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The Welsh Assembly Government today announced that it is going to radically transform the way it supports the Welsh economy. The Deputy First Minister and Minister for the Economy and Transport Ieuan Wyn Jones outlined a vision of making Wales “one of the best places in the world to live, to work and to thrive”.

“Economic Renewal: A New Direction” sets out the role devolved government can play in providing the best conditions and framework to enable the private sector to grow and flourish.  

In future government resources will be targeted at tackling wide systemic issues within the Welsh Economy - investing in infrastructure, research & development and improving the conditions within which businesses operate. Economic Renewal will see a fundamental shift away from direct and generic support for companies to a focus on creating the right environment for businesses to succeed.  

The policy has been developed following extensive consultation with business, academia, trades unions and other key organisations and individuals.  

The consistent feedback was that government should concentrate resources where it can add the most value – where the private sector by itself cannot deliver.  

The new approach includes:

• Reducing the level of direct business support, with resources and funding moved to wider infrastructure development – this will mean half the resources of the Single Investment Fund now going to infrastructure projects. Most of the finance that the Economy & Transport Department provides directly will be gradually moved to a repayable model.

• We believe our role to be an enabler of growth rather than a direct deliverer of services to individual companies, so we will reduce the level of direct business support beyond the start-up phase to create space for private-sector business support.

• Developing high quality and sustainable infrastructure to underpin economic growth.  Investors and indigenous businesses must be able to count on communications, transport, energy and other infrastructure necessary for 21st Century enterprise.  This includes a commitment for every business in Wales to have access to Next Generation broadband by the middle of 2016, with all households enabled by 2020 – and a major improvement in mobile phone coverage.

• Supporting industry-led investment in six key sectors, where Wales has clear advantages for growth, instead of the current 14.  The new target sectors, supported by resources released following closure of the Single Investment Fund are:
o Creative industries
o ICT
o Energy and Environment
o Advanced material and manufacturing
o Life Sciences
o Financial and Professional services

• Full integration of the Foreign Direct Investment (FDI) teams and stimulating trade teams to support these six sectors.  International Business Wales (IBW) will cease to exist as a separate function within the department and the IBW brand will be replaced with a ‘Wales’ brand that highlights successes and counters negative perceptions.

• Creating a more responsive planning system, with a package of reforms to help businesses. This will include improving guidance for businesses, reducing the number of applications, examining the process of consultation and a careful scrutiny of any changes to the system.

• A reduction of bureaucracy in public sector procurement, including a single National Procurement Website. We want businesses of all sizes to be able to bid for public sector contracts and easily navigate the system.

• We will improve the co-ordination of our processes that lead to regulations that impact on businesses. We recognise that the assessment process for all regulations must challenge the Assembly Government to make sure we fully realise the effect suggested polices will have on business.

• Working with business to broaden and deepen the base of skills in Wales, including science, technology, engineering and maths, extension of the Apprenticeships programme and a new Basic Skills Employer Pledge. We will ensure that our young people are motivated and ready for the world of work, with the right attitudes and skills for the workplace. Employers will get help to tackle the costs arising from low levels of literacy and numeracy.    

• Increasing investment in our new priority sectors for Research and Development. We will work with universities and businesses to make sure research and development is commercialised and contributes to economic development.

• Improved supply of premises for business in areas where there is a shortage through a combination of direct provision and gap funding.

• As direct business support is reduced, we will still have a role in providing information on opportunities and guidance to business online. Our websites will reflect this new approach and we will drop the FS4B brand.

Although the Government’s ambitions are shaped, but not constrained, by the current economic climate, the Deputy First Minister has said that this change in direction should be seen as an opportunity to help build a stronger future for Wales.  

“’Economic Renewal: A New direction’ is a radical re-think of the way the Welsh Assembly Government supports economic development. Our actions are based on a shared vision and ambition of what needs to be done to create a more prosperous Wales” , Mr Jones said.

“In the current economic climate our investment needs to be smarter. We must concentrate our efforts and our resources on areas where we have the greatest degree of control and where their impact will be most widely felt.

“We asked for the opinions of business and wider society and we have listened. We want to create a high quality infrastructure so that businesses, large and small, are well connected within and beyond Wales. Our people, businesses and communities need the right facilities, skills and services where they live and work if we are to compete in the global economy.

“We recognise that, over the long term, the performance of the Welsh economy has not met expectations.  This new approach sets out a clear, defined role for devolved government.

“It is not our role to get involved in the day to day running of business – but we do have a significant part to play in creating the right environment to encourage entrepreneurship and allow our private sector to grow and flourish.  

“The culture of direct business support through grants has run its course. Our aim will be to encourage a stronger culture of investment and therefore the finance we provide will be through repayable investments administered in a swift and responsive service. We will establish a new framework for measuring the performance of this approach and we will publish this in the autumn.

“Our Single Investment Fund will be reallocated to serve our two key economic development priorities: infrastructure and our key sectors. However, we also believe that we still have a role to play in working with regionally important growth businesses. We will make some of our funding available for this purpose.  Wales will also continue to be open to good ideas across the wider economy and we will retain the flexibility to fund strategic projects outside the key sectors that will deliver jobs and growth. We reserve the right to continue to be open to strategic projects, including inward investment, outside the key sectors. High-quality proposals for support, including inward investment will be adopted if they represent significantly better value than projects identified within our six sectors.

“I am determined that my department should become a leader in the UK and the wider world.  The new department will have a culture of delivery, proactively seeking out new opportunities, focusing where maximum value can be added.  We will become far more business led and able to respond more quickly to the ever changing and evolving world in which we live.  The strategic restructuring will lead to difficult decisions being made in the short term in order to ensure that the department is properly and effectively aligned to deliver the government’s priorities. The aim is to ensure that the necessary changes will be in place by the end of 2010

“We are realistic – ‘Economic Renewal: A New Direction’ will not yield immediate results. This is a long term approach taking precedence over short term headlines. This is about creating an excellent team that can attract investment and create an environment for strong and sustained economic growth.  It is a vision which requires a whole-government approach and I am grateful to my cabinet colleagues who are fully committed to making this work for Wales.”

To deliver this new approach there will be significant changes to the way the Assembly Government’s Economy & Transport department operates. A new infrastructure group will be created and the department as a whole will be restructured in line with the new priorities to include six key sector teams.  The work of the regional teams will be refocused to reflect the new priorities. Although it is too early to give exact figures, a reduction in overall staff numbers is anticipated.

The aim is to ensure that the necessary changes will be in place by the end of 2010.

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