Let’s first examine the issue of the provision of growth capital, which will affect Welsh businesses.
Its purpose is to provide growth capital for businesses in Wales and is aimed solely at businesses in key sectors or key-sector supply chain.
The finance offered by WAG, as discussed in the ERP, will be subject to an agreed repayment profile up to seven years (or the minimum term necessary to deliver the project) from completion of project. The offer may include a payment holiday option of up to one year at the beginning of the repayment period.
So, no surprises there. There will be a repayable grant system that was trailed heavily within the ERP.
However, what about those projects that are ‘mobile’ and wish to come to Wales? These are the very projects that Plaid Cymru AMs said we should stop grants to as, in their opinion, large inward investing companies like Bosch have let the Welsh economy down despite taking millions of pounds in grant funding.
Well, guess what. It would seem that Wales is again “open for business” to inward investors (and WAG is at pains to emphasise this). Those who have been lobbying hard for this have obviously struck a chord with the ever increasing sensitive crew inside the Department of the Economy and Transport (DE&T). More relevantly, any projects may not be restricted to key sectors and may not be repayable.
In an ambiguity that would make Sir Humphrey Appleby proud, it has been announced that “mobile projects” (i.e. those from outside of Wales) will be focused in key sectors or key-sector supply chain BUT that projects outside key sectors considered if they provide a better return/value than projects identified within our sector pipelines. In other words, any large inward investor creating jobs is welcome to get grants to come to Wales.
The question is whether they would have to repay the grant, as in the case of indigenous Welsh businesses?
Again, ambiguity is the order of the day with the document stating that whilst repayment terms would be “established during application process”, and that the finance would only be “repayable if agreed targets not met e.g. number and quality of jobs, leverage of investment, longevity of project”.
In other words, this suggests that inward investors get to keep the money if they hit their jobs target, which is exactly the same regime that the current grant system operates under.
However, the lack of consistency over the current grant regime does not end with its position on grants for large companies.
According to the guidance on business finance, this only applies to the DE&T, not those of other department i.e. other Assembly Government departments also provide specialised support to their sector – e.g. tourism, food, farming and social enterprise – and there are no current plans for changes in these areas.
Therefore, there will be support for food businesses from Rural Affairs, including a processing and marketing grant (if small or medium food processor); the administration and funding of Section 4 Tourism Grants will revert to the Department for Heritage on 1 October 2010.
In other words, grants will be made available to Welsh businesses operating in the food and tourism sectors but not in the rest of Wales simply because that funding is administered by another part of WAG.
Whilst the companies operating in those sectors are bound to be heaving a collective sigh of relief, you couldn’t make up the degree of inconsistency and indecision that seems to have infected the highest levels of government policy. In such circumstances, I am sure that a local manufacturing business will wonder why it is not eligible for any support to expand their business whereas the hotel down the road will get a grant to do so or, more relevantly, the large overseas company.
Therefore, the message from WAG is seemingly this.
If you are a Welsh company outside of the six key sectors, you get no access to finance at all, unless you are operating in the food or tourism industry where grants still seem to be available.
If you are a Welsh company inside the key sectors of the economy, you do get a grant but it has to be repaid back over a period of seven years.
However, if you are a non-Welsh company bringing jobs into Wales, you still get a grant that is not repayable.
This seems to suggest that we now evolved where the vast majority of indigenous Welsh companies are treated as inferior as compared to those coming in from outside of Wales.
Is that really a policy that Ieuan Wyn Jones and other Plaid Cymru AMs really believe in? It may be a logical approach that civil servants may be able to justify but what about the Party of Wales?
Indeed, what sort of reaction would the Deputy First Minister get if he put forward such a proposition to the gathered masses at the annual Plaid Cymru conference that starts today?
