David Sokol No Longer Replacing Buffett as Berkshire Hathaway CEO

David Sokol has been the primary guy in the running, and Warren Buffett's top pick, to replace the Oracle of Omaha as the CEO of Berkshire Hathaway. Well David is no longer available for the position.

Just ask him.

David Sokol recently withdrew himself and resigned from the expected job and responsibility of running what is perhaps the most successful holdings company ever to invest.

He has allegedly stepped down after information about some personal trades of a company he purchased stock in which has recently been bought by Berkshire Hathaway.

Buffett has said that the decision does not come as a derivative of that trade nor the surfacing of that news.

I my self have to wonder a bit as the media is hitting this thing pretty hard. But I have enough confidence in Buffett to take his word... for the most part.

So now the real question is this...

Who will hop in the driver seat now that David Sokol is out?


It is a big question that needs answering. Warren who is still in relatively good health is 80 years old. He is not senile yet and still seems to navigate his way around a prospectus and balance sheet pretty well but hey... he is old.

They say there are four internal potential candidates that are already being considered.


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IN FINLAND

In a week when the Finnish Ambassador to the Court of St James was visiting Wales, I am returning the favour.

I am currently in Finland, where I have been attending a meeting of the  MBA4PhD international project between Wales, Gothenberg and Turku, as well as exploring ways in which the University of Turku can work more closely with the University of Wales over the next few years.

As the picture shows, Turku is a paradise in the summer although it is hard going at this time of year, with snow still falling yesterday.

I have had some interesting discussions with colleagues about the state of the Finnish economy, with many worrying about Nokia's future, especially given its dominance in such a small country.

However, it would seem that exports are helping the nation to recover from recession. According to the Finance Ministry, gross domestic product will grow by 3.6 percent this year, before growth slows to 2.7 percent in 2012 and 2.4 percent in 2013.

Certainly, innovation remain key to developing the future Finnish economy and the University of Turku, through my old friend Professor Antti Paasio, is reorganising itself in the field of .commercialisation to ensure that academics can make the transition from the laboratory to the market-place. If his initial successes are anything to go by, then the University, and the Turku economy, has a very bright future.

Business Law - Basic Agency Relationship Explained

This business law article discusses the basic legal environment of the agency relationship in the world of business.



Agency Relationship

An agency relationship describes a two party relationship in which the agent is authorized to act on behalf of the principal. This relationship is created by an agreement between two parties in which one party (agent) will act for the benefit of, and under the control of, the other (principal).

For such a relationship to exist and for the agreement to be legally valid both parties must have "capacity" or the ability to make coherent decisions for themselves.

Agent Authority

There are four main types or key concepts of agent authority.

Actual Authority - Is the right to make decisions for the principal given to the agent. It is delegated or communicated to the agent by the principal party.

Express Authority - This is authority expressed by the actual words of the principal party.

Apparent Authority - This is authority communicated by the principal to a third party about the agents authority. This would be like a company explaining an affiliates role to a customer. Take note that an agent can not give itself this apparent authority.

Implied Authority - This is authority that can be reasonable assumed given the validity and understanding of the expressed authority.

Types or Class of Agents

There are three main types of agents.

General Agent - describes a party that is continuously employed to conduct transactions or business operations and actions on the principles behalf.

Special Agent - A party that is employed or authorized to conduct a specific, single, or temporary activity on the behalf of the principal party.

Sub-Agent - This is an agent of an agent appointed to assist with the role given to the agent by the principal party

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FISCAL FALLACIES

Last week, I was sent a paper written by Tim Morgan of the Centre for Policy Studies. Entitled "Five Fiscal Fallacies",  it articulates, in detail, the need for reducing public expenditure by the current Coalition government.

Most importantly, it debunks some of the myths that have been pushed by the Labour Party and the Trade Union movement over the last ten months, namely that the reductions in public expenditure are “savage” cuts.

For example, “in 1999-2000, government spending totaled £343 billion, which, had it simply moved in line with inflation, have reached £438 billion by 2009-10. In fact, spending in that year was £669 billion, a real-terms increase of 53% over a ten year period in which GDP had increased by less than 17%. By 2014-15, and again expressed at 2009-10 values, aggregate spending will be a modest 3% below the 2009-10 figure, which cannot remotely be described as a “massive” cut. Moreover, spending will remain 48% higher than in 1999-2000”.

So, to deal with the worst financial crisis that any UK government has had to face for generations, public sector expenditure will need to be reduced by 3 per cent by 2014-2015.

The author also makes the critical point about the low levels of public sector productivity in the UK, an issue which very few commentators have picked up upon.

“Research compared the published 3.4% decline in public sector productivity between 1997 and 2007 with the 28% gain recorded in the private sector and concluded that taxation could have been lower by £58 billion had the public sector achieved private-sector levels of productivity improvement”.

Given that the BBC and much of the press has been unswerving in accepting, at face value, the Labour Party’s propaganda, this paper is worth reading if only to get a more balanced view.

Queen Narissa's Hag Costume - 2007 Enchanted

The Hag Costume of Queen Narissa

Enchanted 2007 - Hag Costume - Queen Narsia

This is the Hag Costume that Queen Narissa Wears in the 2007 Movie Enchanted.


Susan Sarandon played Queen Narsia in the 2007 movie Enchanted. She sported this costume when the Queen transformed into the Hag to trick Giselie with the old poison apple trick. Giselie was played by the actress known as Amy Adams.

The Hag costume was designed after the cloak the Hag wars in the film's animated opening. In this opening scene Narissa throws Giselle through the portal leading to the human world where Giselle lands in New York, New York.

This costume was created by the designer known as Mona May.

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Andalasian Royal Servant Costume

Nathaniel's Andalasian Royal Servant Costume

This is the Andalasian royal servant costume that the character of Nathaniel wears in the 2007 hit movie Enchanted.

Nathanial is the ever loyal servant of Queen Narissa that he is helpless but to do all the evil tasks that she asks of him.

Timothy Spall, a well known character actor, portrays Nathanial. Queen Narsia is played by none other than Susan Sarandon.

Tim wears this servant costume on the streets of New York City during the portion of the movie in which the characters are thrown through the magic portal into the human world.

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2008 King Miraz Battle Costume - Chronicles of Narnia

King Miraz Battle Costume

This is the King Miraz battle costume from the 2008 block buster hit The Chronicles of Narnia - Prince Caspian.


For those of you who need a refresher King Miraz is a Lord of Telmarine and is the current King of Narnia. His thrown is kept with an iron wrist rule. He works diligently to dilute the spirit of those of Narnia and works to wipe out all memories of their storied past.

