainly feel that they are in danger of losing their jobs whilst Wales loses key skills at a time it can least afford to because of the accumulated failure under the senior management team to understand what economic development in Wales should be about.

Conclusion

If the First Minister wants a real economic development strategy that will drive the Welsh economy forward in the next 10 years, rather than the next 10 months, good examples of effective public/private partnership exist. He needs to look at some of the states in the USA or closer at home e.g. in Scotland.

Failing this, he and the Permanent Secretary might commission PWC to develop a strategy for putting the department on the right track. It might be costly but will have a better chance of delivering effective change and economic support to the people and businesses of Wales and would be far better than allowing the current shambles to continue limping from one failure to the next. 

Wales deserves better.

THE DEPARTMENT OF ECONOMY AND TRANSPORT - AN INSIDER'S VIEW PART 1

As I mentioned last week, late last year, a letter was sent to me at the Western Mail which, unfortunately, was not given to me until the end of last month.

It purports to come from a group of senior managers within the Department of Economy and Transport (DET) who are “driven by a sense of frustration and concern that a failing department is steaming towards further failure".

It is anonymous and the authors are very open in stating that “cowardly and possibly disloyal as it is, we have chosen not to put our names to the paper. At a time of job threat, there could be only one result”.

Nevertheless, having read the details, there can be very little doubt that whoever has written the critique certainly has insider knowledge of the machinations of the civil service. Whether there are any exaggerations in some of the claims made could only be verified by DET itself (which is highly unlikely). 

If only partly true, it is a fascinating insight into the hidden world of the civil service in Wales and some of the allegations suggest there are some serious questions that need to be answered by those in power. 

I have edited the responses slightly, given that some of the comments were specifically addressed at one individual who has now been removed from post. 

It must also be noted that the critique is not one sided.

For example, the authors note that

“There is a need for change in the way that DET in Wales is managed and delivers its economic strategy is not in question and within the ERP the result of the new strategies and ways of interacting with businesses are not all bad. For example, the focus on infrastructure is rational and the move to a sector focus and an increased emphasis on partnership by bringing in external panels of business people to work as advisors to the Deputy First Minister and with civil servants is a good idea. The move from grants to loan in the current climate also has merit even if some businesses will be concerned of the impact that ‘loan’ has on the view of the balance sheet”.

Nevertheless, they suggest that there are five reasons why the current changes that are afoot in DET won’t work and why they will have little effect on the ability of businesses in Wales to grow and create high quality, high value jobs. Tune in tomorrow for the insider's view.

THE COUNCIL FOR ECONOMIC RENEWAL

Given that we are suppose to have a system of relatively open government here in Wales, WAG seems keen not to divulge certain pieces of information to the general public.
For example, there has been much mystery surrounding the membership of the new Council for Economic Renewal which, according to WAG, was supposed to be a "fresh start" and which shouldn't be "a simple re-hash the former Business Partnership Council".

So where are the details of the council? Who sits on this new dynamic body?

Well, unfortunately, there is no information anywhere on the WAG website although we are promised that the minutes will be available by the end of March.

However, the little information I have been able to glean from our democratic body suggests that, despite a bright new dawn being promised, the membership is exactly the same i.e. the minimum legal requirement of 14 external members (5 each from Business Wales and Wales TUC and 2 from Social Enterprise in addition to the Chairs of the DET Ministerial Advisory Group and the Wales Employment and Skills Board).

Also, as with the BPC, membership can be broader than that represented by the minimum legal requirement and the new Council can draw from the widest and best range of knowledge and experience. So no change there either.

Anyway, judge for yourselves as there is a list of the individuals and organisations who have attended the meetings of the Council for Economic Renewal held in December 2010 and March 2011.

