WAG'S SCORCHED EARTH POLICY

The more I write about the ERP, the more I seem to get confirmation from various commentators of the mess that Ieuan Wyn Jones' Department of Economy and Transport (DET) is creating.

The latest comments seem to suggest that not only are staff within DET uninformed about what is going on, but so are most of the businesses in Wales that have previously worked in partnership with WAG to deliver jobs and prosperity to local economies.

"I can confirm that local authorities have been told not to offer grants above £5k with immediate effect (no such thing as phasing in or out in the WAG vocabulary) - it had been possible to offer grants up to £35k in some areas and to certain projects, although this was not common. There was an opportunity to use the Local Investment Fund to lessen the impact of the ludicrous and disastous overnight closure of SIF, but WAG says No. So £5k is the maximum grant now available to business - important help for many at a time when cash and credit is still scarce but inadequate for many others.

This is despite the fact that none of the funding for LIF comes from WAG but is entirely funded by the EU via the Wales European Funding Office (WEFO). It is clear that WAG's intention is to end ALL grant support to business, whatever their size and to re-direct EU funding away from LIF (and other EU funded initiatives) into its new (fleeting?) priorities such as Broadband. Local authorities and other organisations are being squeezed out of access to these funds, which are to become WAG's own piggy bank. WEFO is no more than a department of WAG with no independence and no apparent ability to stand up for Welsh business.


It is definitely the case that almost all SMEs and larger companies are totally unaware of the end of SIF and the scrapping of FS4B after just 18 months and at God knows what cost (not that FS4B was ever more than a massively over complicated and bureaucratic mess). Their reaction is almost universally shock and a real fear of what this means for themselves and the Welsh economy. Where is the Welsh media in all of this? Hardly a peep from any of them.


IWJ could well be out of office next year and will leave behind a legacy that will be catastrophic - what is he thinking of?"

If the commentator is right, there are serious questions to be asked on:

(a) how WAG can influence expenditure by democratically elected local authorities and
(b) why the European funding body WEFO is allowing them to do so?

Does Ieuan Wyn Jones truly understand what his senior civil servants have done to the small business community that have always been supported by his party, Plaid Cymru?

More importantly, is the type of democracy we want in Wales where the parties in power can just do want they to do with little opposition?

Once the ERP had been published, there has been no detailed discussion with the stakeholders being affected (in this case, the businesses of Wales), tight control of the press and other influencers in the business community and a cack-handed attempt to take full advantage of the summer apathy to bulldoze through their economic strategy.

Such actions are what you expect from a banana republic, not the Welsh democracy that was voted for back in 1997.

QUOTE OF THE WEEK - UPDATED

“As the world emerges from recession, successful exporting companies will be even more important for economic prosperity. Globalisation means our competitors are just as likely to be across the ocean as down the road, so international focus is vital.”

Ieuan Wyn Jones, Daily Post, July 28th

So that is why you have abolished International Business Wales which, at a cost of £10.5 million in 2009-2010, has created or safeguarded around 7,500 jobs this year.

Let us also not forget IBW has helped hundreds of Welsh companies with their exporting activities during the last twelve months - a business support activity which will now be abolished for companies across Wales.

International focus is important to WAG - what do you think?

Update: read the following extract from a comment that has just been posted:


Thanks for setting up this blog, I’ve been reading it every day for the last week and been passing on the link to officers in WAG, clients of mine and other business professionals. 
It should be noted that the success of IBW had been largely helped by the grant scheme that was on offer to clients; consequently, the Invest Wales Team (WAGs grant dept) should also get a lot of the credit for the job creation. 
Let’s face it; a substantial grant to help with set up costs; job creation is a considerable inducement to potential inward investors. 
This week an associate of mine went up to an FS4B (I thought it had been scrapped) event, and apparently the presenters had asked for some briefing from WAG on the proposed changes, but no-one was able to supply anything. It would be a safe bet to suggest that they (whoever they are) are still trying to make it up! 
Repayable grants were introduced in 2006 on a selective basis, and were usually targeted at companies that forecasted high profits and cash flow. I understand, to date, none of these repayable grants have been collected, therefore, the success or failure of repayable grants can’t be measured, so what basis can it now form as policy for all offers of grant.
It seems shameful that WAG officials fought tooth and nail for Assisted Area Status (and Wales still has another 2 years to benefit from it) for IWJ to flush it down the toilet.
And which companies said businesses don’t need grants!! Doh!!  Do you want a grant? No, I’d rather have a loan, please ! It’s intellectually incoherent!!!!
My understanding is that the local authorities have been asking to up the level of grant assistance (currently £5k) for the Local Enterprise Fund (grant for small businesses) to help fill the void, but WAG said ‘No!’…. another own goal.
I’m told Scotland is keeping its grant scheme for the time being, but don’t panic we can offer broadband, so if you want set up your business in Newcastle Emlyn you can yippeee ………well ok not now but at some point, booo!.

The sentiment is well made - I had a telephone conversation this morning with someone who was hugely instrumental in bringing in Admiral to Cardiff. He believes, like many others, that to abolish support to business in Wales at a time when we are trying to emerge out of recession is utter madness.

Keep the comments coming in. In particular, I would be grateful for ideas on how we get WAG to reconsider this madness before it starts to really affect the Welsh economy.

STIMULATING DEBATE?

It would seem that my critique of the Economic Renewal Programme has elicited some interest on the blogosphere over the last few weeks, with over 5,000 visits to the site during the last month with around 8,000 pages viewed.

Given that I use this site to hone ideas for the weekly columns for the Western Mail and the Daily Post, I am very pleased that there is increased interest due to the commentary on the ERP, even if some of the traffic is coming from WAG itself, at least according to the statscounter.

I sincerely believe, in the absence of any serious discussion in the mainstream press, that we need a proper debate on this policy given the importance to Wales of these changes and I hope that these articles have stimulated some interest. They will continue both on this blog and in the newspaper columns.

However, I must reserve a special thanks to one particular viewer, or should I call him my No 1 fan.

