Monday, July 5, 2010
WHERE'S THE BEEF?
One of the groundbreaking adverts from the 1980s (and one that was even adopted for a presidential campaign) was Wendy’s “Where’s the Beef” campaign.
After attending the launch of the Economic Renewal Programme (ERP) this morning, I am afraid I feel a little bit like the three old ladies in that infamous clip.
Certainly, it was an uninspiring presentation and a disappointing document overall, with little real evidence for any of the policies that have put forward to renew the economy of Wales, apart from the fact that they ‘had consulted widely with business’.
On reading the details, it would seem that WAG has mainly consulted with the CBI and have adopted, hook, line and sinker their preoccupation with supporting large firms in Wales to the detriment of the SME sector, which seem to be the biggest victim of this shake-up.
Certainly, one would not disagree with one of the central planks of the ERP, namely of moving away a grant culture towards one that is based on repayable loans.
However, as 50 per cent of the grant money (i.e. the £100 million Single Investment Fund) is now being transferred to infrastructure projects, this means that the small business sector in Wales is essentially losing out on £50 million of repayable loan capital.
At a time when bank lending remains weak, it would seem that WAG has reduced the amount of finance that is available to support the growth of the SME sector in Wales.
One also has to question the focus of the remaining business support funds on six key sectors of the economy by WAG.
From my experience of running the Wales Fast Growth 50 project during the last twelve years, it is clear that growth and excellence is not limited to any particular sector but can occur in any company which has the right product or service, the right management team and, more importantly, the access to funds and markets to make it happen.
Successful businesses are not confined to any one industry and in limiting the support available to a limited number of sectors; WAG may be stifling the economic potential of thousands of Welsh businesses.
This document also signals the end of any type of entrepreneurship policy in Wales, which could have serious consequences for the economy.
I am incredulous that at a time when the creation of jobs in the private sector should the key priority of government, policymakers in WAG – who have always had an ambivalence towards entrepreneurship and a bias towards larger firms – have ignored all the evidence that shows that it is small young businesses that create jobs, especially after a recession.
For example, an analysis by the world famous Kauffman Foundation of U.S. Census Bureau data showed that companies less than five years old created nearly two-thirds of net new jobs in the United States in 2007.
And as one of the authors noted,
"This study sends an important message to policymakers that young firms need extra support in the early years of formation so they can grow into viable job creators. Sometimes a single barrier, such as limited access to credit for business growth, can mean the difference between survival and failure. We must create an environment that aids firm formation and growth if we are going to turn employment around."
Shame no-one in WAG bothered to read it.
There are plenty of other issues but having only had time to glance through the document over the last hour or so, I will hopefully be able to digest it in more detail by the end of the week in readiness for my column in the Western Mail.
However, by largely ignoring new and small firms in Wales in favour of an agenda for larger businesses, this economic renewal programme may be taking an enormous risk with the future of the Welsh economy.