Thank you, Deputy Presiding Officer. Thank you for the opportunity to lead my first short debate.

It was said in the late 1970s that, if every small firm took on one more employee, the unemployment problem would be solved. Indeed, with 4.2 million small firms in the UK our minds would soon turn to the problem of a shortage of labour. It appeared that, in the 1980s, the Thatcher Government took this absurd proposition vaguely seriously and for a time we heard of the enterprise economy coming to our salvation as traditional industry was strategically abandoned. I believe that small and medium-sized firms in Wales have the potential to contribute to the growth and development of our economy nonetheless. However, I’m under no illusion that they will solve all our problems, and they alone will not insulate us from the global uncertainties that are currently being created by politicians offering solutions to difficult problems in 140-character tweets.

I want to use this debate today to pose a number of questions about the role and value of SMEs to the Welsh economy, and I want this debate to be the opening, from these benches, of a wider debate that will contribute to the future development of this Assembly’s economic strategy, and I want all parties and none to play a part. It’s for this reason that I’ve established and chair the cross-party group on small and medium-sized enterprises. With a secretariat provided by the Federation of Small Businesses, it will hold its first full meeting in the new year. I hope this group will hear from a range of academics who, by their own proclamation, have been excluded from the policy-making process here in Wales, and therefore I hope they take up the challenge. I also want businesses themselves to play a part, to tell their stories, and for those stories to be heard by policy makers.

Today I will set out as much as I can my own views about areas that we may focus on in future debates. I am perfectly happy to be told that I am wrong, or at the very least that my understanding needs further refinement. My only intention is to provide a foundation on which further ideas can be built. In this context, I would like to briefly focus on two areas. Firstly, what is the role of SMEs in our economy, and, secondly, where are these businesses, and are they in the right place? I believe that it’s a mistake to see our small firms simply as engines of employment. The SME sector, though large, is also heterogeneous and fragmented. The role of SMEs in job creation is anyway disputed by academics. Some like Birch have claimed that they play a huge role in job creation, and others more recently have argued that their lack of durability means that small-firm employment is too insecure to be considered a long-term option for many seeking work.

Notwithstanding that dispute, there’s a distinction between policy makers’ desire for small-firm job creation and the indifference of owner-managers to such aspirations. SME owner-managers are undoubtedly reluctant employers, and indeed I entitled my PhD thesis ‘The Reluctant Employer’. Indeed, why would any sensible owner-manager choose to employ—[Interruption.] Thank you to the member for Llanelli. Why would any sensible owner-manager choose to employ when there are cheaper, more accessible, trusted alternatives? A great many owner-managers have reliable sources of support available to them at least in the medium term. They may be in the form of strong ties to family and friends who will help in the running of the business, but over time the manager will form relationships with other business associates who provide mutually dependable support that goes well beyond a transactional relationship. Access to this social capital is vital for the early development and growth of the firm. So perhaps instead of seeking economic salvation from our small firms sector we should look instead at what small firms actually do—things that are fundamental to our daily lives. I would add that the public and private sector are inextricably linked, and we should be suspicious of any policy maker who suggests that it would be in any way easy for private firms to take up the slack from reductions in public activity.

With such studies as ‘Towards a New Settlement’ by Dave Adamson and Mark Lang, and ‘What Wales Could Be’ by Karel Williams, academics have examined how we should re-orientate our economy here in Wales. They talk of moving towards a locally based and sustainable structure, with SMEs benefitting from strong procurement policy in which the Welsh Government takes a proactive lead. Indeed, Professor Adamson and Dr Lang are currently undertaking a micro deep place study in Lansbury Park in my constituency and I look forward to examining the outcomes. The work of Professor Williams forms a key part of what is called the foundational economy—those businesses that provide us with our basic everyday needs. And I’m keen to explore these ideas, however, they will come to nothing if their value cannot be coherently and concisely explained to both those making policy and those benefitting from it.

