The following amendment has been selected: amendment 1 in the name of Rhun ap Iorwerth.

The next item on the agenda then—we'll go back to normal—is the debate on entrepreneurship and the national imperative. 

I can't understand you now. [Laughter.]

Well, I'm sorry, but—

I think we need to move from business, I'd be here all day if I was doing all this in Welsh. I will practice over the Christmas recess, I promise. 

So, I call on the Cabinet Secretary for Economy and Transport to move the motion. Ken Skates. 

Motion NDM6578 Julie James

To propose that the National Assembly for Wales:

Recognises that entrepreneurship and small and medium-sized enterprises are imperative to Wales in creating better jobs and supporting investment and that the Welsh Government, in partnership with stakeholders, has a key role to play to create the right environment and support infrastructure. 

Motion moved.

Thank you, Deputy Presiding Officer. I'd like to begin by thanking you for allowing me to bring forward this debate today, and to begin by positing a question: what is it, what connects the most successful and diverse economic regions around the world, from Boston to Utah, from Israel to the German Mittelstand? In my view, it's a vibrant business base; a business base driven by the twin pillars of entrepreneurship and innovation. Entrepreneurship and innovation enabled by the availability of finance; research and development; skills; infrastructure and, of course, opportunity.

As a Welsh Government, we have a very clear vision of what we want to achieve here in Wales. We want to grow our economy, and that means fostering entrepreneurship and helping businesses of all sizes to become more productive and more successful. But it has to be growth with a purpose: growth that tackles the inequalities and productivity challenges that hold our economy back; inclusive growth that spreads opportunities so that we all play a part and deliver to our full potential. That's why it's important to champion and to cherish our entrepreneurs and the benefit of entrepreneurial skills to enable growth within businesses. I recognise the success we have already achieved in this regard.

Since its launch in 2012, Business Wales—the Welsh Government's service for entrepreneurs and SMEs—has dealt with over 150,000 enquiries; it's provided advice to over 77,000 individuals and businesses; it's engaged nearly 0.25 million young people in entrepreneurship; signposted and provided information to a further 92,000 businesses; it's created over 25,000 jobs and safeguarded a further 5,000; and it has supported the creation of 12,000 new enterprises here in Wales.

I recently announced that the Business Wales accelerated growth programme since April 2015 has created over 2,300 jobs to date, and the programme has also helped participating companies attract £80 million of private sector investment and generate £38 million of exports. This highlights the potential in Wales and also the importance of a supportive ecosystem that proactively helps entrepreneurs and SMEs maximise their contribution to the Welsh economy. 

Building capacity has been a key objective. Big Ideas Wales, which encourages entrepreneurship from an early stage and develops the entrepreneurial skills of young people, has delivered, in my view, outstanding results, with 70 per cent of young people under the age of 25 now having aspirations to work for themselves. And 375 role models have engaged with more than 56,000 young people in 86 per cent of schools, further education colleges and higher education institutions.

I do think that we need to celebrate the successes of young people in business. We have some excellent examples of the practical ways that we do this, through competitions and also through boot camps. Capacity building of this type complements our drive to encourage graduate start-ups. More broadly, the recent winners of the Fast Growth 50 showcased the talent and opportunity that we have in our country. 

It's encouraging to see that we now have a record number of active businesses in Wales, and the number of new business births is the highest for over a decade. Small and medium-sized businesses in Wales account for 99.3 per cent of enterprises in our country, 62 per cent of employment and 39.7 per cent of turnover. To grow, Welsh businesses must evolve and to evolve, they must innovate. Government, academia and providers of finance are all part of that ecosystem. That's why I've supported Be The Spark, a new national initiative to drive innovation and entrepreneurship here in Wales. The approach has been developed by a high-calibre panel, chaired by Simon Gibson, and has resulted from Wales's participation in the regional entrepreneurship acceleration programme at the Massachusetts Institute of Technology. It's estimated that the MIT alumni and the Boston ecosystem combined would equate to the twelfth biggest economy on the planet. Be The Spark is a strategy specifically for Wales that makes innovation-driven entrepreneurship the responsibility of all stakeholders, not just Government, but also financiers, larger corporates, academia and entrepreneurs, and Be The Spark has examined key metrics to outline the challenges for Wales. 

