Small and medium sized enterprises make up the bulk of businesses in Wales: Welsh Government Statistics show that, of the 238,190 businesses in Wales in 2015, 236,595 (over 99%) are SMEs; they account for over a third of private sector turnover. Moreover, most SMEs – around 95% of them – have fewer than 10 employees. Providing support to these enterprises where they need it is crucial, given their abundance and contribution to the economy.
Currently, the Welsh Government supports SME development in a number of ways, most notably via Business Wales and Finance Wales. The former provides information and guidance for businesses, the latter – as its title suggests – financial support through a mixture of debt and equity. These organisations aren’t without their critics: the Access to Finance Review three years ago cast the future of Finance Wales into doubt, although the new Wales Business Fund it administers and the recent appointment of a Chief Executive suggest otherwise.
The Welsh Government also provides business rates relief, available for growing SMEs in Enterprise Zones and a variety of other businesses, subject to purpose and various state-aid limits.
All the political parties recognize the issues with the Welsh economy, and the role of enterprise in changing that – as a nation, our economic output (measured by GVA per capita) has sat stubbornly around 72% or so of the UK average since devolution, having fallen from around 85% in the mid 1980s. Each party offers the business community a package rooted in improving access to finance, implementing business rates reform and extending business rates relief. Andrew RT Davies, leader of the Welsh Conservatives, has talked of creating a “Small Business Hub”; Kirsty Williams, leader of the Welsh Lib Dems a “Small Business Administration”. Carwyn Jones has pledged to reduce business rates under Welsh Labour, as has Rhun ap Iorwerth for Plaid Cymru.
On the surface, there’s a depressing similarity to all the parties’ offerings.
At the Federation of Small Businesses’ launch of its manifesto for Wales last November, a panel discussion with a representative from each of Labour, Conservatives, Lib Dems, Plaid Cymru and UKIP was largely a spewing of anodyne rhetoric, rather than a presentation of an innovative vision for the future of Wales. The FSB in Wales commissioned the Centre for Research on Socio-Cultural Change to write the report “What Wales Could Be”, and those with the tenacity to wade through this 95-page magnum opus will find a host of ideas and comments that don’t seem to have made it into broader political discussion.
The CBI, meanwhile, has commented in its manifesto that medium-sized businesses have been the “forgotten army” of the Welsh economy for too long. They see these businesses as offering huge potential, but one largely overlooked by political parties looking to implement policies that favour either small businesses or large organisations.
Clearly it will be interesting to see how much of these business groups’ ideas, or other truly original thinking, make it to the parties’ manifestos. In the Gorwel report “Wales: Time for a Realistic Perspective” published last year, we comment that, to date, well-meaning political rhetoric and policies haven’t worked. The feedback we received on the report certainly concurred with that comment. It may seem trite to say there are many ingredients to economic success, but without sound leadership and bold policies – and expedient delivery of those policies – businesses in Wales will suffer, as will the broader economy for obvious reasons. So far, there’s little to suggest the parties appreciate that.
Of course, governments play a broader role than just facilitating business-based support programmes, and tomorrow we’ll look at economic development more generally – and its implications for businesses across Wales.