Despite his insistence that no-one cares about this blog or my opinions, he continues to take the time to visit it and supply a rich vein of comments which include "idiot", "sad", "delusional" "pathetic" and "loser". 

Perhaps he should apply for a job working in the public relations department of WAG :)

I haven't a clue about the motivation of this person (mad, bad or dangerous to know?) but at least he has provided a source of daily amusement on my holidays when I manage to sign on to read the comments.

We have now even started a sweep to see how many times various words pop up in his comments by the end of the month. So with two days to go, don't let me down now.

As for everyone else, all comments are welcome and will be published.

HAMP Modifications Are Drying Up - Uh Oh?

I was reading over an article I saw on a proclaimed debt help resource for homeowners.

The article was on the stats and numbers pertaining to the HAMP modification performance to date.

I expected to see good numbers as I have been hearing good things amidst the never ending slue of finance blog posts that I read on the housing market.



At first I really did see some promising numbers. There was a few highlights to warm you up stating how much money everyone was saving through these modifications through Obamas homeowner help program.

Then the first data table looked pretty swell as well. At first but as I followed the dates down from May of last year to the turn of the decade and then the numbers just started to crawl.

The next data table was even worst in fact it was a bit horrifying. It was just month to month growth rates for the cumulative modifications and net new monthly modifications... it was bad. I almost want to believe those guys made the whole thing up... but he didn't.

I think the future is becoming bleaker suddenly and no one knows it yet.

I hope we are not as screwed as those damn data tables make me think we are.

At one point I thought maybe that the population of eligible homeowners was simply exhausted. This is not so. The Make Home Affordable Outreach effort are only increasing in intensity. More and more homeowners are being urged to check the basic qualifications of Obama's modification assistance program and to apply if eligible.

THE MUPPET SHOW

Yet another unsolicited email, this time from someone who runs a manufacturing business that is expanding internationally.

"I don't know if you have any inside track on what is happening with WAG/IBW etc but nobody seems to have a clue what the hell is going on". 


"We have built a strategy around what they sold us and it looks like we are being  abandoned (as is every other exporting SME). 


"These muppets seem to have forgotten about trade and are more interested in giving blokes in Ebbw Vale faster internet to surf dodgy web sites!"

A direct but accurate description of the chaos that currently passes for the Department of Economy and Transport as they try and rush through the Economic Renewal Programme.

I also gave a speech at the AGM of a £40 million turnover North Wales food manufacturing business last night. They had developed a plan for expansion in a rural area where jobs are hard to get and were told, a few weeks ago, that they no longer qualified for support despite having been told, months before, that they would get financial aid to create jobs.

Why on earth didn't WAG phase in the changes over time rather than adopting this guillotine approach that is hitting Welsh businesses hard?

During the week that David Cameron is over in India trying to create stronger trade links with one of the World's fastest growing economies, civil servants in Cardiff Bay are quickly dismantling IBW, the one organisation in Wales that would have been able to help Welsh businesses to export.

Many small businesses are just starting to find out that they have been abandoned by WAG and the analogy with the Muppet Show become more real with every story I get.

SOLD A PUP - THE REAL OPINION OF WELSH BUSINESS ON THE ECONOMIC RENEWAL PROGRAMME?

Yesterday, I was copied in on an email sent to the South Wales Chamber of Commerce by the managing director of Holbrook Timber Framing, based in Bridgend.

He has given me permission to reproduce the email on this blog which comments on my article from Saturday's Western Mail regarding the Economic Renewal Programme (ERP):

"I have read with interest the observations by Dylan Jones-Evans on the ERP announced by WAG recently. We are one of the relatively new start up businesses that have featured in the Fast Growth 50 on three occasions since our start up in 2003. We will turnover approx £4.7million in 2010 and we employ 48 people directly and at any one time we engage the services of 15 subcontractors.

"We operate in the manufacturing and construction industries. We have survived the last few years but it has obviously been a struggle.

"Dylan is spot on with his observations in the switch of 50% of the SIF to repayable loans, the support of a limited amount of sectors and the development of a high performance broadband network.  There seemed little consultation and this support strategy is poorly thought out. We have been fortunate to have AIG and RSA support in the past six years but we have delivered in job creation and proved ourselves to be an entrepreneurial indigenous company. Our type of company seems to be overlooked in the details of the latest ERP.

"I can only sum it up by saying if we were setting up today, recession aside, we would in no way have been able to have developed our business and create the level of employment we have under the proposed support strategy.

"I wonder how many more companies that would say the same?? I would forecast there would be many!!

"This is not a policy for high growth SME’s and twenty companies like us create 1000 jobs."

Holbrook is exactly the type of business we should be supporting in Wales - a local family business that is investing in developing its workforce and growing its market.

It isn't a high technology firm based in one WAG's six 'sexy' sectors but one that has done remarkably well despite the sectors in which it plies its trade being hit hard by the recession.

As some may have noticed during the last couple of weeks, there has been a concerted campaign to try and push the line that businesses in Wales are supportive of the ERP.

However, the simple fact of the matter seems to be that many owner-managers are simply not aware of what has been going on and, when they find out, they are surprised at the implications not only for their business, but for the Welsh economy as a whole.

Increasingly, they are becoming aware that WAG has simply abandoned them for a strategy that has little to do with the needs of indigenous Welsh businesses but is, instead, reflecting  a civil service view of the Welsh economy that has little to with reality.

In fact, I am beginning to wonder if the Minister actually knows what he has actually signed up to - it is hardly the type of policy supporting small local businesses that Plaid  Cymru has advocated in the past.

Perhaps the Minister isn't the only one who has been 'sold a pup' by the civil service in Wales.

I have spoken to owners of businesses during the last two weeks that are increasingly worried that the organisations that purport to represent them - the CBI, IOD, FSB and Chambers - have agreed to go along with the recommendations  without consulting their members have actually been consulted on the outcomes for their business.

Hopefully, one or more of these bodies will discuss the reality of what this plan will do for the Welsh economy and the vast majority of Welsh business.

If they do, then the quiet acquiescence we have seen over the last few weeks may well be replaced by a far stronger opinion from the wealth creators of this nation.

