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The Auditor General for Wales

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Report by the Auditor General for Wales

Presented to the National Assembly on 9 May 2000

This report has been prepared for presentation to the National Assembly for Wales under the Government of Wales Act 1998.

John Bourn 
Auditor General for Wales 
National Assembly for Wales
Cardiff Bay
Cardiff
CF99 1NA

9 May 2000

The Auditor General for Wales is totally independent of the National Assembly. He certifies the accounts of the Assembly and its associated sponsored public bodies; and he has statutory authority to report to the Assembly on the economy, efficiency and effectiveness with which the Assembly and its sponsored public bodies have used their resources in discharging their functions.

This report was prepared for the Auditor General for Wales by the National Audit Office Wales.

For further information about the National Audit Office Wales please contact:

National Audit Office Wales
23-24 Park Place
Cardiff
CF10 3BA
Tel: 02920 378661

email: ian.summers@nao.gsi.gov.uk

Web site address: http://www.agw.wales.gov.uk/index.htm

• Introduction
• The Agency's main approaches to and activities for supporting indigenous businesses
• The Agency's processes for appraising, monitoring and evaluating the effectiveness of its support for indigenous businesses
• Conclusion
• Appendix 1: Previous enquiries by the Welsh Affairs Committee into support for industry in Wales
• Appendix 2: Examples of support schemes and initiatives under the Agency's main business development programmes
• Appendix 3: Main public sector or publicly funded bodies providing support to indigenous businesses in Wales
• Appendix 4: Assembly administered and European funded economic development programmes in Wales

1. Following a request from the National Assembly’s Audit Committee, the Auditor General for Wales asked the National Audit Office Wales to produce an overview of the activities of the Welsh Development Agency that focused on:

• identifying the Agency’s main approaches to and activities for supporting indigenous businesses, in the context of its programmes overall; and
• outlining the Agency’s processes for appraising, monitoring and evaluating the effectiveness of its support for indigenous businesses.

2. This report describes and illustrates the range of the Agency’s activities and achievements at a time of considerable change for the organisation, not least its amalgamation with the Development Board for Rural Wales and the Land Authority for Wales on 1 October 1998 and ongoing changes to the Agency’s responsibilities. The report does not attempt to provide a comprehensive directory of all the services available from the Agency, but sets out in broad terms the Agency's framework and mechanisms for supporting businesses in Wales. In particular, it shows that the Agency’s support for indigenous businesses in Wales encompasses more than just its business development functions, and ranges from securing and preparing land for development to providing premises and other infrastructure.
3. In preparing this report, the National Audit Office Wales took account of previous enquiries by the Welsh Affairs Committee into economic development issues in Wales (Appendix 1). The National Audit Office Wales also notes that the Assembly’s Economic Development Committee has appointed an independent expert advisor to undertake a review of support available to businesses in Wales.

The Agency’s main approaches to and activities for supporting indigenous businesses

4. Indigenous businesses in Wales include firms ranging in size from sole traders to substantial businesses and are involved in every sector from agriculture to electronics and from medical supplies to art and design. Most indigenous businesses in Wales, however, are small and medium sized enterprises, employing fewer than 200 people each. There are over 60,000 of these enterprises in Wales, employing over 600,000 people overall, about two thirds of the workforce in Wales. These firms are of great diversity and with differing needs both within and between business sector and geographical location.

   The Agency’s aims and objectives in supporting indigenous businesses

5. The Agency’s mission is "to increase the economic prosperity of the people of Wales, and to make Wales the best place in which to live and work, by promoting globally competitive industrial and commercial activity, with a highly skilled and well paid workforce in a good environment, and providing employment opportunities linked to the capabilities of the workforce". Within its total annual programme budget (£176 million for 1999-2000) the Agency undertakes a wide range of activities geared to supporting the creation and development of existing businesses in Wales, to encouraging inward investment from outside the region and to promoting the growth of firms.
6. The Agency’s main aims and objectives for providing support to indigenous businesses in Wales applies equally to inward investors and are based on:

• securing and preparing land for development, including the reclamation of derelict land;
• facilitating the provision of infrastructure to support businesses;
• providing or procuring industrial and commercial properties to encourage businesses to locate at particular sites; and
• providing support and development programmes to assist businesses to grow.