• John Bennet Wales Social Enterprise Coalition
• Nick Blundel UCATT
• Paul Byard Engineering Employers Forum
• Nia Davies FSB
• John Harper RICS
• Richard Houdmont CIM
• Richard Jenkins FMB
• Russell Lawson FSB
• David Lermon ICAEW
• Bob Macey IoD
• Martin Mansfield Wales TUC
• Mick McGuire CML
• David Morgan RICS
• Graham Morgan Chamber Wales
• Paul O’Shea Unison
• John Phillips GMB
• Richard Price Home Builders Federation
• Non Rhys Chair of Business Wales
• David Rosser CBI Wales
• David Russ Chamber Wales
• Derek Walker Wales Co-op
• Sian Wiblin Wales TUC
• John Burgham Unite
• Ben Cottam Chair of Business Wales
• Pam Drake GMB
• Robert Lloyd Griffiths IoD
• Peter Hughes CML Cymru
• Nick Payne RHA
• Nigel Keane WSPU
• Heather Eason WSPU

MICHAEL SHEEN ON RICHARD BURTON

“He is Wales, he is film, he is theatre, he is poetry, he is spirit, he is passion and he is hiraeth. He is everything that we aspire to be. The Hollywood Walk of Fame would be blessed to have his star on it. It is an absolute outrage he does not have a star there. He is the star that will shine the brightest.”

Michael Sheen on Richard Burton

SIR MARTIN GIVES FIRST INNOVATION LECTURE

Delivered by Nobel Prize Winner Professor Sir Martin Evans, Tuesday night marked the inaugural Global Academy Annual Innovation Lecture, held in Cardiff Castle.

The lecture centred on Sir Martin’s indefatigable work within the field of stem cell research and underscored its impact it has on our everyday lives.

In attendance were 80 people made up of representatives of bioscience companies, academics, luminaries of the public health sector as well as Prince of Wales Innovation Scholars (POWIS).

POWIS is a £12 million programme, funded through European Regional Development Funds, the private sector and the University of Wales, which aims to recruit 100 talented scholars to assist innovative Welsh companies develop new products, processes and services.

The aim of the lecture, managed by the University of Wales Global Academy, is to bring POWIS scholars and leaders within the field of innovation together to share best practice and learn from a distinguished scientist who, throughout his career, has accrued manifold awards in recognition of his services to stem cell research.

Sir Martin is also co-founder of Cell Therapy Ltd, a Wales based bioscience company that collaborates closely with the Prince of Wales Innovation Scholarships programme.

Speaking at the lecture, Director of the University of Wales Global Academy, Professor Dylan Jones-Evans, commented;

“By developing programmes such as POWIS, the University of Wales is encouraging greater innovation across Wales. We are especially proud that Sir Martin has agreed to give the first in this series of innovation lectures which will provide the inspiration for a new generation of scientists, engineers and, hopefully, Nobel Prize winners based in Wales.”

Sir Martin Evans, added; “It is important not to teach students just to learn, but to learn to explore outside of the boxes we tend to put them into.”

LABOUR MARKET DATA FOR WALES

In the midst of all the excitement of the Manufacturing Action Plan for Wales finally being published after a three year hiatus, it seems that the news channels have forgotten that today is also the publication date of the latest Labour Market data for Wales, which includes information on employment, unemployment and claimant count.

Given that we have two very different governments at a UK and Welsh level both trying to claim credit for any good news on jobs and blame the other for the bad news on increasing dole queues, what does this latest release tell us?

• First of all, 126,000 people are currently unemployed, a slight increase on last month but a decrease of 7,000 on a year ago. The unemployment rate of 8.7 per cent is the highest of all four of the home nations.  
• In terms of employment, there are currently 1.327 million employed in Wales. This is a slight increase on last month but 20,000 higher than a year ago. However, the employment rate of 67.5 per cent remains the third lowest of the UK regions after the North East of England and Northern Ireland.
• Economic inactivity remains at 490,000 - no change from a year ago (i.e. 26 % of the working age population)
• Finally, the claimant count has gone down from 77,700 to 70,300 in the last year, a decrease of 10 per cent over the previous 12 months. Youth claimant count remains 11 per cent lower than in February 2010.

From one point of view, it looks very positive, but whilst employment is increasing, there does not seem to be a similar concomitant decrease in unemployment across Wales, which remains stubbornly high. I do not expect these figures to change dramatically during the final release of the Labour Force statistics prior to the Assembly election so it will be interesting to see whether any of the policies of the four main parties in Wales will kickstart the economy and, more importantly, create jobs.

THE CHALLENGE - STIMULATING INNOVATION

“If Wales is to improve its innovation performance over time, then we must ensure that the sum of the parts – government, industry and academia – is greater than the whole”.

The Challenge

It is critical to encourage innovation so that the amount of R&D undertaken in Wales increases substantially. Welsh Higher Education Institutes have a key role to play here and WAG funding must incentivise the commercialisation of knowledge, whilst maximising the potential linkages between academia and industry.

