Item 7 on our agenda this afternoon is a statement by the Minister for Economy and Transport on the proposed future delivery model for the Business Wales service. I call on the Minister for Economy and Transport, Ken Skates.

Diolch, Dirprwy Llywydd. As Minister for the economy, I have always been clear that small and medium-sized businesses are the backbone of the Welsh economy. Not only are they important in number—of almost 300,000 currently active businesses in Wales, more than 257,000 are micro, small and medium sized—they are all so critical to the way our economy and the way our communities operate.

Through the supply chain, on the high street, in our public services, small and medium-sized businesses make up so much of the vitality and the energy of the Welsh economy and Welsh communities. And from the young tech start-up to the growing artisan brewer, to the locally owned construction firm or the family law practice, how we as a community around them, in turn, support and help those firms to grow, to access finance and to plan for their futures is, in itself, critical to the future of the Welsh economy.

I'm proud of what the Welsh Government has done over the course of devolution to support those small and medium-sized firms. Through Business Wales, we have been able to fill in the gaps and provide high-quality information, advice and guidance to support entrepreneurs and businesses with their plans to start up and grow their businesses through all cycles of growth.

Since 1999, and through the crash of 2008 and beyond, the Welsh Government has proactively supported community-based and locally owned firms at each stage of the business lifecycle—from idea generation, through those often tricky few years, and on to accelerated growth. And I'm proud that, since 2013, Business Wales has dealt with over 126,000 inquiries through its helpline and had over 3 million visits to its website. It's provided business advice to over 71,000 aspiring entrepreneurs and SMEs. It's supported SMEs to create over 28,000 jobs and it has safeguarded a further 45,000. And it has supported entrepreneurs to create 10,500 new businesses.

A feature of its work that I am particularly proud of what has been done has been the inspiration for the next generation of entrepreneurs and business leaders. Through the 406 Big Ideas role models across Wales, over 219,000 young people across all of our schools, colleges and universities have been engaged to think about how they could start their own business or become a successful entrepreneur. It’s what has helped 57 per cent—57 per cent—of young people under 25 to now have aspirations to work for themselves and to be their own bosses, to start their own businesses.

The impact of Business Wales can perhaps be most clearly seen in the positive effects it has had on our economy. For every £1 spent through the Business Wales service, £10 is generated in the wider Welsh economy, with up to £17 in the more focused areas of support. The four-year survivability rate of start-ups supported by its work now stands at 85 per cent and that compares to 41 per cent for those who do not get support. Twenty per cent of jobs created by Business Wales's support are filled by unemployed people, increasing to 40 per cent for jobs in self-employed enterprises.

Given the significant amount of structural funding that the Business Wales service has benefited from over many years, it is important to point out that these benefits to our economy are as a direct result of our membership of the European Union. And whatever happens over these coming months and weeks, I want to pay tribute to our partners in Europe who have, through support for Business Wales, helped us to achieve these important things.

But through all of our work, we've always kept asking ourselves one important question: what next? How can we make our services, through Business Wales, sharper and more tailored to the needs of firms and companies the length and breadth of Wales? This is why, in 2017, I was delighted to launch the Development Bank of Wales, our response to the market failure we saw in start-up and growth finance here in Wales. An institution, I'm pleased to say, that now manages over £1 billion of finance, supporting Welsh firms and projects across the country.

But reflecting on these achievements and in thinking about future challenges, it’s time for us as a Welsh Government to work with you as the National Assembly for Wales to help put Business Wales on a stronger footing for the future; to prepare it, and consequently our businesses, for what our economy will look like after Brexit; to help it help us with the wider challenges we identified in the economic action plan of preparing for digital disruption, of improving productivity, of increasing the incidence of fair work, of decarbonisation and of promoting inclusive growth. And so, over the last few months, I have been working closely with my officials to begin that work: work we want you, as members of our national Parliament, to support us with; work that can build on, evolve and enhance the Business Wales service for the future.

