Monday, January 21, 2013


Earlier this week, the Welsh Government launched an independent review to examine access to business funding in Wales.

It will be carried out in two parts – the first will examine the extent that High Street banks meet the funding needs of Welsh businesses, focusing primarily on the requirements of SMEs (Small to Medium Sized Enterprises).

The second part will look at alternative sources of funding for businesses and the role that the Welsh Government can play in facilitating their development.

As this blog has pointed out on numerous occasions during the last decade, access to external finance for both start-ups and existing businesses in Welsh businesses is fundamental to sustainable economic growth.

I was therefore delighted to accept an invitation from the Minister for Business to head up this review to examine whether SMEs in Wales can get the finance they need to sustain their current operations and support their growth ambitions.

Currently, one of the major brakes on growth is the perception, rightly or wrongly, by the small business community that accessing finance is proving difficult in the current economic climate.

In fact, many business owners I have spoken to during the last four years have voiced their concerns that, in many cases, they simply cannot get money from financial institutions to grow their ventures.
Others have noted that when they do approach the bank, it inevitably results in a review of their finances that, in some cases, results in reduced banking facilities - such as a cut in their overdraft limit -rather than the increased funding initially expected.

On the other hand, when I talk to acquaintances in the banking sector, they say that there is plenty of funding available to support the sector and the problem is actually a lack of demand from small firms as a result of a cautionary approach within an uncertain economic environment.

Therefore, a key part of the review will be to move past the rhetoric and examine the reality of the situation, the solutions required to getting capital flowing into the Welsh business community and what the Welsh Government can do to facilitate and support this process.

I am also keen to be able to look at the regional context across the UK and examine detailed data on banking finance and practices to determine whether Wales is, in any way, disadvantaged when it comes to current lending practice.

For example, it has been reported that certain banks are ‘blacklisting’ certain sectors and, as a result, no finance is available within such sectors. If this is true, and banks are less inclined to lend to sectors such as leisure, this could have a real impact in Wales, as compared to other UK regions, given the higher contribution of the tourism sector to the economy.

Senior bankers have also told me that a future trend will be for banks to move away from supporting smaller businesses and having a greater focus on mid-sized firms that have real potential for growth.

Again, with Wales having a higher proportion of small firms and a lower level of mid-sized businesses than most other regions of the UK, this could also have serious consequences for the ability of the business community to obtain finance to develop further.

I am also fortunate not to be doing this on my own and have the support of an excellent advisory board that not only consists of some of the leading academics in banking and small business finance but also professionals and businesspeople who have been there, done that, and worked with small firms or grown them themselves. They include:

  • John Antoniazzi, former partner at Deloitte in Wales;
  • Katy Chamberlain, Chief Executive of Business in Focus;
  • Professor Robin Jarvis, Head of SME Affairs, The Association of Chartered Certified Accountants (ACCA) and Professor of Accounting, Brunel University;
  • Professor Phil Molyneux, Dean of the College of Business, Law, Education and Social Sciences and Professor of Banking and Finance, Bangor University;
  • Huw Morgan, former Head of Business Banking, HSBC Bank plc;
  • Chris Nott, Chair of the Financial and Professional Services Sector Panel and Managing Partner of Capital Law LLP;
  • Professor Stephen Thomas, Professor of Finance, CASS Business School, City University London;
  • Mark Woolfenden, Managing Director, Afonwen Laundry

Their advice and wisdom will be vitally important in determining the real facts behind the current situation.

During the next couple of months, I will be discussing this challenge with financial institutions, academics and other key stakeholders in the supply of money to business, including officials from the Bank of England and the UK Treasury.

However, what is really critical to this review is that we get to understand the real situation faced by businesses in Wales and I would urge as many as possible to respond positively to the call for evidence.

A linkedin site “Access to Business Finance Review” has already been set up at which comments can be left, and there is a dedicated webpage on the Welsh Government’s site that contains full details of how to respond to the call for evidence.

I will also be contacting as many business owners as possible during the next few weeks to ensure that we get as full a picture as possible, both good and bad, of their experiences of dealing with financial institutions.

