Tuesday, March 8, 2011


“The general consensus from the business community, according to WAG’s own consultation regarding the ERP, is that business support should be streamlined and made less bureaucratic, rather than abolished”

The Challenge  

According to the FSB in Wales, support given to businesses in terms of advice needs to be relevant, timely and properly attuned to individual needs. FSB statistics show a low level of take-up of government funded business advice among businesses even though this support has a key role to play in developing businesses. Decisions should be taken as close to the businesses as possible and not centralised. A top down structure that has given too much power to civil servants replaced the Welsh Development Agency’s decentralised model. The business support programme should therefore be streamlined and simplified, cutting red tape and bureaucracy and ensuring that the right support gets to businesses quickly and easily.

The Evidence

As part of its new Economic Renewal Programme, WAG has abolished its FS4B business support programme for SMEs. It has instead developed a strategic approach to business support that will focus resources on six key sectors only. Yet, evidence suggests that if business support is to be focused on growing businesses, then a sectoral approach has difficulties. For example, a study from the OECD[1] found that, contrary to the perceptions of many policy makers, only around one third of growth businesses are in high technology sectors. In addition, a recent study for NESTA [2] shows that the Business Services and the Wholesale and Retail sectors provide almost half the high-growth firms in the UK. Therefore, instead of adopting a sectoral focus, WAG should have an increased focus on improving the quality and appropriateness of support with limited resources, keeping in touch with the changes in the small business community and managing the network of Welsh private sector expertise. 
As Wales emerges out of recession and firms begin to consider further investment opportunities, the demand for business support is likely to increase substantially in Wales. Whilst parts of the private sector – such as accountants and lawyers - may well take up the slack in some of the more prosperous areas, it would be expected that a gap in support will emerge in those areas which are currently in receipt of European Convergence Funds. If an increased number of firms do not get support, then it will give them less chance to maximise their potential for job creation and reduce their competitiveness, thus compounding the low levels of economic activity within these more deprived communities.

The Way Forward

The Commission noted that the abolition of the Welsh Development Agency in 2006 was a serious error in the delivery of economic development policy by the Welsh Assembly Government. Whilst the WDA can probably never be resurrected in he same form, the principles of a customer facing business support must be re-established. The general consensus from the business community, according to WAG’s own consultation regarding the ERP is that business support should be streamlined and made less bureaucratic, rather than abolished. 
The Welsh Conservatives believe that there should be a more efficient support system to new and existing firms. All businesses have the capability to add value to the Welsh economy although business support should be tailored according to the stage of growth of the venture. For example, all new businesses should receive some initial mentoring support whilst “gazelles” – those firms with high growth potential – should receive more tailored support that will help develop their company further.  
We need to maximise the expertise and experience of the private sector in providing the right level of business support with the minimum amount of bureaucracy and red tape.

The Welsh Assembly Government should therefore:

- contract out all business support services but ensure that deliverers will be held fully accountable for results and contracts withdrawn if they are not delivered
- ensure that those deliverers take into account the differing way that support needs to be tailored for women, ethic business and social enterprises, because of the way they approach business, cultural constraints and the balancing of social and financial objectives
- avoid duplication across government departments by merging all support to business into one central service, including human resource development advice, currently based in DCELLS, and the support for tourism businesses that is currently within the Department for Heritage. This will minimise duplication of business services and cut down on red tape.

[1] OECD (2007) High growth enterprises and gazelles, OECD, Paris.
[2] Anyadike-Danes, M., Bonner, K., Hart, M. and Mason, C.  (2009) Measuring Business Growth - High-growth firms and their contribution to employment in the UK, NESTA Research report, October 2009SMALL