9. What assessment has the Welsh Government made of the financial barriers that stop social enterprise start-ups in Wales? OQ57451

Thank you. We work closely with the social enterprise sector, and finance has been raised as a key barrier for social enterprises to start up. That's why, through WEFO, our Welsh European Funding Office, the New Start programme pilot was approved in 2020. I've also committed a further £235,000 to support the creation of social enterprises, targeting climate change, to help the sector deliver a fairer, greener economic recovery here in Wales.

Thank you. As the Minister will be aware, small-scale social enterprises are a business model that struggles to take hold in the marketplace, with funding being by far the biggest challenge it faces, particularly start-up capital. Since most social entrepreneurs are individuals, the predominance of funding comes from their savings rather than traditional forms of financing, such as bank loans.

Despite the fact that some people are willing to pay more for goods and services that come from a social enterprise, many consumers—particularly those who are among the poorest in society—are price sensitive, and will look to purchase at the most competitive price. The problem that this creates for social enterprises is that it limits their ability to expand, as their business model is not always profitable enough to access the necessary funds.

In Valleys communities, we have a juxtaposition, in that these are the communities most likely to benefit from social enterprises, yet they are the least likely to be able to afford to pay more for goods and services. With this in mind, Minister, what assessment has the Government made of the long-term financial support that is needed for social enterprises in Wales in order for them to expand from being small and medium enterprises? Thank you.    

Well, there's an honest challenge there, and I know that the Member won't like it, but it comes back to some of the reasons why we've talked so much about former European funds. A lot of the support that we provided has actually come come from the former European funds that we used to receive. Not having those means that we're compromised in our ability to do that; we have to direct resources from other parts of the Government. I would like to be able to do more and give more certainty, and actually not having certainty about where those funds are coming from is a real problem. The specialist business support that often social enterprises need to move to a position of being generally profitable is something that we do have a range of people that can provide. So, we support Social Business Wales, the Wales Co-operative Centre and others to do just that.

Our challenge will be that, if there isn't the money available, it means that we're having to cut our cloth accordingly, and that is a real problem. I want to carry on supporting this sector. I think that they have a big role to play in communities right across the country. We would be in a much better position to give them the stability that I think they need and deserve if we had greater certainty on how replacement EU funds were going to be used. I would have thought that that point, in itself, should not be one that should in fact be party controversial, but I'd hope we could get rather more agreement on wanting stability in funding coming to Wales to do just what the Member suggests should happen.

Thank you, Minister.