THE STATE VS THE FREE MARKET

THE GEOGRAPHICAL FOCUS OF BUSINESS SUPPORT IN WALES

Yesterday, I showed the discrepancies in support across Wales for the Labou-Plaid's flagship economic initiative, the Pro-Act scheme.

Today, I can reveal the similar discrepancy that exists with regard to business support across Wales. According to a Freedom of Information request made to the Welsh Assembly Government, data has become available regarding the "offers of financial support" that have been offered/committed to businesses  across Wales for the period 05/07/2010 - 02/02/2011.

Offers totalling £50.15 million in financial support has been made to 180 companies during this period. However, as with the Pro-Act Funding, nearly half of this has been concentrated in four counties.

Wrexham, once the manufacturing powerhouse of the Welsh economy, has received the lowest amount of financial support, with only two businesses helped by WAG. The Vale of Glamorgan has only been awarded 0.5 per cent of the funding on offer, which has gone to just three companies.  More relevantly , businesses in some of the poorest counties - including Anglesey, Blaenau Gwent and Merthyr Tydfil - have received some of the lowest levels of support in Wales.

Is there a pattern emerging here where funding is focused on certain counties in Wales? Certainly, location seems to becoming a key factor if you want to receive any type of government support from the Welsh Assembly Government.

PROACT AND ITS EFFECT ON DIFFERENT PARTS OF WALES

Whilst a row broke out earlier this month between Labour and Plaid Cymru over which party was responsible for developing the Pro-Act scheme, no-one seems to have examined or considered the relative impact that the programme has had on different parts of Wales.

Thanks to a report written by the Assembly Members’ Research Service, the differences in ProAct funding to businesses across Wales can now be revealed.

According to WAG's own data, nearly half of the £27 million of funding went to 90 businesses in the four counties of Neath Port Talbot, Carmarthen, RCT and Swansea. Given the way that ProAct was largely promoted by WAG towards manufacturing companies (although it was not exclusively geared towards this sector) this geographical focus in counties along the M4 corridor is not unexpected.

However, with Labour and Plaid Cymru constantly describing the scheme as being a panacea for the economic issues across the whole of Wales, it is surprising to see that companies based in some counties in Wales received very little support.

For example, let's examine the local economies of the constituencies of the two top men in the Welsh Assembly Government, both of which have been claiming credit for the Pro-Act scheme. Bridgend received only 1.3 per cent of the total funding for Pro-Act whilst in Anglesey, only five companies were supported.

Similarly, businesses in the Vale of Glamorgan, where the Finance Minister of the last Welsh Assembly Government is based (and whose party suggest that she should take credit for the development of Pro-Act) has received only 0.5 per cent of the funding which has helped just 6 companies and 42 employees.

The two counties receiving the lowest amount of funding have been Ceredigion and Conwy, with only a single company supported in the former and three companies in the latter. This is despite both Plaid Cymru AMs representing both counties going out of their way to praise the scheme.

For example, Elin Jones "specifically highlighted the work during the recession including over 10,000 people saved from redundancy due to Ieuan Wyn Jones AM’s ProAct scheme" whilst Gareth Jones also noted that "with schemes such as ProAct and ReAct, and the strategic use of capital funding, the Plaid driven government is doing all in its powers to help the people of Wales to weather the current economic storm".

Therefore, whilst there seems to have been a general acceptance that ProAct was good for the Welsh economy as a whole, this data shows that is simply not the case and has been largely concentrated in a small number of businesses based in a few counties.

WHAT WILL BE THE EFFECT OF AV ON THE WELSH ASSEMBLY ELECTIONS?

As the main focus of the Welsh media is quite rightly on the National Assembly for Wales elections, it is easy to forget that there is another poll taking place on that day, namely the referendum on the Alternative Vote system.

To those who follow politics, there remains some debate over whether the AV vote will have any effect on differential turnout within this election.

For example, will more Liberal Democrat voters, rather than staying at home following the battering their party has received in the press and by the polls, actually come out and vote for AV and then, at the same time, give their vote to their party?

Equally, given that the latest AV poll shows that two thirds of Conservative voters are against any changes to the current first past the post system (by far the highest proportion of any UK political party), will the normally Assembly reticent traditional wing of the Conservative Party come out in droves on May 5th to oppose the AV vote and, at the same time, vote for their local Conservative candidate in the Welsh election?