King Miraz wore this suit of Armor during the epic fight with Peter Pevenise.

King Miraz was played by Sergio Castellitto, he had the luxury of waring this battle costume. William Moseley played Peter Pevenise.

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SEO Website Tip - Create Multiple Domains for Each User Language Common to Your Target Market

This is a seo tip for those niche sites with target markets across multiple languages and countries.

If you have a site topic that targets users across multiple languages and cultures you may want to create a separate site that is language specific for each applicable market of users.

To create a website that targets multiple languages and cultures you will want to have domains that are specific to those languages and countries. For instance you if France and French speaking users are a major target user than you will want to have your entire site translated to the French language and you want to have the content on a mysite.fr this is all in addition to your mysite.com

The site content needs to be more than just auto translated through some sort of translation tool. To do this effectively you are going to need to have a human translate the content.

Don't go overboard with this idea. You don't need a .uk, .ca. and a .com version that is all in the same language. Not to mention the cost of this strategy is gonna cost so you are going to only want to create different language sites as these sites will be effective.

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THE UNIVERSITY OF WALES: BRINGING THE BEST OF THE WORLD TO WALES

Last week, all of my time was spent managing a major summit of leading academics from some of the world's top universities.

Attended by professors from institutions such as the Massachusetts Institute of Technology (MIT), Harvard University, Oxford University, University of Memphis, Boston University and the University of Central Florida, it discussed key issues in the critically important and growing area of geospatial cyber-physical supply chain, including environmental security, supply chain management and high performance computing.

They were joined by representatives from the United Nations, US Department of Defense, Northrop Grummann, Microsoft, IBM and Sonalysts.

You only have to open a newspaper these days to know that the field of cybersecurity is becoming a major issue for governments and industry around the World.

For example, the US Federal Government recently announced plans to spend more than $13 billion a year within the next five years on protecting its systems. In the UK, cyber crime is costing the economy up to £27 billion every year. In fact, cyber-physical security is now considered the number one threat to national security, being deemed more critical than conventional nuclear attacks. Last year alone, the US logged over 300,000 virus attacks on their networks and noted that organized crime now makes more money from cyber crime than any other activity.

To put it bluntly, in a week where the Minister of Education questioned the role of the University of Wales, the summit has been a tremendous success and showed what a different and innovative higher education institution can do.

What other university in Wales would have been able to put together such a world class summit in less than four weeks? That is the time that it would have taken for most Vice-Chancellors to get the memo about the event!

As a result, it is a major coup for Wales that MIT's Geospatial Data Centre and the University of Wales Global Academy will be working together to jointly develop solutions for cybersecurity leadership and training, a partnership that will place Wales at the forefront of developments in this area.

This followed the conclusion of the summit, namely that a multidisciplinary team is necessary to address the problems of cybersecurity and that the UK and the US would need to produce many thousands of experts in this field over the next few years.

We have also signed an agreement to set up a new research centre which will utilise the new £40 million High Performance Computer in the area of cybersecurity, bringing world experts together in Wales to examine the key issues in this area.

As I have said many time on this blog, part of the mission of the Global Academy, which we only established just over two and a half years ago, is about bringing the best of the World to Wales, and we have had a wonderful event over the last two days that will make a real difference to the discourse on the growing importance of cybersecurity in all aspects of our lives.

We hope to work closely with many of the participating academics to take forward the agenda identified by the summit and to advance relations between MIT and the University of Wales as we now plan to develop a joint training programme for taking forward educational developments in the field of cyber-physical security, an area that the summit agreed was the overriding issue for government, business, and universities.

Indeed, as the influential ComputerWorld UK magazine noted,

"The University of Wales could become one of the UK’s foremost cybersecurity education and training centres after a recent conference produced a deal to work with the prestigious MIT Geospatial Data Centre in the US.......Currently in the UK, cyber security training happens in a piecemeal fashion through a scattering of university courses across the country, or through computer science engineers who change tack professionally later on in their careers. Tie-ups like this bring in some outside expertise and training experience, which the UK still lacks, though there is a shortage of trained people in the US as it stands."

A number of academics at the event also linked up with Geolang Ltd, where we have our first Prince of Wales Innovation Scholar. This builds on previous links with MIT which have resulted in the company submitting bids for major contracts on both sides of the Atlantic,

As well as academic developments, the University of Wales was delighted to be able to show the best of Wales to the delegates - nearly all of the visiting academics had never visited Wales before. By showing them some of the best that Wales has to offer, including The Celtic Manor 2010 Club House (weher Simon Gibson gave a tour de force speech), the Wales Millennium Centre and Cardiff Castle, we hope they gained a great impression of Wales and will look forward to future visits as we develop this joint project.

We also had two pre-summit events in London, including a reception at Gwydyr House, hosted by the Secretary of State for Wales (above) and a tour of the House of Commons, both of which delighted the delegates.

Finally, the two day summit has been filmed by award-winning director Professor Thomas Levenson from MIT. Not only will the material will be used as part of the global training programme, but it is hoped that it will be turned into a  documentary and submitted to the Sundance Festival next year. Yes, you read it right - Wales will be represented at one of the World's premier film festivals.

So if anyone asks you what the University of Wales does for Wales, point them to this blog entry for starters.

Darth Maul Star Wars Costume - 1999 Phantom Menace

Darth Maul Costume

This is the Darth Maul Costume used in 1999 in Star Wars - Episode 1 - The Phantom Menace. The costume is on display at Disney on loan from the Lucas film Archives.

Darth Maul was played by Ray Park. Ray sported this costume as the apprentice to the evil Sith Lord known as Darth Sidious. Darth Sidious was played by Ian McDiarmid.

Darth Maul was on a quest to take out two Jedi Knights. The target Jedi were Obi-Wan Kenobi, who was played by Ewan McGregor, and Qui-Gon Jinn who was played by Liam Neeson. These two Jedi Knights were amidst their own mission which was to settle the growing hostility brewing on the planet Naboo. The conflict was with the Trade Federation.

Ray Park is a martial artist as well as an actor and wore this costume in the first film of Lucas's prequel trilogy.

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Darth Vader Costume Picture and Description
This is the 1977 Darth Vader costume.

Darth from 1977 Star Wars Movie

The six part Star Wars saga tell the story of the coming to power, the fall, and the final redemption of Anakin Skywalker. We all know of this story, these films, and the great legacy it has become. A big part of this legacy can be found in the Darth Vader Costume created in 1977.

The Darth Vader costume was worn by an English body builder named David Prowse. Though as many of us know the soul and voice was done by none other than James Earl Jones.