Central to that work has been the overriding aim to make Wales the very best environment anywhere in Europe to start up and grow an inclusive and sustainable business. To do that, we have focused our work on three key areas. First is the key area of creating a future Business Wales service that is a high-quality, front-end advice and inquiry portal; one that provides everyone who wants it a one-stop shop for digital, helpline and inquiry support.

The second element has been to focus on the creation of a service that can enhance the capacity and the capability of our regional economies in Wales to support inclusive growth. In short, that means having a business support service that works with partners in the regions and communities of Wales, with local government, with our universities, our colleges and with our high street banks; one that makes simple but strong connections between partners to make those places fantastic locations to start and grow a business.

And the third area of our work focuses on inclusive and sustainable growth. As a Minister, I have been very clear that every business has a responsibility to support inclusive growth, and in turn, as a Government, we have a duty to create the conditions within which more micro and small businesses can grow in inclusive and sustainable ways, to become thriving SMEs, to support the productivity, profitability and resilience of existing medium-sized businesses, to secure their long-term future ownership and to ensure the promotion of fair work.

My intention is that Business Wales will continue to be delivered on a national footprint, and to ensure efficiency it will also build on current provision to provide further opportunities for regionalisation that will align with the regional frameworks being developed by the chief regional officers. I will aim to make sure that the Welsh Government plays its part in ensuring Business Wales has the investment needed to make the service a success.

With the right support and investment, we believe that Business Wales can have a significant economic impact, helping businesses create up to 6,000 new jobs a year, by maintaining the impressive four-year survivability rate for supported start-ups and through adding some £220 million of value through goods and services into our economy annually.

But while I want to be honest with the Chamber about what we can achieve, I also need to be honest and blunt about the danger we face, too. The UK Government’s failure to confirm that replacement structural funding will come back to Wales puts the future viability of delivery services like Business Wales at risk. For Business Wales, this means £12 million per annum is at risk, and opportunities with it that we cannot afford for our businesses and our communities to lose in a post-Brexit economy.

I'll be working very closely with my colleague the finance Minister and with wider Welsh Government colleagues to ensure that we repeat our clear and unambiguous position: not a penny less, not a power lost as we leave the European Union. My commitment to building a high-quality Business Wales is absolute. I hope that the UK Government will not stand in the way of that ambition.

Can I thank the Minister for his statement today? I largely support the aspirations of what the Minister has said in most of his statement. I certainly agree with the start of his statement today, when he said that small and medium-sized businesses are the backbone of the Welsh economy. I couldn't agree with that more. I suppose the latter part of his statement was perhaps a little negative. I do think there are going to be some real challenges as we leave the European Union, but there'll also be some opportunities, and I would hope that future funding, as I'm sure he would agree with me, would be more tailored and more suited to Wales's needs, and less restricted.

In the spirit of the Minister—. I think what he's saying today is he's looking for suggestions from this Parliament and Assembly Members, so I'll ask my questions in the spirit of—I'll give him suggestions in a questioning way. Under the proposed future delivery model of Business Wales, I wonder what considerations the Welsh Government has given to merging the functions of the Development Bank for Wales and Business Wales in order to maximise the economic impact of both and to make it easier for businesses to access finance. If that was a consideration, also your thoughts on keeping the branding of both organisations, despite them perhaps being one body. I'm just sort of floating a suggestion there, and asking for the Minister's views on that.

The FSB have made some recommendations that,

'When determining value for money across the UK, business support should move beyond...job creation targets towards'

—and I'm quoting the FSB here—

'a broader economic conversation. This could include modernisation, decarbonisation targets, productivity gains, and the social impact on communities.'

I would welcome your views on the FSB's recommendations.

The issues of low awareness of alternative sources of finance is highlighted in Professor Jones-Evans's report, and this chimes with me in terms of dealing with my own casework. I wonder how you will ensure that any proposed future delivery model for Business Wales will do more to raise the brand awareness and communicate the full range of financial sources and options available to businesses.