Certainly, the UK's most popular political blog seems to think that there is certainly a correlation between areas holding other elections and the No vote. Yesterday's article by Mike Smithson suggests that recent polls are indicating that the No vote is stronger where other elections are taking place, as the graph below indicates from the ICM poll.

Of course, Mike points to the fact that those voting in areas with other elections are more likely to vote No. However, given that 66 per cent of Conservatives, higher than any other party, are intending to vote against the AV system, what does this mean for local and Assembly elections were turnout is normally lower than for the General election?

The AV vote has, to date, been largely ignored by BBC Wales, ITV Wales, the Western Mail and the Daily Post. Yet it is clear that the “English” media, which still dominates in Wales through the national press, will begin to focus heavily during the next fortnight on the debate between AV and the first-past the-post system, especially given its potential for creating rifts within the Coalition Government.

So, ironically, could turnout in the Assembly election, which still remains below half of those entitled to vote, actually be boosted by the other poll on the day and therefore skew the expected result completely? We will find out in just over a fortnight.

THE PRIVATE SECTOR IN WALES IS TOO SMALL?

Last year, the First Minister, in an interview with Andrew Marr, made the statement that "our problem is...that our private sector is too small. We have to do more to unleash the entrepreneurial spirit that does exist in Wales".

As the previous blogpost argues, there seems to be little within the Labour manifesto to "unleash the entrepreneurial spirit" as Carwyn Jones suggests, especially given their new policy focus on large companies in Wales.

Indeed, in previous interviews, he has emphasised the point that, stating that  “It’s sometimes said that the public sector in Wales is too large. I disagree; the public sector appears large because the private sector is too small.”

But what has happened to the private and public sectors during the last Assembly Government?

Examining data for public and private employment in wales shows that during the first three years of the Labour-Plaid administration:

•  private sector employment in Wales had reduced by 34,000 in June 2010, a fall of 4 per cent as compared to June 2007. The biggest falls were to be found in Blaenau Gwent (-19%), Torfaen (-14 per cent) and Conwy (-11 per cent), all local authorities within the European Union Convergence areas of Wales. 
• 69.2 per cent of all employees in Wales are to be found in the private sector. The highest proportion of private sector employment by county is to be found in Flintshire, Pembrokeshire, Caerphilly, Newport and Monmouthshire.
• public sector employment increased during the same period by 11,000 (or 3 per cent). Interestingly, the biggest beneficiaries during this period were not only Ceredigion (21% increase) and Isle of Anglesey (16% increase) but two counties which had seen a fall in private sector employment - Conwy (15% increase) and Blaenau Gwent (15% increase). 
• Overall, 30.8 per cent of all those employed in Wales are to be found in the public sector in June 2010. The counties with the highest proportion of public sector workers are Ceredigion (35.6%), Isle of Anglesey (35.6%) and Cardiff (35.4%)

So what we find is that the Welsh public sector has continued to grow under the last Assembly Government whilst the Welsh private sector has declined.

If we look at the statistics available for Wales for the period 2001-2010, we see that the private sector in Wales has been declining in relative importance, at least in terms of employment, since the First Assembly Government.

In fact, during the period 2011-2010, the actual number of those employed in the public sector in Wales has increased by 67,000. In contrast, the number employed in the private sector has declined by 12,400.

The First Minister may be correct in saying that the private sector in Wales is too small but, as the statistics above show, there has been little success by successive Labour-led governments in Wales in addressing this issue during the last decade.

Indeed, assuming the premise, from the statements made during the last few weeks- that Labour politicians do not want to cut any public sector jobs in Wales - then to achieve the balance of private:public sector employment last seen in 2001 i.e. ensuring that our private sector is not "too small", the Labour Party would need to create an additional 170,000 private sector jobs over the term of the next Assembly to achieve this.

Unfortunately, there seems to be little evidence within their manifesto that they have any plan to go any way towards making this a reality.

C.B.A.T.B.A. - LABOUR AND THE WELSH ECONOMY

I have just had an opportunity to briefly examine the Labour Party manifesto for the 2011 Assembly elections.

The opening line in the section on the economy, entitled “Standing up for growth and sustainable jobs”, states that “Wales faces significant economic challenges and the next Assembly term will be a critical period for the Welsh economy”.

Yet, the rest of the section is a major disappointment, and for a so-called progressive party with a radical manifesto, I can see no major far-reaching policy innovations that will radically change the direction of the Welsh economy and prevent it from languishing at the bottom of the UK prosperity league table.