7. The Agency considers all four of these activities to be integral parts of its support for indigenous businesses and they have been provided by the Agency throughout its lifetime, to differing degrees. An exception is the provision of enterprise support, which was transferred from the Agency to the Training and Enterprise Councils in 1991. The former Development Board for Rural Wales continued to provide enterprise support in its area of operations and as the Mid Wales Division still undertakes that role as part of the enlarged Agency. The Assembly has yet to decide which body or bodies will take on future responsibility for enterprise support in Wales following the winding up of the Training and Enterprise Councils on 1 April 2001.

   The Agency’s main activities in supporting indigenous businesses

   Land acquisition and strategic sites

8. The Agency expects to spend some £24 million in 1999-2000 on land acquisition and the development of strategic sites, including the development of specific industrial sites for major indigenous business expansions and for inward investors as strategic employment sites.

   Land reclamation

9. The Agency expects to spend around £19 million in 1999-2000 on its land reclamation programme. Besides rectifying physical and contamination hazards, the programme is also intended to prepare land for development by indigenous businesses and inward investors.

   Provision of buildings

10. The Agency expects to spend some £36 million in 1999-2000 on the provision, directly and indirectly, of advance and bespoke buildings for indigenous businesses and inward investors. The Agency provides advance buildings in areas where there is no adequate private sector construction activity and a shortage of quality premises to assist indigenous business expansion and inward investment promotion. The Agency also provides bespoke buildings for key established businesses, mainly in joint ventures with the private sector.

    Community regeneration

11. The Agency expects to spend some £18 million in 1999-2000 on its regeneration programme. This provides projects that enhance the economic and commercial prospects of specific areas. The programme has been targeted to areas in West Wales and the Valleys.

    Business development

12. The Agency expects to spend some £23 million on its business development activities in 1999-2000, nearly half of which was to support rural areas. For 1999-2000, the Agency increased its budgeted support for indigenous business by some £8 million. The Agency has also increased the number of staff it deploys to help and advise indigenous companies, particularly on its regional business development teams.
13. The objective of the Agency’s business development function is to promote business growth, innovation and competitiveness in the economy of Wales. The Agency has identified key characteristics required for developing a successful business (product, process, people, finance, market, infrastructure) and they form the framework upon which the Agency’s programmes have been modelled (Appendix 2). These programmes focus on:

• access to finance and markets;
• transfer of technology and innovation;
• promoting the use of new media, modern communications and information based activities; and
• supporting skills development at all levels.

In addition, in 1998, the then Secretary of State gave the Agency specific responsibility for supporting the agri-food sector.

14. The Agency also provides financial support to other organisations directly involved in the provision of support for indigenous businesses. Some examples are:

• support for Regional Business Connect;
• Wales European Information Centre;
• Wales Co-operative;
• Chwarae Teg;
• Menter a Busnes;
• Arts Council for Wales; and
• Welsh Lamb and Beef Promotions.

15. To illustrate the range of actions and interventions by the Agency and the former Development Board in supporting indigenous businesses in Wales, Figure 1 sets out some case study examples. These illustrate the nature of the Agency's support, from providing land and factory premises to business development programmes.

    Delivery of support to indigenous businesses

16. The Agency’s organisational structure for delivering business support is based on four regional divisions covering North, Mid, South West and South East Wales together with four Wales-wide divisions covering business development, land development, international and marketing activities and strategic policy. Figure 2 summarises the contribution made by the Agency’s main operational divisions in delivering support to indigenous businesses in Wales. The Agency’s divisions are staffed by professional people whose experience and skills complement the Agency’s programme activities through the advice and support they provide to individual businesses in Wales.
17. The Agency undertakes most of its support for indigenous businesses in partnership with a wide range of bodies in both the public and privates sectors. Major strategic public sector partners include the Assembly, the unitary authorities and the Training and Enterprise Councils (Appendix 3). In this process, the Business Connect network is the main delivery mechanism for support to new and existing businesses in Wales. The Agency also undertakes its support activities within the context of wider Assembly administered and European funded economic development programmes in Wales (Appendix 4).

