‘If EU funding is not replaced, small firms inWales will suffer’
Future governments must replace the millions of pounds of EU money that currently supports small firms in Wales or risk an economic slowdown, according to the Federation of Small Businesses.
In a report published today, the business organisation points out that in recent funding rounds the devolved governments of the UK have received some of the highest allocations of ESIF (European Structural and Investment Funds).
Wales receives five times more in per capita terms than England does.
This funding has provided a vital part of regional policy in helping local economies and businesses across Wales, the FSB says.
Given the importance of this funding to Wales, FSB Wales argues a similar funding distribution to that received in previous rounds should be retained.
As a net contributor to existing EU budgets, the UK should eventually receive a budgetary dividend once it leaves the EU. The FSB says the UK Government should, at the very least, aspire to maintain the level of funding currently on offer to support small businesses.
The new report, Reformed Business Funding: What Small Firms Want from Brexit, found that most businesses in Wales that have used EU-funded schemes believe the cash has had a positive impact on their business (68%) and local area (68%).
The research indicates the benefits of EU funding are even broader, with many other firms indirectly gaining from wider economic growth.
The research uncovers a clear relationship between the likelihood of applying for business support and growth ambitions among small UK firms.
Those looking to grow by 20% or more (89%) are far more likely to apply for support than those that aspire to remain the same size (65%).
Successful applicants for EU-funded schemes in Wales expressed a number of frustrations with the application process, the most common being the amount of information required to make an application (76%), the length of the application process (38%) and the need to meet excessive reporting requirements after funds are granted (23%).
To address these frustrations, FSB Wales is proposing a reduction in bureaucracy as part of a reformed business support landscape.
FSB Wales Policy Unit chair Janet Jones said: “This research demonstrates how vital it is for funding for Wales to be protected post-Brexit and for the Welsh Government to have oversight of this.
“However, there are opportunities to do this differently, with member businesses in Wales wanting to see spend concentrated on things such as transport infrastructure (20%), extended tax relief for small businesses (21%) and business support (20%).
“Should EU funding fail to be replaced in 2020, then it is clear that as a net beneficiary, Wales will be worse-off than much of the UK as a result. We are clear that this funding must be protected to ensure the continuity of business support.
“However, we need a new conversation with businesses to reinforce the benefit of this funding and bring them closer to what is an important public investment.
“Brexit offers the opportunity to improve upon how and where we use this money. We have called on the next UK government to ensure that it is replaced and will take forward a conversation with Welsh Government as to how it is used.”
Tony Sage, director of Safety Sage, a Caerphilly-based health and safety training business that has received EU funding, said: “The React 2 funding allowed me to broaden my skill base in a way that I wouldn’t have been able to otherwise.”