This costume was created by Lucasfilm for the exclusive use at Walt Disney World.

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REFLECTIONS ON THE BUDGET

For the last few days, I have been slightly out of the loop hosting a conference in Cardiff for the University of Wales.

The World’s first summit on the geospatial cyber-physical supply chain brought together leading scientists from some of the world's top universities to discuss key issues in this critically important area.

It was a fantastic event with professors from institutions such as MIT, Harvard University, Oxford University, University of Memphis, Boston University and the University of Central Florida creating an international masterclass of discussion and dialogue with other representatives from the United Nations, US Department of Defense, Northrop Grummann, Microsoft and IBM.

Needless to say, the outcome of the conference, apart from creating sixty new ambassadors for Wales, could create significant opportunities for the Welsh economy over the next few months.

As a result of spending time at this successful event, it was only yesterday that I finally got the chance to examine the effect of the Chancellor’s budget on the Welsh economy.

Given that George’s Osborne’s ability to make any major changes to spending or taxation was severely hampered by the requirement for reducing the large deficit run up by the previous Labour administration, it is worth noting some of the positive measures that could help the Welsh economy to grow during the next few years.

First of all, the decision to reduce the main rate of corporation tax to 26 per cent from April will be welcomed by many of the medium-sized and larger companies in Wales. However, I would like to see the Chancellor indicate that there will be a similar decrease to the small business rate as well during the next few years, given that we keep hearing from politicians that small businesses are the “backbone of the economy”

Many small businesses will be glad that this is a government that is finally tackling the mountains of regulations that bedevil entrepreneurs every year and are introducing a moratorium that will exempt micro-and start-up businesses from new domestic regulation for three years. Along with the move to drop existing proposals for specific regulations that would have cost business over £350 million, this is long overdue, especially as some surveys suggest that owner managers of smaller firms spend up to three days per week dealing with government bureaucracy.

With the Welsh Assembly Government looking to boost innovation across a number of technology-based sectors such as biosciences, advanced manufacturing and the creative industries, the increase in tax relief from 175% to 200%, with the aim to increase it further in 2012, could have a significant effect on businesses in these critical industries. Medical companies clustered around the Institute of Life Sciences in Swansea will also be boosted by proposed improvements and simplification to the regulation of medical research to shorten approval times for clinical trials.

Access to finance is key to developing the small firm sector in Wales and initiatives such as the Enterprise Investment Scheme are critical tools in enabling funding to be raised for businesses. It is therefore great news that not only is the income tax relief on the EIS being increased from 20 per cent to 30 per cent, but the amount that any individual can invest to gain this relief has also doubled.

Of course, some measures introduced by the Chancellor will apply only in England although the Assembly Government will be given the funding, under the Barnett formula, to do the same. The question, of course, is whether they will use that funding to make a real difference.

For example, will they follow the lead of the UK Government and develop enterprise zones with simplified planning rules, superfast broadband and tax breaks for businesses. Certainly many parts of the South Wales Valleys would benefit enormously from such a proposal and I urge the First Minister not to ignore the potential of this new policy out of political intransigence.

I also hope that the Welsh Assembly Government will extend the small business relief scheme as has happened in England, given that many small firms in Wales have been severely disadvantaged by having higher rates bills than Scotland or England during the last 12 years.

To me, the most radical proposal in the entire budget relates to the right for Northern Ireland to consult on reducing corporation tax below that of the UK, a result that is due to intense lobbying by the business community in Northern Ireland.

As Chairman of the Welsh Conservatives’ economic commission, I have already made the case that if Northern Ireland’s argument revolves around their poverty relative to the rest of the UK, then Wales, as the poorest of all the UK regions, should also be given the opportunity to consult on such changes.

Whilst all the other measures in the budget are clearly to be welcomed, that, to me, would be the most important decision that could be made by any Chancellor in modern times and would help transform the Welsh economy. Let us hope that at least one party will take up the call for this radical change during the forthcoming Assembly election.

THE CIVIL SERVICE CODE

I thought it would be pertinent to post the civil service code of conduct on this blog.

Recent events have made me think that some individuals have, unfortunately, forgotten some of the key elements of this code.

Perhaps this will help them review their position when considering their response to Ministers.

Civil Service values

1. The statutory basis for the management of the Civil Service is set out in Part 1 of the Constitutional Reform and Governance Act 2010.

2. The Civil Service is an integral and key part of the government of the United Kingdom. It supports the Government of the day in developing and implementing its policies, and in delivering public services. Civil servants are accountable to Ministers . They are in turn accountable to the National Assembly for Wales.

3. As a civil servant, you are appointed on merit on the basis of fair and open competition and are expected to carry out your role with dedication and a commitment to the Civil Service and its core values: integrity, honesty, objectivity and impartiality. In this Code:

• ‘integrity’ is putting the obligations of public service above your own personal interests;
• ‘honesty’ is being truthful and open;
• ‘objectivity’ is basing your advice and decisions on rigorous analysis of the evidence; and
• ‘impartiality’ is acting solely according to the merits of the case and serving equally well Governments of different political persuasions.

4. These core values support good government and ensure the achievement of the highest possible standards in all that the Civil Service does. This in turn helps the Civil Service to gain and retain the respect of Ministers, the National Assembly for Wales, the public and its customers.

5. This Code sets out the standards of behaviour expected of you and other civil servants. These are based on the core values which are set out in legislation.

Standards of behaviour


Integrity

6. You must:

• fulfil your duties and obligations responsibly;

• always act in a way that is professional and that deserves and retains the confidence of all those with whom you have dealings ;

• carry out your fiduciary obligations responsibly (that is make sure public money and other resources are used properly and efficiently);

• deal with the public and their affairs fairly, efficiently, promptly, effectively and sensitively, to the best of your ability;

• keep accurate official records and handle information as openly as possible within the legal framework; and

• comply with the law and uphold the administration of justice.

7. You must not:

• misuse your official position, for example by using information acquired in the course of your official duties to further your private interests or those of others;

• accept gifts or hospitality or receive other benefits from anyone which might reasonably be seen to compromise your personal judgement or integrity; or

• disclose official information without authority. This duty continues to apply after you leave the Civil Service.

Honesty

8. You must:

• set out the facts and relevant issues truthfully, and correct any errors as soon as possible; and

• use resources only for the authorised public purposes for which they are provided.

9. You must not:

• deceive or knowingly mislead Ministers, Parliament or others; or

• be influenced by improper pressures from others or the prospect of personal gain.

Objectivity

10. You must:

• provide information and advice, including advice to Ministers, on the basis of the evidence, and accurately present the options and facts;

• take decisions on the merits of the case; and

• take due account of expert and professional advice.

