Janet Finch-SaundersBiographyI’m really pleased to be able to make a contribution to yet another call to this Welsh Government to support our businesses across Wales. We’re calling on Welsh Government today to reprioritise its support for small and medium-sized enterprises, the lifeblood of our economy, and to commit to backing them fully and effectively. In 2014, SMEs created 25,500 jobs in the private sector. We all know they are key to job creation in Wales and they provide support and employment in local communities across Wales. Just look at the recent success in my own constituency of Surf Snowdonia—new jobs, new employment. We welcome the new jobs announced yesterday by the Target Group, yet month after month we still see devastating job losses, often from companies that have received significant amounts of Welsh Government funding. We also see a shocking lack of due diligence from this Welsh Labour Government, who do not hold information on the very businesses that they have provided funding—taxpayers’ money—to. The damning report of the Auditor General for Wales into the regeneration investment fund for Wales, established to restore jobs and prosperity to Wales’s deprived communities, estimated a loss of £15 million to the public purse. This is a clear example of the Welsh Government’s failure to spend taxpayers’ money effectively in support of our Welsh businesses. Today, we are asking how we can ensure that such a catastrophe doesn’t happen again. Furthermore, the Federation of Small Businesses has highlighted the struggles of businesses in Wales when it comes to finance. The feasibility study for a development bank for Wales concluded that helping new businesses and microbusinesses to access funding and support is vital. All too often, we hear of small SMEs struggling to navigate the complex and overly bureaucratic funding and grant structures of the Welsh Government. Finance Wales has repeatedly been a cause for concern and has been reluctant to respond to the changing environment for SMEs since the financial crisis of 2008. Yet, despite being declared unfit for purpose, Finance Wales continues to this very day, with many issues remaining unaddressed. Now, I really have concerns here about the Welsh Government’s commitment to helping Welsh SMEs access finance. What has happened to the recommendations put forward in the development bank Wales study? The National Federation of Retail Newsagents has said that small business rate relief has been crucial in helping independent retailers remain in business. Going forward, however, the Welsh Retail Consortium has stated that the business rates system is woefully out of date and that this disincentivises investment in property. Wales has the highest high street vacancy rate in the UK. We need a full business rate review so that we can buck the depressing trend of almost one Welsh high street shop closing down every two days. Business rate relief is one of the strongest tools that you have in your possession, Minister, and, obviously, it’s at the disposal of the Welsh Government per se; they should support you in your role to ensure that our businesses get this vital support. Abolishing business rates for all businesses with a rateable value of under £12,000 would really enable them to grow and expand, and we as Welsh Conservatives have been calling for this for years. The FSB estimates that, if every SME in Wales could employ one additional member of staff, then every person in Wales who wanted a job could have one. As the recent Bevan Foundation report recognised, growing the Welsh economy will require a radical change in thinking and approach by the Welsh Government, who will need to be pro-business in both perception and reality. The efficiency of Welsh Government support for SMEs needs drastic improvement. Labour have short-sighted policies that fail to stimulate economic growth. We need a Government in Wales who will create an environment here that enables us to prosper both economically and socially, and, as the last 16 years have proven, the Welsh Labour Government are simply not the ones to do it. Roll on 6 May. 15:48 Y Dirprwy Lywydd / The Deputy Presiding Officer
I call the Minister for Economy, Science and Transport, Edwina Hart. 15:48 Edwina Hart
The Minister for Economy, Science and TransportI will resist the temptation to go into soundbites in response to some of the comments that have been made in the Chamber today, because some of the contributions, as Mick Antoniw indicated, were much wider than what the motion was about and started to explore some other ideas that we need to continue to explore as a Government. I will deal in the first instance, I think, with the amendments. In terms of the amendments, we won’t be supporting the amendments today, not because I didn’t agree with some of the issues that Rhun ap Iorwerth raised, because I think he understood fully how sometimes things will fail, how business isn’t perfect and actually understood the issues of risk, which I also thought Eluned Parrott understood very well—that it is not a perfect world. If it was a perfect world, all the commercial banks would certainly not have lost any money on any of the deals that they’ve done, because allegedly they’ve taken such wonderful due diligence on every matter that they have dealt with. I think it is very important for us to acknowledge that. Also as well, I think it’s important to acknowledge the importance of actually giving repayable finance, because there is a difference between grants and repayable finance and the way that you look at particular issues, and that is very key as well indeed. In terms of the motion, I will be making a statement on the development bank, as I’ve indicated. We are