Whilst some of these will undoubtedly be challenging, I want to embrace the corresponding opportunity and set an ambition of where we need to be, and it's here. We need to address lower than UK start-up rates, from the current 60 per 10,000 to 120 per 10,000. The UK rate at present stands at 93 per 10,000. We also need to proportionally increase patent activity from 3.3 per cent to 5 per cent. We need to encourage an active and diverse angel investment community. It's a fact that Wales currently receives under 1.1 per cent of UK angel investment. We also need to increase the HE graduate start-up levels from 0.3 per cent of the student population to 1 per cent. That would lead to an extra 1,000 new starts every year. Extend this target still further to students currently in higher education, and we could deliver another 1,000 new starts. That's close to a 1 per cent increase in the business stock in our country. We also need to increase the proportion of growth firms in Wales from 19 per cent to 30 per cent classified as growing. And, finally, we need to increase the level of industry research and development expenditure, delivered in collaboration with higher and further education.

Deputy Presiding Officer, we need to harness the power and influence of all stakeholder groups and move forward with a shared objective. It should be a shared objective across Government, across education and businesses, and I do think that a prime example of this in action is the Welsh Government's £20 million investment in the Deeside advanced manufacturing research institute, which targets the need to focus on commercialisation, unlocked by all stakeholders working together. But as a Government, we don't have all of the solutions ourselves. Entrepreneurs and corporate leaders, those working in risk capital, as well as key people from academia and Government, need to work together to make this happen, and Be The Spark has to be the key driver for innovation-driven entrepreneurship here in Wales.

As part of this collaborative approach, I am delighted to note that NatWest has agreed two-year funding for the chief executive officer of Be The Spark, Caroline Thompson. Entrepreneurs are imperative for developing a strong economy and creating better jobs and supporting investment. We need to encourage entrepreneurship from an early age, through raising aspirations and understanding of entrepreneurship. The entrepreneurial mindset has benefits for those who not only start a business but also enter employment. There's an identified key challenge for our larger businesses where intra-preneurship is an essential ingredient in improving productivity through innovation.

Business Wales is the recognised service for entrepreneurs here in Wales. It provides support for aspiring entrepreneurs, start-ups and existing microbusinesses and small and medium-sized enterprises through a variety of channels, including online, on the phone and through dedicated business advisers located across the length and breadth of our country. I highlighted earlier the importance of the Business Wales service here in Wales. 

Mark Isherwood rose—

I'll give way to the Member.

I had the pleasure of attending the Be The Spark event last Wednesday. They welcomed the fact you had hosted it. They did express regret that nobody from Welsh Government was able to attend it, but it was great to hear contributions not only from business, including someone from Wrexham sat next to me, but also from local authorities, with the chief executive of Monmouthshire speaking, and, of course, academia as well. So, how will you ensure, given what you're saying, that this is about a collective innovation-driven entrepreneurship approach that includes social entrepreneurship, innovation in public service delivery and, of course, driving the economy of Wales through the business sector too? 

I'm delighted to hear the change of heart by the Welsh Conservatives concerning the Be The Spark initiative. The change of approach has gone from one of objection in the summer to now applauding the work of all of the stakeholders in Be The Spark, and I'm delighted that one of my most senior officials is indeed a founding member of the Be The Spark team here in Wales.

I was sorry I was unable to be at the particular event that the Member highlights. I, with my colleague Lesley Griffiths, that evening travelled back to north Wales because of the tragic circumstances that we faced, but I am utterly committed, as are my officials, to playing a very active role in ensuring that Welsh Government contributes to what must be a cultural change in the way that we approach entrepreneurship and innovation-driven entrepreneurship. Indeed, I've been insistent on maintaining the Be The Spark initiative across all stakeholder groups, with Welsh Government taking the leadership role. We have faced, in the past, some criticism for taking this initiative forward, but I do believe that the event that the Member points to is another example of the success of this particular programme.

We'll be seeing in the months to come the number of mentors and the number of people pledging support to Be The Spark increasing still further, with valuable opportunities for networking to take place. I'm pleased today to say that, in complementing the Business Wales service and to complement the Be The Spark event that took place very recently, I've announced more than £5 million for new activity to support entrepreneurship in Wales. This includes £1 million of funding to establish a pathfinder project to encourage regional, community-based entrepreneurship, and the initiative will focus on engaging with disadvantaged individuals at a community level in specific locations across Wales, following an approach that is flexible and responsive to local, regional and spatial needs, including the new economic regions and the Valleys task force.

Recognising the importance of space and supporting our commitment to taking Wales forward through procurement, an additional £4 million has been allocated to support the establishment of another four enterprise hubs across Wales. These hubs will be located to fill areas of market failure, working hand in glove with incubators from the private and academic sectors so that, wherever you live, you can access incubation. This is in addition to the £1 million of funding I previously announced to establish a new business hub in Wrexham.

