Tuesday, May 31, 2011


Western Mail column 28th May 2011

Last week, the Welsh Conservatives released data which seemed to imply that the Welsh Government has used the current round of European funding to subsidise its own programmes rather than supporting projects developed by the business community.

According to a press release from Shadow Minister for Business, Andrew RT Davies that landed in my in-tray last week, £665 million of European Funded Convergence grants has gone to fund 68 projects sponsored by the Welsh Assembly Government. This represents 48 per cent of all the funding awarded since 2007.

Other recipients of European grants funding include the local authorities (£320 million), university sector (£207 million), the voluntary sector (£121million), government sponsored bodies (£51 million) and further education (£13 million). In contrast, private sector sponsors have received only £7 million of grants for six projects.

To many working within the private sector, this is extremely disappointing news, especially as this performance is even worse than the previous major funding programme - known as Objective 1 - when only 13 per cent of the £1.3 billion programme earmarked for the poorest parts of Wales went to private sector projects between 2000 and 2006.

During the election campaign, we heard a lot from politicians about how we should grow the private sector in Wales and I am sure it will be pointed out that a considerable of the funding awarded to public sector bodies via European funding will then be targeted to support private sector companies.

That may well be true but I have heard many complaints from businesses that they have been actively discouraged from the labyrinthine processes for applying for funding directly. More relevantly, they argue that many of the programmes being developed have little relevance to the real needs of Welsh business.

Indeed, many have expressed the opinion that the Welsh Government remains reluctant to make the most of business expertise and experience in the development and delivery of regeneration programmes such as those provided through £2 billion of European funding.

Rather than working with, and listening to, the private sector, it has been suggested to me by leading businesspeople in Wales that there has been an air of entropy that is content to continue with the status quo that has resulted in the poor performance of our economy during the last decade.

Of course, we now have a new Minister in the department responsible for the promoting business and the economy and one can only hope that she will take a very different approach to her predecessors in bringing in business expertise to support the army of civil servants at her disposal.

However, it is not only in relation to economic development that business can help and we all know that the private sector has much to offer the Welsh Government, from advice on key issues across departments to supporting the supply of vital public services.

For example, there is growing evidence that the private sector can make a real contribution to
ensuring that the Welsh budget is fully realised for the nation, especially at a time when the funding from the Treasury to Wales is reducing.

According to the CBI and other business representative groups, there is enormous potential for Public-Private Partnerships (PPP) in improving services by delivering efficiency savings. These can provide value for money for taxpayers, increase government transparency and financial accountability and encourage long-term collaboration through genuine partnering, resulting in enormous savings could be made for investment in front-line services.

In addition, there could be the leveraging of significant private sector investment for new projects and the opportunity to access private sector technical, management, and financial resources and expertise. Public sector managers could then focus on delivering their key services, rather than managing projects which take them away from their core business.

Since the National Assembly for Wales was created, there has been a moratorium by the Welsh Government on private sector involvement in areas such as the NHS. However, this has not stopped other parts of the public sector from working with businesses. For example, the Welsh Local Government Association has agreed that private companies should have greater involvement in delivering council services, which could result in projects such as new schools being built through money provided from private funding.

If our economy is to recover, then the new Welsh Government must ensure that, where appropriate, the private sector is fully engaged in delivering its strategies and opportunities should be created for Welsh businesses to work more closely with the public sector.

Certainly, if we are to drag ourselves from the bottom of the prosperity league table for the UK, the private sector must be fully engaged by politicians and civil servants as a key partner in helping government to improve public services and, more importantly, to create wealth and employment in the economy.