It is notable that there is a tacit admission that their current strategy - the Economic Renewal Programme (ERP) - has got it largely wrong on focusing only on six key sectors. As the manifesto notes,

“In building upon the support for the sectoral approach of the Economic Renewal Programme Welsh Labour also recognises that much of the existing economic base of Wales and future projections of job growth and wealth creation lie outside the six key sectors, in areas such as business services, construction and tourism”.

So, here we have the main party in Wales admitting that the ERP’s main policy of focusing support on a companies in a few key sectors, one which they supported without question for the last ten months, is not only wrong but which flies in the face of existing evidence.

Such a statement may not be the final nail in the coffin in the ERP, but is certainly an indication that it will not last long under the next Assembly Government.

However, the biggest disappointment is that Labour simply have not learnt the lessons of the past and the fact that it is entrepreneurs and the SME sector that drive job growth out of a recession, not the large firm sector. Indeed, they continue to argue, erroneously, that

“Much of the economic base of Wales is founded on large companies and they are vital to many parts of Wales” and that they will “Continue to build strong links with our anchor companies and develop strategic, mutually supportive/beneficial relationships with these key companies, embedding them in the Welsh economy through developing close links with our further and higher educational institutions and maximising supply chain opportunities”.

The only sop to the critically vital SME sector is that Labour will “Review what entrepreneurial support is needed by start-up and small firms (SMEs), with real potential to thrive and grow, and how we can embed an entrepreneurial culture in Wales”.

Considering that the last Assembly Government has allegedly spent a small fortune on this very exercise already through the ERP, is that all that Welsh Labour can offer SMEs in Wales?

Do we really need another business support review that will no doubt take months and come up with yet another strategy that will prove to be largely useless?

Certainly, Labour’s continuing ambivalence towards entrepreneurs and small firms in Wales remains an open goal for the other three parties, especially as they seem to be the only major party that has no policy on reducing business rates for small firms.

Given the critical importance of firing up the Welsh economy, this is a disappointing document from Wales’ largest party and frankly, it would seem that they have learnt nothing from the last 12 years of running Wales. I see nothing substantial here that will change the direction of the Welsh economy, especially within its more deprived communities, and if Labour do retain power after May, then it is clear that we will not see the radical change necessary to stop Wales continuing its downward economic spiral.

One of the sayings popular with my son and his friends is "C.B.A.T.B.A" which translates from teenager lingo into "Can't Be Arsed To Be Arsed". Having read their proposals for the Welsh economy, I think that statement perfectly defines the attitude of the Welsh Labour Party towards supporting the Welsh business community.

WOEFUL WELSH PERFORMANCE ON EUROPEAN FUNDS

In February, I referred to a report on the European Commission’s Framework 7 funding programme and the under-performance of Wales in accessing the funds available i.e. that as of 2010, Wales had secured €39 million euros in research funding.

Contrast that with the news for Ireland yesterday that, during the same period, our Celtic cousins had attracted €269m and were on course to secure €600m in research funding to Irish researchers and enterprises by 2007 to 2013.

Given some of the lackluster commitments by Welsh politicians to improving the research competitiveness of our economy, it is worth reading what the Irish Minister for Research and Innovation Sean Sherlock had to say:

“Thanks to national investment in research, Ireland is participating in the Framework Programme from a far stronger position than ever before. A critical mass of research activity has developed in both the public and private sectors and the design of the current programme suits the needs of Irish researchers in many ways”.

WAG civil servants take note – there is not only a proactive strategy for obtaining European funding in Ireland but the government is helping to develop the capacity of the private sector through European funding.

After 12 years of devolution, we really should be doing better.

COMMUNITIES FIRST OR LAST?

Given the row that has erupted today over the alleged future of the Communities First scheme, it is worth noting the conclusion of the Assembly's public accounts committee last year, which stated that Communities First "has not delivered good value for the significant amount of public money spent on it".

According to the Committee, this was largely a result of "weaknesses in the Welsh government's construction and management of the programme...we are particularly concerned that the Welsh government provides insufficient direction to service providers and is not adequately monitoring the programme."

Indeed, the Committee was spot on on the deteriorating state of the programme, although this is hardly news to those of us who have been commenting on this area.

For example, back in July 2007, I noted that "the (Communities First) programme has been accused of adopting a top down approach that has largely focused on the administration of the programme and becoming yet another bureaucratic jungle for individuals and communities to navigate through. Such organisational and operational problems have culminated in the scandalous position of £6 million of Communities First funds allocated to our poorest communities being returned unspent to the Assembly Government last year (2006)".

