New development bank for Wales recommended to drive forward business growth

Issue date: 11 March 2015

UWE Bristol

A task and finish group led by a professor from the University of the West of England (UWE Bristol) has recommended that the first regional development bank in the UK should be created as a catalyst to drive the Welsh economy. Professor Dylan Jones-Evans' led a group of experts to examine concerns firms in Wales were failing to borrow the money they needed to expand and take on more staff. They have recommended that Wales becomes the first part of the UK to bring in a Development Bank to address this issue.

Professor Jones-Evans, who holds the chair in entrepreneurship and strategy at Bristol Business School said, “The Task and Finish Group has produced a comprehensive report that sets a clear direction for the Welsh Government regarding the improving access to finance to small firms. A new Development Bank for Wales - the first regional public bank in the UK - would aim to provide funding for a greater number of businesses through working closely with the private sector to address the half a billion pounds funding gap that currently exists and, more importantly, ensure that affordable flexible loans are made available to help Welsh businesses grow.”

The report found that there was a gap of £500m a year between what Welsh businesses want to borrow and what banks are willing to lend and made a series of recommendations as to the role of a new Development Bank for Wales to close this gap. This included:

■ Focusing on the provision of finance to microbusinesses given the growing importance of this sector for employment in Wales.

■ Working with private sector to fill the funding gap by providing the finance that will enable the banks to overcome collateral, or affordability issues and lend to Welsh SMEs.

■ Addressing gaps in the awareness and provision of invoice financing to SMEs in Wales.

■ Creating a Welsh Angel Capital Association to act as an umbrella organisation to encourage the development of multiple angel groups and networks.

■ Boosting investment into high growth and innovative firms by outsourcing venture capital to a network of specialist funds and establishing a network of micro-venture capital funds with regional and sector focus.

■ Ensuring that the products of UK Export Finance are marketed effectively within Wales so as to drive forward internationalisation in the economy and the benefits of higher efficiency that exporters competing in a wider market can obtain.

Mrs Edwina Hart, the Minister for Economy, Science and Transport in the Welsh Government, said she had received the report and will make an oral statement in response to the recommendations on 17 March. “I have now received his report which raises key points about the methods to close the funding gap and help deliver finance to Welsh SMEs including charitable, community and social enterprises. It also raises questions about some of the principles which underpin the provision of finance and the role of government funding for SMEs in economic development.”

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