Friday, December 3, 2010


If you believe the spin continuously emanating from officials within the Department of Economy and Transport within the Welsh Assembly Government, then the new Economic Renewal Programme (ERP) is not a product of civil servants’ imaginations but “of months of consultation with businesses, unions and academics”.

In fact, press officers are keen to emphasise, in almost every Ministerial speech, article and public utterance, that the ERP is industry led and supported by the business community.

For example, a recent submission on the ERP noted, “the close collaboration and consultation with partners was strength of Economic Renewal: a new direction”.

Of course, whilst the CBI is a major supporter of WAG’s approach to focusing efforts on large anchor companies, repayable grants and broadband, it does not represent the views of all businesses in Wales.

Indeed, given that WAG boasts that the consultation with the business community was one of the most extensive ever undertaken, then it is worth examining what exactly the private sector considered to be the main economic development priorities.

WAG officials organised various roundtable events across Wales between January and April 2010 to discuss the main priorities of the ERP. More than 250 people attended these events which, according to WAG, were held to encourage further engagement with businesses and other stakeholders, gathering their views about the future of the Welsh economy and what WAG could do to help them meet the challenges and maximise opportunities post recession.

Given this detailed discussion with the business community, one would expect that the conclusion from the private sector reflected the four main changes being implemented by the ERP, namely the abolition of grants, a focus on six key sectors, the removal of business support from the majority of SMEs and the spending of hundreds of millions of pounds of public money on broadband.

Unfortunately, nothing could be further from the truth and thanks to the Department for Economy and Transport, which kindly sent me copies of the entire consultation process, I can now reveal details of what was actually said within the roundtable events which took place around the country.

Let’s start by examining the grant system, which has been at the heart of the new economic approach.

According to WAG officials, the perception is that the business community in Wales no longer requires grants and that any new repayable grant system should be limited to certain sectors.

But the consultation process actually reported the opposite - that grants to business were seen as an essential part of a competitive proposition to business. In fact, the message to government was not for the elimination of the grant system but to ensure less bureaucracy, further simplification and a more efficient process.

Similarly, the overall view regarding business support was that it was too complex and bureaucratic. However, no one asked for the wholesale abolition of help for small firms in Wales, as has currently happened under the ERP. Indeed, there was no call at all for a focus on six specific sectors, with the main request being a simplification of the business support process.

Finally, in terms of provision of broadband, whilst a third of those who responded to the section on 21st century infrastructure demanded faster broadband, there were more positive responses for investment in transport infrastructure. Certainly, there was no overwhelming demand for government to pay for a superfast broadband for all businesses as we have been led to believe.

Therefore, according to the “most extensive consultation exercise undertaken with the Welsh business community”, there is little evidence of demand for the abolition of grants, the closure of business support, the focus on six sectors and increased government expenditure on broadband. Yet the Minister for Economic Development seems to have been sold the line, from his senior civil servants, that these are the very issues that the business community have requested as being critical.

Of course, it is up to the democratically elected Government to decide the direction of travel for the Welsh economy but it is clearly unacceptable for civil servants to try and wrap their policies in the blanket of business respectability when their own consultation process with the private sector suggests a very different approach.

And as if the reporting of the consultation process itself wasn’t flawed, then the Federation of Small Businesses (FSB) which has 10,000 members in Wales, has now suggested that their “members felt that the engagement during the meetings with businesses during the Economic Renewal Consultation period was not genuine, and felt that uncomfortable leading questions were pitched at them regarding choosing between whether they’d prefer investment in infrastructure or direct business support.”

That is a damning indictment of the whole consultation process and there must be doubts as to whether those leading the Department of Economy and Transport can ever be taken seriously again by the business community.

In fact, these revelations follow heavy criticisms of the Department of Economy and Transport by the previous Minister, Andrew Davies, who said that he held senior management and senior civil servants responsible for the effective waste of £100m of public expenditure under the Technium programme.

In addition, an independent report from internal WAG auditors heavily censured the way the department was being run, highlighting management weaknesses that exposed the department to "significant risk".

And last month, the Assembly’s Enterprise and Learning Committee has stated, quite unequivocally, that they are still unclear as to how “delivery of the Economic Renewal Programme will be any different if the Welsh Government’s senior management team will essentially remain the same, albeit within yet another new departmental structure.”

Clearly, these revelations and criticisms should make the current Minister for Economy and Transport consider carefully whether his organisation is truly fit for purpose and the right people are in place within his senior team to take Wales forward out of recession.

Indeed, given the fact that Wales continues to languish at the bottom of the UK prosperity league table, it is the least our business community deserves.