Some recipients of Business Wales have advised that the quality of advice can vary, and I wonder how any proposed future delivery model for Business Wales can ensure that the advice given is consistent across the country. Other criticisms of the current model are that banks' relationships with Business Wales can be somewhat ad hoc when it comes to referrals or signposting businesses to access Business Wales assistance and support. Therefore, how will any new delivery model, in your view, foster a closer working relationship between Business Wales and its key partners from the financial institutions, and I include in that, of course, the community bank of Wales as well, which has been talked about, and alternative finance providers, to ensure we have a more joined-up approach?

Can I thank Russell George for a number of very persuasive suggestions for improving the Business Wales model as we move forward? There is a major challenge, though, in maintaining the financial support for Business Wales services if replacement funding is not guaranteed by the UK Government, in the form of ensuring that every penny is passed to the Welsh Government to spend on vital business support services. That challenge is very real because we face, after 2021, a budget reduction of something in the order of 48 per cent for Business Wales if that replacement ERDF funding is not secured. That, in turn, would have huge implications in terms of the number of businesses that we'd be able to support and give advice to, the number of jobs that could be created, and the number of jobs that could be sustained. So, I am hopeful that the UK Government will clarify its position in terms of replacement funding and will guarantee that we, as the Welsh Government, will secure it.

I think the points made concerning the work that Business Wales and the Development Bank of Wales do together is very important. The suggestion of a merger is something that I and others have considered in the past. It's certainly something that I keep an open mind to. But I'm also concerned with the close working relationship that Business Wales has with Careers Wales. Again, we looked at how we could improve the working relationship between Careers Wales and Business Wales, and we are pleased that they are working incredibly closely now. I'm not minded to suggest at this point that full mergers would be to the benefit of the end user—the customer, the business that accesses support—but it's something that I think could and should be considered on a regular basis.

In terms of high-street banks, I think Russell George makes an incredibly important point. It was something that I referred to towards the end of my statement. There is an absolute need to ensure that high-street banks do signpost businesses to Business Wales if they believe that those businesses could benefit in any way, shape or form from the advice and support that is offered. The important point, though, for Business Wales, is that they need to ensure that every high-street branch is aware of the Business Wales service. That form of collaboration is going to be vitally important in order to raise the brand awareness of Business Wales as well, and this is something that Russell George pointed to as well. I think brand awareness has come on incredibly well in recent times, but in an age in which we are bombarded with a plethora of messages and brands every moment of every day, it's important that the momentum that's been built up by Business Wales is not lost.

Now, Russell George mentioned the feedback of businesses. Now, the feedback of businesses concerning Business Wales's customer survey is very impressive indeed: 90 per cent of businesses were satisfied with the level of knowledge and expertise of an advisor; 89 per cent were satisfied with the level of professionalism; and 86 per cent would recommend the service to others. However, I recognise the need to ensure that there is absolute consistency right across Wales. So, as we press forward with regionalisation of services such as Business Wales, we will not stop looking at how we can ensure a consistent high-quality service across every part of the country.

Russell George referenced the FSB's report, which I fully support. I think the importance of placemaking in business support considerations cannot be overstated. The economic action plan had placemaking right at its heart, with the focus on the foundational economy, with the desire to see business support not focused on simply buying jobs or creating jobs, but contributing to other priority areas, such as decarbonisation, such as the strength and resilience of the high street, and, of course, the health and well-being of the workforce. So, as Business Wales proceeds into the future, and its new operating model is developed and fully implemented, I would expect Business Wales to operate on the basis of the economic contract being used, and the economic action plan prioritised being fully respected.

Thank you for the statement and for the early copy of it. I certainly agree—how could I not—on the importance of SMEs to the Welsh economy. The figures, as you've presented them, are quite shocking, if truth be told: 259,000 businesses, and 257,600 are micro and small and medium businesses. So, to say that they are the backbone of our economy is an understatement.

I have worked with Business Wales and have referred a number of businesses to Business Wales—certainly, there are committed staff there, but the concerns I have very often, and the Minister will be aware of this, as I have corresponded with him on the issue on a number of occasions, is that there’s underfunding often, not enough resources provided to them, and there is too much pressure placed on too few staff, and the result is that they occasionally can’t deliver. And in seeking a new model, we would be looking for new prioritisation to ensure that the objectives of the staff working on the ground can be delivered.