almost at the final stages of being able to make a statement to the Chamber. In terms of extending the small business rate relief scheme, I regard that as success, but I’m in the hands of the finance Minister and the UK Government and settlements regarding issues around that matter, and that is quite clear. Also, in terms of new trade opportunities for Welsh businesses, we are always open to ideas on that agenda. So, it’s not in the content of the speech, but it’s on the specific issues within the amendment. If I turn as well to the contribution that Eluned Parrott made, I think it’s very important for us to understand about a more holistic support thing. I think there is a possibility perhaps, as we move to a development bank and others, about how we link all those issues in. The support is about whether you should put an account manager in to help for a period of time—whatever help and assistance you can give to a business. This is something I think we can explore when we discuss further how Business Wales will have to be more closely aligned, I think, to any developments with Finance Wales and it going into a bank. Now, I heard Mohammad Asghar’s contribution. Well, I read the excellent report from the Finance Committee on Finance Wales. I’ve accepted the recommendations. There was an issue of not throwing the baby out with the bath water. At the end of the day, build on what you’ve got and the experiences you have got and mould it. That’s what I’ve tried to do in building a consensus about how we go forward on those particular issues. Now, I understand why this debate has been tabled today, following the news coverage over the summer about a closure of a business that was financially supported by the Welsh Government. This specific situation is very disappointing and distressing, and I think Lynne Neagle illustrated that very well today. I know, Lynne, that everybody’s been grateful for your support, and I have given my commitment to look in detail at what happened behind that. I note your comments as well about the trade unions, because in trade union workplaces things are better managed even when they’re absolutely horrendous. So, it’s very important, I think, for us to recognise that we should be opposing everything that’s going on in the Trade Union Bill in Westminster and support our trade union colleagues for the excellent job they do in representing workers in the workplace through difficult situations. But I am limited on the issue that Lynne’s raised with me because there are police investigations under way. Once they are concluded and we know where we’re going, perhaps I’ll be able to give a fuller statement. This case has obviously drawn a lot of attention, but it is the exception to the rule, not the rule. So, I will set the record straight because I did provide several pieces of information now in the public domain as a result of Freedom of Information Act 2000 requests, but if I can deal with May 2001 to the present date, the number of businesses from whom we’re seeking to recover funds is 1.3 per cent of total offers made—14 businesses in total. The amount of money being recovered is £4.41 million, 1.4 per cent of the total value. During the period, two highly successful rounds of the Wales economic growth fund have been completed, including financial support to grow SMEs and business start-ups. Only five WEGF projects have failed to date, representing 1.3 per cent of projects supported and 1.5 per cent of the value. Now, we assess the viability of grant applications prior to agreeing to any funding commitment. The evaluation considers the company’s legal statement, its trading history, its management experience, its client base, investment readiness, governance arrangements, financial viability and marketing plans. Significant effort has been invested in improving our grant management processes, and the grant centre of excellence continues to provide advice, guidance and training to grant managers. Grants are provided to business from across the Welsh Government and it is important we get value for money for the grants awarded. We must achieve a balance that is appropriate. We can’t be overly bureaucratic. On one hand I hear on that side of the Chamber that they want more bureaucracy and that they want me to streamline things more. At the end of the day, a balance has to be struck, and we must take informed risks. The criticism of business, always, about Government is that they don’t take managed risks. Yesterday, I had the pleasure of attending an event with businesses at the ExCeL centre—it was defence and security businesses. Large ones, small ones; there were micros there that we’re supporting to go there from Wales. What they said about us as a Government is that we were business-friendly, ready to act and could turn things around. Regrettably, not all business is successful, but the figures are clear that that’s very infrequent. Can I put some context on that? On 31 December 2014, nearly 5,000 businesses supported by the UK Government’s enterprise guarantee scheme had defaulted, which is around 19 per cent. Similar rates have been experienced by the UK Government-backed start-up loans company, with a default rate of 18 per cent since starting in Wales in 2013. So, the comparisons to what we’re doing with that are actually very good. I don’t condemn them for the fact that those businesses have failed. I wouldn’t do that, because they had to manage a risk and take a risk and thought that they were doing the right thing. Now, the overwhelming number of businesses that we support are successful in creating jobs—Deloitte with 700 and CGI with 620. When you look at what we’re doing in terms of the higher end—the skills and research and