It demonstrates that there are some serious issues related to the process of implementing the Economic Renewal Programme, problems that could seriously affect the economic recovery.
"Following some correspondence with the ERP team in which I pointed out that WAG officials felt forced to meet companies and were even cancelling appointments, ERP issued guidance to WAG staff concerning how they should deal with contacts from industry and commerce. I have attached this note for your information. You will see that it is concerned with staff continuing to maintain the pretence that WAG is still open for business. However, despite this guidance, staff still continue to refuse to meet with promoters of prospective projects, because they have no details of how the new scheme is to operate and what it is to offer. When I recently arranged to meet with an Assembly Member I offered the opportunity to senior officials to feed me with their views on ERP so far. The following is an exact copy of a comment that was received only today from a senior respected official who has many years of experience in grant and economic development roles: "concerns are that no-one knows what is happening with new scheme, where people are going to be and what the objectives are. One scheme has closed and there is no new one; the people designing it have not spoken to those who know about delivering it." This is a comment today that you will find echoed throughout the whole of the WAG economic development functions. May I recommend that you phone up and try it out yourself.
If you compare the guidance note with the original announcement of the launch of ERP you will see massive dilution of the original claim that the "grant culture" was to end and repayable grants would be linked to six target sectors only. If you read the ERP staff guidance carefully you will see that for internationally mobile projects that grants will not be repayable unless the project fails to deliver its objectives. This is identical to the clawback provisions of the previous grant scheme. Secondly, the guidance notes say that: "A Regional Growth Fund will also be established to provide support to regionally important projects outside the key sectors. Further information on this fund and its operation will be made available shortly.". In another section of the notes it also says: "high-quality proposals, outside the key sectors, will continue to be considered if they represent significantly better value than projects identified within our sector pipelines.". These two quotations make it clear that the commitment to the six sectors is no longer rigid, indeed support will be offered in "worthy" cases. Once again, this was a key criteria of the previous grant scheme, which incorporated a formalised Quality Assessment. Of course, these statements are mere rhetoric, for example, no attempt is made to describe how to determine if a project outside the sector represents significantly better value than projects identified within our sector pipelines".
I'm told by ERP and WAG officials that the attached guidance note is all that is available to staff in the operation of the new scheme. In my correspondence with ERP they have told me that the "new" scheme will not be launched and no further guidance will be issued to staff, companies or consultants. I was told that it was thought inappropriate to be seen to launch a new grant scheme when the Minister had announced an end to grants.
There are a number of serious problems with this "flexible" approach:
Any offers of assistance will need to be made within legal powers and if the scheme is not detailed there is a chance it will be ultra vires. For example, repayable grants could be seen by the courts as loans and the government is not a bank. Under what statute may the National Assembly of Wales make loans? Bodies making loans need to be approved by the FSA and staff need to be properly trained and approved. Who may issue the legal challenge? Well any aggrieved (rejected) party or any company that challenges the need to repay in seven years time. Food for thought?
Staff have no detailed guidance that will help them in detailed negotiations with industry and commerce. Staff have had no training in the "new" scheme.
The Department currently has ISO 9001 accreditation, which guarantees quality. However, this accreditation is based upon very detailed guidelines of the operation of the old scheme, highly formalised documentation and detailed desk instructions for all staff. The highly formalised and detailed system is required to ensure consistency and quality in the operation of the appraisal process. From what I read and hear, it seems likely that ISO will be forced to rescind the current accreditation as the previous grant scheme to which it relates has been cancelled and ERP personnel seem disinclined to control or specify the new scheme in any way. I may write to ISO on that one myself.
A detailed reading of the guidance notes will reward you with other interesting bits of rhetorical gobbledygook, eg. it says that the old scheme closed to applications on 5 July and the new arrangements came into place on 1 September but that there has been no break in service! However, the operation of the new scheme is only in place in theory, since staff have not been given the guidelines of the new scheme and no training has been undertaken. October approaches and it seems no applications for grant under the "new" scheme have yet been accepted. In fact there is no new scheme on place and staff continue to refuse to have meaningful meetings with companies. If officials find themselves compelled to meet with companies they merely collect data on the proposal and forward these up the management chain for guidance on what to do next. Since there are no detailed guidelines to underpin the appraisal system, senior members of staff are now being expected to use inconsistent and subjective methods to decide which projects may be allowed to proceed and which are to be rejected at an early stage. You will see in the quotes above, from the guidance notes, that methods for assessing "better value" and "Regional Growth Fund" arrangements have not yet been published.
A few AMs responded to me following my first email on this subject but I had hoped for more interest and some sign of action, given the very serious effects of the lack of a coherent policy is having on Welsh industry and commerce in the worst recession in living memory. You will have noted recently that respected financial bodies are warning of a return to recession by Christmas and the housing market is showing evidence of that evaporation of confidence. Coalition cuts are soon to start impacting on Welsh public sector jobs with knock on effects into support industries. The current gamble on an unproven strategy at such a time may soon be seen as an insane suicidal act."