11. You must not:

• ignore inconvenient facts or relevant considerations when providing advice or making decisions; or

• frustrate the implementation of policies once decisions are taken by declining to take, or abstaining from, action which flows from those decisions.

Impartiality

12. You must:

• carry out your responsibilities in a way that is fair, just and equitable and reflects the Civil Service commitment to equality and diversity.

13. You must not:

• act in a way that unjustifiably favours or discriminates against particular individuals or interests.

Political Impartiality

14. You must:

• serve the Government, whatever its political persuasion, to the best of your ability in a way which maintains political impartiality and is in line with the requirements of this Code, no matter what your own political beliefs are;

• act in a way which deserves and retains the confidence of Ministers while at the same time ensuring that you will be able to establish the same relationship with those whom you may be required to serve in some future Government; and

• comply with any restrictions that have been laid down on your political activities.

15. You must not:

• act in a way that is determined by party political considerations, or use official resources for party political purposes; or

• allow your personal political views to determine any advice you give or your actions.

MISDIRECTION AND HIGHER EDUCATION

In magic, they say the most important skill is that of misdirection – which is the act of taking advantage of the limits of the human mind in order to give the wrong picture and memory.

As the mind can concentrate on only one thing at a time, the magician uses this to manipulate the "victim's" idea of how the world is supposed to be.

Take, for example, the announcement yesterday on the review of governance in higher education.

Driven by one journalist’s obsession and another man’s petty desire for revenge, one of the week’s main stories on the BBC was about the University of Wales’ validation provision in Singapore.

Yet, around the same time, HEFCW were announcing a cut of nine per cent in the budget for higher education in Wales, which would see funding cut by £65 million for 2011-2012, undoubtedly resulting in at least a thousand job cuts across the university sector unless further efficiencies can be made.

Did the education minister play on the fact that anything that his department could throw towards a compliant BBC on the future of the University of Wales would take precedence over any other news on higher education in Wales?

In fact, when was the last time the BBC passed up an opportunity to highlight such large-scale job cuts in the public sector?

Indeed, why focus on one case of student complaint when other instances  have been largely ignored by BBC Wales (such as Clarke vs Cardiff University where a law student won an extraordinary three-year legal battle with Cardiff University to prove she should have passed her exams).

In fact, student complaints have risen by 37% in the last two years and yet no-one at BBC Wales has bothered to examine this in any detail in relation to higher education institutions in Wales.

In magic, the observer's attention will be grabbed with a coin, or another small and shiny object as a shiny object captures more attention and seems less likely to disappear or to be manipulated.

Then attention is directed away from the object  through a combination of comedy, sleight of hand or an unimportant object of focus, thus providing just enough time for the magician to do whatever he or she wishes to do with the original object.

In the case of the BBC and higher education in Wales, you have to wonder whether they are the victims of misdirection or are, instead, just willing assistants in the show.

THE DEPARTMENT OF ECONOMY AND TRANSPORT - AN INSIDER'S VIEW PART 2

As mentioned yesterday, there are five key reasons, according to the "insiders" who sent me their critique report, as to why DET isn't working. As you will see, most of is to do with the civil service set-up within the department although some will argue that this is due to a lack of political leadership. 

This is what they had to say - judge for yourselves. 

1. The ERP is politically driven.

It is owned by the Deputy First Minister, not by business and certainly not by senior management within the department. It may or may not stick after the next Assembly elections, depending on the election result.

The view from the ground internally is that senior management appears not to care much either way as long as it gets the department to the next election line. What happens after is up for grabs.

Rather than being treated as a real strategic approach to using public sector economic development as a tool in Wales to get alongside business and create robust structure for wealth creation, skills development and business prosperity, when you scratch the surface of the ERP the gloss comes off, leaving it looking weak and lacking in coherence.

Unfortunately,  as far as the Deputy First Minister is concerned and the election only months away, the ERP is now the only game in town and like a Soviet style 5 year plan, the exercise now is to talk it up rather than allow critical questions about its durability. Timing, they say, is everything. The problem for the ERP is that by May, there will be little evidence proving that the plan is working but what political opponents won’t be able to prove is that it isn’t.

2. Top management within the department lack leadership qualities and substance, particularly around vision and strategy.

People understand that opportunity in DET is achieved by loyalty to the person that promoted you, not because of merit.  Consequently, in the last three years of WAG survey, the SCS (Senior Civil Servants) team within DET has scored the lowest across WAG (somewhere in the 35% range) on questions about belief in their leadership quality and the staff’s trust in their ability to lead. Needless to say, nothing of note has occurred in the department to change these perceptions. 

The ‘leadership’ problem is not unique to this department of WAG but appears most pronounced here and the problem for the ERP is that the people who will be most engaged in delivery do not believe that senior management have much of an idea about what they are doing. “Making it up as they go along” is the commonly heard complaint. 

Senior WAG management have said rightly that they are not in post to be liked, but the ability to be believed and respected by staff would be an advantage.

3. There is no ability within the department to understand, lead and manage change.

Since the merger with the WDA there has been constant change within DET. The problem is that this has been imposed and top down with no critical understanding of ‘emotional intelligence’ or the business techniques that can make a large change management process work. 

Consequently, change hasn’t taken effect and people still talk about how things were done ‘better' in the WAG or the WDA. This comes back to the inability to think critically about leadership across the SCS team and also to the ‘cloning’ characteristic across senior management. 

There is little evidence of management’s ability to learn from failure. The leadership and senior management team within DET have been the same team who were charged with getting both the WAG-WDA merger and then the implementation of FS4B (the business support structure) right and they failed on both. Why then should anyone believe them when they say they have learned from the past and will get the ERP right? 

No one thinks that driving change in the public sector is easy but with a bottom up approach and managed with modicums of respect and emotional integrity for existing skills and experience, effective change can be made to happen.

4. DET is supposed to be open for business, it is not.

If we were an actual business we would be bankrupt. There is no vision, no strategy and crucially no viable product range.  If you are an indigenous business looking for help or an inward investor enquiring about good reasons to come to Wales, the majority of staff would probably telly you to come back in a few months when things are clearer. This has been the situation in the department for nine months, will remain so until the new sector team are selected and then go on through and beyond the next assembly election. The reality is that the department, despite protestations and formal lines to take’, will effectively be on hold for 12 months whilst teams bed down, new policies develop and practices rolled out. 