Figure 2: Welsh Development Agency organisational structure for delivering support to indigenous businesses in Wales

The Agency’s Business Development Division focuses on a range of support programmes for businesses in Wales, such as providing access to finance and markets, promoting innovation and the transfer of technology, encouraging the use of modern communications, information technology and media, and providing specific support for the agri-food sector. The Agency’s business development function includes initiatives to promote and encourage the creation of new enterprises in Wales as well as activities to encourage the growth and development of existing businesses in Wales. A result of the Agency’s merger with the Development Board for Wales and the Land Authority for Wales has been the broadening of the business development function with the aim of supporting more effectively small to medium sized enterprises and rural communities as well as medium and large sized businesses. Members of the Agency’s Business Development Division staff are based in the Agency’s headquarters in Cardiff as well as in each of its four regional offices.

Land Division

The Agency’s Land Division supports and encourages the creation of land development opportunities in situations of market difficulty across the whole of Wales, for indigenous businesses and inward investors alike, as well as land for housing. The Land Division carries out its land assembly, development and disposal activities in concert with both the public and private sectors. The Division as well as the Agency’s four regions undertakes land related activities, including strategic employment sites, urban regeneration and town improvement schemes. Members of the Agency’s Land Division staff are based mainly in the Agency’s headquarters in Cardiff and at St Asaph.

International and Marketing Division

As well as being responsible for attracting inward investment into Wales, the Agency’s International and Marketing Division promotes business support to indigenous companies in Wales.

North Wales Division

The Agency’s North Wales Division provides economic and social development support to an area with a population of over 600,000 people (21 per cent of the total population of Wales) and includes both the most prosperous and least prosperous counties of Wales. Recent initiatives supporting indigenous businesses in the region have included the deployment by the Agency of additional rural support executives, to work with rural businesses and communities in the food sector, and the development of an agri-business programme, to provide grants for food processors and business reviews for young farmers. The Division also undertook assessments of the forestry and landscape industries to inform the development of appropriate support initiatives for businesses in these sectors.

Mid Wales Division

The Agency’s Mid Wales Division provides support services for a population of over 230,000 people (8 per cent of the total population of Wales), but comprising some 40 per cent of the land area of Wales. The Division is giving priority to supporting new business formations, developing indigenous businesses and attracting appropriate investment from outside Wales. Recent activities supporting indigenous businesses have included a comprehensive agr-business programme, support for innovation and technology within small and medium sized enterprises, and an energy efficiency programme. The Division supports the Business Connect network, including the provision of an advisory service for rural retailers.

South West Wales Division

The Agency’s South West Division serves a population of over 650,000 (22 per cent of the total population of Wales). The area is economically diverse, with a high dependence on agriculture and small indigenous businesses. The Division piloted the Agency’s Mentoring Scheme for sharing business experience in rural Wales. Recent initiatives to support indigenous businesses have included actions under the Agency’s Source Wales programme in Milford Haven and involvement in a number of joint ventures with local authorities and other partners.

South East Wales Division

The Agency’s South East Wales Division covers an area with a population of 1.2 million people (over 48 per cent of the population of Wales), and a workforce of nearly 650,000 (50 per cent of the total working population of Wales). Within the area there are pockets of economic and social deprivation, particularly in the South Wales Valleys. Support for indigenous businesses includes a range of specialised programmes designed to improve the competitiveness of small and medium sized enterprises through introduction of modern technology and, through the Source Wales programme, adoption of World-class ‘best practice’.

Source: Welsh Development Agency

New priorities and programmes

18. Against the background of the Assembly’s National Economic Development Strategy for Wales, the Agency has identified four new key priority areas and is developing a new programme structure (Figure 3). The Agency plans to refocus its activities and resources over the next three years towards its new strategic priorities, through a combination of enhancing those existing programmes that contribute most to these priorities, reducing others and developing new programmes aimed at achieving prosperity across Wales.

Figure 3: The Agency’s new strategic priorities and delivery programmes for economic development in Wales

19. The Assembly has also recently proposed the creation of a new company, Finance Wales, to be responsible for providing debt, equity and management support to small and medium sized enterprises in Wales that are unable to raise finance from commercial sources. Under these proposals, Finance Wales will be a wholly owned subsidiary of the Agency, accountable to the Assembly.

