Time for the private sector to step up
Companies need to rely on strengths as Welsh Assembly cuts spending and calls time on the grants culture
Self-reliance will be the defining theme in Welsh business for years to come. That’s after the worst effects of the recession have been cushioned by two factors: the interventionist Welsh Assembly Government and a diverse private sector.
Early in 2009, the Assembly Government’s investment arm, Finance Wales, raised £150m, much of it from Europe, to invest in growing businesses. It could not have come at a better time, as private equity firms and banks were tightening their criteria and in some cases withdrawing from the market.
Ministers also came up with two schemes, ProAct and ReAct, to help companies train workers and take on those recently made redundant. Then there’s the fact that public sector employment in Wales is higher than elsewhere – and those jobs have been safe, which has kept money circulating through shops and the service sector.
But that will change. Assembly government spending will be £400m lower in 2010/11 and later cuts are likely to be deeper. Economy minister Ieuan Wyn Jones wants to move away from giving companies grants, towards what he dubs an “investment culture”. That’s a big change for some parts of Wales where grants have been a way of life for decades. While help will still be available, it seems an enterprising spirit will count for more than the ability to fill out forms – and who could argue with that?
The economy’s broad base will be an immense help. Unlike Scotland, for example, Wales is not particularly reliant on a couple of industries. It has a few sturdy financial groups led by insurer Admiral, but is also strong in manufacturing, technology, energy, food and drink, and TV production.
These industries rely on communications, which should be improved with the new Fibrespeed broadband link to North Wales. The electrification planned for the rail route from Swansea, Cardiff and Newport to London will also help.
Consumers who once travelled out ofWales to Bristol or Birmingham to do their shopping will spend more of their precious pounds in Wales now that the expanded St David’s shopping centre has opened in Cardiff. It may even lure some shoppers across from England.
The next decade will see Wales play up its underlying strengths. It’s less expensive to do business here – salaries are lower and so is property. The lifestyle is attractive – you are never more than 30 minutes from beautiful scenery or beaches. Nine out of ten people will tell you that Wales is friendlier. And small country status means places like Cardiff, with fewer than 400,000 people, can host international sporting and cultural events that they can only dream of over the Severn.
Perhaps the most striking example is the Ryder Cup, which will come to the Celtic Manor, 20 miles from Cardiff, in October 2010. Self-made tycoon Sir Terry Matthews turned the nursing home where he was born into a hotel and golf course worthy of golf’s top tournament. Ten years ago, Wales didn’t really do golf; it did rugby. But that historic cultural stuff did not bother Matthews. See, it’s all about self-reliance.
Douglas Friedli
Editor of Wales Business Insider based in Cardiff