However, the betting is also that in three years or less, the ERP will be gone and some cynics suggest that it will be replaced by a new split between policy and implementation and the revolutionary re-establishment of an agency, charged with driving economic development in Wales. Because policy was better driven when the WAG had charge of it and the WDA had a range of business focused products that they could deliver. Reality check time perhaps but the fault is the leadership’s strategic and intellectual inability to deliver transformation.

5. Staff morale within the department is on the floor. 

Since the merger was mismanaged, there has been a continued  cycle of failed change. The consequence is that people are both demoralised and very unmotivated.  Staff also see poor performance at senior management level rewarded or, when a policy fails, get moved sideways to far less critical roles. The main drop in headcount numbers in the new department are in IBW and relationship management. Here not only will many lose their jobs but hard working staff who have built up years of skills, experience and contacts in relationship management, trade development and inward investment are competing for far fewer customer facing roles in the new structure. 

So, at a stroke, the department will move from having a strong outward facing economic development expertise to one that is driven by inward thinking and by the imperative to make the politically driven ERP work. 

Yes, perhaps a focus on sectors is sensible but at the cost of one sector competing with another for resource and support as opposed to a division dedicated to bringing in inward investment. Staff certainly feel that they are in danger of losing their jobs whilst Wales loses key skills at a time it can least afford to because of the accumulated failure under the senior management team to understand what economic development in Wales should be about.

Conclusion

If the First Minister wants a real economic development strategy that will drive the Welsh economy forward in the next 10 years, rather than the next 10 months, good examples of effective public/private partnership exist. He needs to look at some of the states in the USA or closer at home e.g. in Scotland.

Failing this, he and the Permanent Secretary might commission PWC to develop a strategy for putting the department on the right track. It might be costly but will have a better chance of delivering effective change and economic support to the people and businesses of Wales and would be far better than allowing the current shambles to continue limping from one failure to the next. 

Wales deserves better.

THE DEPARTMENT OF ECONOMY AND TRANSPORT - AN INSIDER'S VIEW PART 1

As I mentioned last week, late last year, a letter was sent to me at the Western Mail which, unfortunately, was not given to me until the end of last month.

It purports to come from a group of senior managers within the Department of Economy and Transport (DET) who are “driven by a sense of frustration and concern that a failing department is steaming towards further failure".

It is anonymous and the authors are very open in stating that “cowardly and possibly disloyal as it is, we have chosen not to put our names to the paper. At a time of job threat, there could be only one result”.

Nevertheless, having read the details, there can be very little doubt that whoever has written the critique certainly has insider knowledge of the machinations of the civil service. Whether there are any exaggerations in some of the claims made could only be verified by DET itself (which is highly unlikely). 

If only partly true, it is a fascinating insight into the hidden world of the civil service in Wales and some of the allegations suggest there are some serious questions that need to be answered by those in power. 

I have edited the responses slightly, given that some of the comments were specifically addressed at one individual who has now been removed from post. 

It must also be noted that the critique is not one sided.

For example, the authors note that

“There is a need for change in the way that DET in Wales is managed and delivers its economic strategy is not in question and within the ERP the result of the new strategies and ways of interacting with businesses are not all bad. For example, the focus on infrastructure is rational and the move to a sector focus and an increased emphasis on partnership by bringing in external panels of business people to work as advisors to the Deputy First Minister and with civil servants is a good idea. The move from grants to loan in the current climate also has merit even if some businesses will be concerned of the impact that ‘loan’ has on the view of the balance sheet”.

Nevertheless, they suggest that there are five reasons why the current changes that are afoot in DET won’t work and why they will have little effect on the ability of businesses in Wales to grow and create high quality, high value jobs. Tune in tomorrow for the insider's view.

Home Loan Approval - Your Best Financial Footing

This article describes some basic steps one can take to improve the chances of approval for a mortgage loan.




Have Stable Monthly Budgeting Habits

It is a good practice whether awaiting for a loan approval decision or not to always maintain a stable monthly budget that utilizes wise spending, saving,  and income earning habits.

Maintain Healthy Credit Scores

Your credit scores and your credit reports will have a big impact on the lenders decision to approve or deny you the funds you need to buy a home. You want to ensure that your credit score is as high as you possibly can get it. This means checking your reports and ensuring that all info and activity is accurate and that their are no mistakes that are hurting the appearance of your credit history.

Make sure you understand credit score basics so that you are able to do what you need to do if something is out of place. If you don't understand what your looking at than how will you know if it is OK?

Pay Off Unsecured Consumer and High Interest Debt

If you have credit card debt, owe money on store credit accounts, personal bank loans, or any sort of high interest debt than you really should pay it off.

Lenders are not going to want to lend money to folks that owe on a lot of rip off high interest credit cards or other sorts of unsecured debt.

At the very least you need to consider a debt consolidation loan with more favorable terms.


Be Upfront with The Bank or Lender - Tackle Obvious Approval Issues First

If there are some obvious weaknesses on your loan application it is a good idea to bring them up first. This allows you to offer an explanation instead of coming up with an excuse for when they find out about it anyways. Plus you will be able to avoid applying for the loan if the weakness is a automatic disapproval trigger for the lender.

If nothing else this will make you appear and feel more responsible as a borrower.


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Debt Settlement Risk Factors

Debt Settlement Risk - Three Key Fundamental Risks

Debt Settlement has some fundamental risks that come with the decision to pursue efforts of settling debt for a discounted price with your creditors.

This article provides an outline of three existing debt settlement risk.



3 Financial Risks

No Guarantee

• There is never a guarantee that you will be able to settle debt with a lender. Just because you want to settle and make an offer does not mean that they will take it.

Taxes

• You will most likely have to pay taxes on any debt forgiven by your lender.
• The government and the IRS count those funds as income. So you will get a 1099 for the discounted amount of debt in most cases.

Credit

• Your credit score is not going to be in good shape. there is no doubt that you will have to become delinquent in order to have any real chance of settling any debt with your lenders. Those missed payments and default statuses go on your credit history and payment history records.
• Also just because you settle a debt successfully does not mean that other potential creditors are going to view that as a good thing. Think about it. You borrowed money and did not pay the full amount back.

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California Hardest Hit Fund Foreclosure Assistance - Strategic Focus

The California State Housing Authority has taken targeted measures to provide assistance to homeowners in financial hardship through the Hardest Hit Fund.

Like all states receiving help from HHF they have worked hard at developing innovative mortgage assistance programs targeted to the specific needs of their homeowners foreclosure assistance needs.

In addition to developing new programs they have adopted the approach of improving and expanding existing efforts and foreclosure prevention programs already in place.

California has decided to hyper focus borrower assistance resources towards aiding low to moderate income homeowners.