Deputy Presiding Officer, growing businesses also need, of course, access to growth capital, and the recent launch of the Development Bank of Wales is an important core component of the Government's economic policy and delivery. The development bank is a key tool to address this issue. Business Wales and the Development Bank of Wales have an agreed operational plan in place to better align the services offered, with a clear aim of benefiting the customer. This will enable us to provide a seamless mix of expert advice and support alongside affordable finance exactly when it is needed.

I want to continue to develop the scope and role for the development bank supporting SMEs and entrepreneurs, including considering innovative finance solutions. In addition, my officials are exploring options for closer alignment in joint working between Business Wales and Careers Wales. Securing closer integration between the two services has the potential to better connect the delivery of business support and employer engagement with the education, economy and skills system, and a more streamlined approach to services for our customers.

We want to ensure that entrepreneurship is part of the suite of options made available to young people. This will build on our ambitions of the new curriculum to encourage ambitious, creative and enterprising contributors. We need to make the right connections to nurture the talent of our pupils and students and to support their interest for business through Big Ideas Wales.

Finally, we need to ensure that we continue to provide entrepreneurs and SMEs in Wales with the appropriate environment and the appropriate support at the right time to enable them to create better jobs and support investment in the Welsh economy. Deputy Presiding Officer, I'm keen to hear Members' views about how we can support this agenda together, going forward.

Thank you very much. It'll be interesting to see your reply, given that that was a 14-minute opening speech. Never mind. I have selected the amendment to the motion, and I call on Rhun ap Iorwerth to move amendment 1, tabled in his name—Rhun.

Amendment 1. Rhun ap Iorwerth

Add as new points at end of motion:

Calls on the Welsh Government to invest in a network of entrepreneurial hubs in every part of Wales.

Proposes that additional financial transaction funds allocated to Wales by the UK Government are used to create a new SME investment fund for the Development Bank of Wales.

Calls on the Welsh Government to establish a dedicated national innovation body, as a partnership between business, government and academia, to drive up levels of new product development.

Amendment 1 moved.

Yes. A 50-second reply to the debate from the Cabinet Secretary will be interesting to listen to.

I am pleased, in the absence of the Member for Carmarthen East, to take part in this debate for Plaid Cymru to pursue issues with regard to economic development.

It is a debate on a vital area for the future of Wales. Our economic future is based on talented people developing ideas and developing those ideas in Wales, and we have to create the correct business environment to allow entrepreneurs to succeed, and our amendment sheds some light on what we in Plaid Cymru would like to see with regard to Government intervention to achieve that objective.

I’ll focus on innovation, which means doing entirely new things or, possibly, doing old things in new and better ways, but innovation can’t, necessarily, happen in a vacuum and we need to promote and encourage innovation. That’s why we call for the establishment of a dedicated national innovation body to increase expenditure on research and development, for example, to develop a reputation for Wales internationally as a nation of excellence with regard to research and innovation.

And there’s a close relationship, isn’t there, between innovation and entrepreneurship. When entrepreneurs transfer new information into new practice, that’s when innovation happens. Innovation and creating devices and developing new ideas create entrepreneurs, but what we need to do is to be a nation that can accelerate the speed at which our entrepreneurs can make use—practical use—of new ideas and innovations, and that’s where the Government’s role is vital.

It would be good to think that the market in itself would ensure that there’s plenty of research in the development of products, in R&D, here in Wales, but it’s not always the case. We can’t always depend on the market, and there are international examples that show that the role of innovation bodies is extremely valuable in getting to grips with underfunding, perhaps, in R&D funds, because of market failure. There is a great deal of variance with regard to the size and structure of bodies that exist in locations worldwide, but the raison d’être for those bodies is consistent. It’s possible that Innovate UK and Enterprise Ireland are some of the most recognised innovation bodies in the world. They’re large: £600 million in the case of Innovate UK, and €300 million with regard to Enterprise Ireland. But there are smaller bodies that work in a regional context, a sub-state context, which can lead to very important lessons for Wales.