I certainly agree with the Minister’s concerns when it comes to the impact of leaving the European Union. We know how much European funding has been provided over the years to initiatives related to business development, and we know that at this point in time, within possibly a few months of leaving the European Union, we still don’t have the kind of assurances, even at that most fundamental level, in terms of future funding in order to continue with this work, which is going to add to the pressures on the scarce resources available to Business Wales at present.

In terms of the future of the first key area outlined by the Minister, I certainly agree that we need to further develop this one-stop-shop element. The second element relates to what needs to be done, namely to root more of our businesses within communities across Wales. There has been a shift in frameworks by Business Wales that has moved Business Wales further away from businesses. That’s certainly the case in my constituency, and we must be more sensitive to the need to ensure that Business Wales staff are on the ground within our communities, in all parts of Wales, so that every business, wherever they are, can feel that they have a real link with sources of advice and support.

In terms of the third area of work that the Minister mentioned—sustainable growth—I would welcome further information from the Minister on his ambitions in investing in community initiatives that can become businesses that are important employers within our communities and are truly rooted within those communities. I visited Ynni Ogwen recently in Bethesda, which is doing excellent work environmentally in terms of the way it produces energy, but also in terms of the work it does as a hub for economic development in that area. So, I would welcome further information on that.

Also, could we have further information on the steps that need to be taken in order to root Welsh businesses here in Wales for the future? The problem, as we know, is that when a business reaches a certain scale, there is that temptation in Wales to sell up, losing the control that we have of those businesses. We saw that happen in the case of Marco Cable Management in my constituency recently. It was exactly that: a company that had received support from the Welsh Government, but that business wasn’t given the support that it needed to root itself in Anglesey. And what’s happening now—it is moving to the midlands, and that is something that I regret deeply, and I do feel that there is still a lack of focus on that work of retaining Welsh businesses here in Wales, because that’s how you retain their profits in Wales for today, but also their commitment to Wales for the future.

I think Rhun ap Iorwerth makes a number of really important points today and raises vitally important questions about the delivery model moving forward, but can I thank him, first of all, for kindly recognising the professionalism of staff who are delivering Business Wales services? I recognise the huge contribution that they make, often in very demanding circumstances, and capacity and capability is absolutely vital—it's one of the two pillars underpinning the new delivery model, and it will be equally important to Business Wales itself.

Now, I do strongly believe that closer working with our regional teams across Wales will assist in enhancing capacity and capability within the business support service sector, but so too will closer working with high-street banks and the development bank and, as I mentioned to Russell George, Careers Wales. It's important that all work together and collaborate so as to ensure that all of our investments, all of our support services, are tightly focused, and that no matter what sort of service you are requesting, what sort of support you are in need of, the system itself is very clear, there are no wires exposed, you don't need to navigate your way around it—you just have a one-stop shop to go to, and all of the capacity and capability that is required is within that broad array of organisations behind that front door.

In terms of sustainable growth, I should just say, Dirprwy Lywydd, that Social Business Wales and the Wales Co-operative Centre also play an important role in driving sustainable economic growth in Wales, and their mutual roles will be incredibly important moving forward, as they help to drive growth in the number of community-owned businesses.

And in terms of rooting businesses in Wales, we should not forget the vitally important role of the development bank, especially in supporting middle-sized firms. Members may not be aware of the full extent of the work that is currently taking place by both Business Wales and the Development Bank of Wales, but I would be happy to write to Members, because since Economic Intelligence Wales was launched in 2018, Business Wales and the Development Bank of Wales have been working together to look at the missing middle in Wales and how we can answer those points that Rhun ap Iorwerth made in his contribution.

Already, Economic Intelligence Wales and the Development Bank of Wales have undertaken some quantitative research to analyse medium-sized firms in Wales. Initial findings were available back in September, and the final report is to be published imminently. But there will be another phase to their work, and that other phase will be qualitative research undertaken by Business Wales to identify the type of support that is needed, and I will present that to Members in the spring of 2020.