PUTTING ALL YOUR EGGS IN ONE BASKET?

Last week, I examined the role of demise of International Business Wales (IBW), one of the key recommendations that came out of the Economic Renewal Programme (ERP).

Indeed, given that much of IBW’s public face has been about attracting inward investment projects to Wales, it is not surprising that the line from the Welsh Assembly Government (WAG) has been one in which it has heralded "a move away from the traditional grant culture for big business to a culture of investment".

Of course, what WAG has conveniently forgotten to tell small businesses is that the ERP heralds a move away from a traditional grant culture for ALL businesses, large or small.

I sincerely hope that accountants and business support agencies across Wales have woken up to this fact and are now informing the thousands of small indigenous businesses that have benefited from previous financial support that the tap has been turned off.

Whilst a “culture of investment” is to be welcomed, WAG seems to have also conveniently forgotten to tell small businesses across Wales that whilst they are now replacing grants with repayable loans, these will only be available to a select number of companies within six “key” sectors.

So is your company within one of the lucky sectors? According to policymakers within WAG, the sectors chosen for support are

• ICT
• energy and environment
• advanced materials and manufacturing
• creative industries
• life sciences and
• financial and professional services.

Why these sectors?

Well, there is no real rationale given, as with much of the actions contained within the ERP, but the strategy does point out that these sectors correspond to around one third of private sector employers in Wales in business turnover and employment terms. In other words, these are the sectors dominated by large employers and not small firms.

Yet such logic is completely flawed on a number of levels.

For example, a recent study from the consulting firm McKinsey showed that in order to generate jobs, service sectors will continue to be necessary for strong job creation, and these are sectors dominated in Wales by the SME sector.

Such companies are your ‘cashcows’ that create much of the wealth needed within an economy and, more importantly, policy changes can impact sector performance in two to three years. In those traded sectors – such as the ones chosen by WAG there must be a focus on ensuring that local companies become globally competitive but with the clear understanding that this will take a number of years and is therefore not the remedy for supporting the Welsh economy out of recession.

There is also a hidden warning for Welsh policy makers in the McKinsey report, as it suggests that competitiveness in new innovative sectors is not enough to boost economy-wide employment and growth, with even mature high technology sectors, such as semiconductors, accounting for 0.5 percent or less of developed economies’ employment.

Closer to home, my experience of running the Wales Fast Growth 50 project for the last twelve years has taught me that success is not limited to any group of sectors but is down to the excellence of the individual company regardless of the industry in which it operates.

Only a third of last year’s winners were located in the six sectors proscribed by WAG and as I finalise the list for this year, it is clear that there will be a substantial group of fast growth businesses, the very ones we need to kickstart this economy, that will no longer be eligible for support from the Assembly Government

So there we have it.

WAG has decided that the economic fortunes of the Welsh economy will be driven mainly by a group of large companies within six key sectors, with no financial assistance given to the rest of Welsh business.

Simply put, if you are not in one of these sectors, then you do not get any financial support from the government. This is despite evidence that banks are simply not lending sufficient amounts to the SME sector.

For example, a recent study by the IOD shows that whilst 39 per cent of company directors had applied for finance in the first six months of the year, one in three were turned down.

I have no objection to having some focus on key sectors, but this should not be at a cost to the rest of the business community with the potential to grow and develop.

If WAG had decided that, in reorganising its £100 million grant fund that half would be turned into repayable loans for six key sectors and the rest for other businesses in Wales, not many would have objected. Instead, it has decided, without consulting properly with small businesses, that it will instead give the £50 million of funding that could have supported small firms through repayable loans to provide “next generation” broadband connections.

What evidence is there that all businesses in Wales need next generation broadband? Surely, a business can decide whether it needs faster broadband for itself and apply for a repayable loan to upgrade its system via one of the existing providers.

Why should government spend its money on this area when the private sector, such as BT, Virgin Media and specialist firms such as Fibrespeed, is already active across Wales?

More relevantly, who decided that access to broadband is more important than access to capital as businesses try to emerge out of recession?

It is not too late for WAG to change its mind on this matter, and almost no-one would argue about the move away from grants to repayable loans. However, restricting those loans to a few select businesses is tantamount to gambling with this country’s future prosperity when every business and every job is critical to get us growing out of the economic downturn.

Stabilizing The Housing Market – How America Did It

The mortgage loan and housing crisis created tremendous economic anxiety and directed the American economy towards a black hole of financial hardship.

Though the US economy is not out of the recession or perhaps depression, things have appeared to settle down a bit.

It looks as if the housing market may be stabilizing. This sis a article exploring the steps and actions that were taken to stabilize the US housing market.

Key Actions of Housing Recovery

• The FHA's Efforts and Powerful Initiative

• Their efforts to spend capital on mortgage assets and securities when private capital was no where to be found.

• Political backing of their efforts to reform the financial markets and particularly the practices and operations involving debt and risk management.

• Obama’s Making Home Affordable Plan

• HAMP Modifications have helped 1.2 million homeowners obtain a loan modification

• HARP Refinance

• Lender Incentives

• Freddie Mae as acting agent for the MHA-C or the compliance assurance operations

• The Plans overall flexibility and agility to structure and restructure programs as they are needed.

• The Marketing and Advertising – aka the out reach efforts of the Making Home Affordable Plan

• The Hardest Hit Fund – Foreclosure Relief

• Home Buyer Tax Credit
• The home buyer tax credit added a great incentive for first time home buyers.

• The Nearly 25 Billion Dollars Given to US Housing Agencies
• US Housing Agencies were able to keep lending while other private lenders were saddle bagging cash out of fear and financial panic.

• 1.4 Trillion dollars of Purchases by the FED and Treasury to Keep Credit Markets from Choking
• Thank God. We would be Russian otherwise.

• Financial Support for Fannie and Freddie

All of these actions taken by our collective American government has really helped stabilize the US housing market.