    The Agency’s research and consultation activities

20. The Agency carries out research and economic analysis to inform its programme development and project support activities and to identify business needs and market opportunities. In its 1999-2000 Business Plan the Agency undertook to carry out a thorough analysis of the economy in Wales to provide a basis for its 2000-2003 Corporate Plan and strategic operational objectives, and to inform discussions about longer-term economic development strategy in Wales. In December 1998 the Agency established a panel, comprising a small group of economic development practitioners and policy analysts to carry out an economic analysis of Wales. The panel’s report was published in May 1999 and its key conclusions formed the basis of the Agency’s 2000-2003 Corporate Plan.
21. The Agency also undertook to carry out a major study of the needs of indigenous businesses in Wales. This work is intended to be a definitive survey of small and medium-sized indigenous businesses in Wales. The Agency invited tenders for this study in early 2000 and plans to publish the results on completion. The start of this study has been delayed because of extended discussions between the Agency and the Assembly about the aims and focus of the proposed research.

The Agency’s processes for appraising, monitoring and evaluating the support it provides for indigenous businesses

22. Within its operational programmes the Agency adopts a project-based approach to providing support for businesses in Wales, whatever their origin or ownership. The Agency sets out its key project management requirements in its Code of Practice.

    The Agency’s appraisal and approval of projects for support

23. The main characteristics of the Agency’s project appraisal and approval procedures are summarised in Figure 4. The Agency operates specific processes and procedures for joint venture projects, in reflection of the wide range of public and private sector bodies it deals with.
24. The Agency’s project appraisal arrangements apply in practice to all capital and those revenue projects over £25,000 and, in principle, to revenue projects below £25,000. The Chief Executive has delegated authority to approve projects (up to £4 million for major capital projects and up to £400,000 for major revenue projects). All approvals given by the Chief Executive or an Executive Director above £500,000 are formally reported to the Agency’s Board. Assembly approval is required above the Agency’s delegated limits.

The Agency’s project appraisal requirements include:

• Checking that the project is within the Agency’s powers to support;
• Appraisal of the options for delivering the proposed project;
• Examination and recording of the project’s anticipated inputs and outputs;
• Securing written approval, from specified delegated authority holders, before agreeing to support a project in principle and before making a commitment to support a project.

Project approval

The Agency’s project approval requirements include:

• Use of a standardised format for approval submissions;
• Peer review of draft submissions;
• Consideration of submissions by the Agency’s Senior Management Team and Board before formal approval or rejection by the Board and Assembly where appropriate;
• Standard format for any subsequent submissions for approval of the same project.

Source: Welsh Development Agency

25. The Agency operates within a framework of strategic targets. Previously set by the Secretary of State and now by the Assembly, they relate to creating and securing jobs, securing private sector investment and reclaiming and developing land for development. Each of the Agency’s divisions submits a monthly management report to the Agency’s Board, detailing planned and actual activities and outputs against strategic targets, together with any key issues for Board level attention. This process includes reporting on significant matters to do with the progress of indigenous business support projects, resulting from the Agency’s routine project monitoring.
26. The Agency’s project monitoring shows it to have been successful in recent years in reclaiming land and completing individual building and infrastructure projects to support the development of indigenous businesses. For example:

• the reclamation of the 350 acre former Oakdale Colliery site to provide an area of over 170 acres available as a development opportunity in the Valleys;
• the construction of ten factory premises, totalling nearly 113,000 square feet of floor space, throughout Mid Wales, including advance units at Machynlleth, Builth Wells, Cardigan, Talgarth and Llandrindod Wells and bespoke premises at Bala, Machynlleth, Dolgellau and Hay-on-Wye;
• the construction of a 25,000 square foot business unit at Mona Industrial Park, Anglesey, as a development specifically tailored to the needs of the food industry;
• the completion of 20,000 square feet of small office units at St Asaph Business Park;
• the completion of a meat packaging and processing facility at Merthyr Tydfil, aimed at creating over 660 new jobs;
• the completion of a skills training centre at Barry as part of a joint venture with the Vale of Glamorgan Council, the former Welsh Office, South Glamorgan Training and Enterprise Council and Barry College.

27. The Agency has also been successful in recent years in identifying and securing business opportunities for indigenous businesses in Wales. For example, in 1998-99 the Agency identified business opportunities in excess of £40 million for indigenous firms in Wales, over £10 million of which was in the highly competitive European electronics, engineering and automotive sectors. A further £12 million of business was also secured in 1998-99 through the Agency’s Source Wales programme for small indigenous businesses, including a £1 million order placed with an engineering firm by the Greek government for the production of wind turbine towers.