If there is a major issue with businesses accessing finance in Wales, then I can assure you this review will not only get to the heart of the matter but will come up with practical recommendations that, if necessary, can be implemented to ensure that funding is available for those businesses that want to grow and create jobs within the Welsh economy.

Wednesday, January 16, 2013


Last Thursday, I was privileged to speak at NESTA’s annual roadshow to encourage greater innovation in Wales.

As a charity devoted to promoting and developing innovation across the UK, the event was a perfect opportunity to showcase the work they are already doing in Wales and to consult on how to promote further innovation in the economy.

This includes a research project at the University of Wales that is examining regional innovation within peripheral economies, using Wales as a case study of how academia, industry and government can work together to develop a more innovative economy.

Whilst the project still has some way to go until it is completed, the preliminary results should hopefully have a direct impact on the way that innovation policy is developed within Wales, especially in terms of the commercialisation of knowledge from business and the university sector.

There will be more written on the results from this research project over the next few months.

But it is not only academic research studies that NESTA supports. A number of more practical innovation projects were presented on the day, all of which were very different to each other but showcased how innovation can make a difference.

One of these is “The Big Green Challenge”, a £1 million prize fund for communities across the UK funded by NESTA to develop a plan to reduce carbon emissions.

Only three winners shared this prize in the UK, and one of these was the Green Valleys community interest company in the Brecon Beacons.

With £300,000 to take its ideas forward, it has focused on using carbon reduction as a way to promote economic renewal within local communities through increases in renewable energy generation, developing sustainable woodland, reductions in fossil fuel dependency and promoting local sustainable food production. It is certainly a model that could and should be replicated across other local communities.

Another equally innovative but totally different project supported by NESTA is the Welsh Crucible project. Led by Cardiff University, this is a programme of personal, professional and leadership development for highly promising young academics who are building their careers in Wales.

It aims to help participants to discover how other early- to mid-career researchers in other disciplines are tackling the same issues as them, the skills and attitudes that are likely to make their research more innovative, and how thinking creatively can make a difference to their work and career.

And as readers of the Western Mail will have discovered through a series of articles last year, it is also supporting young researchers to transfer their knowledge to the public sphere to make an impact thus demonstrating the real value that exists within Welsh universities.

Finally, there is the Creative Councils programme that has been developed by NESTA and the Local Government Association to support innovators in local government across England and Wales to develop and implement radical innovations that address a long-term challenge that matters in their area.

With only six local authorities funded across the UK, it is great news that one of the most forward thinking councils in Wales has been chosen to participate in this public sector innovation programme. Monmouthshire has used the opportunity to develop the 'Your County Your Way' programme to implementing a cultural transformation within the council to listen and respond more creatively to the needs of its communities.

Central to this approach is an internal training programme, the Intrapreneurship School, which is building innovation skills across all departments within the council, and I am proud that my colleague Richie Turner has been working closely with the team at Monmouthshire to help develop opportunities in this area. Details of the programme are shown in the video below.

Therefore, NESTA certainly is pushing the boundaries when it comes to supporting individuals and organisations to develop new ways of thinking and doing here in Wales but more certainly needs to be done to encourage those with great ideas to come forward to help the economy.

Indeed, too often we have organisations purporting to be supporting innovation when it is merely words on a document rather than real action. As Paul Matthews, the Chief Executive of Monmouthshire County Council, noted in his excellent presentation, "innovation is a mindset" that needs to be adopted across the organisation.

Certainly we need to encourage more private, public and voluntary organisations to think more innovatively and, more important, to act more innovatively if we are to move forward as a nation. The fact that we already have some fantastic projects in Wales to act as trailblazers to others is a massive step in the right direction.

The last word of the event went to Geoff Mulgan, the chief executive of NESTA, who said in his closing speech that "We want to be an ally and partner to all innovators in Wales".

It is an invitation that should be taken seriously and I hope that Welsh innovators will take full advantage of this offer over the next few years.