Refinancing Consumer Craze - Low Mortgage Interest Rates

Low Mortgage Rates – Low Mortgage Origination –

Sky Rocketing Mortgage Refinance Origination Loans

Low Mortgage Rates Create High Demand for Mortgage Refinancing

Mortgage rates are low as they can be. I honestly do not know if we are ever going to see rates this low ever again. Though I should say that statements like that some how always seem to turn out wrong.




So with low mortgage rates you may suspect as I would that there would be high levels of mortgage origination's. Consumers would take advantage of such an opportunity.



Right…



…well…



…yes and no.



See the level of mortgage origination's is not rising. This is due to the low home sale figures as of late. But consumers are still taking advantage of the low mortgage rates.



Consumers are taking advantage of low mortgage interest rates by refinancing out of higher more profitable (for lenders) interest rate mortgage products into lower more borrower friendly loans. Mortgage refinancing activity has doubled from the end of the first quarter.



According to MBA, the Mortgage Banking Association, the weekly refinance index has pushed past 4,000. That number dwarfs recent index lows of 2,000.



I think that this is a positive trend for the American consumer. By refinancing into a lower mortgage rate homeowners will be able to lower monthly mortgage rates and and make home affordable.



This is a great opportunity for consumers to take advantage of the ability to utilize mortgage refinance as a debt solution in these times of financial hardship.

THE PERFORMANCE OF INTERNATIONAL BUSINESS WALES

Finally, I have managed to track down the latest performance data for International Business Wales (IBW).

However, I had to go directly to UKTI for this information as it was not forthcoming from the Welsh Assembly Government.

For the record, this is the performance for IBW for the year 2009-2010.

• 65 new projects
• 3,431 new jobs
• 3,931 safeguarded jobs

This gives a total of 7,362 jobs created or safeguarded by IBW, which is a higher number than the other devolved regions of Scotland and Northern Ireland.

More importantly, IBW has been responsible for 7.8 per cent of all inward investment related jobs in the UK, well above what is expected for Wales.

Therefore, congratulations can finally be offered to the team at IBW that have done their nation proud against their regional rivals and, more importantly, have generated nearly 3,500 new jobs at a time when we have lost nearly 50,000 in the private sector as a result of the recession.

What is shameful about this whole episode is that WAG has been sitting on this data for about ten days but have steadfastly refused to publicise the success of IBW because of the Minister's decision to abolish the body as part of his new economic strategy for Wales.

I would have thought that the creation of 3,500 new jobs and beating most of your regional rivals would have been a cause for celebration but political imperatives were far more important than demonstrating that the Welsh economy finally has a good news story.

I just hope the Minister, his advisers and senior managers have been suitably embarrassed by IBW's excellent performance at a time when has been little else to celebrate during the last two years.

I know they won't change their mind over their decision to close down the division - when was the last time you saw a politician apologise for making a mistake - but at least IBW staff can hold their heads up high knowing they have done a great job for Wales PLC.

Well done to every single one of you. You have done Wales proud.

A CAUSE FOR CELEBRATION?

There have been various rumours on the Welsh blogosphere that International Business Wales has done rather well in terms of the number of new jobs created through inward investment projects in 2009-2010. If I knew the truth, they would be published on this blog, I can assure you.

Yet, there has been no press release from the Welsh Assembly Government regarding this vital piece of information.

Contrast this with other parts of the UK such as the North West of England, North East of England, Liverpool, West Midlands and South West England, all of which have released information on the number of jobs and projects developed within their regions.

What has WAG got to be afraid by not releasing this information?

Is it not right that if the rumours are true and IBW has done well in terms of new job creation, we should be lauding this success as a big win for Team Wales?

On the other hand, would this just be too embarrassing to the Minister who has just scrapped the body in his Economic Renewal Programme?

More importantly, doesn’t WAG have an obligation to releases such information to the general public or is this yet another example of how our devolved government has become less and less accountable since 1999?

As no answers are forthcoming, I have now asked a couple of our Assembly Members to try and find out what has actually happened.

After all, if thousands of new jobs are on their way to Wales, it should be a cause for celebration.

UPDATE: Just had the following comment put on a previous post:

"As an ex WDA employee of 16 years experience in inward investmennt overseas, I left in 2005 aghast at the plans then to scrap the WDA brand - arguably Wales' most well known brand name and to merge the WDA into WAG. It was bound to fail and I take no joy in its demise now - it is a huge loss for Wales. The WDA had its faults, but it also had its huge successes. Since leaving the WDA I now spend all of my time working with and advising Development Agencies all over UK and Europe on inward investment strategy etc. All of the various comments made in the above posts I not only absolutely agree with but I can verify that IBW's competitors both in the UK and Europe are amazed at what has happened, especialy since the scrapping of the English RDAs overseas offices will leave a huge opportunity for the devolved administations of Scotland and N Ireland - Wales should have been positioning itself to make the most of this as the Scots and N Irish are doing."

YOU COULDN'T MAKE IT UP

Having posted on the demise of IBW on Saturday, it was well worth reading the comments section on the excellent "Change of Personnel" website regarding the same issue.

Two notable comments jump out and I hope that CoP doesn't mind me replicating them here, although I recommend you do read the full article.

Anonymous said...

Whilst I rarely raise my head above the parapet on matters of the ex-WDA (less I am accused of bias), I am minded to contribute to this debate. As the last Marketing Director of the WDA, I am now forced to ply my trade in the SE of England, where I run Invest Thames Gateway (which does what it says on the tin!). As most Welsh Civil Servants never actually cross the bridge, allow me to tell them what is happening. Disbelief and laughter about the dismembering of the Welsh international identity, for starters. When the whole apparatus of FDI in England is being dismantled, and "localised", this should have spelt a major opportunity for the Welsh to get back into the world and push the benefits of Wales (albeit RSA free, but hey, England manage it!). This is more about certain members of the D&ET getting back at what they perceived was the last bit of the old WDA, rather than a strategic approach to opportunity creation. I suggest that Wales starts to be nice to UKTI and apologise for the rather high handed way they have acted towards them for the past 25 years, otherwise FDi will also go the way of the recent economic strategies of WAG.

Anonymous said...

"I hear that the Scots have increased their FDI & Trade budget by 25% to take advantage of the demise of RDA's and IBW!"