I’ll talk about the JIC Innovation Park in the Czech Republic in South Moravia. Now, it’s a region with only 1.1 million residents, and unemployment has fallen from 12 per cent in 2002 to 4.7 per cent by now. It was only £0.5 million annually that the innovation park fund stood at when it was established, but now the sum has increased to £1.5 million. It’s a relatively small amount of money, but it has a significant impact. South Moravia has had a regional innovation strategy since 2002 and the innovation park focuses mainly on implementing strategies in partnership with the chamber of commerce, universities and other not-for-profit bodies. It focuses on the research agenda and has ensured research so that South Moravia spends 3.4 per cent of its gross domestic product on research and development, and that’s three times the percentage of the gross value added of Wales spent in this area. So, these are our competitors that we need to compete with, with regard to our expenditure on innovation. The Basque Country is also an example where there is an innovation body that is doing excellent work.

I know that the Welsh Government doesn’t support the idea of arm’s-length expert bodies supporting the Government in its agenda. I know when I was economy spokesperson I mooted the idea of having a new Welsh Development Agency for the twenty-first century. ‘It’s not democratic; it’s a quango’—that was the call from some, but, in the devolved era, there is that accountability here in the National Assembly. And, with regard to the Basque Country, the CEO there is a politician, and changes every four years, so it is possible to operate an arm’s-length body without losing accountability.

Time has beaten me. We do need innovation in policy as well. We need innovation in the Government’s attitude towards economic development. I appeal on behalf of business, and on behalf of the economy in Wales, for creativity from the Government and from the Cabinet Secretary.

Thank you. Hefin David.

Diolch. I've never fully understood this concept of entrepreneurship, despite having tried to teach it for some period of time in my professional life. The concern I have is where entrepreneurship is wrapped up with the concept of small and medium-sized enterprises, and, of course, when you talk about innovation-driven entrepreneurship, which is what the Cabinet Secretary has raised today, you can start to understand what we're talking about. We're talking about high-tech fast growth, perhaps.

But, nonetheless, not all small and medium-sized enterprises are considered to be entrepreneurial in those terms, and an awful lot of firms are microfirms, they're never going to grow beyond 10 employees, and you could even say that that's the vast majority of firms in the sector. Therefore, we should be careful when we use phrases like 'small firms are the lifeblood of the economy'. We need to know exactly what we're talking about, and I'm cautious when using such language.

Self-employment is a separate thing, too, to the concept of entrepreneurship, and we see in the Government motion that it mentions better jobs alongside the concept of entrepreneurship. Well, not all jobs in small firms are better jobs. Some jobs are pretty hideous in small firms, where you've got people, maybe young people, on very low salaries doing the kind of jobs that machinery could be doing at higher cost for the business owner. So, it can be what the academics would call 'bleak house' HR within small firms, so we shouldn't just assume that entrepreneurship is all small and medium-sized enterprises and it's going to solve all economic problems.

That said, what the Cabinet Secretary is talking about, particularly in the concept of business hubs, is working with academia, working with industry and partners, to develop innovation-driven entrepreneurship, which is that thing, which, also, Rhun ap Iorwerth has referred to, that will be an engine for growth. I'll come back to self-employment in a minute, but also the Cabinet Secretary mentioned community entrepreneurship projects, and, by that, I would assume the Cabinet Secretary is also referring to social enterprises, and I would, at this point, therefore, take the opportunity to mention a social enterprise in my constituency, the Ridgeway Golf Club. All profits plunge back into the Ridgeway Golf Club; it's got nine full-time employees, four part-time—these are the kinds of things we should be encouraging for community entrepreneurship—and they also do very reasonably-priced weddings, should any royals be watching this debate, as I'm sure they may well be.

Self-employment, though, we need to consider as part of this entrepreneurship concept. There are 237,200 small enterprises in Wales, and they're employing 389,600 people. That is 1.6 employees per firm. So, a majority of small firms will not grow beyond that microfirm stage, and the business owners who run them don't want to. So, we need to be very clear about the kinds of businesses that are targeted when we refer to entrepreneurship.

The northern Valleys, by which I mean Caerphilly, Blaenau Gwent and Merthyr Tydfil local authorities, for example, have the lowest levels of self-employment in Wales. The Valleys area also has the lowest level of female self-employment in Wales, but not the lowest level of male self-employment. That could be because of the preponderance of construction businesses in that area. The Federation of Small Businesses recently produced, and launched at my cross-party group—the cross-party group I chair on small and medium-sized enterprises—a report on self-employment, which gives us that picture.

Self-employed people in the Valleys also tend to have fewer educational qualifications than those in urban or rural Wales, and what would concern me is if the Government's approach is entirely towards high-tech fast-growth firms and leaving behind those self-employed people who are the foundation—the economy of the everyday that provides so much to our economy. Entrepreneurship—I get concerned—may leave out those people.