The evidence

Recent research shows that investments in innovation accounted for between two-thirds and three-quarters of labour productivity growth in OECD countries such as Austria, Finland, Sweden, the United Kingdom and the United States between 1995 and 2006[1]. Innovation was the main driver of growth. A lack of innovation – characterised by low levels of investment in knowledge, such as skills, research and development, and technology - has been identified as a major barrier restricting the growth of the economy. In Wales, which has a higher dependency than most of the UK regions on universities for its R&D, there remains a disconnect between the key innovation actors in government, industry and academia[2]. Many operate in silos rather than as an efficient innovation system that effectively transfers knowledge from the laboratory to the marketplace and then provides the necessary resources and support to fully exploit that knowledge. As a result, there needs to be a greater effort in ensuring that programmes focus on building both research capacity in both the academic and private sectors whilst enabling better relationships between the universities and industry. This is a role that government can contribute to and, more importantly, stimulate and enhance.

The Way Forward

If the future Googles, Yahoos and YouTubes of the future are to emerge in Wales over the next decade, then there must be a different approach to supporting innovation and not just repeating the same policy initiatives that have largely failed. In particular, government needs to ensure that all the key actors work more closely together as part of an innovation system and not operate in isolation or, even worse, in competition.  If Wales is to improve its innovation performance over time, then we must ensure that the sum of the parts – government, industry and academia – is greater than the whole. Therefore, the Welsh Conservatives should look to establish a Welsh regional innovation system, which will be directed under a separate private sector led Innovation Council for Wales.

CASE STUDY

 YORKSHIRE INNOVATION COUNCIL

Yorkshire Innovation is the Science and Industry Council for Yorkshire and Humber. The role of the Council is to promote a culture of innovation and advise on ways to improve the economic performance of the region by increasing levels of innovation in our companies. Yorkshire Innovation supports innovation across Yorkshire, enabling companies in the region to gain a real competitive advantage that will underpin their long-term growth. Yorkshire Innovation Council Members are ambassadors for the region, promoting the region’s major assets and world-leading technology on the international stage. They act as key influencers, helping shape government policy and decision-making. Council Members are renowned amongst business communities and in academic circles and are committed to championing the science, technology and innovation assets of the region, attracting investment and encouraging collaboration.

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[1]  OECD (2010) The OECD Innovation Strategy: Getting a Head Start on Tomorrow, OECD, Paris, May.

[2] Bristow G. and Jones-Evans, D. (2008) The prospects for public sector led regional innovation systems: lessons from Wales, Regional Studies Association conference

GVA OR GDHI - THE REAL STATE OF THE WELSH ECONOMY

In terms of the state of the Welsh economy, there is an interesting pre-election game being played in the political arena.

Critics of the Welsh Assembly Government state, quite rightly, that Wales has the lowest GVA (gross value added) per head of any of the UK regions and that on this internationally accepted measure of prosperity, West Wales and the Valleys is now poorer than some parts of Bulgaria and Poland.

Not so, insists the Welsh Assembly Government.

According to the First Minister, GVA per head is the wrong measure to use for the economy especially, as he said recently, “gross disposable household income in Wales is catching up pretty quickly with the rest of the UK”.

So who is right?

There is little argument over the status of GVA data, which shows that Wales has declined from 77 per cent of the UK average GVA/head in 1999 to 74 per cent, although some parts of Wales, such as Cardiff, have become more prosperous since 1999 although West Wales and the Valleys has continued to decline relative to other parts of Europe.

However, there has been little debate or analysis over gross disposable household income in Wales (GDHI), which is an estimate of the amount of money that households have available for spending or saving.

As the First Minister rightly points out, GDHI/head has actually increased slightly from 86 per cent of the UK average in 1999 to 88 per cent in 2008 (see graph above). That modest increase is very different to the claims of the Welsh Assembly Government that household incomes had "outstripped" the UK average and Wales is catching up pretty quickly with the rest of the UK.

Embarrassingly, the current household income per head remains considerably lower than the 90 per cent measured in 1995. In fact, the peak for relative GDHI in Wales was reached in 2006 and, since then, the gap between the UK and Wales has been widening.