And if these comments weren't bad enough, there was worst to come.

A few days after WAG announced the Economic Renewal Programme (ERP) and the abolition of IBW, data was released by the UK Government which showed that a record numbers of countries invested in the UK in 2009/10, with inward investment generating 94,000 jobs over the past year, a 20 per cent rise on the previous year.

Interestingly, the South West of England want to trumpet their success to all and sundry but there has been absolute silence from the normally effervescent public relations team at DE&T about Wales' inward investment performance.

Is this because, woe betide, IBW may actually have done better than expected last year and WAG is

reluctant to share its success with the rest of the Welsh public?

There is a further article on the Regen site which examines the consequences of the abolition of the Regional Development Agencies on English regions.

As the author notes,

"If inward investment is left out of the equation and simply transferred to UKTI in Whitehall, there is a risk that the UK will only attract companies to the "easier options" of London and the South East, with the rest going to the well-resourced inward investment teams of Scotland, Wales and Northern Ireland with their extensive overseas offices network."

I assume this piece was put together before the ERP was published and you can now scratch the inward investment team of Wales from that equation, which could make us more dependent on UKTI for drumming up opportunities for Wales.

Yes, believe it or not, a Plaid Cymru Economic Development Minister may well be responsible for returning the responsibility for inward investment back to London through his actions.

You couldn't make it up even if you wanted to.

STOP DIGGING

Before I start, I think that Nerys Evans has been one of the better new AMs and, regardless of political persuasion, is exactly the type of individual that we should see within our National Assembly. Her recent intervention on Communities First was both insightful and long overdue.

However, I would like to know how she could have lent her name to the following press release which beggars belief and stretches incredulity to its limit.

According to Nerys,

"Plaid Cymru has long argued that small businesses are the lifeblood of the Welsh economy and that town centres are the heart of our communities. Since the start of the recession, as a part of the Welsh government, Plaid has worked hard to protect small businesses in Wales from the worst of the economic storm. Now that Wales is coming out of the economic crisis, Plaid leader and Economy Minister, Ieuan Wyn Jones has launched the Economic Renewal Programme which will see significant investment in infrastructure and a move away from the traditional grant culture for big business to a culture of investment . This will benefit all areas and all types and sizes of business".

Unfortunately, the Welsh Assembly Government, of which Plaid Cymru is a part, did very little to help small businesses during the recession, especially in rural areas such as Pembrokeshire:

• the majority of the funding from the Pro-Act scheme has gone to large companies, mainly within the South Wales Valleys
• tourism businesses in Narberth have faced some of the highest increases in business rates despite Plaid's electoral promise to scrap them for 50,000 firms
• they have now cut support to the vast majority of small to medium sized firms at a time when they have been starved of growth capital by the banks.

Of course, when Nerys states that there is "a move away from the traditional grant culture for big business to a culture of investment", what she has carefully omitted to say is that there will be no grants for any type of business, big or small, and that all but six sectors of the economy will not even be getting repayable grants from the government.

WAG has even managed to omit food and drink from their list of important Welsh sectors, even though it is one of the growth industries in the Pembrokeshire economy.

Does she really think, in her heart of hearts, that the businesses of Tenby and the rest of Pembrokeshire are going to be dancing in the streets when they hear that all the business support and funding has been cut but they can have faster broadband which most will never need?

I very much doubt it but if you are the Director of Policy of one of the coalition partners, what can you do?

As Jeff Jones has said previously on this blog, if you are in a hole, stop digging.

It is time that this line about helping small firms, and which no-one seriously believes, is dropped otherwise whatever dwindling credibility WAG has left in economic development will disappear very quickly.

PETER HAIN'S GRASP OF ECONOMICS

In focusing on the Welsh economy over the last week, it is has been easy to forget the general debate on the economic approach at a UK level.

That is why it was worth reading a comment piece by Daniel Finkelstein of the Times from last month in which it is suggested the current Shadow Secretary of State for Wales is not quite up to speed with economics.

Anyway, I reproduce the article here for you to make your mind up but given the level of ignorance in this short piece alone, you have to seriously worry who is advising the MP for Neath on such matters.

Peter Hain's grasp of economics

On Saturday night, I caught an interview with Peter Hain in which he made what appeared to be an extraordinary claim

"I think we did make a big offer [in negotiations with the Lib Dems]...except in respect of the cuts agenda. Because what we found is that they wanted to do exactly what they've agreed to do with the Conservatives, which is to start cuts this year".

Now this is very striking. Peter Hain - who knows what went on in the talks - is saying that the Lib Dems did not move to cutting this year under pressure from the Tories. They were pushing for it themselves.

But it turns out that what is striking is not what went on in the talks. It is Peter Hain's grasp of economics.

When pressed by Andrew Neil, who says we had all assumed the Lib Dem position was one they had agreed to as a compromise, Hain says this:

"No. My understanding, and I am sure I am right on this, is that they were making demands for extra spending on the one hand, in terms of tax policy, and on the other hand the cuts that would fund it, this year."

"And we were always very clear, and I think history will prove us right as this year advances by the way, that if you start to mount the deep cuts that this Conservative and Liberal Democrat Government is already doing, that it will jeopardise the recovery, and send unemployment sky high".

Where to start?

First, he has muddled up spending and tax cuts. The Lib Dem tax policy does not require "extra spending".

And second, more seriously, he has confused spending reductions and fiscal tightening.

The Labour position (absurdly overblown in any case) is that £6bn less borrowing this year will send the economy into a nosedive. It is obvious from Hain's explanation that - in contradiction to his interpretation - the Lib Dems were not proposing such a tightening in negotiations with Labour.

Instead they were proposing a shift in which they spent less and also taxed less.

It shows a very cavalier approach to the argument about the impact of tightening this year, to suggest that there would be an impact even if the money were given back in tax cuts.

It's almost as if making the charge of increasing unemployment was more important to Peter Hain than the actual economic case.

Surely not."