Monday, January 14, 2013


On Friday, the news broke that 350 jobs were at risk at Welsh Country Foods on Anglesey. This follows a decision by Asda, its major customer, to use another supplier for its lamb.

With the supermarket chain accounting for half of the business at the Gaerwen site, this means that Vion, the owner of the business, has no option but to place its workers on redundancy notice.

The response from Asda was typically vague, suggesting the decision had been taken because of the changing needs of customers, but that they ‘remain committed to sourcing lamb from Wales”.

This commitment to local sourcing would probably be questioned by Scottish farmers, who recently found through a ‘secret shopper’ survey that Asda and its main rival Tesco still give significant shelf space to imported lamb during the peak season in the UK.

Yet, only fifteen years ago, Asda made the momentous decision to cancel all orders for New Zealand lamb to support the UK’s sheep industry, citing the quality of British meat as a key factor.

Where has this commitment gone since then?

Indeed, farmers and consumers alike will wonder why Asda, on its website, is promoting New Zealand lamb under the heading “What Makes Butchers Selection New Zealand Lamb So Good?” when there is no similar advertising campaign for either British or Welsh lamb.

Remember, this is a supermarket that has been given planning permission to build superstores across North Wales with the expectation from councillors that it would try and source locally where possible.

Certainly, if the Gaerwen plant shuts down, where will the twelve Asda stores in North Wales be getting their lamb from? Not from local suppliers if the planned closure goes ahead.

But if Asda cannot be persuaded to buy lamb to keep the plant open, then there must be due consideration as to whether it requires government support as a vital strategic site for farming in North Wales.

As the only major abattoir in the region with over 640,000 lambs are processed annually through the site, its closure would have a significant impact on both the farming and food industry locally as facilities such as slaughtering, boning and retail packaging, all of which add value to the final product, would disappear.

Of course, some would say that this is merely market forces in operation and that if there is not enough demand for Welsh lamb, then why keep the plant open?

That would be short sighted in the extreme. Only last year, the UK became a net exporter of lamb for the first time in 17 years, selling 98,500 tonnes overseas, with France, Ireland and Germany showing strong growth in demand.

Not only that, estimates from the World Bank show that demand for meat production will increase by 80 per cent between 2000 and 2030 mainly due to rising meat consumption in Asia, giving North Wales farmers further potential for exports but only if they have the right plant in place to process their meat.

The fact that, despite this strong growth in overseas sales, the UK still imports over 88,000 tonnes of lamb means that there are also opportunities to sell to British markets, if only some buyers would reconsider their purchasing strategies.

Perhaps Asda, owned by the American giant Wal-Mart, believes that people no longer care about where they buy their products from as long as it is cheap.

But I believe that we in Wales have an enormous pride in our country and what we produce.

And when our farming industry is under threat because of some vague explanation regarding the decision to buy its lamb elsewhere, then hopefully customers across Wales will vote with their feet and buy from those supermarkets and butchers that are proud of having Welsh meat on their shelves.

Friday, January 11, 2013


A great new film has been released which every person interested in entrepreneurship should watch.

Something Ventured tells the story of the creation of an industry that went on to become the single greatest engine of innovation and economic growth in the 20th century.

It is told by the visionary risk-takers who dared to make it happen…Tom Perkins, Don Valentine, Arthur Rock, Dick Kramlich and others.

The film also includes some of our finest entrepreneurs sharing how they worked with these venture capitalists to grow world-class companies like Intel, Apple, Cisco, Atari, Genentech, Tandem and others.

Beginning in the late 1950s, this small group of high rollers fostered a one-of-a-kind business culture that encouraged extraordinary risk and made possible unprecedented rewards.

They laid the groundwork for America’s start-up economy, providing not just the working capital but the guidance to allow seedling companies to reach their full potential. The lives of hundreds of millions of people would be dramatically different without the contributions that these venture capitalists made to the creation of PCs, the Internet and life-saving drugs.

Watch it and learn!

Wednesday, January 9, 2013


The Republic of Ireland was one of the economies hardest hit by the recent global recession.