As an article in the Economist from a year ago pointed out, the biggest obstacle in developing poorer communities is likely to be the inertia of the bureaucratic, rule-bound public sector. It also notes that success may depend on the emergence of a subgroup of social entrepreneur that (are called) “civic entrepreneurs”, who can navigate the treacherous waters of bureaucracy.

Given the difficulties within social enterprise programme such as Communities First, the question is not whether we have such civic entrepreneurs in Wales, but whether any are ready to put their heads about the parapet and make a difference within their local communities?

More relevantly, will the civil service in WAG become less anally retentive about their micro-managerial approach to any type of community that receives public money?

FREEDOM OF SPEECH AND EXPRESSION

"Give me the liberty to know, to utter, and to argue freely according to conscience, above all liberties."

John Milton

"If we don't believe in freedom of expression for people we despise, we don't believe in it at all".  

Noam Chomsky

"I disapprove of what you say, but I will defend to the death your right to say it."

                                                                                                                      Voltaire

"For a nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people". 

                      John F. Kennedy

"If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter."

George Washington

"A people which is able to say everything becomes able to do everything".

                                                                                                    Napoleon Bonaparte

"The test of democracy is freedom of criticism".

                                                             David Ben-Gurion

START-UP WALES

Earlier this week, a new initiative was launched to encourage greater entrepreneurship across the UK.
Start-up Britain, backed by the UK Government as well as 60 global brands such as Axa, Barclays, BlackBerry and Google, as well as the Government, will offer up to £1,500 worth of special offers to people setting up a new business.

It will also support competitions to encourage greater entrepreneurship, offer entrepreneurial work placements and provide free mentoring to those looking to start a new venture.

Sir Richard Branson, one of the backers of the initiative, rightly said that “firing up a new generation of entrepreneurs will be a crucial part of our recovery and essential for creating sustainable growth in Britain over the next decade and beyond.”

Yet, in Wales, there is a sense of déjà vu about all of this.

Back in 1999, the private sector led Entrepreneurship Action Plan (EAP) was launched as the first regional enterprise strategy of its kind in the World.

True, it was administered by the Welsh Development Agency (WDA), but fully involved business, higher education and voluntary bodies in its design and implementation.

Its success is clearly demonstrated by the fact that, between the period 2002 and 2004, the number of new enterprise births in Wales went up from 8,970 to 11,525, an increase of 28 per cent. The EAP, with its strategy for increasing entrepreneurial activity, was at its zenith during this period before being closed down by the Welsh Assembly Government in 2005.

And what has happened since?

During the period 2004-2009, Wales then experienced a 28 per cent decrease in the number of new businesses being created in Wales. In contrast, the average decline in the number of new business births across the UK as a whole was 15.7 per cent whilst the number of new firm starts in Scotland had actually increased by 2.4 per cent over this five year period .

In terms of employment, this fall in the number of new business starts has meant that around 10,000 fewer businesses have been created in Wales since 2004, impacting directly upon the number of new jobs within the private sector economy and a loss in turnover to the Welsh economy of around a billion pounds.

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 since been relegated to the fringes of economic policy.

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.

Clearly, something has gone drastically wrong for Wales to go from having a high rate of entrepreneurial activity driven by one of the most admired entrepreneurship strategies in Europe (and which was copied by the European Commission itself) to having one of the worst performances for business start-ups in the UK.

Entrepreneurship needs to be one of the major driving forces behind the Welsh economy as we emerge out of recession. Whilst I hope that we will have a government after May that would be bold enough to admit the mistakes of the past and reintroduce the EAP immediately, I have become too cynical in my old age to imagine that the pinstriped army that advises ministers would be so bold and imaginative.

So, like Start-up Britain, perhaps what we need is to get the private sector in Wales to drive forward such an initiative. Could we, under a Start-Up Wales brand, see major brands supporting new businesses in our economy?

Would Admiral be prepared to offer reduced discounted insurance to new firms? Could BT Wales provide free broadband for the first 12 months of a new business?

What about some marketing support from organisations such as MediaWales?

Given that lack of financial skills is the key reason as to why half of businesses fail within the first three years, would large accountancy companies in Wales such as PWC, Deloitte’s and Grant Thornton be prepared to offer simple training to entrepreneurs on the basics of finance?

Could law firms such as Eversheds, Morgan Cole, Capital Law and Hugh James together provide a free legal helpline to those starting a new venture? What about the Welsh branches of banks such as HSBC, Lloyds, NatWest, Barclays and Santander coming together to organize a national business plan competition for young entrepreneurs?

