Business Wales Facing £12m Funding Shortfall from Brexit

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The UK Government’s failure to confirm that replacement structural funding will come back to the Welsh Government puts the future viability of delivery services like Business Wales at risk.

Since 2013 Business Wales has dealt with over 126,000 enquiries through its Helpline and had over 3 million visits to its website. It has provided business advice to over 71,000 aspiring entrepreneurs and SMEs.

Furthermore, the survivability rate of start-ups supported by Business Wales now stands at 85%, compared to 41% for those who don’t get support.

Ken Skates AM, Minister for Economy & Transport has issued a full statement stressing the importance of the Business Wales service.

FULL STATEMENTThe proposed future delivery model for the Business Wales Service

As Minister for the Economy I have always been clear that small and medium sized businesses are the backbone of the Welsh economy.

Not only are they important in number – of the 259,200 currently active businesses in Wales, 257,600 are micro, small and medium sized – they are also critical to the way our economy and our communities operate.

Through the supply chain, on the high street, in our public services – small and medium size businesses make up so much of the vitality and the energy of the Welsh economy and Welsh communities.  And from the young tech start-up, to the growing artisanal brewer, to the locally owned construction firm or the family law practice, how we, as a community around them, in turn, support and help those firms to grow – to access finance and to plan for their futures – is, in itself, critical to the future of the Welsh economy.

I’m proud of what the Welsh Government has done over the course of devolution to support those small and medium sized firms.  Through Business Wales we have been able to ‘fill in the gaps’ and provide high quality information, advice and guidance to support entrepreneurs and businesses with their plans to start-up and grow their businesses through all cycles of growth.

Since 1999 and through the crash of 2008 and beyond the Welsh Government has proactively supported community based and locally owned firms at each stage of the business lifecycle – from idea generation; through those often rocky first few years and on to accelerated growth.

I am proud that since 2013 Business Wales has:

  • Dealt with over 126,000 enquiries through its Helpline and had over 3 million visits to its website.
  • It has provided business advice to over 71,000 aspiring entrepreneurs and SMEs.
  • It has supported SMEs to create over 28,000 jobs and safeguarded a further 4,500.
  • And it has supported entrepreneurs to create 10,500 new businesses.

A feature of its work that I am particularly proud of has been what it has done to inspire the next generation of entrepreneurs and business leaders.

Through 406 ‘Big Ideas’ Role Models across Wales, over 219,000 young people across all of our schools, colleges and universities have been engaged to think about how they could start their own business or become a successful entrepreneur. It’s what has helped 57% of young people under 25 to now have aspirations to work for themselves and be their own boss.

The impact of Business Wales can perhaps be most clearly seen in the positive effects it has had on our economy:

  • For every £1 spent through the Business Wales Service, £10 is generated in the wider Welsh economy with up to £17 in the more focussed areas of support.
  • The 4-year survivability rate of start-ups supported by its work now stands at 85%, compared to 41% for those who don’t get support.
  • 20% of jobs created by Business Wales are filled by unemployed people, increasing to 40% for jobs in self-employed enterprises.

Given the significant amount of structural funding that the Business Wales service has benefited from over many years, it is important to point out that these benefits to our economy are a direct result of our membership of the European Union.

And whatever happens over these coming months and weeks – I want to pay tribute to our partners in Europe who have, through support for Business Wales, helped us achieve these important things.

But through all of our work, we’ve always kept asking ourselves one important question – ‘What Next’?

How can we make our services, through Business Wales, sharper; more tailored to the needs of firms and companies the length and breadth of Wales?

That is why in 2017 I was delighted to launch the Development Bank of Wales, our response to the market failure we saw in start-up and growth finance here in Wales – an institution I’m pleased to say that now manages over £1bn of finance supporting Welsh firms and projects across the country.

But reflecting on these achievements and in thinking about the future challenges ahead, it’s time for us as a Welsh Government to work with you as a National Assembly for Wales to help put Business Wales on a stronger footing for the future.

To prepare it – and our businesses – for what our economy will look like after Brexit.  To help it help us with the wider challenges we identified in the Economic Action Plan of preparing for digital disruption, of improving productivity, of increasing the incidence of fair work, of decarbonisation and of promoting inclusive growth.

And so over the last few months I have been working closely with my officials to begin that work.  Work we want you as members of our national parliament to support us with.  Work which can build on, evolve and enhance the Business Wales service into the future.

Central to that work has been our overriding aim to make Wales the very best environment anywhere in Europe to start-up and grow an inclusive and sustainable business.

To do that we have focused our work on three key areas:

The first key area is in creating a future Business Wales service that is a high quality, front end advice and enquiry portal.  One that provides everyone that wants it, a ‘one stop shop’ for digital, helpline and enquiry support.

The second element has been to focus on the creation of a service that can enhance the capacity and the capability of our regional economies in Wales to support inclusive growth.

In short that means having a business support service that works with partners in the regions and communities of Wales – with local government, with our universities and colleges and with our high street banks.  One that makes simple but strong connections between partners to make those places fantastic locations to start and grow a business.

And the third area of our work focuses on inclusive and sustainable growth.

As a Minister I have been very clear that every business has a responsibility to support inclusive growth.  And in turn, as a government, we have a duty to create the conditions within which more micro and small businesses can grow in inclusive and sustainable ways.

To become thriving SMEs; to support the productivity, profitability and resilience of existing medium sized businesses; to secure their long-term future ownership and to ensure the promotion of fair work.

My intention is that Business Wales will continue to be delivered on a national footprint and to ensure efficiency it will also build on current provision to provide further opportunities for regionalisation which will align with the regional frameworks being developed by the Chief Regional Officers.

I will aim to make sure that the Welsh Government will play its part in ensuring Business Wales has the investment needed to make the service a success.

With the right support and investment, we believe that Business Wales can have a significant economic impact, helping businesses create up to 6,000 new jobs; by maintaining the impressive 4-year survivability rate for supported start-ups and through adding some £220m of value through goods and services into our economy annually.

But while I want to be honest with the chamber about what can be achieved, I also need to be honest and blunt about the danger we face, too.

The UK Government’s failure to confirm that replacement structural funding will come back to the Welsh Government puts the future viability of delivery services like Business Wales at risk.

For Business Wales, this means £12m per annum risks being lost– opportunities that we cannot afford for our businesses and communities to lose in a post-Brexit economy.

I will be working closely with my colleague the Finance Minister and the wider Welsh Government to ensure we repeat our clear and unambiguous position – not a penny less, not a power lost as we leave the European Union.

My commitment to building a high quality Business Wales is absolute.  I hope the UK Government will not stand in the way of that ambition.