With unemployment reaching 15 per cent earlier this year and the Irish Government having to make austerity cuts that make those emanating from Whitehall look positively generous in comparison, there remained serious doubts as to whether the Celtic Tiger could recover any of its bite during the next decade.

Yet despite these challenges, the new Irish Government has begun a serious fightback and is continuing to look to innovation as the key driver in growing its economy for the future.

In particular, it is developing key strategies that are focusing on those areas of the economy it sees as being critical in transforming the business sector over the next decade.

One of these is the so-called Green Economy that encompasses a range of activities spread across different sectors that have the common objective of providing goods and services in a sustainable way that reduces the impact on the environment.

These include renewable energy, energy-efficient products, resource-efficient production techniques, the re-use, recovery and recycling of waste, water management and low carbon vehicles.

And it is not surprising that there is a focus by the Irish on the Green Economy that, despite the World’s economic problems, is estimated to be worth around nearly £4 Trillion pounds by 2015 and to be employing round 36 million people around the World.

So how are the Irish going to try and capture a small but significant slice of this important and growing sector?

The clues to this are to be found in “Delivering our Green Potential”, the recent policy statement by the Irish Government on growth and employment in the green economy.

According to this document, Ireland has significant strengths and advantages that it can leverage to exploit business opportunities in the Green Economy.

These include abundant renewable energy resources that raise the prospect of Ireland becoming an exporter of clean energy to the UK in the future and a strong research base that is highly relevant to a number of opportunities.

The country also has excellent natural resources such as clean water, air and land to support sustainable economic development as well as an outstanding natural environment and rich biodiversity to develop and support green tourism and related activities.

More importantly, it has a number of exemplar companies and organisations with a proven track record and international credibility in the Green Economy.

It is a comprehensive document that any politician or policymaker in the UK would do well to read thoroughly. However, in my opinion, five key issues jump out as being worthy of further consideration.

First of all is the role of government itself. Politicians are often accused of commissioning hefty strategic tomes that then lie gathering dust on the bookshelves of their civil servants. A critical part of this document is the high commitment to real action being demonstrated by the Irish Government to ensure that it takes the lead in pushing forward its green policies.

For example, the government has established a clear policy for renewable energy that will further develop wind energy, ocean energy, bioenergy, sustainable transport energy, and the supporting energy infrastructure.  Through this, it aims to achieve a 33 per cent reduction in public sector energy use by 2020.

Secondly, there is appreciation that the green economy can be applied across all sectors. Indeed, the Irish Government has now engaged in growing a green financial services industry as a key niche i.e. those capital markets, investment-banking activities and related advisory services that support the development, financing and promotion of a low carbon economy.

With global investment in this niche sector predicted to grow fourfold to over £600 billion by 2020, Ireland is looking to develop its reputation as a world-class green financial management hub. Indeed, green assets under management in Ireland have tripled in the past four years.

Thirdly, there is the continuing commitment to supporting green innovation through encouraging and facilitating collaboration between the university sector and the business community, predominantly by prioritising research in areas such as smart grids and smart cities, sustainable food production and processing, and marine renewable energy.

One excellent example of this is the Irish Maritime and Energy Resource Cluster (IMERC), which is a collaboration between Government Departments, state agencies, higher education institutions and industry partners led by University College Cork. IMERC is aimed at using the expertise and experience of researchers, teaching staff and naval personnel on the development of an ecosystem of innovation in the maritime sector and is underpinning Ireland’s position as an early leader in the ocean energy sector.

Fourthly, there is the issue of skills. It is widely recognised that the green economy often relies on jobs with specialist knowledge and expertise, especially in the fields of engineering, science, technology and mathematics. As a result, universities, as well as further education colleges, are being encouraged to align their courses with the needs of companies within the green sector in Ireland.

Finally, and most importantly, there is the key issue of branding and the drive to create an established international image to promote Ireland’s “Green” offering. In particular, this green image will be focused on attracting potential inward investors that are looking to base their operations within an environment that supports green policies.

