GETHING ON HIS ECONOMIC PLAN
NEW Economy Minister Vaughan Gething said he would need to be convinced of the merits of creating something akin to a new Welsh Development Agency or outsourcing Welsh Government business support to the private sector.
He also said that the Welsh Government would be open to conversations about supporting Sanjeev Gupta’s business interests in Wales, despite a Serious Fraud Office probe into the steel magnate’s business empire and links to collapsed finance company Greensill.
A recent report from the OECD, while recognising the Welsh Government’s collaborative approach with local authorities and city regions through new corporate joint committees, said a new WDA-like body, with a regional dimension, could be established.
The WDA was abolished, with staff brought into the Welsh Government, in 2006. There are also those who believe Welsh Government business support should go one step further than a new at-arm’s-length WDA-type body by outsourcing it to the private sector – although private firms run some current programmes – with clear key performance indicators with financial penalties if they are not achieved.
Mr Gething said: “I am interested in the future of business support and the way that Business Wales [the business support brand of the Welsh Government] operates. It is not just the model it has, but the fact that a good chunk of its money comes from current European Union sources as well.
“So we really need to be clear about what is going to happen to that money and we may be forced to have another look at the way that business support operates, but I don’t think it would be helpful to move away from a single and well-recognised brand into having to do something different because it is forced upon us and then having an alternative competing set of brands introduced by different parts of the UK Government.
“I would need to be persuaded that we would get better outcomes if we had a privatised model of business support. So obviously, what works and why and where is the evidence, but you couldn’t do that by having a successful in-house brand as we currently have.”
On improving start-up activity and entrepreneurship levels in the Welsh economy, he said: “We want to see that happen as we don’t have the rate of business start-ups and new businesses growing that we want to see. That is part of our challenge.
“So, we do need to look at how we foster business growth and business start-ups. And the challenge is what the government can do, alongside others, to encourage people to take up a career as a potential entrepreneur themselves. There is always a challenge around the levers that government has and how it encourages people to do that [set up in business], but we certainly recognise that the rate of new business start-ups in Wales is something that we want to address.”
Mr Gething, previously Health Minister, has a departmental budget of around £600m. While it has taken on new responsibilities like tourism and innovation, its previous transport remit has moved into the new climate change department headed by Julie James and deputy Lee Waters.
Tata announced last year a separation of its Dutch operations with those in the UK, where it employs around 8,000 in Wales including 4,000 at its primary steel-making plant at Port Talbot.
That process is still progressing despite an aborted sale of the Dutch business to Swedish firm SSAB.
Tata has not commented on speculation of potentially moving to a less emitting arc furnace operation at Port Talbot, which would require a smaller workforce, or integrating any new furnaces and rolling capacity at Llanwern in Newport.
Tata has been in discussions with the UK Government over potential financial support under the so called Project Birch initiative set up to provide funding to companies deemed of national strategic importance.
The only funding provided to date has been to Cardiff-based recycled steel venture Celsa. The Welsh Government also provided the Catalanowned firm, that employs 800 in south Wales, a £2.9m loan and nonrepayable finance of £690,000 from its Economic Resilience Fund.
Mr Gething said: “At the recent Steel Council meeting, Tata certainly didn’t give any indication at all that they are looking to disinvest from the UK. We did have a broad conversation, though, about proposals from the industry and industry body Steel UK about how they want to progressively decarbonise the sector.
“There is obviously interest to as to whether there are arc furnaces or the blast furnaces that we have, in how to move to less carbon in production progressively. They want to do that without compromising the ability to produce effectively. So I am optimistic about the fact that the industry themselves have come up with a plan to move to net zero and it is about how we engage alongside each other to make that a reality.
“It was also good that in the meeting that [UK Business Secretary] Kwasi Kwarteng said he saw a strong future for the industry as well, as we haven’t always had such clear-cut commitments given about the UK Government seeing a future for the steel industry. We need to see that delivered consistently and obviously the actions alongside it.”
On Liberty Steel, which has operations in Newport and Tredegar with a combined workforce of less than 200, he said: “We are open to conversations with the company about how we maintain jobs and the capacity for the sector. We are still looking to have a constructive relationship with Liberty as part of a key economic sector for us.”
Mr Gupta is seeking to refinance his business empire and has put a number of interests in the UK up for sale. Mr Kwarteng rejected a request for £170m in UK Government funding, citing the opaque structure of Mr Gupta’s group company GFA Alliance, saying there was no guarantee that any funding provided would find its way to Liberty Steel and his other company interests in the UK.
The UK Government has confirmed that the replacement for EU structural funding will bypass the Welsh Government, but with local authorities and city regions able to bid for funding through the Shared Prosperity Fund.
Asked what the Welsh Government will do to support bids in Wales, Mr Gething said: “We have got a range of regional bodies that exist now, like the corporate joint committees, city regions and growth deals, with local authorities that are more collaborative. We need to understand what that architecture looks like. It is not about politicians arguing with each other, but it is actually how do you provide a framework that help businesses to not only exist but to grow.
“However, it would be eminently preferable if there was a proper conversation with the Welsh Government about how the Shared Prosperity Fund works in practice, so that we don’t set up routes to finance and business support that are deliberately contradictory. It would be much better if we were able to design these things together.
“We are looking to be pragmatic about the first year [of the Shared Prosperity Fund] but let’s make no mistake – the deliberate attempt to circumvent the Welsh Government and devolved responsibilities after 20-odd years is not helpful and not a good thing for the prospects of the union and actually our ability in Wales to maximise the benefit for the Shared Prosperity Fund in the future.”