A core theme in the development and design of their approach is to ensure that their programs and the operations of their assistance efforts remain flexible and agile. This is in response to the success that the Obama home affordable mortgage assistance programs have had with the same approach.

To get the most bang out of their buck California foreclosure assistance efforts has put significant measures in place to have lenders, loan servicers, and PMI insurers to match their efforts dollar to dollar.


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California Foreclosure Prevention Programs - Hardest Hit Fund Program

California Mortgage Foreclosure Crisis - Hardest Hit Fund Assistance

The Hardest hit Fund has contributed approximately 700 million dollars to aid California's fight to stop foreclosure.

California homeowners have endured comparatively high levels of financial hardship. Many borrowers in California have lost the ability to make mortgage payments due to a loss of income, divorce, medical issues and other typical causes of unpreventable hardship. The difference in California is that a large population of homeowners have been adversely affected by the unwinding housing, mortgage, and foreclosure crisis. Factors such as rising monthly mortgage payments and unprecedented statewide declining home values have created a compounding effect compared to other states.  These horrific economic conditions have triggered an even worst and unforeseen trend in which homeowners are now strategically defaulting on their mortgage because of the overwhelming drop in home values and thus home equity.

The housing slump and economic hardships experienced in California are dramatically worst in comparison to other states. This difference appears both in the size and severity of the declining trends of the housing and mortgage slump as well as the rising rates of foreclosures. The typical mortgage solutions and foreclosure alternatives that work in other states do not prove as effective in California because of the limited dollars available to help this large segment of California homeowners suffering through financial hardship and mortgage default.

These circumstances have led to the decision to financially assist the state of California in it's fight to stop foreclosure and provide homeowners assistance through available resources of the Hardest Hit Fund which was created trough the Making Home Affordable Plan.

California Mortgage Help from Hardest Hit Fund Program

California Housing Finance Agency has taken measures to offset the consequences of elevated levels of foreclosure and mortgage default by developing government mortgage assistance programs through the Hardest Hit fund. The California Foreclosure Assistance Plan provides debt help and mortgage assistance for homeowners in financial hardship. 


The California mortgage assistance programs have been developed by working with lenders, loan servicers, borrowers, housing counselors, and private mortgage insurers to create, develop, and utilize targeted mortgage solutions that will reduce the growing amount of foreclosures and help financially troubled homeowners keep their home.

Four California Homeowner Assistance Programs

The California Foreclosure Assistance Plan is composed of four mortgage help programs. Three of the four programs focus on creating an opportunity for homeowners to keep their home. The fourth program provides homeowners with foreclosure relocation assistance in the form of financial aid.

• Monthly Mortgage Payment Assistance for Unemployed Homeowners - Provides homeowners with financial  aid to help pay the monthly mortgage payments.
• Home Loan Reinstatement - Helps homeowners bring their loan current by providing financial assistance to pay of part of the past due balance.
• Mortgage Balance and Principle Cuts - Gives borrowers with upside down home loans financial aid to pay off part of the principle balance on the mortgage loan.
• Moving Assistance and Financial Aid - Provides borrowers who are losing their home due to a short sale or deed in lieu up to 5,000 dollars in foreclosure relocation assistance. This cash for keys like program provide financial assistance to homeowners who will incur moving expenses due to foreclosure.

Though the foreclosure and home assistance programs will help a great deal of homeowners in financial hardship they will only put a dent in the entire California foreclosure crisis. These programs that are funded through the Making Home Affordable Plan's Hardest Hit Fund will act as an effective compliment to the Federal mortgage assistance programs such as the Home Affordable Modification Program and the Home Affordable Refinance Program.

THE COUNCIL FOR ECONOMIC RENEWAL

Given that we are suppose to have a system of relatively open government here in Wales, WAG seems keen not to divulge certain pieces of information to the general public.
For example, there has been much mystery surrounding the membership of the new Council for Economic Renewal which, according to WAG, was supposed to be a "fresh start" and which shouldn't be "a simple re-hash the former Business Partnership Council".

So where are the details of the council? Who sits on this new dynamic body?

Well, unfortunately, there is no information anywhere on the WAG website although we are promised that the minutes will be available by the end of March.

However, the little information I have been able to glean from our democratic body suggests that, despite a bright new dawn being promised, the membership is exactly the same i.e. the minimum legal requirement of 14 external members (5 each from Business Wales and Wales TUC and 2 from Social Enterprise in addition to the Chairs of the DET Ministerial Advisory Group and the Wales Employment and Skills Board).

Also, as with the BPC, membership can be broader than that represented by the minimum legal requirement and the new Council can draw from the widest and best range of knowledge and experience. So no change there either.

Anyway, judge for yourselves as there is a list of the individuals and organisations who have attended the meetings of the Council for Economic Renewal held in December 2010 and March 2011.

• John Bennet Wales Social Enterprise Coalition
• Nick Blundel UCATT
• Paul Byard Engineering Employers Forum
• Nia Davies FSB
• John Harper RICS
• Richard Houdmont CIM
• Richard Jenkins FMB
• Russell Lawson FSB
• David Lermon ICAEW
• Bob Macey IoD
• Martin Mansfield Wales TUC
• Mick McGuire CML
• David Morgan RICS
• Graham Morgan Chamber Wales
• Paul O’Shea Unison
• John Phillips GMB
• Richard Price Home Builders Federation
• Non Rhys Chair of Business Wales
• David Rosser CBI Wales
• David Russ Chamber Wales
• Derek Walker Wales Co-op
• Sian Wiblin Wales TUC
• John Burgham Unite
• Ben Cottam Chair of Business Wales
• Pam Drake GMB
• Robert Lloyd Griffiths IoD
• Peter Hughes CML Cymru
• Nick Payne RHA
• Nigel Keane WSPU
• Heather Eason WSPU

MICHAEL SHEEN ON RICHARD BURTON

“He is Wales, he is film, he is theatre, he is poetry, he is spirit, he is passion and he is hiraeth. He is everything that we aspire to be. The Hollywood Walk of Fame would be blessed to have his star on it. It is an absolute outrage he does not have a star there. He is the star that will shine the brightest.”

Michael Sheen on Richard Burton

LABOUR MARKET DATA FOR WALES

In the midst of all the excitement of the Manufacturing Action Plan for Wales finally being published after a three year hiatus, it seems that the news channels have forgotten that today is also the publication date of the latest Labour Market data for Wales, which includes information on employment, unemployment and claimant count.

Given that we have two very different governments at a UK and Welsh level both trying to claim credit for any good news on jobs and blame the other for the bad news on increasing dole queues, what does this latest release tell us?