Of course, household incomes are not even across all parts Wales and, as the government’s own statistics show, relative GDHI has, since 1999, actually fallen in some areas, including Anglesey, Conwy-Denbighshire, Swansea, Wrexham-Flintshire, and the Gwent Valleys.

 In Bridgend-Neath Port Talbot, where the First Minister’s own constituency is based, GDHI/head has decreased by 2 per cent in the period 1999-2008.

However, whilst it is worthwhile comparing the whole of the Welsh economy to the rest of the UK, the biggest debate over the last few weeks has been in relation to the relative decline of West Wales and the Valleys, especially given the large amounts of European money that have been committed to supporting the region.

In this respect, its overall GDHI has grown by 46 per cent during the period 1999-2008 as compared to 48 per cent for Wales and 47 per cent for the UK.

More critically, the statistics show that despite billions of pounds of European funding being given to West Wales and the Valleys, the growth in household income in the more prosperous East Wales (which includes Cardiff, Vale of Glamorgan, Newport and Monmouthshire) has been considerably higher at 52 per cent since 1999.

Surprisingly, one of the few glimmers of growth within the poorest regions is that of the Central Valleys, which has seen its relative GDHI grow from 75 per cent of the UK average to 83 per cent. How much of that growth is due to individuals moving into an ever-growing suburban commuting belt in the lower reaches of Rhondda Cynon Taff whilst working in Cardiff is uncertain.

Of course, it may be expedient for some politicians to blame structural changes in the 1980s for the decline in the economic fortunes of the poorest parts of Wales although adopting an “Ashes to Ashes” mentality does little to deal with the simple fact that the Welsh Assembly Government simply hasn’t got it right during the last twelve years in ensuring that all parts of Wales benefit economically.

Indeed, Slovenia - another European nation that has a similar population to Wales - managed to improve its GDP from just under 70% of the EU average in 1999 to greater than 90% of the EU average in 2008. And the Slovenian economy had to deal with the legacy of fifty years of communist rule!

Therefore, whether you use GVA or GDHI as measures for relative prosperity, the overall conclusion is that the gap between the poorest and richest parts of Wales has actually been growing since the Assembly was established. Rather than hiding behind selective statistics, it is time our government accepted the facts as they stand and, more importantly, developed a proper long term strategy to ensure the future prosperity of all parts our nation.

THE CHALLENGE - SKILLS

“Business development and skills should go hand in hand within any enterprise support network and there should be a seamless approach by government to the delivery of support in this area. The Welsh Conservatives should therefore create a new Department for Business and Skills that will enable a clear strategic approach to be adopted”.

The Challenge

The skills of the Welsh workforce lag behind more prosperous regions of the UK and compare poorly to the world’s leading advanced countries.

The evidence

“Skills That Work for Wales – A Skills and Employment Strategy and Action Plan” is a critical report produced by The Wales Employment and Skills Board that, unlike many other reports, takes seriously the premise that if we improve skills within Wales we will have a more prosperous society, reduced inequality, more jobs and less poverty. Most importantly, the Board emphasised the important message that improving skills is not merely an issue for Government alone, but must fully involve employers at every level. One of the critical conclusions of the report was the importance of skills in the strategic development of businesses alongside other issues such as capital investment, innovation and workforce planning. While recommending that different arms of Government should work more closely together, it is a shame that the report did not take the next step and propose that economic development and skills should be integrated under one super department within the Assembly to ensure real value for employers. In particular, the higher education sector needs to review its role within the economy and adopt a wider skills-based approach to its agenda for supporting economic development and finally recognise that producing basic research may not be the only way it can influence the future of the Welsh economy.

The Way Forward

As the Enterprise and Learning Committee of the National Assembly for Wales has pointed out, there should be better links between economic development and education. However, the Economic Commission believes that a further step is required to deal with the lack of co-ordination between the Department of Economy and Transport and the Department for Children, Education and Lifelong Learning.  Business development and skills should go hand in hand within any enterprise support network and there should be a seamless approach by government to the delivery of support in this area. The Welsh Assembly Government should therefore create a new Department for Business and Skills that will enable a clear strategic approach to be adopted.

THE CHALLENGE - FUNDING FOR SMALL BUSINESS

“The Welsh Conservative Party would make the new repayable grant system available to all sectors of the Welsh economy and all sizes of businesses.  It is vital, as the nation struggles to come out of recession, that every business that needs finance to grow and create employment within their local economies is given every opportunity to access such funding”.

