The development bank has an ambitious, five-year plan to generate more than £1 billion of investment to support the Welsh economy. It will help businesses to support over 5,500 jobs per annum. The development bank will significantly increase the availability of funding to SMEs to £80 million per annum within five years, compared with £56 million in 2016-17. It will increase the impact on the Welsh economy by over £170 million per annum by 2021-22, taking private sector leverage into account. In recent years, the targeted provision of finance made available to microbusinesses has trebled from £6 million to £18 million. This has enabled businesses with fewer than 10 employees to quickly and efficiently borrow from as little as £1,000 to £50,000. The development bank will continue to prioritise this important market segment in Wales, which is also the lifeblood of our rural economy, and I’ll say more on this later.

The new bank is developing a culture of continuous improvement. Working with Business Wales, it will improve its online customer services, helping more companies to benefit more efficiently. Not only will the bank improve access to existing financial products, it will also identify future business needs and create suitable new products. To help do this, the development bank of Wales is already working with the Office for National Statistics, Cardiff University and other academic institutions so that they can better understand the financial issues that SMEs face, and develop appropriate new solutions.

I am clear that the new bank should not lose sight of its primary function of providing money with management. This includes providing gap finance alongside private sector funders, to enable deals to materialise that wouldn’t otherwise do so, and providing a full range of management support in addition to simple finance. Whilst approving these ambitious plans for the development bank today, I am pleased to see that the bank will have a presence across the whole of Wales. This includes the rural areas across Wales where market failure in the banking sector is most pronounced. Recognising its pan-Wales role, the bank has organised a series of launch events across the country during October.

The development bank is a major component of Welsh Government’s strategy to deliver a more prosperous and secure Wales, as set out in ‘Taking Wales Forward’. It will differ from Finance Wales, not only in terms of the increased scale of funding available to Welsh businesses, but also better business support in collaboration with Business Wales. The organisation already manages significant operations on behalf of other Welsh Government departments, most notably Help to Buy, which falls under the remit of my colleague Carl Sargeant, Assembly Member, Cabinet Secretary for Communities and Children. I also believe there is potential, though, for the development bank to further extend its provision of financial services in the future, to support other Welsh Government departments to develop innovative and cost- effective solutions.

The transition of Finance Wales into the development bank is already well under way on a number of fronts, including delivering a number of new funds and significantly increasing support to SMEs, now and in the future, for example, a management succession fund, new technology seed finance and a working capital fund to support fast-growing businesses. Also, work is taking place on establishing the new intelligence unit; creating an angel co-investment fund with related support; developing new branding for the development bank; and improving online interaction with customers, making it easier for customers to get advice and funding online.

We are also committed to establishing the headquarters of the development bank of Wales in north Wales by the end of this year. The bank will have a regional presence to support the department’s regional footprint. Work is already ongoing to identify suitable premises in and around the Wrexham area, where the bank aims to grow to 50 staff over the next two years.

Today, I am delighted to confirm that I have approved the establishment of the new £100 million Wales flexible investment fund. The fund will be managed by the development bank, and as its name implies it will be fully flexible. It will provide a combination of debt, mezzanine and equity funding options ranging from £25,000 to £5 million. It will offer loans with terms of up to 10 years, in recognition of scenarios where small businesses require patient capital. As I touched on earlier, microbusinesses will also be able to benefit from this fund. This £100 million package of flexible support comes on top of an announcement I made last year to create the £136 million Wales business fund. Today I am pleased to announce that we are putting a further £35 million into that fund, increasing it to £171 million.

Last year, Carl Sargeant AM, Cabinet Secretary for Communities and Children, announced £230 million for the second phase of the Help to Buy scheme. Taken alongside the bank’s direct investment and private sector leverage, this funding underpins the bank’s ambition to generate more than £1 billion of investment support into the Welsh economy over the next five years. The development bank of Wales will increasingly become self-funding. The business model assumes it will no longer need any grant support from the public purse for operational costs from next year onwards. In summary, the development bank of Wales is a cornerstone organisation for investment and business support. Given its increased scale and breadth of expertise, it is well placed to meet the challenges and opportunities we will inevitably face, and make Wales more prosperous and secure.