Overhaul in small business support urged by FSB review

A radical overhaul in how Welsh government supports enterprises is needed, says a report for the Federation of Small Businesses (FSB).

It wants more help so growing firms stay under Welsh ownership, warning current approaches are failing.

The Manchester Business School report says "orthodox economic thinking" and "mainstream policies" took Wales nowhere.

The Welsh government claimed its economic policies were working.

The independent What Wales Could Be report was commissioned by the FSB, and revealed exclusively to BBC.

It says Wales is "not economically in a good place and is in urgent need of revitalisation".

Report author Prof Karel Williams argues efforts to close the wealth gap between Wales and the south east of England will fail so should not underpin Welsh government policy.

He said there is no point using public funds to attract companies with no local connections because the policies are generic, and used by every other western European country that is lagging economically.

Ministers should instead incentivise business owners to allow them to keep the firms in Welsh hands.

This would include supporting bosses to build firms and to find suitable successors to eventually take over the company such as through employee ownership.

The report also criticises Welsh government strategy and urges ministers to focus on sectors where they can maximise impact, such as construction.

Avana Bakeries in Newport has had six changes of ownership in 25 years

SOME OF THE MAIN ISSUES:

• Trying to close the growth gap between Wales and the rest of the UK is "misguided" and instead economic progress should be measured in how basics likes housing, food, health and care are provided

• A need to address a "churning" of business ownership, where there is a "pass the parcel" involving home-grown firms sold on. These include Rachel's Dairy, which has seen four changes of ownership in less than 15 years; and Avana Bakeries - six changes of ownership in 25 years - its history called "a kind of slow-motion tragedy of missed opportunity"

• A "preoccupation" with attracting inward investment, rooted to the WDA of the 1980s and "pouring water into a leaky bucket"

At the moment, there is a lack of small and medium sized companies in Wales employing between 10-250 people which is making the economy unbalanced, says the report.

It suggests some of the smaller companies are not developing into larger enterprises as they should.

The report says Wales has real possibilities with "much more imagination and experimentation" in how devolved powers are used.

FSB Wales policy unit chairman Janet Jones hoped the research will spark a fresh debate over the future of the economy in Wales.

The Welsh government said: "We have yet to receive a copy of this report.

"However, it is clear our economic policies are working. Last year we recorded more than 38,000 jobs created, safeguarded or assisted, the best performance for 10 years."