Sex Sells - Republicans Reverting to What Works - Watch Out Palin - Nikki Haley is Turning Heads

 Republicans Sporting Old Fashioned Sex Appeal

Republicans and the rest of the political world are still not quite sure what they uncovered when they brought Sarah Palin to the presidential race. I say the republican party is really on to something here.


Sarah Palin is an icon to many, and a bloggers wet dream.

How can you resist a gun stroking brunette in a red, white, and blue bikini.

She has stars and stripes in all the right places.

The idea of Sarah Palin having anything to do with the type of decision making, authority, or fiscal responsibility that comes with the oval office is scary.

But just the same, I think the republicans are on to something with this new trend of campaigning with a few good looking policy makers.

There are now two of these brunettes running loose amidst the political right.

Introducing Nikki Haley

Nikki Haley of North Carolina has won the support and backing of Sarah Palin and all her facebook.com friends.

But I don't really care about the endorsement, I care about the ratings that this new one could represent for politics as a whole. Perhaps this political publicity boost is what America needs.

Perhaps this is what the people need to start looking, to start caring, and to finally give a damn.

True, there may be some danger in just looking for a pretty face. Maybe sticking her in a skimpy outfit and placing her on a vanity fair cover for all the boys and girls to see is arguably inappropriate.

But hey sex sells.

I guess what we all have to ask ourselves is what the hell this new gal is all about?

Does she have a real agenda?

Can this one actually be a politician?

Will she shorten her life from stressing over what is wrong with this country?

Will she step in political harms way to address issues that are going to make a difference like President Obama has as a democrat?

I hope so.

This country needs to put political hype to use towards getting the average 26 year old blogger, construction worker, college freshmen, 16 year old cheerleader, and those poor home schooled kids that are just plain weird to pay attention to politics. What are we going to do as a country when all the voters die? They are a dieing breed.

We all need to pay attention and care about the issues that are country has to deal with. If not our country may diminish into the bunch of commission breathing, interest serving, numskulls that we truly are.






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MYOPIA AND ENTROPY

Over the next month, this blog will look very carefully at some of the new policies developed as part of the Economic Renewal Programme (ERP) launched by the Welsh Assembly Government (WAG) last week.

Hopefully, it will help to start a debate on whether this is the right approach to turn around the Welsh economy and to drag us from the bottom of the UK’s prosperity league table.

I will start by examining the decision to abolish International Business Wales (IBW), the Assembly’s overseas investment arm that was responsible for attracting business into Wales as well as promoting Welsh business abroad.

Some will say that this decision to close down the last remnant of the old Welsh Development Agency was justified by the outcomes of last October’s review of IBW by Glenn Massey, the former inward investment specialist. However, if you bother reading the Massey report in detail, it actually has little evidence to suggest that the division was doing badly.

If we examine IBW’s record on new jobs being brought into Wales in 2009 as compared to 2005, then the numbers are approximately the same, and equates to 6.2 per cent of the UK figure, which is higher than the proportion Wales would be expected to bring in as a region. More importantly, it did this job with roughly a third less of the resources than it had five years ago

Does this look like failure?

Actually, IBW has done exactly what would be expected of it under such conditions, namely deliver the same results with a vastly reduced budget. Whilst it was suggested that “IBW has left Wales at the bottom of the 12 UK regions when it comes to safeguarding jobs”, the report stated that made the point that “IBW has no direct responsibility for reinvestment by foreign owned companies in Wales.

Indeed, if you read Massey’s comments very carefully, it shows that the primary reason for issues such as the lack of branding, a silo approach across the Department of Economy and Transport (DE&T) and the focus on RSA as a tool for inward investment, were not due to operational issues within IBW itself but were failures in strategy that are decided at the highest levels of government.

To put it simply, it would seem that a lack of strategic direction at the top, rather than IBW, was essentially the reason as to why there was little care and attention given to the reinvestment needs of over 500 foreign owned companies in Wales, a situation that may have cost tens of thousands of jobs in Wales during the recession.

In fact, the potent mix of myopia and entropy that exists at the highest levels of the civil service is perfectly exemplified by this decision to scrap IBW and its functions.

Let’s take for example, its role in inward investment. Whether you agree with grants to large foreign companies (and I don’t), the real question is whether there is a role for an agency such as IBW to act as marketers for the Welsh economy, and to sell everything that is good about this nation to potential investors?

Consider this one recent change in the business environment that seems to have passed WAG officials by.

The new Westminster Government is gearing up the UK to be the most attractive place for inward investors with a reduction in corporation tax to 24 per cent over the next four years, the lowest level in Europe with the exception of Ireland.

Not only that, they have done the Welsh economy a massive favour as compared to the English regions by essentially wiping out ‘the opposition’ through their decision to abolish the regional development agencies that have been battling it out with IBW to attract the best companies.

Imagine if you were a business given such a golden opportunity?

With your main competitors closed down and the field wide open, would you have followed their lead and shut down the part of your firm that is marketing your goods to the rest of the World? Of course not - you would have taken full advantage of the situation presented to your business.

Maybe WAG doesn’t think that Wales can sell itself at a global level. If that is the case, what about IBW’s other role, namely the provision of support the internationalisation activities of Welsh businesses?

Does anyone seriously think that Welsh firms do not help with accessing overseas markets when the total value of exports for Welsh business for the last 12 months fell by 16.8 per cent to £8.8 billion. In contrast, Scottish exports rose by 3.5 per cent to £14.8 billion. Given this dismal performance, it is not surprising to find that Wales, with only 1264 exporting firms in 2010, accounts for only 2.7 per cent of the total number of exporters in the UK.

Would you, if you were in charge of the Welsh economy, therefore close down the body responsible for helping Welsh firms to increase their export activity or would you empower them, through your new economic renewal programme, to double that figure over the next decade, and ensure that Wales, at the very least, punches at its weight in terms of international performance?

The more one reads the Economic Renewal programme (and believe me, I have read it several times), the more one begins to wonder how WAG will deal with the 131,000 people currently out of work in Wales, with an employment rate that is lower than any other part of the UK apart from Northern Ireland.

