Boost Wales by supporting start-ups

Jan 24 2008 by Martin Shipton, Western Mail

THE Welsh Assembly Government should switch the focus of business support away from already successful companies to small firms in their crucial start-up phase, according to a leading proponent of entrepreneurship.

Chief executive of Venture Wales Phil Cooper says he would like to see a national debate about how the Welsh economy can be improved.

Venture Wales began in the Valleys in 1983 and is now the biggest business support organisation in the country, offering advice and help to more than 1,000 companies a year.

Mr Cooper said he was “horrified” when he read a recent article in the Western Mail about the latest GVA (Gross Value Added) per head figures, comparing average income levels in Wales with those in other parts of the UK. The figures suggested the economic performance of Wales was the worst in the UK, with GVA per head in 2006 running at just 77% of the UK average.

At one time the Welsh Assembly Government had a target of getting the Welsh figure to 90% by 2010. Regional GVA figures for 2005 also suggested the Objective One European aid programme for West Wales and the Valleys had little impact on improving economic performance in Wales’ poorest communities.

Emphasising that his opinions were not influenced by the commercial considerations of Venture Wales, which has a substantial property portfolio, Mr Cooper said, “I think there is a duty on all of us involved in trying to improve the economic performance of Wales to think seriously about this matter and consider carefully the best way forward. There is no point in trying to pretend there isn’t a problem when the statistics prove otherwise.

“I have serious reservations about the Assembly Government’s recent strategy of trying to pick winners. Rather than focusing on companies that are already successful, it would surely make sense to concentrate on helping start-ups. In many cases, start-up companies just can’t afford to take on long-term leases.

“One of the problems with backing already successful companies is that most of them are in the parts of Wales that have done relatively well economically. That perpetuates a Cardiff-centric, M4 corridor emphasis, when we should be stimulating new small businesses in places like the Valleys. It is perverse to help companies in richer areas at the expense of those in the poorer parts of Wales.”

Mr Cooper put forward a number of further points, which he said could help improve the economic performance of Wales:

Refocus the economy and transport department of the Welsh Assembly Government on the real needs of its external stakeholders rather than navel-gazing on its internal problems. There is a need for rationalisation based on actual market needs not on public sector perceptions;

Stop officials talking about confusion in the business support market as if it were caused by the delivery chain and providers of services – the biggest culprits are public sector bodies who have developed programmes in isolation;

Face up to the reality that several key government programmes that seem to be the nucleus of current strategy are not achieving anywhere near the expected outputs and have failed. Redirect the resources into programmes that have a history of success and you get more value for money – not the other way round, as is the current scenario;

Reduce the red tape and bureaucracy involved for small firms and individuals who try to access publicly funded business support programmes. Entrepreneurs tend to favour approaches that are high on innovation and low on bureaucracy;

Clarify the role of the economy and transport department and decide if they are fund-holders and programme managers of government funds or deliverers of services to small firms. Evidence suggests that their skill sets and cultural values are better suited to the former rather than the latter;

Establish economic development targets as this will make it easier to measure success and capture the enormous goodwill available from the numerous business support organisations involved with the delivery of services.