Thanks to the Government of Wales Act, from May 3, following elections, the Welsh Assembly Government has primary law making powers. But what does this mean for Welsh businesses? Wyn Jenkins asks what businesses want and what the political parties say they will do with the extended powers.
The Welsh Assembly is now in recess and the 3 May 2007 elections are just around the corner. These elections, however, are no ordinary elections for Wales. Whichever party gets into power - or ends up sharing power if some predictions are correct - will have more power over Wales and Welsh life than any other Welsh-elected political body in history.
This is thanks to the Government of Wales Act 2006, a piece of legislation that gives the Assembly primary law-making powers for the first time in its history.
The exact scope of these powers will be very much down to how the Assembly chooses
to use the Act. But there is no doubt that this represents an opportunity for Wales to take control of its own destiny in a way that it has not had the power to do for a very long time.
Cynics in the business community should understand this. "It is all too easy for businesses to be dismissive or cynical about the ability of the Assembly to do good," said Dave Pritchard, dean of the school of management at UWIC, speaking at Ballot Box to the Boardroom, an event designed to promote the engagement of businesses with the coming election. "That is a big mistake. The Assembly has a £314bn budget and is in control of key things such as infrastructure and skills. Unless business spots that as something they can assist with, they are missing a trick."
Pritchard argues that while many Welsh businesses are dismissive of the powers of the Assembly, they also have unrealistic views on what it can do. "Take a realistic approach and engage. They will answer emails and meet with people," he says of the politicians. "It is vital that - especially in the context of its new powers - that the business community in Wales becomes more actively involved with politics in Wales."
Glyn Mathias, electoral commissioner for Wales, speaking at the same event, adds that while companies in Wales may find themselves frustrated with the Assembly, they should count themselves lucky. "Businesses in Wales actually have far more access to politicians than in Westminster. Make use of it."
But how exactly do businesses in Wales want the Assembly to use the power invested in it by Welsh voters? Even without the Government of Wales Act there are many ways in which the Assembly could improve the lot of businesses in Wales and the attractiveness of Wales to would-be investors. The flip is there are also many things the Assembly could make things a whole lot worse.
"It is a double-edged sword," says David Rosser, director of the Confederation of British Industry (CBI) Wales. "There is undoubtedly the temptation with the Government of Wales Act to go out and grab more power. But you have to ask whether we have the ability to use that effectively. All businesses really want is consistent and transparent regulation and certainty. There are many things we want the Assembly to do, but they involve improving the type of place Wales is to do business rather that tweaking rules."
Business leaders also stress that having a regulatory regime vastly different to England could harm the Welsh economy. It would make things confusing for businesses operating each side of the border and could hinder inward investment.
At the same time, however, Wales must be careful not to be left behind by legislative changes elsewhere. Ann Beynon, director of BT Wales, stresses that it is important the Assembly keeps abreast of legislation in Europe and Westminster and takes a considered approach to what it alters and adopts "Wales should not rush into everything with its new power and change every draft of legislation that comes from Westminster. But equally it must not let things slip through the net so Westminster is doing things we are not. We need to be careful there are no gaps."
Rosser wants the Assembly to deliver on the big things before it gets too caught up in legislative differences. Transport infrastructure is first on the CBI's list. It would like to see more of the economic development budget spent on transport and infrastructure. "We need a 21st century infrastructure in the 21st century," he says. "This is a key issue for Wales."
Secondly, the CBI wants the Assembly to invest in improving the skill levels and education of young people in Wales. "People are not served well by the education system in Wales now," he says. "It is a problem across the UK. But there will be a prize for whoever gets it right first."
Planning is next on the list - a big bugbear with the business community. "If you could just sort out the planning system and get hearts and minds moving in the same direction so that things happened faster in Wales, there could be huge rewards. There is a strong argument that local authorities are not best placed to make non-residential planning decisions and that more could be done centrally with the Assembly."
Rosser reiterates he would prefer the Assembly did not use its extended powers to start tweaking regulations. He simply wants it to deliver on the basics.