If we don’t encourage entrepreneurship, help small businesses to grow, assist firms to internationalise and attract the best global businesses, then how are we going create jobs and wealth across all parts of our nation?

The business community can only hope someone within WAG has the answer to that conundrum.

HANSEN'S WISDOM

Having identified the best blog in Wales last week, I was lucky enough. on Monday, to read one of the best articles ever published on the Welsh psyche.

Written by the irrepressible Carolyn Hitt in the Western Mail, the article takes to task those small minded people that continually hold Wales back, a mentality that has been prevalent in Newport earlier this week with the "Farmhousegate" fiasco at the Celtic Manor Hotel, which saw local Newport councillors incredibly attack Sir Terry Matthews, a man who has brought over £150 million of investment into Wales' third city.

The one paragraph that does stand out though is her reporting of "a remarkable and impassioned rant" from the former Wales coach Steve Hansen on the tribalism that for him was "a source of both fascination and incredulity".

To quote Mr Hansen,

“There are so many people here who are poisoned by the selfish attitude cancer that runs through this nation. It’s stopping you from being the country you can be and I don’t just mean that from a rugby point of view.

It’s not a united country from east to west and north to south. It’s pockets of different people. And the little villages in the west fight with each other and little villages in the valley derive a lot of satisfaction when one of the villages down the road are put under the cosh.

And when you look at the history of Wales and the battles that it’s been in, it’s been beaten by itself rather than been conquered by somebody else. They’ve spent so much energy fighting each other they’ve allowed the enemy to slip in and do the business and take them over or win the things they wanted to win.

That’s still happening in rugby and it’s happening in everyday life in Wales. If we could just get rid of that, this could be one of the greatest nations in the world.”

Enough said.

Financial Reform Pushed Through By Democratic Majority and Three Republicans

A New Financial Industry Reform Bill Has Passed

Well 2,100 pages of potential American Policy and Law fixing to keep a tighter watch on the financial industries practices of marketing products to the American Consumer is on its way to Presidents Obama's Desk. Obama is expected to sign.


From what I have read thus far this bill is not really “known”.

That is a confusing way for me to put it but everything I have read has been vague at best.

ABC has said that the bill will add some consumer protection agency to keep a close watch on lending practices. Also Bond rating agencies may have to come up with a new business model which is well.... long over due.

Another potentially big aspect of this thing will effect derivative trading and the regulations that are put on private equity and hedge funds. That will be interesting to see play out.

Overall I think the financial markets do need some shape up or restructuring I guess I am just not sure that a 2100 page bill that no one really seems to understand or have even read seems a little fast.

I do believe and have faith in Obama to make the right decision on this one. He truly believes something needs to be done. I will support his decision regarding reform of the financial industry.


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Goldman Sachs who really caught some heat from the subprime mortgage securities it was selling as securities (imagine that) settled with the SEC for a little more then 500 million dollars.

In the grad scope of things this is no big deal to old Goldman. However in light that i still do not see how acting as a broker and selling securities can end up as a 550 million settlement with the SEC.

I don't know about those guys.

The brass tax of all this boils down to a fine that represents approximately 4% of what Goldman made in earnings for that year. I think they are probably happy just to get this stuff over with.

I know I would be.



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Judge Judy Rules On America's Tube

Judge Judy Tops Ratings Charts

So I am glancing over scraps of a USA Today Newspaper and wouldn't you know it Judge Judy is glaring at me from the Life section with that judgmental scowl. Actually that is a bit of a fib. She was smiling and looked deceptively friendly.


Any how, I started to read this featured article out of respect for my Grandma who is over 90 and does not miss a episode. As I read on in a much similar fashion to how you are now doing I discovered that tomorrow my grandma will be one of the almost seven million viewers who tune into Judge Judy on a daily basis.

that is approximately 1 out of every 43 of us!

Not even Oprah can run those kind of numbers.

So this tells me little but does tell me something...

You can bet your bottom dollar that Judge Judy and her network are really pulling for that unemployment benefit extension.

(Ha - That's  funny)



Here Comes the Finance Guy Careless Speculation of Financial Figures

No but seriously, what is the rate for a 30 sec spot in between the Judge Judy court room judgments?

At a $10.00 per 1000 you are talking 7 million dollars. That must be way to high. Most likely it is closer to 10 bucks per 10,000. That sounds better but still high.

Maybe old JJ should start a Vlog or something on YouTube.com I bet she would make big bucks doing something like that.

Hell... I would watch. I know that my Grandma can't get enough of Judge Judy. She loves her.



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PANIC IN CARDIFF BAY?

As I predicted yesterday, it seems that WAG's press office is working overtime to try and minimise any criticisms of the Economic Renewal Programme.

They have even gone so far as to write a last minute piece for today's Western Mail to try and explain how this new approach will benefit SMEs (whilst conveniently omitting the fact that they have cut support to the vast majority of small businesses in Wales).

Sorry, guys, your arguments just don't stack up and if that is the best you can do, then you need to get a new job.

For example, perhaps the Minister can explain why, in an interview in 2007, he said he was keen to increase business support to start-up companies and said " It is not just about the grant aid which is available, but giving the right advice at the beginning, in areas like the business plan, financial management and securing premises.”

Does he believe that, because of the recession, and new economic circumstances, that start-ups no longer need this business support, especially during the critical fiorst two years of their existence?

What has changed so much that he has now essentially abandoned FS4B, the main scheme for business support, cut business funding by a half to £50 million and is focusing his efforts on six sectors only? Where is the evidence for such an approach?

More relevantly, why is WAG so nervous about a debate on the economic direction for this nation?

Do they seriously think that everyone in the business community will agree with them just because they have done essentially what the CBI has suggested them to do?

It doesn't take a genius to work out that they have let down the small firm sector in Wales and if organisations like the FSB and the Chambers feel constrained in saying so, I can assure you there will be at least one person shouting from the rooftops to make sure everyone knows about this betrayal.

However, I do have one thing to thank the senior civil servants in WAG for.

People always come to me and ask how do you find something different to say every week in the Western Mail?

I must admit that it is sometimes difficult to also motivate oneself to put together 800 words together every week (without the advantage that politicians have of press office doing it for them!).

