FSB Wales has published new research today on the future of business support. Building Businesses: Building Communities Through Business Support in Wales provides an overview of the changing landscape of support for small businesses in Wales and points to the importance of business support architecture in recovering from the pandemic and growing the Welsh economy.
The current support available from both Welsh and UK governments has played an essential role throughout the pandemic, helping many small businesses navigate through the challenges presented by Covid. Numbers of small businesses accessing funding after March 2020 rose to 78%, as Welsh firms battled against the impact of the pandemic and the resulting restrictions.
While our findings suggest the most common reason for small businesses in Wales to access support from Business Wales and other streams has been to recover from the pandemic, small businesses in Wales remain aspirational and resilient, with ambitions of growth of at least 20% per annum.
However, that growth is dependent on joined-up support, as 40% of SMEs still plan to seek public sector business support in the next two years.
Our findings clearly reinforce the huge need for business support architecture in Wales to be clearly and concisely communicated. Currently 83% of small Welsh businesses are aware of Business Wales, which recent data from Welsh Government suggests boosted the Welsh economy by an estimated £790m a year by mid-2021.
The growth potential following the re-opening of the economy is being threatened by a concerning disconnect between Westminster and Cardiff Bay on future scenarios for business support. This is causing confusion and risks a danger of duplication and disconnection between administrations, threatening a bad return on investment for public money.
Wales previously received approximately £400 million a year of European Structural funds, currently replaced by the UK Shared Prosperity fund. Just under a quarter of Welsh SMEs have benefitted from structural funds, but the future of this support remains unclear.
The confusion around the Shared Prosperity fund and future business support is bad for business and FSB makes the case that urgent clarity is required. However, the research clearly indicates that new relationships and shared purpose between governments is not only necessary but desirable to grow Welsh businesses in a sustainable and resilient way.
FSB Wales Policy Chair Ben Francis said:
“Supporting small businesses has never been more important. For some, the doors will have only just recently opened after a particularly challenging festive period.
As we look to the potential for an end to the current restrictions at the end of March, many small businesses will be preparing for an influx of rising costs at once, with National Insurance contributions for employers set to increase by 1.5%, along with energy bills and VAT rising from the current reduced rate to 20%.
Combined with staffing difficulties and supply chain issues, providing long term sustainable room for growth for small businesses in Wales is of the upmost importance.
This will require UK and Welsh Governments working together to overcome the current political impasse provide long term clarity.
If we are to look to sustainable economic re-growth and long-term development, then we need services and institutions underpinned by strategic vision and long-term stability. That’s why we’re calling for an Economic Development Bill in Wales to cement that architecture around business support and growth to meet the aims of businesses and the communities of Wales.”