The Challenge                    

It is generally accepted that the current system of grant support is largely unsustainable within the current economic climate. The Welsh Conservatives believe that, overall, there needs to be a gradual move away from the free grant culture in Wales towards an environment where companies, especially SMEs, get quicker access to repayable soft loans that can lead to a more sustainable financial support structure for business to flourish and grow. However, this should not mean abandoning SMES within our poorest communities and, in particular, there will still be a need for grants in the Convergence region of Wales, especially for start-ups and for innovation-based projects that are higher risk and would not be in a position to agree terms on repayable loans. This, however, should be viewed as investment in R&D and in increasing the intellectual capital of the nation.

The evidence

The Welsh Conservatives have supported the general principle of repayable grants. However, it is the belief of the Commission that these should not be limited to any one sector, as currently proposed by the Welsh Assembly Government, as various research studies have shown that growth companies are not limited to any particular industry. As a recent report from the UK Government has demonstrated [1], high-growth firms engage in diverse activities and are not only involved in high-technology sectors. So, while there are reasons to support the development of high-growth businesses in a few promising sectors, ‘traditional sectors’ should not be forgotten. In fact, business services and the wholesale/retail sector – two industries that have been excluded by WAG - provide almost half the high-growth firms in the UK. In addition, two thirds of Wales still qualifies for the highest level of European structural  fund intervention rates and full advantage must be taken of this status until 2015 to help grow and develop the private sector. There remains a clear case to provide financial help to support SMEs within the poorer parts of Wales and a “one size fits all” economic strategy may not be fit for purpose. For example, 64 per cent of employment in West Wales and the Valleys comes from SMEs as compared to 52 per cent in East Wales i.e. SMEs are the main employers within our poorest communities and need support to grow and develop [2].

The Way Forward

Unlike the sectoral approach of the current Labour-Plaid Government, the Welsh Conservative Party should make the new repayable grant system available to all sectors of the Welsh economy and all sizes of businesses.  It is vital, as the nation struggles to come out of recession, that every business that needs finance to grow and create employment within their local economies is given every opportunity to access such funding. We would also seek to create a new innovation grant that could fill the funding gap to enable high-risk private sector projects to receive vital initial seed-funding that would not be forthcoming from traditional sources of finance. Finally, the Commission believes that whilst repayable grants may be the only sustainable strategy for future funding of small business, the current Welsh Assembly Government has acted with too much haste in abandoning grant support for SMEs in Wales. This especially the case for the poorest Convergence region which, unlike any part of the UK with the exception of Cornwall, is eligible to receive the highest rate of grant support. Therefore, there should be detailed discussions with the Welsh European Funding Office (WEFO) to create a Convergence SME grant fund which could be used to support the growth ambitions of new and existing firms within our most deprived communities. This would be funded entirely from European grant aid and private sector match funding, could be linked directly into a new small business support structure for Wales and would last the lifetime of the current Convergence funding period.

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[1] BERR (2008) High growth firms in the UK: Lessons from an analysis of comparative UK performance BERR Economics Paper No 3, November 2008

[2] Welsh Assembly Government (2010) Size Analysis of Welsh Business, 2010, October 27th

THE TRUTH ABOUT ECONOMIC DEVELOPMENT IN WALES

Having just arrived back from Finland, I am finally catching up with yesterday's business news.

Of course, I am not surprised at all by the headline in the Western Mail business section regarding the Economic Renewal Programme which suggests that only 15% of businesses are positive about Economic Renewal Plan. In fact, more than 30% of businesses believe the Welsh Assembly Government’s flagship economic policy will have a ‘detrimental impact’ on the economy, a new survey suggests.


The ‘Welsh Economic Barometer’ unveiled by business services firm PwC was unveiled today at an Institute of Welsh Affairs conference held in Cardiff. The straw poll of Welsh businesses found that two thirds of businesses questioned admitted they had not read the government’s Economic Renewal.

Of the minority that had, 40.6% thought it would have no impact, while only 15.6% felt it would improve the competitiveness of the Welsh economy.

Whilst this seems of little surprise to those of us outside of WAG, it would seem that those working within the corridors of power have also extreme doubts about the direction of travel by the Department of Economy and Transport.