So, the Welsh Government must encourage and grow sustainable self-employment and go beyond the construction sector, diversifying into sectors of the economy of the everyday, and ensuring that female business owners have as much opportunity as others.

Welsh Government must also recognise that interaction between the self-employed is not just competitive and very often, at microfirm level, is collaborative. Small firms work together to build social capital. So, rather than find employees, very often small firms will work with associates to deliver certain projects. So, you get clusters of firms working together, which—. You asked the question. Well, 10 small firms employing 50 people: is that as valuable as one small firm employing 50 people? I'd say, 'Yes, it is'. So, don't let a focus on entrepreneurship let those people down. If we're going to boost entrepreneurship—and let's use the word—and make self-employment a success, we need to appreciate the nuanced way in which it works in different parts of Wales, and join it up with other strategies and initiatives that the Welsh Government has to offer.

As we approach Small Business Saturday, I and my Welsh Conservative colleagues welcome this debate on entrepreneurship in Wales, and very much welcome the principles of the Government's motion. I agree that unlocking entrepreneurship is essential in order to enable the creation of a strong and vibrant economy. I also agree that the Welsh Government has a key role in creating the right environment for this underlying entrepreneurial talent to thrive. Also, the Cabinet Secretary, in his opening remarks, talked about building the correct business base as well, which I also agree with. I also very much agree that it's very important to celebrate and encourage younger people when they start up in business themselves. I certainly am a big fan of role models going into schools to tell younger people about the positive life option available to them of self-employment and running their own business.

With regard to Plaid's amendment, I was originally a little bit sceptical because my concern is that we don't want to see lots of empty buildings with the creation of more hubs. But I've heard the wider explanation from Plaid in regard to their amendment, and I'm happy to indicate our support for that amendment this afternoon.

The national imperative for entrepreneurship exists today, as it did 18 years ago, when the Assembly was first established. I don't think, in 18 years, we have anywhere near harnessed entrepreneurial potential, perhaps, as we should have done. I have to say, regrettably, I think the data speaks for itself. I know that the Cabinet Secretary mentioned an increase in enterprise births, but, from the research I've undertaken, there are fewer registered enterprise births in Wales in comparison to the UK as a whole, and business births in Wales represent a smaller proportion of businesses than any other UK region.

It’s clear that a strong, self-supporting economy and a culture of entrepreneurialism is built on appropriate business support. We know that the Welsh Government has traditionally favoured non-repayable loans, which will still account for over two-thirds of all capital lending to Welsh firms, and this is in spite, of course, of the Welsh Government’s stated aim to transition to an investment-led culture in relation to business lending practices. From my perspective, the Welsh firms fully deserve the financial support of the Welsh Government, but Welsh taxpayers also deserve strong commitments from the Welsh Government that the money extended to private firms will eventually be repaid and will be recycled to benefit other business start-ups and other vital public services. So, in this regard, I do think that the Welsh Government is failing to create the right and correct business environment. That said, I think that the development bank is the right organisation to support SMEs over the long term. It will be, of course, essential that the development bank has the right level of funding to provide intelligent and better targeted financial support to boost growth amongst SMEs.

In an environment where we have seen business start-ups fall by a quarter, I do think that the Welsh Government needs to show that Wales is very much open for business, and remove some of the obstacles and barriers that face entrepreneurs, through a permanent scheme for small business rate relief and a new approach to enterprise zones, which I think has been, I’m sad to say, a failure, given the data that we have received so far. The figures don’t make positive reading. Each new job created as a result of this flagship policy has come at a cost of £74,000, with £221 million having been invested since 2012. Now, enterprise zones were set up by the Welsh Government to grow the local economy and to provide new jobs, but there is little evidence of that to date. I appreciate that the Cabinet Secretary may say, in his 40 seconds, that he has got to have a longer term approach here. Yes, let’s see that happen. I hope that does come to be the case.

I suggest that we do need a new approach that will see the Welsh Government collaborate closely with the UK Government on the industrial strategy to help Welsh businesses create better, higher-paid jobs. In that regard, the strategy makes very clear commitments to advancing Wales's city and growth deals. I was heartened last week when the Chancellor gave reference to a mid Wales growth deal. I was very heartened by that, and that’s, of course, a recommendation that the Economy, Infrastructure and Skills Committee recently made as well. I very much hope that the Government will be responding positively to that. I’m looking at the clock and my time’s out, but I do hope that the Cabinet Secretary will manage to address many of my points in the 40 seconds that he has.   

