“The Entrepreneurship Action Plan should be reintroduced to act as a focal point for encouraging new business start-ups across Wales.”
Wales has experienced the largest decline in the number of new businesses being created since 2004. In order to create an enterprising and innovative economy, there is a need to encourage greater opportunity to develop entrepreneurship, especially within our more deprived communities.
The UK innovation agency NESTA released a new report on innovation indicators which indicated that a dynamic enterprise culture is essential for innovation i.e. a high birth rate of new businesses will drive competitive markets. As discussed earlier, Wales has experienced the largest decline in new business starts of any UK region, a situation that could have a serious knock on effect on the innovative capacity of the Welsh economy, regardless of the increased spending on research and development within the University sector. A UK Treasury study reported that successful entrepreneurship has the potential to help deprived areas through lowering unemployment not only through residents creating their own employment, but also indirectly through multiplier effects in the community and via other social contributions. The decline in the number of new businesses across West Wales and the Valleys could impact upon the ability of these poorer communities to recover. If we are to create a strong and vibrant economy, then we need to see an increase, not a decrease, in the number of entrepreneurs in Wales.
Contrary to the current thinking within WAG, the statistical evidence shows that SMEs remain the major job creators within the economy. A recent study from the Kauffman Foundation reveals that, in their first year, new firms add an average of 3 million jobs. Similarly, WAG’s own data on firm structure shows that, during the period 2003-2010, 70 per cent of all employment growth in Wales during the period 2003-2010 came from SMEs i.e. 68,000 jobs. There are also clearly geographical differences in the influence of large firms across Wales. For example, 46 per cent of employment in East Wales in 2010 came from large firms as opposed to 36 per cent in West Wales and the Valleys i.e. small firms are driving employment within our poorest communities, a fact that is yet again being ignored by policymakers in Wales.
The Way Forward
It cannot be a coincidence that the decline in the business start-up rate began after the abolition of the Entrepreneurship Action Plan (EAP) for Wales and the merger of the WDA into WAG’s Department of Economy and Transport. Whilst creating a more entrepreneurial Wales was at the heart of the WDA’s mission, predominantly through the successful implementation of the EAP and its promotion of an enterprise culture, it has been relegated to the fringes of economic policy by the new regime within WAG. This is despite the proud fact that Wales was light years ahead of any other part of Europe in terms of developing an effective regional enterprise strategy, a competitive advantage that was thrown away because of the whims of politicians and policymakers who failed to understand the long term strategy needed to create an environment in which entrepreneurs are encouraged and supported to flourish and create wealth and employment. Therefore, the Entrepreneurship Action Plan should be reintroduced to act as a focal point for encouraging new business start-ups across Wales and in developing social enterprise as a key part of the delivery of that strategy.
 NESTA (2009)The Innovation Index - Measuring the UK’s investment in innovation and its effects
 Kane, T. J. (2010) The Importance of Startups in Job Creation and Job Destruction, Kauffman Foundation, July 2010.
 Welsh Assembly Government (2010) Size Analysis of Welsh Business, 2010, October 27th