development—where we are supporting, we’re doing a lot. We have created 38,000 more jobs, safeguarded another lot of jobs and we’ve had the best performance we’ve had in 10 years. When you look at the forecast investments in Wales by foreign-owned companies, that is actually record breaking. Furthermore, the latest labour market statistics published this morning show that, over the last 12 months, Wales has seen the largest rate of increased employment of any part of the UK. We’ve seen significant falls in the level of economic inactivity, which is down by 1.2 per cent on the quarter and has continued to outperform the rest of the UK over the past year. This level of performance, I think, reflects the proactive policies and strategies that we’ve taken. I think they say it all. Wales also benefits, I think, from our close relationship with the EU. There are issues around the EU that are causing uncertainty for companies, which is going to be very difficult for us in Wales. We’re a pro-EU Government here. We don’t want any messing around with the issues on the European Union and, I can tell you, neither do the multinational companies that are within Wales. It is interesting. I met two companies recently who raised those very issues with me, because they had German and other parent companies there and were wondering what would happen in the future. So, I think we’ve got to understand exactly where we are in terms of the EU membership. I thought a number of good points were made. I rather liked Mick Antoniw’s; I thought you were absolutely right about issues about parking and localised issues here. Sometimes, we’re just looking at what they can gain in revenue, and not looking at the long term and what we’ve got to lose. In terms of the regeneration of towns, there was a big issue discussed here about what towns should look like. On that note, can I say that there have obviously been some useful comments made? Some comments I haven’t agreed with, but at the end of the day, it has been useful from the point of discussion. But of course, the Government will be opposing the motion.
I call the Minister for Economy, Science and Transport, Edwina Hart. 15:48 Edwina Hart
The Minister for Economy, Science and TransportI will resist the temptation to go into soundbites in response to some of the comments that have been made in the Chamber today, because some of the contributions, as Mick Antoniw indicated, were much wider than what the motion was about and started to explore some other ideas that we need to continue to explore as a Government. I will deal in the first instance, I think, with the amendments. In terms of the amendments, we won’t be supporting the amendments today, not because I didn’t agree with some of the issues that Rhun ap Iorwerth raised, because I think he understood fully how sometimes things will fail, how business isn’t perfect and actually understood the issues of risk, which I also thought Eluned Parrott understood very well—that it is not a perfect world. If it was a perfect world, all the commercial banks would certainly not have lost any money on any of the deals that they’ve done, because allegedly they’ve taken such wonderful due diligence on every matter that they have dealt with. I think it is very important for us to acknowledge that. Also as well, I think it’s important to acknowledge the importance of actually giving repayable finance, because there is a difference between grants and repayable finance and the way that you look at particular issues, and that is very key as well indeed. In terms of the motion, I will be making a statement on the development bank, as I’ve indicated. We are almost at the final stages of being able to make a statement to the Chamber. In terms of extending the small business rate relief scheme, I regard that as success, but I’m in the hands of the finance Minister and the UK Government and settlements regarding issues around that matter, and that is quite clear. Also, in terms of new trade opportunities for Welsh businesses, we are always open to ideas on that agenda. So, it’s not in the content of the speech, but it’s on the specific issues within the amendment. If I turn as well to the contribution that Eluned Parrott made, I think it’s very important for us to understand about a more holistic support thing. I think there is a possibility perhaps, as we move to a development bank and others, about how we link all those issues in. The support is about whether you should put an account manager in to help for a period of time—whatever help and assistance you can give to a business. This is something I think we can explore when we discuss further how Business Wales will have to be more closely aligned, I think, to any developments with Finance Wales and it going into a bank. Now, I heard Mohammad Asghar’s contribution. Well, I read the excellent report from the Finance Committee on Finance Wales. I’ve accepted the recommendations. There was an issue of not throwing the baby out with the bath water. At the end of the day, build on what you’ve got and the experiences you have got and mould it. That’s what I’ve tried to do in building a consensus about how we go forward on those particular issues. Now, I understand why this debate has been tabled today, following the news coverage over the summer about a closure of a business that was financially supported by the Welsh Government. This specific situation is very disappointing and distressing, and I think Lynne Neagle illustrated that very well today. I know, Lynne, that everybody’s been grateful for your support, and I have given my commitment to look in detail at what happened behind that. I note your comments as well about the trade unions, because in trade union workplaces