• First of all, 126,000 people are currently unemployed, a slight increase on last month but a decrease of 7,000 on a year ago. The unemployment rate of 8.7 per cent is the highest of all four of the home nations.  
• In terms of employment, there are currently 1.327 million employed in Wales. This is a slight increase on last month but 20,000 higher than a year ago. However, the employment rate of 67.5 per cent remains the third lowest of the UK regions after the North East of England and Northern Ireland.
• Economic inactivity remains at 490,000 - no change from a year ago (i.e. 26 % of the working age population)
• Finally, the claimant count has gone down from 77,700 to 70,300 in the last year, a decrease of 10 per cent over the previous 12 months. Youth claimant count remains 11 per cent lower than in February 2010.

From one point of view, it looks very positive, but whilst employment is increasing, there does not seem to be a similar concomitant decrease in unemployment across Wales, which remains stubbornly high. I do not expect these figures to change dramatically during the final release of the Labour Force statistics prior to the Assembly election so it will be interesting to see whether any of the policies of the four main parties in Wales will kickstart the economy and, more importantly, create jobs.

THE CHALLENGE - STIMULATING INNOVATION

“If Wales is to improve its innovation performance over time, then we must ensure that the sum of the parts – government, industry and academia – is greater than the whole”.

The Challenge

It is critical to encourage innovation so that the amount of R&D undertaken in Wales increases substantially. Welsh Higher Education Institutes have a key role to play here and WAG funding must incentivise the commercialisation of knowledge, whilst maximising the potential linkages between academia and industry.

The evidence

Recent research shows that investments in innovation accounted for between two-thirds and three-quarters of labour productivity growth in OECD countries such as Austria, Finland, Sweden, the United Kingdom and the United States between 1995 and 2006[1]. Innovation was the main driver of growth. A lack of innovation – characterised by low levels of investment in knowledge, such as skills, research and development, and technology - has been identified as a major barrier restricting the growth of the economy. In Wales, which has a higher dependency than most of the UK regions on universities for its R&D, there remains a disconnect between the key innovation actors in government, industry and academia[2]. Many operate in silos rather than as an efficient innovation system that effectively transfers knowledge from the laboratory to the marketplace and then provides the necessary resources and support to fully exploit that knowledge. As a result, there needs to be a greater effort in ensuring that programmes focus on building both research capacity in both the academic and private sectors whilst enabling better relationships between the universities and industry. This is a role that government can contribute to and, more importantly, stimulate and enhance.

The Way Forward

If the future Googles, Yahoos and YouTubes of the future are to emerge in Wales over the next decade, then there must be a different approach to supporting innovation and not just repeating the same policy initiatives that have largely failed. In particular, government needs to ensure that all the key actors work more closely together as part of an innovation system and not operate in isolation or, even worse, in competition.  If Wales is to improve its innovation performance over time, then we must ensure that the sum of the parts – government, industry and academia – is greater than the whole. Therefore, the Welsh Conservatives should look to establish a Welsh regional innovation system, which will be directed under a separate private sector led Innovation Council for Wales.

CASE STUDY

 YORKSHIRE INNOVATION COUNCIL

Yorkshire Innovation is the Science and Industry Council for Yorkshire and Humber. The role of the Council is to promote a culture of innovation and advise on ways to improve the economic performance of the region by increasing levels of innovation in our companies. Yorkshire Innovation supports innovation across Yorkshire, enabling companies in the region to gain a real competitive advantage that will underpin their long-term growth. Yorkshire Innovation Council Members are ambassadors for the region, promoting the region’s major assets and world-leading technology on the international stage. They act as key influencers, helping shape government policy and decision-making. Council Members are renowned amongst business communities and in academic circles and are committed to championing the science, technology and innovation assets of the region, attracting investment and encouraging collaboration.

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[1]  OECD (2010) The OECD Innovation Strategy: Getting a Head Start on Tomorrow, OECD, Paris, May.

[2] Bristow G. and Jones-Evans, D. (2008) The prospects for public sector led regional innovation systems: lessons from Wales, Regional Studies Association conference

GVA OR GDHI - THE REAL STATE OF THE WELSH ECONOMY

In terms of the state of the Welsh economy, there is an interesting pre-election game being played in the political arena.

Critics of the Welsh Assembly Government state, quite rightly, that Wales has the lowest GVA (gross value added) per head of any of the UK regions and that on this internationally accepted measure of prosperity, West Wales and the Valleys is now poorer than some parts of Bulgaria and Poland.

Not so, insists the Welsh Assembly Government.

According to the First Minister, GVA per head is the wrong measure to use for the economy especially, as he said recently, “gross disposable household income in Wales is catching up pretty quickly with the rest of the UK”.

So who is right?

There is little argument over the status of GVA data, which shows that Wales has declined from 77 per cent of the UK average GVA/head in 1999 to 74 per cent, although some parts of Wales, such as Cardiff, have become more prosperous since 1999 although West Wales and the Valleys has continued to decline relative to other parts of Europe.

However, there has been little debate or analysis over gross disposable household income in Wales (GDHI), which is an estimate of the amount of money that households have available for spending or saving.

As the First Minister rightly points out, GDHI/head has actually increased slightly from 86 per cent of the UK average in 1999 to 88 per cent in 2008 (see graph above). That modest increase is very different to the claims of the Welsh Assembly Government that household incomes had "outstripped" the UK average and Wales is catching up pretty quickly with the rest of the UK.

Embarrassingly, the current household income per head remains considerably lower than the 90 per cent measured in 1995. In fact, the peak for relative GDHI in Wales was reached in 2006 and, since then, the gap between the UK and Wales has been widening.

Of course, household incomes are not even across all parts Wales and, as the government’s own statistics show, relative GDHI has, since 1999, actually fallen in some areas, including Anglesey, Conwy-Denbighshire, Swansea, Wrexham-Flintshire, and the Gwent Valleys.

 In Bridgend-Neath Port Talbot, where the First Minister’s own constituency is based, GDHI/head has decreased by 2 per cent in the period 1999-2008.

However, whilst it is worthwhile comparing the whole of the Welsh economy to the rest of the UK, the biggest debate over the last few weeks has been in relation to the relative decline of West Wales and the Valleys, especially given the large amounts of European money that have been committed to supporting the region.

In this respect, its overall GDHI has grown by 46 per cent during the period 1999-2008 as compared to 48 per cent for Wales and 47 per cent for the UK.

More critically, the statistics show that despite billions of pounds of European funding being given to West Wales and the Valleys, the growth in household income in the more prosperous East Wales (which includes Cardiff, Vale of Glamorgan, Newport and Monmouthshire) has been considerably higher at 52 per cent since 1999.

