Development Bank plan 'kicked into long grass'

Finance Wales is to help produce a 'costed business plan for a development bank'

Plans for a development bank for Wales look to have been kicked into the long grass by ministers, according to business figures and politicians.

Economy Minister Edwina Hart has written to AMs about the bank and the future of the Welsh government's arms-length business finance body Finance Wales.

It comes after criticism of its credit charges and jobs creation record.

But the Welsh government said work to create a development bank was ongoing.

In March, a series of independent reports by academic Prof Dylan Jones-Evans, commissioned by Mrs Hart, recommended a development bank be created to make it easier for businesses to borrow money.

He said it could be a "catalyst and driving force" to support small businesses and also help growth in the Welsh economy.

It came after estimates showed there was a £500m-a-year gap between what Welsh businesses wanted to borrow and what high street banks were willing to lend them.

Prof Jones-Evans recommended the new organisation be set up within a year and said Finance Wales should be integrated into the new bank.

But in the letter to AMs, seen by BBC Wales, Mrs Hart said Finance Wales would now take on many of the roles intended for the development bank.

That includes working with high street banks to support companies that have been denied funding.

It also said Finance Wales would begin the process of employing a new chief executive.

Mrs Hart told AMs the Welsh government and Finance Wales would then work together on a business plan for a development bank.

A spokesman for the Welsh Conservatives said the Welsh government should scrap Finance Wales and start again "instead of kicking the development bank into the long grass".

The spokesman said the bank needed to be stand-alone but Labour's plans "muddied the waters".

A Welsh government spokesman insisted work to create a development bank was ongoing, adding: "[AMs] recognise the importance of building on the skills and experience of Finance Wales in determining the final development bank model."