things are better managed even when they’re absolutely horrendous. So, it’s very important, I think, for us to recognise that we should be opposing everything that’s going on in the Trade Union Bill in Westminster and support our trade union colleagues for the excellent job they do in representing workers in the workplace through difficult situations. But I am limited on the issue that Lynne’s raised with me because there are police investigations under way. Once they are concluded and we know where we’re going, perhaps I’ll be able to give a fuller statement. This case has obviously drawn a lot of attention, but it is the exception to the rule, not the rule. So, I will set the record straight because I did provide several pieces of information now in the public domain as a result of Freedom of Information Act 2000 requests, but if I can deal with May 2001 to the present date, the number of businesses from whom we’re seeking to recover funds is 1.3 per cent of total offers made—14 businesses in total. The amount of money being recovered is £4.41 million, 1.4 per cent of the total value. During the period, two highly successful rounds of the Wales economic growth fund have been completed, including financial support to grow SMEs and business start-ups. Only five WEGF projects have failed to date, representing 1.3 per cent of projects supported and 1.5 per cent of the value. Now, we assess the viability of grant applications prior to agreeing to any funding commitment. The evaluation considers the company’s legal statement, its trading history, its management experience, its client base, investment readiness, governance arrangements, financial viability and marketing plans. Significant effort has been invested in improving our grant management processes, and the grant centre of excellence continues to provide advice, guidance and training to grant managers. Grants are provided to business from across the Welsh Government and it is important we get value for money for the grants awarded. We must achieve a balance that is appropriate. We can’t be overly bureaucratic. On one hand I hear on that side of the Chamber that they want more bureaucracy and that they want me to streamline things more. At the end of the day, a balance has to be struck, and we must take informed risks. The criticism of business, always, about Government is that they don’t take managed risks. Yesterday, I had the pleasure of attending an event with businesses at the ExCeL centre—it was defence and security businesses. Large ones, small ones; there were micros there that we’re supporting to go there from Wales. What they said about us as a Government is that we were business-friendly, ready to act and could turn things around. Regrettably, not all business is successful, but the figures are clear that that’s very infrequent. Can I put some context on that? On 31 December 2014, nearly 5,000 businesses supported by the UK Government’s enterprise guarantee scheme had defaulted, which is around 19 per cent. Similar rates have been experienced by the UK Government-backed start-up loans company, with a default rate of 18 per cent since starting in Wales in 2013. So, the comparisons to what we’re doing with that are actually very good. I don’t condemn them for the fact that those businesses have failed. I wouldn’t do that, because they had to manage a risk and take a risk and thought that they were doing the right thing. Now, the overwhelming number of businesses that we support are successful in creating jobs—Deloitte with 700 and CGI with 620. When you look at what we’re doing in terms of the higher end—the skills and research and development—where we are supporting, we’re doing a lot. We have created 38,000 more jobs, safeguarded another lot of jobs and we’ve had the best performance we’ve had in 10 years. When you look at the forecast investments in Wales by foreign-owned companies, that is actually record breaking. Furthermore, the latest labour market statistics published this morning show that, over the last 12 months, Wales has seen the largest rate of increased employment of any part of the UK. We’ve seen significant falls in the level of economic inactivity, which is down by 1.2 per cent on the quarter and has continued to outperform the rest of the UK over the past year. This level of performance, I think, reflects the proactive policies and strategies that we’ve taken. I think they say it all. Wales also benefits, I think, from our close relationship with the EU. There are issues around the EU that are causing uncertainty for companies, which is going to be very difficult for us in Wales. We’re a pro-EU Government here. We don’t want any messing around with the issues on the European Union and, I can tell you, neither do the multinational companies that are within Wales. It is interesting. I met two companies recently who raised those very issues with me, because they had German and other parent companies there and were wondering what would happen in the future. So, I think we’ve got to understand exactly where we are in terms of the EU membership. I thought a number of good points were made. I rather liked Mick Antoniw’s; I thought you were absolutely right about issues about parking and localised issues here. Sometimes, we’re just looking at what they can gain in revenue, and not looking at the long term and what we’ve got to lose. In terms of the regeneration of towns, there was a big issue discussed here about what towns should look like. On that note, can I say that there have obviously been some useful comments made? Some comments I haven’t agreed with, but at the end of the day, it has been useful from the point of discussion. But of course, the Government will be opposing the motion.