Therefore, while Ireland still has a long way to go to recapture its former status as the Celtic Tiger, it is at least developing a strategy that is looking to grow the economy in a key sector during the next few years.

It is an approach that could and should be emulated on this side of the Irish Sea.

Thursday, January 3, 2013


As 2012 draws to a close, many in the local business community will be hoping that the next twelve months will see an upturn in the fortunes of the economy not only here in Wales, but globally.

Whilst it is difficult to predict what will happen, that doesn’t mean that many have not tried to examine the major trends that will be affecting the business world in 2013.

For example, the technology company Ericsson has predicted that cloud computing – where hardware and software is delivered over the internet rather than from your own computer - will continue to develop as one of the most dynamic emerging industries, particularly in the supply of consumer-focused services. 

Already, it is estimated that 50 per cent of tablet users and 40 per cent of mobile phone users are already subscribing to such services and the number of those using cloud computing is expected to double to 625 million users in 2013. This will ensure that it becomes an important part of the way we manage data across all our devices and should be an area where there should be a focus by the Welsh Government in supporting new high growth businesses to develop.

Another important growth sector within the computing world will be the continuing rise of big data. According to analysts, there will be countless opportunities for the creation of new businesses to crunch the massive amount of information being generated every day by companies which is simply too big to store and analyse in house. Wales already has a distinct advantage in this area through its £40million High Performance Computing project, although the challenge will be to ensure that this initiative is fully exploited not just as an academic tool but as a driver of this important new industry.

Whilst 2013 should see the development of new sectors in the economy, it should also experience the revival of an industry most of us thought was dead and buried. In the last few years, many have been predicting the death of manufacturing in the developed world. However, 2012 has seen a change in its fortunes that is likely to continue in the next year, especially in the USA. With increases in the price of labour in the developing world, higher shipping costs and a growing awareness by consumers of the importance of buying their economy’s own products, the American economy is likely to see more decisions, like the one Apple made last month, to repatriate its manufacturing operations from countries such as China.

 The question, of course, is whether European companies will follow this trend. Certainly, with manufacturing forming a key part of the Welsh economy, it is one that policymakers should be observing closely, especially as trendsetting companies such as Hiut Denim in Cardigan are using the slogan “Our town is making jeans again” to build brand awareness of the benefits of local high quality production.

Another major trend for the revival of manufacturing has been the tumbling costs of 3-D printers, which enable you to create solid, physical objects in your small business or, increasingly, in your home. Again, I would hope that Welsh businesses will not ignore this transformational technology as it is likely to be one which will have an effect on our daily lives in a wide range of industries and sectors.

During 2012, one of the key issues facing small businesses has been access to funding, especially from high street banks. As a result, there has been a growth in creative and alternative sources of funding, such as crowdfunding where capital is raised in small amounts from a large group of people using the internet and social media.

With the number of people starting their own businesses continuing to grow next year, I will expect that alternative sources of funding from such ventures will continue to grow and become and important part of the entrepreneurial ecosystem here in Wales.

One of the key industries identified as important by the Welsh Government is life sciences with £100million in funding earmarked for the sector. However, it is predicted that the main trend for next year will not be in the development of new drugs but in how digital technology can help deliver health solutions remotely.

According to industry observers, the digital health-technology market will be worth £4billion by 2015, with telehealth devices being produced that will enable doctors and nurses to monitor outpatient health in the patients’ homes remotely, thereby avoiding non-critical and costly re-admissions to hospitals. This is in addition to the 13,000 healthcare apps available to members of the public through Android and Apple devices. With the NHS in Wales accounting for two fifths of the entire government budget, investment into this emerging industry will not only create new opportunities for entrepreneurs in the sector, but could also help to reduce costs when public sector finances are stretched.

Therefore, whilst the economic situation still seems fragile to many, there are, nevertheless, opportunities for Welsh businesses during 2013. Let us hope that, with the coming of a new year Wales will be at the forefront of many of these opportunities and that our entrepreneurs will take full advantage of these trends to create wealth and jobs in our economy.

Blwyddyn Newydd Dda, Happy New Year!