Anyway, I can now thank WAG for the next few weeks at least, as the ERP has given me the ideal material for my columns in the Western Mail and the Daily Post for the rest of the summer.

I look forward to continuing the debate and deconstructing, line by line, this excuse for an economic strategy for Wales, starting this Saturday.

Thanks a million!

RUFFLED FEATHERS

It would seem that my article in the Western Mail on Saturday regarding the Economic Renewal Programme has ruffled a few feathers down at WAG, so much so that the press officeDeputy First Minister has written a letter to the paper to remonstrate about my audacity in challenging the grand plan.

As it is considered bad form for columnists to respond to a critique by writing a letter back to the Western Mail, I therefore thought I would let you have my thoughts by replicating the letter on this blog.

Dear Sir/Madam,

It seems Dylan Jones–Evans must have not read the details of our new policy ‘Economic Renewal: A New Direction’ (‘WAG takes big risk by withdrawing support from smaller firms Sat 10th July).

If that is the case, how come I had spotted that officials couldn’t even spell entrepreneurship in one section of the report (page 45, first paragraph, for your information). The sad fact that I had read the whole report three or four times and still can't fathom how such a strategy could have been written as a solution to the problems of the Welsh economy.

From now on we will focus our resources on targeting the systemic issues within the Welsh economy and Small to Medium Enterprises (SMEs) are at the heart of this new approach. We will be investing in infrastructure, research and development and improving the conditions within which businesses operate.

The main concern for all small businesses at this moment in time is access to finance. Only today, a study by the IOD shows that whilst 39 per cent of company directors had applied for finance in the first six months of the year, one in three were turned down. If DET had reformed their grant system to focus on repayable loans for the whole of the SME sector in Wales (rather than just six sectors), then it would have been universally welcomed. Unfortunately, it didn’t.

Our focus on infrastructure – such as all businesses in Wales having next generation broadband by the middle of 2016 - is fairer and better for SMEs. It is not our role to run businesses, but we can and will concentrate on interventions that will benefit all businesses. The idea that we are to ‘scrap the support system for small businesses’ is alarmist and wrong.

What evidence is there that all businesses in Wales need next generation broadband? It is the equivalent of government buying every business a Ferrari when for the vast majority, a Ford Focus will do quite nicely. Also, which firm is going to get the contract to deliver this broadband across Wales at the cost of tens of millions of pounds - I guarantee it won't be an SME! Can WAG also explain exactly what support they are going to be offering existing indigenous businesses in Wales? As far as I am aware there will be nothing offered to existing businesses post start-up as FS4B is scrapped apart from support to help with implementing a diversity strategy

We will now be focussing our support on six sectors. Each of the six sectors has a different mix of business types, both large and small. SMEs will be fully involved in making sure we deliver on our commitments.

How many SMEs are actually within these six sectors in Wales? Far fewer than is needed to make a real impact on employment growth I am sure, which is why this is such a high risk approach.

Mr Jones-Evans writes that ‘this…signals the end of any type of entrepreneurship policy in Wales’. Again this is incorrect. We are placing an increased focus on high-potential start-ups that are of high quality in terms of jobs and incomes.

Errr, hold on. WAG suggests earlier on that it is not their “role to run businesses” and yet they want to focus on high potential start-ups. Bit of a mixed message there isn’t there. Surely it isn’t the role of government to ‘pick winners’ as it is something that not even highly trained venture capitalists can do without losing 80 per cent of the businesses they invest in. Juts look at the total failure of their last attempt at a high growth start0up programme, when the business agency Entrepreneur Action went bust as a result. Wouldn’t it be a better policy of “backing winners” and supporting those existing companies that already been through the early growth stages, had secured a customer base, were expanding rapidly, and needed finance and support to make serious inroads nationally and internationally?

Our policy is to create a greater awareness of the opportunities and benefits of entrepreneurship in order to encourage more people to start businesses, as well as assisting established entrepreneurs.

Yes, and WAG's success in doing so since it abolished the private sector led Entrepreneurship Action Plan speaks volumes - whilst the average decline in the number of new business births across the UK as a whole between 2004 and 2008 was 3.5 per cent, in Wales it was 19.4 per cent - the worst performance of any region of the UK

The support services we provide are changing, not disappearing. All the finance we provide will be through repayable investments. These will be administered in a fast, responsive service.

So why not ensure that the fast responsive service for repayable loans is made to all growing businesses in all sectors? Why focus only on six sectors which every other region in the world is, in some way or another, focusing on as well?

Our new approach has been welcomed by representatives from businesses large and small.

You mean the CBI, who even had the cojones to state in their press release that “It is clear from reading Economic renewal: a new direction the Welsh Assembly Government has listened to the concerns of our members….The overall Assembly Government's response was very much in-line with our consultation response." You couldn't get a better endorsement.

Our focus now is delivering this change.

We wait with bated breath, especially as the same senior team within DE&T has failed to deliver the previous government’s programme, as Andrew Davies pointed out recently.

Simply put, WAG expected everyone to simply accept, with comment or criticism, a strategy that, in my opinion, is inherently flawed. There is increasing concern amongst the small business community that this strategy has been accepted as a fait accompli, with no chance to respond properly to these plans.

Well, DE&T's communications team should wake up to the fact that, fortunately, we live in a democracy where comment and critique is not only allowed, but welcomed.

If their public relations team wasn't going to let me ask a question at the ERP launch despite having my hand up for five minutes (yes, the rumours are true), did they really think that I wasn't going to write anything the following week questioning the strategy?

Interestingly, one of the comments on the ERP on a previous posting on this blog has suggested that the civil service has "set up" the Minister by making him sign up to an abandonment of his party's prior support for the small firm sector in Wales.

That is probably conjecture but is is worth noting that since Plaid has entered into coalition with Labour, they have abandoned their pledge to abolish business rates for 50,000 Welsh firms, forgot about their manifesto commitment to create a Deputy Minister for Enterprise, and have now created a bonfire of business support that made Rhodri Morgan's look like a Swan Vesta match.