A couple of weeks ago, I was passed a note that had been sitting within the Western Mail offices since November. It purports to come from a group of dissatisfied (but anonymous) managers from within the Department of Trade and Economy and its contents are, frankly, dynamite.

Having read the detail over the last week, it is clear that it could only have been written by someone with an intimate knowledge of the department and I have no reason to doubt its provenance.

Next week, I will publish the details of these notes, most of which are still relevant. I am sure WAG's response will be a combination of denial and attack. Nevertheless, the analysis is detailed and is not only an indictment of the ERP and its development, but of the way that the Welsh economy has been run by Cardiff Bay for the last few years.

It shocked me and I am sure it will shock you as well.

THE CHALLENGE - ENCOURAGING ENTREPRENEURSHIP

“The Entrepreneurship Action Plan should be reintroduced to act as a focal point for encouraging new business start-ups across Wales.”

The Challenge  

Wales has experienced the largest decline in the number of new businesses being created since 2004. In order to create an enterprising and innovative economy, there is a need to encourage greater opportunity to develop entrepreneurship, especially within our more deprived communities.

The Evidence

The UK innovation agency NESTA released a new report on innovation indicators[1] which indicated that a dynamic enterprise culture is essential for innovation i.e. a high birth rate of new businesses will drive competitive markets. As discussed earlier, Wales has experienced the largest decline in new business starts of any UK region, a situation that could have a serious knock on effect on the innovative capacity of the Welsh economy, regardless of the increased spending on research and development within the University sector. A UK Treasury study reported that successful entrepreneurship has the potential to help deprived areas through lowering unemployment not only through residents creating their own employment, but also indirectly through multiplier effects in the community and via other social contributions. The decline in the number of new businesses across West Wales and the Valleys could impact upon the ability of these poorer communities to recover. If we are to create a strong and vibrant economy, then we need to see an increase, not a decrease, in the number of entrepreneurs in Wales.

Contrary to the current thinking within WAG, the statistical evidence shows that SMEs remain the major job creators within the economy. A recent study from the Kauffman Foundation[2] reveals that, in their first year, new firms add an average of 3 million jobs.  Similarly, WAG’s own data on firm structure[3] shows that, during the period 2003-2010, 70 per cent of all employment growth in Wales during the period 2003-2010 came from SMEs i.e. 68,000 jobs. There are also clearly geographical differences in the influence of large firms across Wales. For example, 46 per cent of employment in East Wales in 2010 came from large firms as opposed to 36 per cent in West Wales and the Valleys i.e. small firms are driving employment within our poorest communities, a fact that is yet again being ignored by policymakers in Wales.

The Way Forward

It cannot be a coincidence that the decline in the business start-up rate began after the abolition of the Entrepreneurship Action Plan (EAP) for Wales and the merger of the WDA into WAG’s Department of Economy and Transport. Whilst creating a more entrepreneurial Wales was at the heart of the WDA’s mission, predominantly through the successful implementation of the EAP and its promotion of an enterprise culture, it has been relegated to the fringes of economic policy by the new regime within WAG. This is despite the proud fact that Wales was light years ahead of any other part of Europe in terms of developing an effective regional enterprise strategy, a competitive advantage that was thrown away because of the whims of politicians and policymakers who failed to understand the long term strategy needed to create an environment in which entrepreneurs are encouraged and supported to flourish and create wealth and employment. Therefore, the Entrepreneurship Action Plan should be reintroduced to act as a focal point for encouraging new business start-ups across Wales and in developing social enterprise as a key part of the delivery of that strategy.

Case Study

ENTREPRENEURSHIP ACTION PLAN FOR WALES

The Entrepreneurship Action Plan for Wales (EAP) was established to help develop an entrepreneurship culture in Wales. To achieve this, three key elements were recognised as being important:

§  Recognising the Opportunity – creating a greater awareness of the opportunities and benefits of entrepreneurship in order to encourage more people to start a business or to grow the business they are in, and to develop a greater entrepreneurial culture within our institutions, communities and businesses;

§  Creating Enterprises - Creating a greater number of sustainable start-up businesses in Wales with potential for further growth, particularly by under-represented groups of society such as women, the young, Welsh language speakers, ethnic minorities and retired workers;

§  Going for Growth - Increasing the number of businesses in Wales that grow, thereby creating greater wealth, employment and opportunity.

