Oral - An update following the Fifth Economic Summit
I am pleased to have the opportunity to update members on the fifth Wales economic summit held earlier this month, on 7 April 2009. The full update paper presented to the summit has been provided to Members.
Recently published data show the challenge that we face. Gross domestic product fell by 1.6 per cent during the fourth quarter of 2008, and the latest labour market data indicates that the sharp deterioration in the market over the last few months has continued, although the overall position still remains reasonable compared with the past.
This emphasises the need for the Welsh Assembly Government to provide leadership, and to work with its stakeholders to ensure that it is in a good position to take advantage of the economic upturn. The Assembly Government cannot be accused of being complacent. The launch of the JEREMIE fund was announced only last week. JEREMIE is an innovative programme, and the first fund of its kind in Europe. This new fund, which is worth £150 million and will be delivered by Finance Wales, will add to the series of current support measures and will help to support the continuous development of the small and medium-sized enterprise sector in Wales. It will also address some of the difficulties facing companies in getting access to funding.
JEREMIE will allow Finance Wales to provide an unprecedented level of funding to small and medium-sized enterprises in Wales, and it will also ensure a higher level of joint investment with the high street banks. The new fund will invest over a period of five years, and it is a long-term commitment to supporting Welsh businesses. The fact that many other regions of the United Kingdom and, indeed, other European countries, have come to us to learn and benefit from our experience, is testament to our innovative approach.
Returning to the summit, leaders from all parts of Government, businesses and trade unions were present, together with representatives from further and higher education. At the last summit, the major problems being caused to business in Wales due to the reduction in loans from banks were highlighted. It was that discussion that established the parameters for more detailed discussion between ourselves and the banks. Representatives from the high street banks came together at the summit in order to launch a guide to small and medium-sized enterprises, produced jointly with the Assembly Government. The aim of this guidance, ‘A Guide to Accessing Bank Finance’, was to provide practical advice to small business to enable them to make effective and robust business cases when applying to banks for loans.
In addition, our relationship managers located in regional offices across Wales, use the Flexible Support for Business service and provide advice to enterprises on the best way of producing business cases to present to the banks. Publishing this guidance during the next few weeks is the first step in ongoing discussions between the Assembly Government and the banking sector, and the details of this advice and support service is currently being developed.
Attendees of the summit were also informed of a number of new measures introduced as part of our continued drive to lead Wales out of recession. The summits have emphasised the need for a rapid two-way flow of up-to-the-minute information between all sectors. Since the last summit, our website pages and booklets for employers and employment practitioners have been supplemented by a new publication on support for people. Around 600 business people attended the series of ‘Weathering the Storm’ seminars, held across Wales in Llandudno, Aberystwyth, Newtown, Swansea and Cardiff, to help businesses get through the recession and emerge ready for the new opportunities of the upturn. These practical seminars brought together private sector as well as public sector organisations to present a truly comprehensive package of business support services, including information on UK-wide schemes as well as measures available only in Wales.
We plan to bring forward £91 million of capital budgets from 2010-11 into 2009-10 in order to invest in labour-intensive projects across Wales. The capital funding relates to projects in the areas of health, and social services, affordable housing, education and the economy, transport and regeneration. That investment will provide an important fiscal stimulus to the Welsh economy and will safeguard jobs, particularly in the construction sector. We are determined to keep as many people as possible in their jobs through the recession, and we will use every opportunity to enhance the skills both of those in work and of people seeking work. The summit was pleased to hear that 32 applications for the £48 million ProAct initiative had been approved to date. ProAct has already helped around 2,000 people to stay in their jobs and to strengthen their skills, helping to secure their own future and that of their companies.
We also announced a major package of measures for unemployed people to gain new skills. They include plans to provide 3,500 jobseekers who have been out of work for at least six months with tailored training. Run in conjunction with the Department for Work and Pensions’s cash-back scheme, we will provide training support for employers if they hire jobseekers who have been unemployed for longer than six months. The established SkillBuild programme is to be extended to meet growing demand in the face of rising unemployment. SkillBuild provides pre-employment training for young people and adults, and it is estimated that up to an additional 4,000 people will benefit from this scheme during 2009. Extra support is to be made available to provide funding for a further 2,500 places for young people and adults in sixth forms and further education. Advice and guidance on skills and training is essential, particularly during the current financial situation. Given the rising demand for the services provided by Careers Wales, we will fund an additional 30 advisers, estimated to benefit over 17,000 people.
We are keen to see Welsh businesses win a greater share of the £4 billion-plus public sector procurement budget. The European Commission has advised that, during the current economic climate, accelerated procurement procedures can be used by the public sector, which would cut the overall length of the process from 87 to 30 days. This procedure can be used throughout 2009 and 2010 for all major public projects, and we are actively promoting the use of this procedure.
Business representatives stressed the importance of cutting the burden of taxation as far as possible during the present difficulties. The meeting noted that further changes mean that around 100,000 businesses in Wales will now be able to opt to limit payment of business rate increases to only 2 per cent this year out of the 5 per cent increase scheduled, with the remaining 3 per cent payable over the next two years. The new rate relief plans are in addition to the £20 million relief for small businesses in Wales and temporary increases in rate relief on empty properties in 2009-10 that took effect earlier this month.
The fifth summit confirmed the readiness of all involved in the Welsh economy to pull together in the face of global economic challenges, and to ensure we are ready for the upturn when it comes.