He has slightly longer than 40 seconds, because he took quite a long intervention from one of your colleagues, so I'm going to allow for that. David Rowlands.

Diolch, Dirprwy Lywydd. Can I thank the Cabinet Secretary for bringing forward this debate on a vitally important aspect of business development in Wales. I would like to say at the outset that we will be supporting the Plaid Cymru amendments to this debate.

Entrepreneurship is the driver of all industrial enterprise. Without it, we would not be able to enjoy all the social benefits that we now take for granted. As the Welsh economy evolves, moving away from the traditional heavy industries of coal and steel, so the role of SMEs will continue to be an essential element in the development of the Welsh economy.

Already, SMEs play a greater role in the Welsh economy than any other part of the UK. It is therefore essential that the Welsh Government puts in place the correct strategies and policies not only to support the existing SMEs, but also to further develop this essential part of Wales's economic growth. It is true to say that SMEs embody much of the aims of the Welsh Government, in that they are often at the cutting edge of innovation, especially in the environmentally sensitive sector. Many of the smaller enterprises employ just a few people, so they should be encouraged to locate in places where they can contribute to the foundational economy. This would have the added effect of embracing the 'jobs closer to home' agenda of the Welsh Government. 

I spoke earlier about creating the right environment for SMEs to grow and prosper. I believe the Welsh Government should use all the levers at its disposal to make this a reality. We acknowledge the roll-out of superfast broadband and the essential role that internet access plays in the development of businesses, but we would again reiterate the need to inform and advise, particularly start-ups, on the advantages that superfast broadband can deliver to help their enterprise prosper.

We would hope that the new Development Bank of Wales, building on Finance Wales initiatives, will play a crucial role in the establishment of a strong SME base in Wales. It is essential that the development bank works closely with Business Wales to facilitate a joined-up approach to helping the sector to develop. Above all, access to capital must be as easy and stress-free as possible. Stakeholder funds must be the essential funding option, as start-up companies, particularly innovative companies, will not see a return on profits perhaps for a number of years. Repayment loans are therefore not a suitable funding arrangement for these companies. The role of the development bank is therefore critical in growing this essential part of the Welsh economy.

Business Wales also has a vital role to play, especially with start-ups in the innovative sector. Often, these entrepreneurs are science-specific, with little business acumen or experience. The advice and help that Business Wales can provide in this area will often be the make-or-break input for these companies. I also see that Business Wales's remit should be to guide companies in the best pathways to appropriate investment from the development bank.

The connectivity between our academic institutions and business is also hugely important in the growth of entrepreneurship and private economy development in Wales.

To sum up, the Welsh Government's remit is to provide the best possible environment for SMEs to prosper and grow. This includes suitable accommodation units in appropriate locations, good travel infrastructure, access to capital and business advice, but also a regime as free from regulation and red tape as possible. Only with these interventions in place will we see a strong, vibrant private sector develop and grow in Wales over the coming years, providing good-quality, well-paid jobs for our future generations.

I intend to examine how two European cities, Aarhus in Denmark and Mannheim in Germany, promote entrepreneurship. People often talk about some of the great cities of the world—and sometimes about Cambridge and sometimes about areas around Harvard—but these are two medium-sized European cities. I'm going to talk about barriers to growth for medium-sized businesses, because Wales is very poor at developing medium-sized companies into large companies—we've actually done it once, haven't we—and barriers for microbusinesses growing into larger businesses, starting with Aarhus.

The second city in population in Denmark is Aarhus. Compare it to Swansea, which is the second city in Wales. GDP in Swansea is 75 per cent of the European average; in Aarhus, it's 107 per cent. So, obviously, Aarhus is doing something right. Aarhus has a university that was founded in 1928—so, compared to our university, it's quite modern—and it's Denmark's largest, with 44,500 students in January 2013. It has probably gone up since then. In ranking lists of the world's best universities, it's regularly in the top 100.

But what else does it do? The largest research area is the INCUBA science park, which focuses on ICT and biomedical research. The organisation is owned partly by the university and partly by private investors and it aims to foster close relationships between public institutions and start-up companies. As we all know, ICT and biomedical research are two of the current growth industries across the world.

Mannheim is Swansea's twin city, but that is where the similarity ends. Economic data for the two areas makes interesting—and for a Swansea resident, very depressing—reading. Mannheim's metropolitan region has a GVA of 147 per cent of the European average, but the city itself goes up to 210 per cent, compared to Swansea at 75 per cent. So, for anybody who's earning £20,000, their equivalent in Mannheim is earning just under £60,000.