At the beginning of the process, a private sector led steering group was established to deliver the Entrepreneurship Action Plan (EAP) for Wales. The group brought together entrepreneurs, educationalists and business support professionals to guide the development phase and oversee the appointment of consultants to carry out the work. The steering group met on a monthly basis and consultants produced desktop research that resulted in a set of six initial themes to explore and develop further. These were: (a) fostering a culture for entrepreneurship (b) unlocking the potential (c) enterprising communities (d) investing in knowledge and experience (e) bridging the funding gap and (f) reaping the rewards.

Whilst the strategy of the programme was guided by the private sector led steering group – the Entrepreneurship Implementation Panel – the operational part of the project was managed by a special enterprise team established within the Welsh Development Agency. Their main role was to commission work from a range of different organisations to ensure the delivery of the programme. Through co-ordinating the role of different organisations and providing the funding for activities, a more coherent approach to the development of entrepreneurship across Wales was established. Tens of millions of pounds of funding were made available through European structural funds to ensure the delivery of all aspects of the EAP, although the programme was abolished in 2005 when the WDA was preparing to merge with the Department of Economy and Transport within the Welsh Assembly Government.

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[1] NESTA (2009)The Innovation Index - Measuring the UK’s investment in innovation and its effects

[2] Kane, T. J. (2010) The Importance of Startups in Job Creation and Job Destruction, Kauffman Foundation, July 2010.

[3] Welsh Assembly Government (2010) Size Analysis of Welsh Business, 2010, October 27th

THE CHALLENGE - REVITALISING MANUFACTURING

THE CHALLENGE

As Sir James Dyson[1] noted in a report on revitalising the manufacturing sector, it could, if supported properly by government, play a major part in the future growth of the UK economy. Dyson suggested that it is critical for the UK economy to rebalance itself away from financial services and property, two sectors that did not generate as much added value as many had suggested. With policymakers now looking for an export-led growth over the next few years, it is clear that manufacturing – which already accounts for half of the UK’s exports – can be doing far more, especially in hi-tech sectors. Secondly, with manufacturing focused outside the south east of England, any growth in the sector will have a disproportionate effect on the less prosperous parts of the UK, including Wales. As Dyson notes in his report: “Whatever it is that creates generic differences between innovators and non-innovators, the consequence is that the former are likely to be quicker, more flexible, more adaptable, and more capable in dealing with market pressures than the latter are.”

THE EVIDENCE

Under the last three Assembly Governments, there has been a decline in manufacturing from 28 per cent of the Welsh economy in 1997 to 18 per cent of the nation’s economic output. Despite this reduction in the overall role of manufacturing, it retains a larger role in the Welsh economy than in many other regions. From global giants such as Airbus and Corus to thousands of small companies producing specialist goods across the country, there remains real potential within the manufacturing sector in Wales.

THE WAY FORWARD

The Commission believe that a coherent approach by WAG could herald a revival for manufacturing again, especially if companies have the right management, the right products and the right skills in place, and the exchange rate remains competitive to drive export activity. More importantly, Wales, with the right support from governments in Westminster and Cardiff Bay, could be leading such developments given that we have some great manufacturing companies, both large and small, that could help drive forward both the Welsh and the UK economy over the next decade. The Welsh Assembly Government should therefore look to implement the manufacturing strategy for Wales immediately and provide support for the manufacturing sector to develop in the future. There should also be greater support provided by the UK Government for the manufacturing sector and politicians and other groups in Wales should work alongside other regions, such as the Midlands, to ensure greater political support for the sector.

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[1] Dyson, J. (2010) Ingenious Britain - Making the UK the leading high tech exporter in Europe.

TIPPING POINT FOR IWJ?

Hat tip to the Druid but read this and weep....

"I don't really remember the meeting. I will be asking officers in my department where this is at. They (Lightning) would have needed some grant funding. It could be still in the pipeline. I'll be asking my staff what's happened to it"

Ieuan Wyn Jones on being asked why nothing had been done 

about a car manufacturer promising 400 jobs in Holyhead.

I know this is a local story and that the WAG Press Office will be pressing their contacts within the BBC to keep this out of the limelight but it really does demonstrate what is wrong with our approach to business in Wales i.e. a government that doesn't give a flying fornication about creating jobs and does not take wealth creation seriously enough.

THANK YOU - DIOLCH!

