4. Statement by the Minister for Economy: Development Bank of Wales — Investing with ambition

Part of the debate – in the Senedd at 3:27 pm on 25 October 2022.

Alert me about debates like this

Photo of Paul Davies Paul Davies Conservative 3:27, 25 October 2022

Can I thank the Minister for his statement this afternoon and congratulate the development bank on its fifth anniversary? Now, the Development Bank of Wales has been very open to scrutiny from the Economy, Trade, and Rural Affairs Committee, and I know Members welcome the ability to question the team on its investments and progress. Now, today's statement rightly recognises that the Welsh economy is more reliant upon small businesses, so it's crucial that the development bank is reaching out to small and medium-sized enterprises and offering support. The Minister has said that the development bank is taking a proactive role in facilitating help for businesses, but doesn't quite tell us how that work is taking place, and so perhaps the Minister could tell us exactly how the development bank is working with small businesses specifically, given the current financial climate.

Today's statement rightly highlights some really good work by the development bank. It's great to hear that it has invested £78 million of equity into Welsh businesses. Of course, we need to ensure that funding is reaching businesses in all parts of Wales, and so perhaps the Minister could tell us more about how the Welsh Government will ensure that the bank is raising awareness of its services to businesses in all parts of the country.

The Minister has already given the bank a total equity investment target of £100 million, which, alongside private sector co-investment, can deliver over £250 million of capital to businesses. Working with co-investors will be critical if the bank is to maximise the impact of its investment in Welsh businesses. Of course, to do so, the bank must continue to encourage the private sector to invest alongside itself, and so perhaps the Minister can tell us more on the work being done to increase that co-investment.

Now, we know the COVID pandemic has had an enormous impact on businesses in Wales, and the development bank has an important role in supporting economic recovery and supporting businesses. It's vital that a one-size-fits-all approach is not blanketly adopted by the bank, and I'm pleased to hear the Minister talk about offering flexibility to its customers through forbearance and repayment holidays. Today’s statement acknowledges that businesses are facing challenges due to increasing costs for materials, wages and, of course, energy, and therefore perhaps the Minister could tell us a bit more about how the bank can provide tailored support to businesses in relation to these specific challenges.

It's vital that we recognise the jobs that are being created by the development bank, and there has been some good work taking place to identify and measure productivity too. According to the bank's corporate plan, its baseline jobs target for 2022 to 2027 is 20,000 jobs, but it's vital that there is some measure of the quality of jobs. And, so, I'd be grateful if the Minister could tell us how the Welsh Government recognises success in terms of jobs, and what does success look like to the Welsh Government in this specific area.

The Minister has made it clear today that, going forward, businesses receiving equity investment will have unparalleled support throughout their investment journey. Today's statement confirms that the bank will be supporting new technology companies to take their products from early concept through to market, as well as businesses targeting high growth, and management teams to buy existing businesses and keep them in Welsh ownership.

I, of course, welcome this ambition, and perhaps the Minister can tell us more about how the bank is investing in new technology start-ups in particular. There has been some good work around the Wales technology seed fund, but more needs to be done, and so I'd be grateful for any further information the Minister can provide on this front.

Equally, it's important that there is support for management teams that want to buy out existing businesses and keep them in Welsh ownership. To date, the Wales flexible investment fund, which is operated by the Development Bank of Wales, has been offering a potential debt-based funding route for employee buy-outs. And I know there is support for management buy-outs available through the Wales management succession fund, but perhaps the Minister could tell us a bit more about how those funds are being evaluated and monitored, so we can ensure that the right support is out there for businesses.

And, finally, today's statement refers to the development bank's work to promote a transition in Wales to a significantly more decarbonised business environment. I'm particularly interested in the development of a new scheme that will allow businesses to take on borrowing to fund capital investment that delivers on decarbonisation. Indeed, the bank's annual report highlights that 41 per cent of its customers have indicated that they are motivated to act on climate change, but actually lack the expertise. And, so, I'd be grateful if the Minister could tell us a bit more about the new scheme that is being developed and when it's likely to become operational. 

Therefore, in closing, acting Presiding Officer, we know that one of the key themes of the bank is investing in businesses that reflect the diversity in our communities, and we must remember that the bank, at its core, is an impact investor with a social purpose. And, so, can I thank the Minister for his statement this afternoon, and say that I look forward to hearing more about the development bank's work in the coming weeks and months? Thank you.