An institution affiliated with the university is the Mannheim centre for entrepreneurship and innovation, which provides a founder and incubator platform for students, young entrepreneurs and investors. The institute is supported by the Mannheim institute for mittelstand and SME research, and the chair of SME research and entrepreneurship at the University of Mannheim.

Successful start-ups: according to local media sources, Payback was sold to American Express for €500 million. Delivery Hero raised $1.4 billion in funding. Auto1 raised $200 million in funding. You've got other firms, such as Goodgame, that are initiating IPOs, raising £32 million in funding. And then you've got Movilizer, which was sold to Honeywell. Not all of them stay locally owned, but they've all grown. That explains why Mannheim was ranked eleventh in the top 15 of the most inventive cities worldwide. Can we get a Welsh team, a Welsh city, in there please?

Turning to Wales, what medium-sized companies tell me are their problems: an inability to secure funding on assets held abroad; a limit of £5 million on lending by the commercial bank of Wales does not meet the needs of medium-sized enterprises; the size of Welsh Government contracts—some are put together in such a way as medium-sized enterprises cannot tender for them. In fact, many are put together so no Welsh firm can tender for them. The difficulty of raising working capital from commercial banks, and the danger that they will call it in at any time.

One microcompany that had grown into a small company told me that their problems were: finding premises that were expandable; needing to move continually as they grow; a lack of readily available buildings; late payments; in construction, the continuing growth of sub-contracted agency workers that distort competition; and difficulty of access to markets. Is it surprising that small breweries have been amongst the most successful? Because we know that large supermarkets and Wetherspoon have been keen to retail their products. We know—we always talk about our own constituencies—about Boss brewery in Swansea. You can actually buy their beer in Wetherspoon pubs and you can get it in most of the large supermarkets. But that's where you've got the large companies helping it. And microbreweries are growing the length and breadth of Wales because they have that.

So, what do we need to do in Wales? Work more closely with universities, either on the Aarhus business model or like the Mannheim centre of innovation and entrepreneurship. But we need to use universities. We also know that the term 'technium' has become synonymous with failure, but the initial idea of using it in Swansea to provide facilities for start-up companies spinning out of the university was a good one. Labelling all advanced factories as techniums was doomed to failure. We need to provide larger loans from commercial banks to medium-sized companies; provide loan schemes against overseas assets; let government contracts in such a size that medium-sized Welsh companies can bid; and make it easier for microcompanies to expand. We are no less skilled, entrepreneurial and capable than anywhere else. We need a policy that works to support the growth of Welsh companies and the starting of new ones. 

The recent FSB Wales report on self-employment in Wales provides a useful snapshot of the current state of entrepreneurship and self-employment in Wales. The report reminds us that the number of self-employed people in Wales has grown by 15,000 between 2007 and 2016. So, nearly two out of every five new jobs created in Wales are actually self-employed. And across the UK, self-employment rates are now at their highest in 40 years. The report's sketching of the positive reasons underpinning these changes is also to be welcomed. 

But the report also outlines some of the challenges inhibiting the growth of self-employment and the entrepreneurial spirit. For a start, it outlines a striking disparity between different parts of Wales. Self-employment rates, it says, are lowest in the south Wales Valleys. The lowest rate in Wales, in Neath Port Talbot, is 8.6 per cent, and this is around a quarter of the rate in neighbouring Powys. In my own authority of RCT, the self-employment rate stands at just 9.8 per cent. 

I note that the Valleys taskforce delivery plan commits the Welsh Government to a range of actions to help address this—for example, the work around targeted business support to boost start-ups and encourage entrepreneurs. I also welcome the work around increasing the numbers of business units, and bespoke business advice to the 100 top Valleys businesses with the greatest potential for growth. Yet, there still remains an area where we must maintain focus to boost economic prosperity in what are, after all, some of the most disadvantaged communities in Wales. For that reason, I welcome today's Welsh Government announcement of the creation of two new hubs in the south Wales Valleys to boost entrepreneurship, and an additional £1 million for community entrepreneurship projects that specifically target people in less advantaged communities around Wales.

However, it is staggering to note the sharp gender disparity in terms of self-employment rates, and that's what I'd like to focus the rest of my contribution on today. For every woman who is self-employed, there are 2.3 men. Again, this disparity is worse in Valleys areas. It's a shame for me to note that the gulf is widest in my own home community of RCT. In my authority, there are three self-employed men for every self-employed woman. Of course, when we look at the raw data, we can miss the many excellent role models of women entrepreneurs out there. From my own constituency, I can think of Helen Walbey, who I would describe as a true renaissance woman. Helen is a policy chair at Federation of Small Businesses Wales, a part-time lecturer and a business mentor. But her real gender barrier-breaking background was in setting up a company called Recycle Scooters, a specialist company selling, servicing and repairing motor bikes, scooters and accessories.