Rhun ap Iorwerth also pointed to the quite stunning figures concerning the number of micro and small businesses in Wales. But, equally, medium-sized firms play a vitally important part in the overall contribution of revenue to Wales and also in terms of employment figures. And already, the Development Bank of Wales is supporting specifically medium-sized enterprises that wish to remain in Wales with management succession funding, which is vitally important in helping to prevent the sale of businesses that might end up being divested or relocated outside of Wales. There is a £25 million Wales management succession fund already available, and this hugely ambitious programme of maintaining and rooting more businesses in Wales is just one of the strands of our work in identifying how we can support and grow a current missing middle within Wales.

Can I thank the Minister for his statement this afternoon? There are few in this Chamber who would not acknowledge the excellent work done by the Business Wales service teams, and, as with Rhun ap Iorwerth and Russell George, can I endorse the fact that indeed the Minister himself is right to point out the importance of the SME and the microbusiness sector in Wales?

Coming back to Business Wales, I have considerable anecdotal evidence of small start-up companies who have benefited from both advice and financial backing given or secured for them by Business Wales. The figures quoted in the statement are impressive, so it is vitally important we build on the work of Business Wales. What's particularly impressive in these figures is the increased number of start-ups that survived past the four-year mark since the various schemes under Business Wales came into being. This must be applauded. It's very worrying when you have a whole number of businesses going into the top of the pipe but falling out of the bottom. If this stops that happening, and it clearly is not happening here in Wales in the way that it did in the past, that really is, again, to be applauded.

As someone who has been in business for over 40 years, I can honestly say that I wish an organisation such as Business Wales had been around when I was starting the several businesses I was involved in over the years. I'm sure I would have gained valuable business experience from such an organisation. 

As the high street banks—if we can still call them high street banks, that is—have all but abandoned financial backing to the small business sector, it is vital that Business Wales is available to help facilitate finance with its referral and help, with further advice through the Wales development bank. However, there is one observed flaw in the current lending system, and that is the development bank's inability to fund more than 50 per cent of the finance it gives to companies, leaving them to seek the balance from the private sector. Whilst I can understand the Welsh Government's desire not to overexpose public funding, I do feel there is a need for the bank to help to secure that extra funding from the private sector by building stronger links with private funders. Would the Minister look at how these connections could be achieved?

Finally, I would wish to endorse the Minister's call for the UK Government to ensure that EU structural funding is not only matched once we leave the EU but even enhanced. I can assure the Minister that we in the Brexit Party will back any Welsh Government measures taken to secure those funds. 

Can I thank David Rowlands for his kind words regarding the people who deliver Business Wales services? I think the fact that 37 per cent of businesses who responded to the survey said that that they would be content or indeed happy to pay for Business Wales support and advice indicates just how effective Business Wales services are right now. That is why we are so keen to ensure that the operating model in the future builds on the success of Business Wales. 

I think David Rowlands makes the important point that a business seeking and securing advice and support from Business Wales probably has double the chance of surviving four years than a business that does not. The figures really are quite incredible, and those figures have contributed to Wales now having more active enterprises that at any other time in its history. And, again, this is a success story that we wish to build on.

In terms of the support provided through the Development Bank of Wales, it's always been our view that, between Business Wales and the Development Bank of Wales, working closely together, businesses can enjoy not just financial support but advice with it. The Development Bank of Wales has been looking recently, particularly in the context of leaving the EU and the support that might need to be provided to businesses, at the risk appetite for lending to SMEs. This is absolutely vital, and also with it is the need to make timely decisions and to ensure that bureaucracy associated with securing financial support is kept to an absolutely minimum. And that is something that I would congratulate the Development Bank of Wales on achieving.

In terms of the funding criteria and the amount that a business is expected to secure from other means, I'm always happy to review the funding arrangements for businesses, but it's absolutely vital that we do stretch private investment as far as we possibly can. 

Thank you very much, Minister.