The funding landscape in South West Wales until 2020

As I look out of my office window at the undulating Carmarthenshire countryside, I wonder how the next round of European Structural Funds and the Wales Rural Development Plan (RDP) will impact both the urban and non-urban parts of South West Wales.

Once again both programmes are arriving late, with many existing funded bodies still on tenterhooks as to whether funding will arrive before they reach a critical point. Will they wither away in waiting, or refresh their various business offerings infused with new cash? I hope for those that survive, they do a better job this time around, to develop projects that leave a lasting economic or environmental legacy beyond a fading, expensive brand.

Landsker Business Centre-Carmarthenshire

Make hay whilst the sun shines

I have been led to believe by many ‘in the know’ that post 2020, most of the funded support will cease, so Welsh SME businesses have five years to ‘make hay whilst the sun shines’.  However in order for businesses to benefit from this cash windfall, they will need to comply (probably) with a number of key criteria.

First and foremost to receive capital grants, many programmes require businesses to create long term sustainable jobs, that are likely to exist beyond the grant term. The more skilled and well paid the job, the more grant may be available. Secondly, they will need to demonstrate good or improved viability and ideally offer something additional to Wales, rather than creating business displacement (i.e. robbing Dai to pay Dewi).

Other important factors to get funding brownie points will be to show innovation, implement and use latest ICT, receive supplies from other EU countries, be environmentally responsible, have the propensity to show year on year growth and ideally be able to export (note that selling to England across the Severn Bridge does not count as exporting!).

Who will receive support?

Once again, there will be an array of diverse programmes supporting certain sectors or themes and once again, there will be hoops and hurdles to navigate. Generally speaking, the schemes launched will support Welsh Government’s nine priority sectors, which are reckoned to deliver more ‘bangs for their bucks’: 1. Advanced Materials & Manufacturing, 2. Construction, 3. Creative Industry, 4. Energy & Environment, 5. Financial & Professional Services, 6. Food & Farming, 7. ICT, 8. Life Sciences and 9. Tourism.

However, we believe that pre start and existing business outside these nine sectors, which can provide a compelling case for support can also be helped; it will be down to the quality of their business case and their overall competence.

Support for land owners and accelerated growth

Early signs show that some business delivery programmes may have improved. For example, the new Farming Connect programme (opens in October 2015), has changed its qualification criteria to suit smaller land owners (who tend to be more likely to diversify) and to extend support to food manufacturers and pre-start businesses with an interest in farming and ‘the land’.

A brand new programme, aimed at very high growth businesses who want to, and can grow by 20% year on year for the next three years (snappily called Business Wales Accelerated Growth), has just opened. It is really innovative, the core idea being taken from successful English SME support schemes, coincidentally entitled Accelerated Growth.

Wales has not seen the likes of this type of programme before, which is a huge economic shame, but better late than never. It will provide Welsh SMEs with more or less “free”, expert, support in areas specific to their particular needs; it is not an ‘off the shelf solution’ like previous schemes. Business Wales Accelerated Growth programme is not for the faint hearted though, with the level of support given being ratcheted against the outputs created (i.e. jobs created, turnover growth, value of investment, export potential etc.).

It could be argued that the most highly successful Welsh SMEs do not need such funded central support as they will get there anyway. In my view, accessing the new Welsh Accelerated Growth programme will probably help them get there sooner.

Encouraging innovation and export

It’s also good news for those businesses that are especially innovative and are solving technical problems or inventing new things. Welsh Government has put in place a wide range of support to encourage inventions and R&D, protect the Intellectual Property so as to safeguard the long term economic value of these ideas that originated in Wales. Good news also if you are exporting or want to export for the first time. Welsh Government sees the export marketplace as an increasingly important economic driver and have put in place various schemes to promote this. There is a great scheme in place called Enterprise Europe Network which can help a lot with ‘shovel ready’ pre export firms. However, not many firms are accessing it.

Ongoing support for start-ups and existing businesses committed to growth

In January 2016  the main business support programme to encourage new business starts and established businesses to grow, will open. This also looks more interesting than past delivery models, with levels of support being proportional to the likely outputs to be created. It is hoped that whoever delivers this programme (currently called, Entrepreneurship and SME Support service), will provide bespoke business services that deliver long lasting economic benefits, rather than creating another gravy train.

I also expect there to be many local initiatives using RDP cash, devised and delivered by unitary authorities working together. We may see a scheme similar to the Local Investment Fund reappear, which previously helped businesses in lots of small grant interventions. We may also see more specialist schemes, where funds are available to update and reuse old buildings suited to modern business needs.

The Social Enterprise Support project delivered by Wales Cooperative Centre has also just reopened and is aimed at helping third sector organisations become more viable and sustainable. To qualify for support the social enterprise will need to demonstrate growth potential resulting in new jobs and improved financial performance. Sadly, many third sector organisations have either “gone to the wall” or are likely to fail as they have been far too “social” and insufficiently “enterprising” to protect their “bottom line”. Wales Cooperative Centre can offer really good support in a wide number of areas including business planning, marketing, HR, governance and training for those social enterprises that are more commercial, whilst still realising their social aims.

Getting back into work

Skills Gateway offers lots of help to subsidise employment and training costs. This offers a range of schemes, of which Jobs Growth Wales has been extended and been really successful in getting out of work youngsters (aged 16-24) into jobs. Another new scheme is also about to launch called the Active Inclusion Fund, which helps ‘older’ people and those most excluded from the labour market to get back into work. Both will offer salary and training subsidies for skills development and new job creation

The funding future?

In conclusion, the future looks bright in terms of accessing support for your business. A simple rule to remember is that the greater your business’s potential and the more your business succeeds, the more support you will be likely to draw down.

The only problem when nearly £2 billion of cash is being introduced to Wales over the next five years, is that the processes set up to deliver this financial benefit often use up a large wedge of ‘our money’ rather than delivering maximum benefit at the coalface. Also, many business support programmes  will still be couched in language that a business owner does not understand. Don’t worry about that, consider using Landsker as your “interpreter” and “translator” to guide you as to what may be relevant and beneficial to your business.

Let’s hope that lessons have been learnt in South West Wales from the previous rounds of Objective 1 and Convergence funding, and this time around ‘shedfuls of hay’ are made by many SMEs, who are the bedrock of the Welsh economy.

Jeremy Bowen Rees

(Jeremy Bowen Rees, Managing Director, Landsker Business Solutions)

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Jeremy Bowen Rees

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