'Grants culture over' warns Jones

The economic development minister has warned that "the massive grant culture is over" in Wales.

Ieuan Wyn Jones, in an interview with BBC Wales, signalled a major shift in assembly government business priorities in the wake of the changing economy.

Mr Jones said there had to be a radical shift from offering large grants to multi-national companies to move here to building up research bases instead.

He has also ordered a major shake-up of his economic development department.

Mr Jones says he is putting in place fundamental changes to the economic development department to adapt to the changing world and to reshape Wales' entire economy post-recession.

The assembly government led talks on the grant package to bring Amazon to Swansea in 2008

He said Wales' "offer" to inward investment had to change radically.

This involves moving away from offering multi-national companies large sums of taxpayers money to locate in Wales, and instead working with them to build up research and design facilities and a tailored skills base.

He told BBC Wales' business correspondent Nick Servini that grants would still be available on a smaller scale and where the economy was fragile.

But he added: "Wales is not going to compete in the future with large companies looking for a low cost, low wage economy. Those days are gone.

"I applaud the work that many of our staff are doing, but do they have the right tools to do the job in a highly competitive and challenging market place?"

ANALYSIS Nick Servini, BBC Wales business correspondent Ieuan Wyn Jones isn't the first to talk about a changing grant culture in Wales, but he is the first to talk about it so explicitly. Few will argue with his assessment of the new economic reality when it comes to inward investment. However, it's still a harsh reality for Wales, which has come to rely on the jobs created by foreign firms since the seventies. Attracting a multi-national firm to set up a big research and development centre is the equivalent of the holy grail when it comes to inward investment. They're great to get but very difficult in practice with other nations and regions fighting for the same jobs.

Mr Jones warned that for smaller, indigenous companies, access to working capital will be severely restricted for some years to come.

But he said the assembly government was examining the possibility of a number of new models, including a "people's bank" to provide that key finance.

Fit-for-purpose

In a frank interview, the deputy first minister pointed to a recent fall in inward investment, as well as businesses moving production to much cheaper areas such as eastern Europe as evidence that policy and strategy needed to change rapidly.

Over the summer, Mr Jones ordered a realignment review of his economic development department, and is now proposing major changes.

This includes forming teams to talk to universities about their innovative ideas but then help with their development to maximise their economic potential.

His intervention comes amid the backdrop of European aid to Wales tailing off dramatically after 2013, and less public finance available for business support.

Welsh MEPs on Sunday warned that Wales was unlikely to qualify again for the highest level of European support, with poorer nations being admitted to the EU.

Mr Jones has given himself a six-month timescale for ensuring that his department is fit for purpose in creating a stronger more sustainable economy.

On Tuesday, there will be a set-piece debate on the economy in the assembly, where Mr Jones is expected to give further details of his plans for change.

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