    The Agency’s evaluation of the success of its supported projects

28. In addition to its ongoing project monitoring, the Agency carries out a rolling programme of evaluation studies across the whole range of its operations. To be independent of the Agency’s operational management, the studies are undertaken by external consultants. The Agency’s central Strategic Policy Division manages the study programme. In recent years the areas evaluated have included the Agency’s Source Wales programme (1996), its technology transfer programme (1997) and its inward investment activities (1997).
29. The results of the Agency’s monitoring and evaluation activities demonstrate, among other things, the inter-relations between the creation and growth of indigenous business on the one hand and attracting inward investment on the other. For example, inward investment can create new supply chain opportunities for indigenous firms, and the Agency’s Source Wales programme is geared to encouraging this. Inward investors can also become well embedded in Wales over time. Figure 5 gives some case study examples to illustrate these points.

Originally an "inward investor" from England (Manchester), this well established family business has grown from 20 employees in 1962, to 75 in 1990 and to over 120 in 1999. The company manufactures a wide range of clothing and its turnover is currently in excess of £10 million. The company has received various support and assistance over this period from the Mid Wales Industrial Development Association, Bala Urban Council and the former Development Board. Support from the Development Board has included encouraging the company in the early 1980s to join a programme run by Wales International Management Centre to broaden its sales base, providing development grants in the 1990s to assist expansion, and providing consultancy support.

Case study 9, Mid Wales

This art gallery and design consultancy was established in 1995 and has steadily increased turnover year on year, expanding in 1999 with the addition of a workshop and studio. The business sells a range of locally made crafts and household accessories as well as providing an industrial design consultancy for customers all over the United Kingdom. The founder established the business after spending time as a freelance industrial designer in London. The business has received support from the Agency and the Business Connect network.

Case study 10, South west Wales

This company, a world leader in power electronics, is establishing a 100,000 square foot facility that should ultimately create over 500 jobs. The Agency is building the factory for the company. The presence of the company is expected to stimulate the local electrical supplies industry.

Source: Welsh Development Agency

Conclusion

30. This report has sought to set out in broad terms the wide range of support and services that the Welsh Development Agency provides for indigenous businesses in Wales. As the case studies in the report illustrate, the Agency’s activities and programmes cover all of Wales and encompass reclaiming and developing land, creating the necessary infrastructure, encouraging and assisting companies to locate at particular sites in Wales, and supporting and advising on further business development. There is also a link between the Agency’s support for indigenous businesses and its efforts to secure inward investment in Wales: indigenous businesses benefit directly and indirectly from the presence of inward investors, particularly in terms of promoting sales and supplier development. The case studies and other examples included in the report also give an indication of the impact of the Agency’s activities.
31. The Agency operates within a framework set by the Assembly and works with other partners in both the public and private sectors. As the report shows, underpinning the Agency’s activities is a sound organisational and administrative structure geared to delivering support for indigenous businesses in Wales as well as securing inward investment. Finally, the work of the Agency is undertaken by experienced, professional people who are able to complement the Agency’s activities through the advice and support that they are able to provide.

1. In November 1998 the Welsh Affairs Committee published a major report on economic development issues in Wales, including the support provided to indigenous industry and to inward investors, and the inter-relationship between them*. This followed the Committee’s earlier report of February 1998 into the impact of the Government’s devolution proposals on economic development and local government in Wales**. The Committee’s main interests in these reports were to inquire into the appropriate balance between supporting indigenous business and encouraging inward investment, and to investigate the range of organisational, financial and infrastructure support available to enterprises in Wales.
2. The Committee made a number of observations and recommendations in these areas***. The Committee was mainly concerned that the balance of emphasis and funding should be shifted in favour of indigenous business. In addition the Committee was concerned about the extent to which there might be duplication of effort between the Agency and other public sector organisations and that the different roles of the various organisations had not been properly thought out. The Committee was also concerned that the enlarged Agency should be provided with the resources needed to do its particular range of jobs.
3. In response, the Government stated that it attached importance to the even-handed treatment of indigenous and inward investors. The Government agreed with the Welsh Affairs Committee on the need to focus on the development of indigenous businesses in Wales, but considered that this did not require any reduction in the promotion of Wales as a location for investment from overseas****. On the Agency’s resources, the Government stated that, in setting the level of the Agency’s gross programme budget for 1999-2000, it had continued to increase the Agency’s grant in aid and had taken realistic account of the levels of income that the Agency could generate itself*****. The Government noted that the level of spending on individual programmes was primarily an operational matter for the Agency.

