Laying foundations for success
Last week AMs from across the party political divide took part in a debate on the role of the foundational economy in Wales.
At FSB Wales, we welcome such strong cross-party support for the development of the foundational economy. But it is important to take a step back to look at what the foundational economy is and how we can make it work for Wales.
Half a million people in Wales are employed in the foundational economy, which is built on the activities that provide the essential goods and services for everyday life in our communities. For example, this includes public infrastructure such as pipes, roads, cables, healthcare, welfare and education. The foundational economy is instrumental in both the public and private sector.
Unlike many sectors that are geographically prescribed, the foundational economy operates across the length and breadth of Wales, and it has long been argued that adequate support for the foundational economy can help replace the gaps left by declining industrial economies. Locally rooted businesses in the foundational economy make up around 40% of the Welsh workforce.
Interventions in last week’s Assembly debate included those from Hefin David, chair of the crossparty group on SMEs, who argued that better links across the Welsh valleys and stronger networks for small firms could help a business grow and remain well-established in the south Wales Valleys. Adam Price pointed to the need to grow and support medium-sized firms across Wales.
Ken Skates, Cabinet Member for Economy and Infrastructure, made an important intervention during the debate when he confirmed that the Welsh Government’s Prosperous and Secure strategy would include an important role for the foundational economy. This is something we look forward to working with the minister on, in order to inform the ongoing debate on SMEs and the future of the foundational economy.
In a Centre for Research on SocioCultural Change report, commissioned by FSB Wales, it is highlighted that much of the foundational economy in sectors such as care and food retailing might have a level of local monopoly. Therefore, taking a clear view on the procurement strategies applied to the foundational economy is increasingly important – allowing small businesses to benefit from procurement spend is key to helping develop flourishing local economies. This could involve negotiating with suppliers in the public and private sectors on issues such as sourcing, training and living wages. Securing diversity in the supply chain, alongside a commitment to involving the SME community, is one way to ensure that the foundational economy in Wales continues to be sustainable.
Anther way FSB Wales has suggested that we ought to support the foundational economy is for the Welsh Government to “raise the social ask” of all large-grounded businesses, for example by ensuring that major supermarket chains do not solve their own problems at the expense of Welsh producers who need fair prices and a UK-wide market for meat and dairy products.
The foundational economy concerns the care that we provide, the roads that we drive on, the greengrocers, butchers and supermarkets that we visit every week and many other essential services. It is a vital economy that is present in every town in Wales. The Assembly has recognised how crucial it is that we support the ability of these businesses to grow and thrive. Now we look forward to the Welsh Government taking up this challenge and making provision for this in the Prosperous and Secure economic strategy later this spring.
Janet Jones is chair of the FSB Wales policy unit.