"We are in a different place with the Assembly now," he says. "It did have some growing pains, but it is in its third term now. It might have new powers, but we are less interested in a shopping list of what we want and more interested in how good government can be. It is critical it uses its new powers effectively. It is not good enough to have vision statements and action plans any more: we need delivery now. It must spend what it has well."
The Federation of Small Businesses (FSB) in Wales takes a similar approach to the CBI, highlighting improvements to the business environment in Wales rather than advocating major regulatory reform. "Small businesses will be looking to the Assembly to ensure that where these (extended) powers are exercised in areas affecting the private sector, they are not used to restrict or limit its operation nor to add to the bureaucratic burden, but rather to create the right environment for businesses to thrive and become more competitive," it said in its election manifesto.
Improvements in infrastructure and skill levels in Wales are also key points to the FSB. But it also sets out calls for the Assembly to consider some specific measures. It believes business rate relief should be increased to achieve parity with England; an employer apprenticeship subsidy be introduced to encourage on-the-job training; and the issue of succession planning within Welsh businesses be addressed. It also believes the grant system should be revised in favour of a system of soft loans, encouraging a culture of
investment. It would also like to see entrepreneurship taught as a subject in schools in Wales.
Brian Morgan, the soon-to-be professor of entrepreneurship at UWIC, has similar priorities. He says he would like the Assembly to target two things: building up indigenous Welsh businesses and improving the infrastructure in Wales. With regard to the first aim, he also believes the Assembly needs to address succession planning in Welsh companies. He also believes it should target business rate relief, reducing it for companies that employ a lot of people or generate wealth for Wales. "Or why not target fast growing companies?" he says. "If revenues increase by a certain level over a certain period, then perhaps a 50 per cent rebate could be awarded. You use it to reward success."
Morgan would also like to see the Assembly use its powers to reduce bureaucracy and improve the regulatory regime in Wales. He is especially concerned by the prospect of Welsh businesses having to keep pace with regulatory change on three fronts: Brussels, Westminster and Cardiff.
"They should be absolutely committed to reducing the burden on Welsh businesses and adopt more of a risk-based approach to regulation. If a company has never had any problems, perhaps it could be inspected a bit less. They should aim to make Wales the most burden-free economy geared towards small business growth in the world."
This applies especially to the planning procedures, Morgan says. "If you could streamline that, it would give us a huge advantage. Beynon at BT agrees. "I would also like to see the planning system improved. If that could be faster and more efficient, that would be very helpful."
Morgan also advocates the use of private finance initiative (PFI) agreements. He would like to see an over-arching investment plan put in place for Wales so that it is clear what investment is coming in and what is needed. Ways in which the difference could be made up through a Welsh version of PFI should be explored, he says. He also advocates the use of such agreements to target renewable energy projects. He believes Wales should seriously consider the proposed Severn Barrage, for example.
Morgan, along with the CBI and FSB, also believes the issue of procurement should be addressed in Wales. While competition and quality must come first and foremost, anything that could encourage the use of Welsh companies could represent a huge fillip to the Welsh economy.
Morgan stresses that Wales must address some of the big problems facing the country. He notes that the size of the public sector in Wales has grown to almost 55 per cent, a figure that is unsustainable. Ultimately though, Morgan hopes the new powers available through the Government of Wales Act, will help give the Assembly confidence. "At the moment we just mess around the margins, reluctant to do anything too different to England. It would be nice to see these powers used to do something significant."
Others agree. Beynon says she would like to see the Assembly be more decisive and take some tough decisions. She too acknowledges that the size of the public sector in Wales is unsustainable and believes the government has no choice but to face up to this problem. "The Welsh Assembly Government has a choice: either create wealth or cut back," she says. "It needs to pick its projects and get on with it. I find a leader is always the one prepared to put a dead cat on the table: the person prepared to take a risk. We need more dead cats on the table in Wales so at least they are not underneath it and smelling."
Also in: April 2007
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Keeping the lights turned on
A combination of global warming and dwindling traditional energy resources represents both a challenge and an opportunity for businesses in Wales. Basheera Khan reports.
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Shaking things up in the Americas
The US represents the most important overseas market for Wales in terms of inward investment and exports. And the way Wales engages with the market has just been given a fundamental shake up. Wyn Jenkins reports.