** Welsh Affairs Committee, First Report Session 1997-98, "The Impact of the Government’s Devolution Proposals on Economic Development and Local Government in Wales, HC329, 17 February 1998", which briefly considered the issue of inward investment versus indigenous growth (paragraphs 38-45).

**** Welsh Affairs Committee Session 1998-99, First Special Report, "Government Response to the Fourth Report of the Welsh Affairs Committee (Session 1997-98) - Investment in Industry in Wales", HC173, 20 January 1999, paragraphs 15 & 16.

1. The main elements of the Agency’s activities in promoting access to finance are involvement in direct finance schemes, such as the Innovation Fund and the Small Loan Fund, and involvement in support schemes, such as the Business Angels (Xenos) network and Venture Capital Brokerage scheme (Figure 1).

Wales Innovation Fund

This venture capital fund is an Agency joint venture with NatWest Bank, with additional support from the European Regional Development Fund, aimed at assisting technology-based businesses in Wales. The Fund was launched in November 1999 and currently has some £5.6 million to invest throughout Wales. It can invest sums of between £150,000 and £500,000 in individual businesses, at commercial rates of return. The support of the Agency and the European Regional Development Fund enables investments to be made in businesses where there may be a higher than normal risk than that acceptable to private sector investors and where transaction costs may be prohibitive.

The Agency’s small loans fund aims to support small and medium sized enterprises and community businesses and to encourage entrepreneurial development throughout Wales. The fund has £3.1 million currently available and provides loans of between £5,000 and £50,000. Applicants must operate in Wales and the loan should lead to job creation and/or economic development in the region.

This Agency supported financial product is operated by British Steel and offers equity and loan packages between £25,000 and £150,000 to growing small and medium sized enterprises only in industrial South Wales. The fund has some £2 million available for investment.

Chaired by the Confederation for British Industry Wales, this initiative is an all-Wales business introduction service linking investors to companies seeking additional finance. Investors registered with Xenos have funds in excess of £20 million to invest in small and medium sized enterprises in Wales.

This Agency supported scheme puts highly experienced executives in touch with small and medium sized enterprises in Wales to provide strategic guidance with business creation and development. After a successful pilot programme in South West Wales, the Agency extended its small business mentoring initiative to the whole of rural Wales in February 1999.

Under this scheme the Agency provides a range of practical assistance to the management teams of small and medium sized enterprises in Wales that have intrinsic merit but whose venture capital applications have been rejected.

This Agency joint venture with the university colleges of Wales provides support for the creation and development of new businesses in the higher education sector in Wales, mainly in the form of commercial advice for academics considering business start-ups.

Source: Welsh Development Agency

Access to markets

2. The two main aspects of the Agency’s access to markets programme are to support existing initiatives, such as sales and supplier development, as well as to promote new initiatives, particularly in the areas of developing overseas markets and exporting potential. Some key elements of this programme are set out in Figure 2. The Agency’s Source Wales initiative in particular continues to operate as a major scheme for small and medium sized enterprises in Wales, both in terms of promoting sales and supplier development.

The Agency’s Source Wales programme aims to help businesses in Wales improve their sales and profitability. It encourages the building of supply-chains for major manufacturing plants from among indigenous small firms in Wales. It does this in two main ways: by locating supply opportunities and matching suppliers in Wales; and by helping to develop the expertise of companies in Wales to meet the requirements of major buyers. It currently involves around 600 small firms that have between 20 and 40 employees each.

The Agency provides financial support to a number of specific sectors in Wales, including the automotive, electronics and energy sectors, to promote and secure benefits for these sectors.

Source: Welsh Development Agency

Transfer of technology and innovation

3. The main overarching element of this programme is the Agency’s Regional Technology Plan, an evolving vehicle for identifying new product opportunities for businesses in Wales and providing a framework for action. The aim of the Regional Technology Plan is to support small businesses by encouraging technology transfer. Under the Plan, there are now over 50 projects promoting innovation and technology in Wales, with an emphasis on increasing the use of new technology by small and medium sized enterprises, enhancing links with academic institutions through the Know How Wales scheme, and establishing a Wales-wide innovation and technology information network.

