5. Will the First Minister make a statement on patterns of self-employment in Wales? (OAQ51252)[R]

Self-employment remains a cornerstone of the Welsh economy and is central to the national strategy. We continue to support businesses to start and grow, to invest and, of course, to improve their contribution to the economy of Wales.

This afternoon, I chaired the cross-party group on small and medium-sized enterprises, and it was our pleasure to welcome the Federation of Small Businesses to launch their report, ‘Going Solo: Understanding Self-employment in Wales’, written by Professor Andrew Henley and Dr Mark Lang. There are a number of recommendations for Government there, but one of the stark issues in the report is that the largest levels of self-employment are in Powys, at 23 per cent, and the lowest levels are in the northern Valleys that I represent, and others, at 8.7 per cent. What specifically can the Welsh Government do to incentivise and increase self-employment in those Valleys communities, and particularly among under-represented groups and women?

What’s interesting about the report is that there’s been an assumption that the reason why more people are self-employed is because economic circumstances have dictated that—they lost their jobs. But, in fact, it seems to indicate that it’s an entrepreneurial pull. It’s actually a desire to be more entrepreneurial, which is something we have sought to encourage for many, many years in Wales. As somebody who was self-employed, mainly, before I came to this place, I understand some of the challenges that that can cause.

How do we take it forward in the Valleys? The Valleys taskforce. That’s done a lot of work to see how we can encourage more self-employment. I don’t believe that people lack entrepreneurial flair in the Valleys; I think it’s encouragement. It’s being able to say to people, ‘You can do this. There’s no reason why you can’t be successful.’ And people need that encouragement. And that’s exactly one of the things that the Valleys taskforce is looking to move forward with in the future.

First Minister, I also attended the event, which Hefin chaired earlier on, and we heard how rural Wales is heavily reliant on the contribution of self-employment to the economy. Hefin’s pointed out that 23 per cent of those in Powys are self-employed, and that compares to the Welsh average of 13 per cent. Now, the FSB Wales report has found that those who are self-employed tend to be older, and young people are not following in their footsteps. Can I ask what consideration has the Welsh Government given to understanding the barriers to young people becoming self-employed, in rural Wales in particular? What potential could a mid Wales growth deal play to ensure that there are local solutions that meet the demands of self-employment in Wales, as opposed to a pan-Wales solution, which might not always be appropriate?

I think regional solutions are important. The Member is right to say that it can’t be one-size-fits-all across Wales. When it comes to younger people, much of it starts in schools, to my mind. I know that work has been done in schools with encouraging entrepreneurial projects, and, of course, the young entrepreneurs scheme, which we have, and also, of course, providing that kind of financial support to youngsters that they need. Older people often have access to capital in a way that younger people don’t, and they can use that capital to set up in business. How do we support people that come into business? Business Wales is one area where that’s done, of course. The development bank will be able to assist people to come into business as well. Improving small and medium-sized enterprises’ ability to access finance—that’s the biggie. We know that the banks in the UK have historically been resistant to providing capital for start-up enterprises, which is why we fell behind for many, many years, which is one of the reasons why the development bank will be there. You can encourage people, but they need to access capital to start up their business. Unless they’ve got family capital behind them, there’s got to be another way of doing it, and that is where Business Wales and where the Development Bank of Wales comes in.

One of the most striking things in the report is this fact: namely, that 38 per cent of the total jobs growth in Wales over the past 10 years can be attributed to the self-employed. Over the same period, there’s been no net increase in the inward investment sector. And again, and I quote from the report:

‘the language of economic policy-making is massively skewed toward the importance of securing foreign-owned inward investment.’

Does the First Minister accept the figures provided by the FSB, and if so, does he accept the need to change emphasis now to indigenous businesses and the self-employed?

I don’t think that we need to choose. I agree. At one time, in the days of the WDA, the emphasis was completely was on inward investment. They didn’t care, really, about small businesses. I remember talking to employees of the WDA. At that time, the focus was on securing inward investment, and after LG, nothing else big came in anyway. So, it is extremely important that we build a foundation of self-employment in the economy. I understand that. But, I don’t think that we can do that by avoiding giving any support to businesses that employ thousands of people in Wales, such as Tata, GE, Airbus, EADS, and so on, who employ thousands of people in Wales. So, we must maintain an emphasis on attracting foreign investment. But, it shouldn’t be solely our strategy, and I would argue that we have now struck the right balance, and we want to ensure that more and more businesses aren’t only established in Wales, but grow in Wales. One of the problems we’ve always faced is that businesses grow up to a particular level and then the owners sell them. So, we must ensure that more is done to ensure that people feel that they can grow those businesses so that they become larger. That, to me, is the greatest challenge in the economy: telling people, ‘Don’t sell out; stay and we’ll assist you to grow.’