Skip to main content

THE EVOLUTION OF ENTREPRENEURSHIP POLICY IN WALES

I have recently published a paper with Dr Martin Rhisiart, of the University of South Wales, in the journal “Technological Forecasting and Social Change”.

It examines the impact of “Wales 2010”, a project developed by the Institute of Welsh Affairs in 1993 to set out the future policies to make our nation prosperous, and how its proposals for developing entrepreneurship had impacted upon the Welsh economy.

One of the clear recommendations from the Wales 2010 was the development of an entrepreneurship culture through key institutional actors such as the Welsh Office and the Welsh Development Agency.

And it was the Welsh Office that initially responded to the challenge and vision of Wales 2010 in its economic strategy document, ‘Pathways to Prosperity’ in 1998 where a commitment to establishing an entrepreneurship action plan was included as the basis for establishing a bespoke programme for enterprise.

As this blog has discussed several times, the impact of the Entrepreneurship Action Plan (EAP) for Wales established in 1999 was profound. Through actions such as embedding an entrepreneurial education in Welsh schools, colleges and universities, creating funds for SMEs and start-ups and encouraging entrepreneurship within the public sector, it began to transform the Welsh economy into a ‘Land of Enterprise’.

Its main target was increasing the number of new businesses and according to data from the UK Office for National Statistics, the number of start-ups created during the period 2002–2005 increased by 21 per cent as compared to 13 per cent for the UK. More relevantly, there was an increase of 24 per cent in the poorer region of West Wales and the Valleys where the above programmes were specifically targeted.

And then there was a moment of policy madness within the Welsh Government when, in 2004, the organisation responsible for implementing most of the EAP, namely the Welsh Development Agency, was abolished. The EAP closed down soon after and entrepreneurship became largely absent within the innovation and economic policy sphere in Wales. As a result, what support there was available was fragmented rather than drawn together under one strategy.

For example, in the most recent economic strategy published by the Labour-Plaid Cymru Welsh Government - the 2010 Economic Renewal Programme - entrepreneurship was only briefly mentioned once in 53 pages, illustrating that it was not particularly high on the Minister’s agenda.
In fact, the assertion that “entrepreneurship is vital for developing a strong economy and therefore crucial for our future prosperity” was not backed up with actions or programmes within the strategy and was more of a vague statement.

The result of not having a strategic focus on entrepreneurship within the Welsh Government can be clearly seen in the start-up statistics between 2005 and 2011. Whilst there was an overall fall of 6 per cent in the number of new businesses in the UK, the decline in Wales was more pronounced (−30 per cent) with a higher deterioration in the West Wales and the Valleys (−33 per cent).

Given that in the preceding period Wales had actually overtaken the UK in terms of business births through the development of a co-ordinated and coherent plan, the subsequent removal of any strategic policy in entrepreneurship clearly impacted directly on the number of new businesses in Wales.

However, since the appointment of a new Minister for the Economy within the Welsh Government in 2011, there has been a gradual reintroduction of key initiatives that suggests that entrepreneurship may be moving back up the policy agenda.

In fact, it is interesting to note that the approach of Welsh Government's policymakers has moved away from a formal strategy for entrepreneurship towards a looser approach in which there are now distinct programmes that address the different elements of entrepreneurship policy including access to finance, high potential start-ups, business support and entrepreneurship amongst young people.
More importantly, there is again a clear strategic intent to develop entrepreneurship that has learnt from the previous policy vacuum since 2005 and has now developed a series of specific interventions that are again reflecting the aims of Wales 2010 namely to create a suite of action areas and needs to support entrepreneurship.

A new entrepreneurship panel has also recently been set up to provide the Welsh Government with strategic guidance and expertise on the development and delivery of the entrepreneurship agenda in Wales. As a result, new firm formation has been increasing again in Wales for the period 2011–13, growing by 38 per cent as compared to 33 per cent for the UK. Interestingly, as there is no longer a specific European Union funded programme focusing on encouraging entrepreneurship predominantly within West Wales and the Valleys, this region has experienced slower growth (34 per cent) in business births than the rest of Wales.

The changing fortunes of entrepreneurship in Wales is best illustrated by the figure below which shows the business birth rate (i.e. new companies as a proportion of all enterprises) over the period 2002-2013.


Therefore, what this paper shows is that through having a dedicated and innovative entrepreneurship strategy, there can be real positive impacts on the economy, especially if it specifically addresses the historical and institutional weaknesses in this area and, more importantly, has a long-term view on entrepreneurship policy.

Certainly, if Wales is to continue its recent economic revival then the original principles of the original Wales 2010 plan published twenty two years ago, namely to ensure that everyone can develop their talents to the full in establishing a thriving ‘enterprise culture’ in Wales, must be at the forefront of government policy for years to come.

Popular posts from this blog

THE CRACHACH

Unlike me, do you consider yourself part of 'the establishment' here in Wales?  As thousands gather for the Eisteddfod in Mold this morning, they will, according to some social commentators, not be participating in the greatest cultural festivals of Europe. Instead, they will merely be bit-part players in one of the annual gatherings of the great and good of Wales.  Unkindly, this set of the movers and shakers in Welsh society is known as 'the crachach' , and constitute a social class all of their own, dominating the educational, cultural and media sectors of Wales and allegedly looking down upon any outsider with new ideas, reinforcing mediocrity and failing to see beyond the limits of their own narrow experience.  They are said to live in a comfort zone that awaits the expected invitation to the next glass of chilled chardonnay and canapés, forgetting that due to their lack of leadership and drive, Wales remains firmly rooted to the bottom of the UK prosperity league ...

THE IMPORTANCE OF THE CREATIVE CLASSES

One of my favourite academic books of the last two decades must be the “Rise of the Creative Classes” by Professor Richard Florida.  This was one of the first detailed studies of the growing group of individuals who use their creativity and mental labour to earn a living and not only included those in arts and entertainment, but also people working in science and technology as well as knowledge-based professions such as healthcare, law, business, and finance.  Fast forward to 2022 and Professor Florida has written an updated report on the creative classes although he and his team now identify a different type of individual who is taking full advantage of the growth in digital platforms, social media, and online marketplaces.  Such ‘creators’ are defined as those who use digital technology to make and publish unique creative content, whether in the form of video, film, art, music, design, text, games, or any other media that audiences can access and respond to.  They ...

THE IMPORTANCE OF FRANCHISING

When we talk about start-ups and entrepreneurship, rarely do we discuss the potential of franchising not only as a way of establishing new ventures in the economy but also as a method of growing existing businesses. According to the British Franchising Association, franchising is the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to own and operate their own business under the brand, systems and proven business model of the franchisor. The franchisee also receives initial training and ongoing support, comprising all the elements necessary to establish a previously untrained person in the business. This enables individuals to start their own businesses without having to develop their own ideas and utilising an existing brand and established market. Of course, whilst each franchise business is owned and operated by the franchisee, the franchisor controls the quality and standards of the way in which the business is...