Would our top entrepreneurs, such as Sir Terry Matthews, Steve Morgan, Henry Engelhardt and Laura Tenison be prepared to give their time as entrepreneurial ambassadors to encourage and enthuse the next generation of business tycoons?

The list of what can be done to help develop a greater entrepreneurial spirit and culture in Wales is endless.

Given the shameful decline in the number of new businesses being created over the last six years, perhaps the time has come for the private sector in Wales to step up to the plate and do what the Welsh government is unable or unwilling to do.

Certainly, it could only benefit the Welsh economy if our business community chose to take up this challenge.

REMEMBERING BRYNLE

Like everyone else in North Wales, we all knew Brynle Williams as the farmer who very nearly brought down a government.

As one very astute political observer later told me, one more week of fuel protests and Tony Blair would have had no option but to resign, and imagine what a very different world we would have been living in today.

I first met Brynle at a BBC Christmas party in Bangor in 2001, where both of us had been invited as regular contributors.

Over a few glasses of wine, the conversation turned to politics and as neither of us were members of a political party at the time, we had a very open discussion.  Naturally, I asked Brynle whether he would be interested in standing for the Assembly and in his usual honest style, he said yes but had not decided which party could have him!

With Brynle, despite the twinkle in his eye, you were never sure whether he was being serious or not but would anyone really doubt that Brynle was anything but one of the most natural Conservatives they would ever meet?

Later, when I decided to take the plunge into politics, Brynle was one of the first to congratulate me on my nomination for Aberconwy. Afterwards, he sort of took me under his wing and insisted on introducing me to as many friends within the farming community as he knew, taking me to the mart in Llanrwst and around various villages in the Conwy Valley where always stopped to have a chat with people. In fact, as a leafleter he was a nightmare as he would barely get around ten houses in an hour because everyone wanted to have a chinwag with him!

The picture above is when I went over to the Anglesey Show and bumped into Brynle at the Federation of Small Businesses stand. He insisted on dragging me around to meet everyone, and was gladhanded by almost every person we passed on the field. He was even greeted by a chief inspector in full uniform, after which Brynle said "Funny how being a politician makes people forget your past. That b****r tried to have me arrested at Holyhead for throwing burgers into the sea!"

Unorthodox in all things, he was never one for sticking to the script. I remember my first party conference in Cardiff when we had all been told, as candidates, to keep strictly to a five minute speech. Not Brynle - he just walked on stage and let rip with a stream of consciousness about everything and anything that popped into his mind. Ten minutes later, he was still going strong and giving the organisers a nightmare as a senior shadow Cabinet member was due to follow him.

Perhaps my two best memories of Brynle are in the final days of the Aberconwy campaign in 2007.

We were both in Trefriw in the Conwy Valley - a nightmare for canvassing as half the village is on the side of a hill. Brynle naturally said that he would do the bottom stretch whilst leaving the hillier sections to me.  After about an hour, I came back down to see Brynle hovering outside a cafe looking like a naughty schoolboy. He beckoned me over pointed inside and said, "come with me and say nothing" and dragged me into the premises. There sitting, having lunch, was Denise Idris Jones, the Labour candidate. Brynle sort of feigned surprise at seeing her (even though he had been waiting outside looking in through the window for ten minutes) and then introduced me as his great friend who was going to do great things in politics (he was half right!).

I have never seen someone gulp their lunch down so quickly and leave. Brynle, of course, found the whole situation totally hilarious whilst I stood there doing an impersonation of a fish out of water.

Then there was the night of the count itself. At around 11pm, Brynle had set up court in the lounge of the newly refurbished  Cae Mor Hotel next to Venue Cymru in Llandudno where the votes were being counted. With a bottle of white wine in front of him, he was relaxed and looking forward to starting his work again the following week.  He said to me that I shouldn't be too disappointed if I didn't win as there was certainly more to life than to politics. However, he did say to me that if I chose to stand again in any winnable seat in North Wales, that he would want first refusal!

A couple of months ago, I was abroad when I had a missed call from Brynle. I did return it when I got home but it went straight to answerphone and it is a regret that I didn't get the chance to speak to him then.

Brynle was truly one of a kind.  In a world where political parties turn out candidates that, at best, are bland, unopinionated and slavishly follow the party line, he was a breath of fresh air and a bit of a rebel in his heart, which is probably why we got on so well!

I shall miss him, and so will Welsh politics.