Having decided to check the stat counter function yesterday for the first time in ages, I had a look to see how many visitors had been on the site since August 2010 when I signed up with the application.

To my pleasant surprise, there had been 54,831 unique visitors to the blog, resulting in 70,334 pageloads. Obviously, not as many daily readers who get the Daily Post on Monday and the Western Mail on Saturday but they can easily ignore my columns in both papers if they wish!

And according to Wikio, this little blog of mine is in the top 500 in the UK which, given I have so little time to devote to it, makes me a very proud Welsh blogger. I am also 116th in 'politics' despite not being politically active at the moment!

So thanks to everyone who bothers reading these thoughts of mine. Of course, whether you like them or not ain't my problem!

THE CHALLENGE - SMALL BUSINESS SUPPORT

“The general consensus from the business community, according to WAG’s own consultation regarding the ERP, is that business support should be streamlined and made less bureaucratic, rather than abolished”

The Challenge  

According to the FSB in Wales, support given to businesses in terms of advice needs to be relevant, timely and properly attuned to individual needs. FSB statistics show a low level of take-up of government funded business advice among businesses even though this support has a key role to play in developing businesses. Decisions should be taken as close to the businesses as possible and not centralised. A top down structure that has given too much power to civil servants replaced the Welsh Development Agency’s decentralised model. The business support programme should therefore be streamlined and simplified, cutting red tape and bureaucracy and ensuring that the right support gets to businesses quickly and easily.

The Evidence

As part of its new Economic Renewal Programme, WAG has abolished its FS4B business support programme for SMEs. It has instead developed a strategic approach to business support that will focus resources on six key sectors only. Yet, evidence suggests that if business support is to be focused on growing businesses, then a sectoral approach has difficulties. For example, a study from the OECD[1] found that, contrary to the perceptions of many policy makers, only around one third of growth businesses are in high technology sectors. In addition, a recent study for NESTA [2] shows that the Business Services and the Wholesale and Retail sectors provide almost half the high-growth firms in the UK. Therefore, instead of adopting a sectoral focus, WAG should have an increased focus on improving the quality and appropriateness of support with limited resources, keeping in touch with the changes in the small business community and managing the network of Welsh private sector expertise. 
As Wales emerges out of recession and firms begin to consider further investment opportunities, the demand for business support is likely to increase substantially in Wales. Whilst parts of the private sector – such as accountants and lawyers - may well take up the slack in some of the more prosperous areas, it would be expected that a gap in support will emerge in those areas which are currently in receipt of European Convergence Funds. If an increased number of firms do not get support, then it will give them less chance to maximise their potential for job creation and reduce their competitiveness, thus compounding the low levels of economic activity within these more deprived communities.

The Way Forward

The Commission noted that the abolition of the Welsh Development Agency in 2006 was a serious error in the delivery of economic development policy by the Welsh Assembly Government. Whilst the WDA can probably never be resurrected in he same form, the principles of a customer facing business support must be re-established. The general consensus from the business community, according to WAG’s own consultation regarding the ERP is that business support should be streamlined and made less bureaucratic, rather than abolished. 
The Welsh Conservatives believe that there should be a more efficient support system to new and existing firms. All businesses have the capability to add value to the Welsh economy although business support should be tailored according to the stage of growth of the venture. For example, all new businesses should receive some initial mentoring support whilst “gazelles” – those firms with high growth potential – should receive more tailored support that will help develop their company further.  
We need to maximise the expertise and experience of the private sector in providing the right level of business support with the minimum amount of bureaucracy and red tape.

The Welsh Assembly Government should therefore:

- contract out all business support services but ensure that deliverers will be held fully accountable for results and contracts withdrawn if they are not delivered
- ensure that those deliverers take into account the differing way that support needs to be tailored for women, ethic business and social enterprises, because of the way they approach business, cultural constraints and the balancing of social and financial objectives
- avoid duplication across government departments by merging all support to business into one central service, including human resource development advice, currently based in DCELLS, and the support for tourism businesses that is currently within the Department for Heritage. This will minimise duplication of business services and cut down on red tape.

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[1] OECD (2007) High growth enterprises and gazelles, OECD, Paris.

[2] Anyadike-Danes, M., Bonner, K., Hart, M. and Mason, C.  (2009) Measuring Business Growth - High-growth firms and their contribution to employment in the UK, NESTA Research report, October 2009SMALL