We should all, therefore, support the efforts of Lee Waters, the Member for Llanelli, who has made it his mission to explore these issues with business owners and residents in Llanelli. You may have seen it on Twitter. He has recently held focus meetings to discuss the needs of businesses and business users in his constituency, and I know that there are other Members of this Parliament that are taking similar approaches in their own areas, and I look, also, to the Plaid benches. I have to say, though, when Lee first told me he wanted to develop an economic strategy for Llanelli, I thought he might have bitten off more than he could chew, but anyone who knows Lee will know his tenacity and his desire to make innovative ideas work for the people he represents. You don’t get elected to Llanelli any other way. I’ve given him, and for the same reason, Steffan Lewis, a minute of this debate today and if there’s time, I’d also like to offer Russell George some time to respond too—[Interruption]. Well, he asked me late.

While not creating anything as grand as an economic strategy, I and my team have conducted our own research in the Caerphilly constituency. We talked to a range of business owners and customers and time and again, the conversations turned to the high street. Our town centres have come under a lot of pressure in the last decade or so due to a number of factors: the rise of internet shopping, out-of-town retail parks, costs of commercial rent and non-domestic rates. We have to ask ourselves now, ‘What do we want our twenty-first century town centres to look like, and do SMEs have a meaningful role as a thriving, accessible and visible part of our communities?’

Much of the evidence I’ve gathered suggests that we need localised conversations. Different town centres should be allowed to have their own unique personalities and this can be seen in all our constituencies. Yesterday evening, I discussed with an AM from another party these issues. She suggested we need to make intelligent and innovative use of vacant space in town centres. She said we shouldn’t be afraid to make the central business district smaller and use vacant shops for housing and flats. The remaining space should be given over to businesses that are going to thrive in that environment, but the space should no longer be seen as premium value. Such an approach would work in her constituency, she argued, and if it proves to be unpopular, I’ll note that it was an AM from another party. It might not work everywhere, which is why localised approaches are required, but in this thinking, we can see, cross-party, the germination of a new way of thinking about small firms.

In my constituency, there exists an innovation centre for start-up businesses called Welsh ICE. I’ve mentioned them before in this Chamber and they were identified as an example of good practice in the Welsh Labour manifesto in May. Yet again, they were mentioned in the ‘Western Mail’ this morning:

‘Five start-ups are reaping the rewards of being put on ICE’

—being part of Welsh ICE. And £1 million funding coming to Welsh ICE.

Many of these firms that exist there are direct customer enterprises and I wonder, why are they located on a business park on the edge of town? Is there a way to incentivise their development closer to the action? Given the importance of social connections, of connections to social capital, is there a benefit in doing so? Perhaps this is something we should investigate. Government at all levels has the power to make these things happen. Indeed, we can use future reform of public service organisations and future collaboration in local government as an opportunity to look at how to better engage SMEs and deliver on our objectives.

Jeremy Miles has written this week about a social enterprise economy whereby the public sector buys goods and services from social businesses, helping maintain resilient supply chains and, yes, social capital. These approaches have the potential to change our economy here in Wales. Perhaps it can be a way in which we make the best of uncertainties about Brexit, although there are no UKIP Members left here to listen to that. This does not mean turning away from the global economy of which Wales has long been a part. It means reducing the emphasis of Government policy on foreign direct investment—something that has characterised our economic development since the days of the WDA and, subsequently, the economic renewal programme. GE, Norgine and Nuaire are big players in and around Caerphilly and I would feel quite hostile to anyone who questioned their value. However, we should be arguing for a broader based economy that focuses on sustainable growth and employment without too much emphasis on inward investment. We need an economy that focuses on particular sectors; SMEs that are rooted in our communities and that have an interest in sustainable growth, without too much of a preoccupation on firms that are fast-growth and high-tech.

Let’s look to the future. Our small firms are not our economic salvation and the sector should not be seen as an engine for employment. They have very specific needs. Instead, we should see our SMEs as part of a bigger puzzle. It’s time to take a step back and consider how we can maximise their potential.

It’s Small Business Saturday on 3 December, so I wanted to time this debate to lead up to this day, where we show support for the role of small businesses in our society and in our economy, and more generally. However, Small Business Saturday is just one day. We can use this debate and that day to kick-start a bigger conversation about the roles that SMEs play in engaging with the wider economy and how this can help us grow successful SMEs that have huge value to the Welsh context.