Then there’s Rachel Bedgood, who established one of the largest pre-employment screening, disclosure and barring service providers in the UK. Rachel and her company have won numerous awards, and really are at the top of their game. Mandy St John Davey took on self-employed information and communications technology consultancy roles with large firms and the Welsh Office. Mandy then turned to property and launched an incredibly successful entrepreneurial career in this area.

Firmly embedded in the foundational economy, we have Sian Davies and her Garnish Cymru business, and Janette Leonard who offers her innovative Dial-A-Dinner enterprise, branching out to also provide healthy food alternatives.

But, of course, listing a few examples from Cynon Valley will not overcome all the barriers to entrepreneurial activity, and to women’s entrepreneurial activity in particular, but it does play an important role in one aspect, by highlighting a number of recognisable and relatable role models, not only encouraging women to think 'I could do that' but hopefully providing networks and mentors who can provide practical support.

Now, this was one of the recommendations on promoting female entrepreneurship that was made in the last Assembly by the cross-party group on women in the economy. I know there is a danger that good work carried out by CPGs can sometimes be sidelined, however the work of this group was crucial to understanding the barriers to women’s economic engagement. I would like to pay tribute to my predecessor as Cynon Valley AM, Christine Chapman, who chaired this group. Christine, with her new life coaching business, is now one of those woman entrepreneurs we so desperately need in Wales, and in the Valleys in particular.

The CPG also recommended that we embed gender awareness in business support and enterprise education. It recognised the need to provide targeted interventions to specifically help women to start up and develop their own businesses. Business Wales and other support providers must engage with women entrepreneurs, and gender-disaggregated data must be gathered and reviewed to ensure that gaps are identified and addressed. The FSB report mentioned earlier notes a particular need to address the gender gap. I hope that this is a challenge we can look to take on today.

Thank you very much. I call on the Cabinet Secretary for Economy and Transport to reply—Ken Skates.

Thank you, Deputy Presiding Officer. I'm conscious of time and so I'll limit my comments to individual Members to as little time as possible. I think it is clear, though, that as well as an ecosystem or a community of enablers, what is absolutely vital in fostering greater sense of entrepreneurship is a cultural change within Wales, a behavioural change, an attitudinal change. Many Members used examples of places around the world where entrepreneurialism and innovation-driven entrepreneurialism is particularly successful in contributing to higher productivity level. Aarhus, Mannheim, other parts of the world—what is absolutely clear from all of those places is that they have the right ecosystem, the right support networks, but they also have a very distinct cultural approach to entrepreneurship—a cultural approach that we need to adopt and embrace with a concerted effort, not only to invest in the structures that are required to foster new business start-ups, but also to encourage a behavioural change. No national body in its own right will enable a significant increase in business start-ups. There is a need to bring together individual interests and collective community interests. I'd be very interested to learn more about the example of Ridgeway golf club. I think what Hefin David said and what Vikki Howells said about the need to address self-employment challenges for people who wish to be employed in, if you like, jobs of the everyday and that they're taken on board—that's why we're keen in schools to ensure that enterprise troopers and that role models don't just encourage young people into tech-led, cutting-edge entrepreneurship activities, but give young people a sense of pride in taking on self-employment in any field that young people wish to pursue.

I also think that it's absolutely essential that the fair work board take on board what Vikki Howells was saying about the disadvantage that were in place in seeking self-employment. I do think that it's a great advantage of Be The Spark: having a woman in charge of that particular initiative.

I'm going to close in terms of the need for everybody to work together. I'm going to close with a comment from Clint Betts, the chief executive officer of Silicon Slopes, a non-profit organisation for entrepreneurs in Utah. When he visited Wales recently, Clint stated that he believes the critical element in building the right ecosystem is that everybody recognises there is no competition in community building. That's the spirit that I want to move forward, and I want to work with Members across this Chamber to fulfil the potential that I know is out there.

Thank you very much. The proposal is to agree amendment 1. Does any Member object? No. [Objection.] Yes, you will have to sharpen yourselves up in the new year, I'm thinking. [Laughter.] Therefore, I defer voting on this item until voting time. 

Voting deferred until voting time.