   Developing information and communication technology

4. The Agency’s media technology programme is focused on developing large-scale, Wales-wide initiatives aimed at increasing the use of information and communications technology to benefit businesses in Wales. The programme has four key objectives:

• to stimulate the demand for new information and communication systems through large scale ‘flagship’ initiatives;
• to stimulate the supply of new media technology by promoting the development of indigenous information and communication systems businesses and support services;
• to enhance telecommunications infrastructure in rural areas; and
• to develop institutional capabilities and mechanisms to take advantage of new technologies.

5. The Agency’s media technology programme has three main elements: implementing the Wales Information Society strategy and action plans; enhancing rural telecommunications networks; and developing information and communications technology businesses and support services (Figure 3).

6. The Agency supports a number of initiatives under its skills and enterprise programme. Key initiatives, developed in partnership with other bodies, are the Entrepreneurship Action Plan for Wales and the Business Connect Wales network (Figure 4). In addition the Agency provides support to specific projects to increase employment opportunities. This includes: assistance to small and medium sized enterprises to develop gender equality in the workplace; a project to increase the employability of graduates in businesses in Wales; a project to assist small and medium sized enterprises invest in the continuing professional development of their graduate workforce.

The Agency has led and supported the development of an Entrepreneurship Action Plan to support the creation and growth of indigenous businesses in Wales. Following a consultation process in late 1999, the Entrepreneurship Action Plan Steering Group presented the action plan to the National Assembly in February 2000. Implementation of the plan began in April 2000. The Entrepreneurship Action Plan Steering Group includes members drawn from the private sector, the education sector, local government, business, the Agency and the Assembly. The Agency also provides executive support to the Entrepreneurship Action Plan Steering Group.

Business Connect Wales is the overriding mechanism for delivering support to indigenous businesses in Wales. It is an umbrella network providing information and advice services on the range of support available to enterprises in Wales. It comprises a number of organisations working in partnership to provide a single point of entry to the business support infrastructure for anyone seeking to establish a new business in Wales, or for established businesses that need information and advice about services available. It is essentially a telephone advice, information and referral facility on the business support services available in Wales. Business Connect Wales was launched in 1996 and reorganised in 1999/2000 to improve its service standards and increase public awareness of the network. All the main business support agencies in Wales are in involved in Business Connect Wales, including the Assembly, the Agency, the Training and Enterprise Councils, local authorities, enterprise agencies, chambers of commerce and the Wales Environment Centre. The network is overseen by Business Connect Wales Ltd, a private company formed in March 1999 and managed by a business led board of directors which reports to the National Assembly for Wales. The Agency provides executive support to the board of directors of Business Connect Wales Ltd.

The Agency is a partner of this initiative, along with the Training and Enterprise Councils, Confederation of British Industry Wales, Higher and Further Education Funding Councils, Wales Trades Union Congress, Welsh Local Government Association, the Qualification, Curriculum and Assessment Authority and the Careers Services Association. The initiative was established in 1997 and is co-ordinated by the Council of Welsh Training and Enterprise Councils. The plan covers a range of activity geared to promoting and encouraging manufacturing training in schools, colleges, universities and the workplace.

Source: Welsh Development Agency

Supporting the agri-food sector

7. The Agency operates a specific programme of support for the agri-food sector in Wales. The programme has five main objectives: to develop and implement a plan for promoting and marketing Welsh branded food and drink products; to identify market opportunities for these products; to assist with collating and distributing market information; to contribute to quality improvements in the Welsh food chain; and to co-ordinate actions within the framework of the Agri-Food Partnership. The Agency’s agri-food programme operates at both a Wales-wide level and specifically in Mid Wales. Figure 5 notes some key elements in the Agency’s programme of support.

On 1 October 1998, simultaneous with the creation of the enlarged Agency, the Agency also acquired ownership of Welsh Food Promotions Limited and its subsidiaries (Livestock Marketing Limited, Taste of Wales (Retail) Limited, and Taste of Wales Limited). Welsh Food Promotions promoted the sale and consumption of Welsh food and had been funded primarily by the Agency, the former Welsh Office, the former Development Board for Rural Wales and the Wales Tourist Board. The functions of Welsh Food Promotions and its subsidiaries have been integrated into the Agency’s agri-food programme.

