We’re chasing the wrong Dragon in Wales at the moment, and it’s high time it stopped.
Today we’ve heard of yet another business in Wales that had recently announced a major funding injection from Welsh Government and is now on the brink of going ‘pop’. Universal Engineering in Llantrisant announced with great Ministerial fanfare that they had negotiated £2M of public funding to support their expansion as they were so confident of the future. That was the middle of February this year. They have called in the administrators and it’s only August.
This raises two important points. Firstly, what, if any due diligence was undertaken by Welsh Government officials in making this decision, and how honest the grant applicant was in relation to the health of the business at the time of the application.
When I’ve previously been critical of this type of investment, I’ve been chided by some who suggested that this risk taking by government is what they should be encouraged to do, not be cowed into a risk averse corner.
The investments are wrong for two key reasons:
1- more often than not the public money is not being invested alongside risk capital, from private investors or institutions. These guys get it wrong too, I agree, but they’re often risking their own money in the deal; they have ‘skin in the game’. Their reputation or kids inheritance will depend on them choosing winners over losers.
2- the investments are made on the basis of jobs created. This may create PR opportunities for the Minister, but do very little to generate wealth in our communities. Jobs will be developed on the basis of wealth being created, not the other way around.
Those who follow these public investments will have noticed a number that have gone to the wall recently. These failures are dreadful news for the employees of the Companies themselves, and the local area in which they’re situated. The fact that our public monies are also being lost alongside the jobs just makes matters worse.
Mrs. Hart, you prided yourself in being an interventionalist when you announced your impending retirement recently. Well it doesn’t look like it has worked. You’ve either got an incompetent team of senior officials in your department or you’re making over-riding judgements from your high office. Either way, save us some money between now and May 2016, and go now. And on your way out take the bureaucrats who made these godawful decisions with you.