Surprisingly, one of the few glimmers of growth within the poorest regions is that of the Central Valleys, which has seen its relative GDHI grow from 75 per cent of the UK average to 83 per cent. How much of that growth is due to individuals moving into an ever-growing suburban commuting belt in the lower reaches of Rhondda Cynon Taff whilst working in Cardiff is uncertain.

Of course, it may be expedient for some politicians to blame structural changes in the 1980s for the decline in the economic fortunes of the poorest parts of Wales although adopting an “Ashes to Ashes” mentality does little to deal with the simple fact that the Welsh Assembly Government simply hasn’t got it right during the last twelve years in ensuring that all parts of Wales benefit economically.

Indeed, Slovenia - another European nation that has a similar population to Wales - managed to improve its GDP from just under 70% of the EU average in 1999 to greater than 90% of the EU average in 2008. And the Slovenian economy had to deal with the legacy of fifty years of communist rule!

Therefore, whether you use GVA or GDHI as measures for relative prosperity, the overall conclusion is that the gap between the poorest and richest parts of Wales has actually been growing since the Assembly was established. Rather than hiding behind selective statistics, it is time our government accepted the facts as they stand and, more importantly, developed a proper long term strategy to ensure the future prosperity of all parts our nation.

THE CHALLENGE - SKILLS

“Business development and skills should go hand in hand within any enterprise support network and there should be a seamless approach by government to the delivery of support in this area. The Welsh Conservatives should therefore create a new Department for Business and Skills that will enable a clear strategic approach to be adopted”.

The Challenge

The skills of the Welsh workforce lag behind more prosperous regions of the UK and compare poorly to the world’s leading advanced countries.

The evidence

“Skills That Work for Wales – A Skills and Employment Strategy and Action Plan” is a critical report produced by The Wales Employment and Skills Board that, unlike many other reports, takes seriously the premise that if we improve skills within Wales we will have a more prosperous society, reduced inequality, more jobs and less poverty. Most importantly, the Board emphasised the important message that improving skills is not merely an issue for Government alone, but must fully involve employers at every level. One of the critical conclusions of the report was the importance of skills in the strategic development of businesses alongside other issues such as capital investment, innovation and workforce planning. While recommending that different arms of Government should work more closely together, it is a shame that the report did not take the next step and propose that economic development and skills should be integrated under one super department within the Assembly to ensure real value for employers. In particular, the higher education sector needs to review its role within the economy and adopt a wider skills-based approach to its agenda for supporting economic development and finally recognise that producing basic research may not be the only way it can influence the future of the Welsh economy.

The Way Forward

As the Enterprise and Learning Committee of the National Assembly for Wales has pointed out, there should be better links between economic development and education. However, the Economic Commission believes that a further step is required to deal with the lack of co-ordination between the Department of Economy and Transport and the Department for Children, Education and Lifelong Learning.  Business development and skills should go hand in hand within any enterprise support network and there should be a seamless approach by government to the delivery of support in this area. The Welsh Assembly Government should therefore create a new Department for Business and Skills that will enable a clear strategic approach to be adopted.

THE CHALLENGE - FUNDING FOR SMALL BUSINESS

“The Welsh Conservative Party would make the new repayable grant system available to all sectors of the Welsh economy and all sizes of businesses.  It is vital, as the nation struggles to come out of recession, that every business that needs finance to grow and create employment within their local economies is given every opportunity to access such funding”.

The Challenge                    

It is generally accepted that the current system of grant support is largely unsustainable within the current economic climate. The Welsh Conservatives believe that, overall, there needs to be a gradual move away from the free grant culture in Wales towards an environment where companies, especially SMEs, get quicker access to repayable soft loans that can lead to a more sustainable financial support structure for business to flourish and grow. However, this should not mean abandoning SMES within our poorest communities and, in particular, there will still be a need for grants in the Convergence region of Wales, especially for start-ups and for innovation-based projects that are higher risk and would not be in a position to agree terms on repayable loans. This, however, should be viewed as investment in R&D and in increasing the intellectual capital of the nation.

The evidence

The Welsh Conservatives have supported the general principle of repayable grants. However, it is the belief of the Commission that these should not be limited to any one sector, as currently proposed by the Welsh Assembly Government, as various research studies have shown that growth companies are not limited to any particular industry. As a recent report from the UK Government has demonstrated [1], high-growth firms engage in diverse activities and are not only involved in high-technology sectors. So, while there are reasons to support the development of high-growth businesses in a few promising sectors, ‘traditional sectors’ should not be forgotten. In fact, business services and the wholesale/retail sector – two industries that have been excluded by WAG - provide almost half the high-growth firms in the UK. In addition, two thirds of Wales still qualifies for the highest level of European structural  fund intervention rates and full advantage must be taken of this status until 2015 to help grow and develop the private sector. There remains a clear case to provide financial help to support SMEs within the poorer parts of Wales and a “one size fits all” economic strategy may not be fit for purpose. For example, 64 per cent of employment in West Wales and the Valleys comes from SMEs as compared to 52 per cent in East Wales i.e. SMEs are the main employers within our poorest communities and need support to grow and develop [2].

The Way Forward

Unlike the sectoral approach of the current Labour-Plaid Government, the Welsh Conservative Party should make the new repayable grant system available to all sectors of the Welsh economy and all sizes of businesses.  It is vital, as the nation struggles to come out of recession, that every business that needs finance to grow and create employment within their local economies is given every opportunity to access such funding. We would also seek to create a new innovation grant that could fill the funding gap to enable high-risk private sector projects to receive vital initial seed-funding that would not be forthcoming from traditional sources of finance. Finally, the Commission believes that whilst repayable grants may be the only sustainable strategy for future funding of small business, the current Welsh Assembly Government has acted with too much haste in abandoning grant support for SMEs in Wales. This especially the case for the poorest Convergence region which, unlike any part of the UK with the exception of Cornwall, is eligible to receive the highest rate of grant support. Therefore, there should be detailed discussions with the Welsh European Funding Office (WEFO) to create a Convergence SME grant fund which could be used to support the growth ambitions of new and existing firms within our most deprived communities. This would be funded entirely from European grant aid and private sector match funding, could be linked directly into a new small business support structure for Wales and would last the lifetime of the current Convergence funding period.

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[1] BERR (2008) High growth firms in the UK: Lessons from an analysis of comparative UK performance BERR Economics Paper No 3, November 2008

[2] Welsh Assembly Government (2010) Size Analysis of Welsh Business, 2010, October 27th