This is a Wales-wide and regionally based partnership, set up in 1998 with the Agency’s support to drive forward the development of the agri-food sector. Action plans have been drawn up by industry working groups for lamb and beef, dairy and organic foods which will be implemented by the Partnership. Membership of the Partnership is drawn from the public and private sectors.

Apart from supporting the Agri-Food Partnership, the Agency is supporting the promotion and marketing of Welsh beef and lamb, promoting opportunities for collaboration between food producers and distributors, assisting the establishment of speciality food producer groups. The Agency has also re-launched the Taste of Wales hospitality scheme in partnership with the Wales Tourist Board.

The Agency supports a wide range of mainly joint venture and partnership initiatives that include business and good practice advice to farmers, training and development projects for farmers, and support for food processors.

Source: Welsh Development Agency

Appendix 3: Main public sector or publicly funded bodies providing support to indigenous businesses in Wales

The National Assembly for Wales is responsible for economic policy development in Wales. The Assembly also delivers a number of support programmes for businesses, primarily grant schemes. Chief among these schemes is Regional Selective Assistance, which aims to reduce disparities in employment opportunities between Assisted and non-Assisted areas in Wales by providing grants to support projects in Assisted areas that create or safeguard jobs and which would not otherwise take place in those areas unless supported. Regional Selective Assistance is available equally to new or existing businesses, indigenous or overseas. Other support includes grants to encourage innovation and a range of overseas trade services to help businesses in Wales to export.

The Welsh Development Agency is responsible for promoting Wales as a location for business, developing and creating competitiveness in businesses in Wales, providing land and premises for businesses, reclaiming derelict land, improving the environment, and the economic and social development of Wales. The Agency provides a wide range of support services in specific business areas, regions and on an all-Wales basis. Services include the promotion of supply chain opportunities (Source Wales), business development services, various projects to encourage technology transfer, and schemes to improve the supply of finance to businesses.

The 22 Unitary Authorities in Wales are responsible, among other things, for promoting economic development in their areas. They work closely with the Local Enterprise Agencies in providing support to local businesses and undertake a range of activities including the provision of grants and loans to new and small businesses and the provision of workshop premises.

The 4 Training and Enterprise Councils in Wales manage a range of schemes to stimulate enterprise and to assist small and medium sized enterprises to improve their competitiveness. The Training and Enterprise Councils are responsible for taking a view of the local needs of their area, based on the judgement of their boards (most of whom are unpaid members of the local business community). The Councils’ activities are managed under contract to the Assembly and delivered through contracts with the Local Enterprise Agencies and other private sector providers.

The 15 Local Enterprise Agencies in Wales specialise in the management and delivery of key support services for small businesses, especially micro businesses (employing fewer than 10 people) and new start-ups. The agencies draw funding from various sources including local authorities, from the Training and Enterprise Councils (under sub-contract arrangements) and from the private sector.

The Wales Tourist Board is the lead agency for providing support for the development and marketing of the tourism industry in Wales. The Board provides a range of advisory services, grants for development projects and research and marketing support. The Board works in partnership with statutory agencies, unitary authorities, the private sector and other bodies.

Source: National Assembly for Wales and Welsh Development Agency

1. The Assembly has principal responsibility for administering, or arranging the administration by local authorities, public bodies and other organisations, of European Structural Funds programmes. The funds are used to co-finance economic development activities undertaken by these various bodies. The Structural Funds programmes provide financial assistance to help combat regional disparities in economic prosperity and are ultimately aimed at job creation.
2. For the period 1994 to 1999, some £400 million was allocated to Structural Funds programmes operating in Wales, the bulk of which was targeted at job creation through the development of small and medium-sized enterprises and at the development of rural areas. The European Commission Structural Funds map and United Kingdom Assisted Areas map have been revised for the period 2000-2006, including the formal designation of the South Wales valleys and West Wales as relatively disadvantaged regions economically (so called "Objective 1" status). Some £1.2 billion Objective 1 funding is available from the European Union.

Regional Selective Assistance

3. The main single form of public sector financial assistance available to both indigenous businesses and inward investors is Regional Selective Assistance, administered by the National Assembly for Wales (the Assembly) in partnership with a number of organisations, including the Agency, the Training and Enterprise Councils and local authorities. In the decade 1988 to 1998 the former Welsh Office spent some £500 million in Regional Selective Assistance on projects which created and safeguarded jobs and which undertook capital expenditure investment in designated Assisted Areas in Wales.

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