If Manchester can build an innovation district, why can’t Cardiff?

Cardiff’s political, civic and university leaders should be asking themselves an uncomfortable question. Why, after years of talking about innovation, entrepreneurship and the knowledge economy, does the capital city of Wales still not have a genuine innovation district?

The contrast with Manchester is becoming increasingly difficult to ignore, with a £1.7 billion development called Sister being created on the former University of Manchester North Campus as the latest stage in a much wider attempt to turn innovation into the foundation of the city’s economic future. It will provide laboratories, offices and affordable space for start-ups alongside homes, shops, restaurants and public spaces, with the ambition of creating more than 10,000 jobs.

This is not another business park on the edge of a city or an office development retrospectively given an innovation label but a development that sits within Manchester’s Oxford Road Corridor, an area that already brings together the University of Manchester, Manchester Metropolitan University, major hospitals, science businesses and cultural institutions within little more than a square mile.

That concentration matters because genuine innovation districts are fundamentally about proximity as they bring researchers, entrepreneurs, investors, established companies and public institutions together in a place where people meet, ideas cross institutional boundaries and businesses can move from start-up to scale-up without leaving the ecosystem.

Cardiff has the assets, but not the district

That immediately exposes Cardiff’s problem:the capital city of Wales does not lack the assets to create something equally ambitious. Cardiff University has its Innovation Campus and sbarc-spark, the city has considerable strengths in fintech, cyber security, creative industries, healthcare and life sciences, and just along the M4, the compound semiconductor cluster around Newport represents one of Wales’s strongest internationally competitive technology sectors.

There are also emerging proposals for a science and technology district south of Cardiff Central station, whilst plans are developing around a health innovation corridor connecting Cardiff Edge, Heath Park and Velindre. Individually, these are all potentially significant developments but collectively they expose the weakness of the Cardiff model of creating projects, programmes and institutions but never quite managing to join them together into a coherent economic proposition.

The real Manchester lesson is leadership

Manchester has and despite the latest political hype, it would be wrong to attribute all of this to Andy Burnham as the Oxford Road Corridor partnership was established in 2007, a decade before he became mayor, and Manchester’s civic institutions have been working together on economic regeneration for far longer. Nevertheless, the new Prime Minister has provided something increasingly important, which is visible political leadership around a clear city-region ambition. He talks relentlessly about Greater Manchester as one economic entity with transport, skills, housing, investment and business growth presented as interconnected rather than separate policy portfolios. The Bee Network is primarily a transport initiative, but it is also an economic development policy because it expands the labour market and makes it easier for people to move between employment, universities and innovation centres.

Above all, Manchester has developed the institutional capacity to turn ambition into delivery. Take the case of Sister, a joint venture between the University of Manchester and Bruntwood SciTech, which brings together university land, commercial development expertise and patient institutional investment. Legal & General and the Greater Manchester Pension Fund are amongst those involved in the wider Bruntwood SciTech model.

That matters because creating laboratories, prototyping facilities and flexible space for growing technology businesses is expensive. Conventional developers will rarely build such facilities speculatively, and Manchester has therefore constructed a long-term partnership capable of taking that risk.

Too many organisations, no single mission

Cardiff has never assembled anything comparable and responsibility remains distributed amongst Cardiff Council, Cardiff Capital Region, Welsh Government, Cardiff University, other universities, the NHS, the Development Bank of Wales and a range of private landowners and developers. Each organisation can quite reasonably point to programmes and investments that support innovation yet nobody appears ultimately responsible for creating a single world-class innovation district for Cardiff.

That fragmentation has consequences and Central Square has transformed the area around Cardiff Central station and attracted major organisations including the BBC and UK Government. Central Quay represents another huge redevelopment opportunity whilst Atlantic Wharf is being reshaped around the new arena and leisure economy.

All have their merits but imagine if, twenty years ago, Cardiff had decided that the area surrounding its principal railway station would become one of Britain’s leading locations for science, technology and entrepreneurship. Imagine if university research facilities, laboratories, venture capital, accelerators and scale-up space had been deliberately incorporated alongside offices, housing and hospitality.

Cardiff Central should be the starting point

The economic impact could have been transformational and there is still an opportunity to do exactly that. The area around Cardiff Central, Central Quay and the land south of the railway station remains the obvious location and has something no other Welsh location can replicate: direct rail access to virtually every major population centre in South Wales and increasingly strong connections with Bristol and London. That should become the physical heart of a Cardiff innovation district, connected to specialist centres elsewhere rather than attempting to relocate everything into one place.

Cardiff University’s existing Innovation Campus, Heath Park, Cardiff Edge, Media Cymru and Newport’s semiconductor cluster could operate as specialist nodes within a wider regional innovation network but there should be one highly visible centre where entrepreneurs, researchers, investors and businesses naturally come together.

Crucially, it needs more than another committee and a genuine innovation district would require a dedicated delivery organisation bringing together Cardiff Council, Cardiff Capital Region, Welsh Government, universities, the NHS and private investors, with independent leadership and a long-term commercial mandate.

Build for scale, not simply start-ups

It should also be designed around growing businesses rather than simply starting them. Manchester itself still struggles with the British scale-up problem and entrepreneurs can launch successful companies but often find that the larger rounds of investment required to grow internationally remain concentrated in London or overseas. Cardiff could learn from that weakness as well as Manchester’s strengths by ensuring that any new district combines incubation with later-stage investment, procurement opportunities, research partnerships and suitable premises for companies employing hundreds rather than tens of people.

None of this requires Cardiff to copy Manchester as the economic strengths of the two cities are different and so are their institutions but Manchester demonstrates what sustained civic ambition can achieve when universities, government, investors and developers agree on a direction and then pursue it for decades rather than funding cycles.

For Cardiff, that may be the most important lesson of all as the city does not suffer from a shortage of innovative businesses, talented researchers, universities or promising technologies. What has been missing is the leadership, institutional alignment and long-term commitment required to turn those individual strengths into something greater.

And after years of discussing innovation in Wales, perhaps the question should no longer be whether Cardiff needs an innovation district. It should be why we have waited so long to create one.

Rural Wales Cannot Afford to Be an Afterthought

There is always a danger when a major policy document is published for England that it is either ignored in Wales because it does not formally apply here or treated as though it can simply be copied across the border. Neither response would be sensible in the case of the UK Government’s new Future of Rural England Report.

Published by the Department for Environment, Food and Rural Affairs, the report examines the future of rural England through six interrelated themes: economic growth, education and skills, housing and infrastructure, health and wellbeing, community safety, and physical and digital connectivity. It argues that rural communities have too often been considered at the end of the policymaking process rather than at the beginning and that this has resulted in services, investment programmes and regulations that do not always reflect the realities of rural life.

On the surface, this is an English strategy built around English institutions, English funding programmes and the evolving system of strategic and mayoral authorities and yet the underlying challenges are at least as relevant to Wales and, in some cases, considerably more acute.

Large parts of north, mid and west Wales face persistent problems of low productivity, limited access to high-value employment, inadequate public transport, poor digital connectivity, ageing populations, housing pressures and the gradual loss of essential services. These are not marginal concerns affecting a few remote communities but shape the economic prospects of a substantial part of the nation and influence the future of the Welsh language, farming, food production, energy and the ability of younger people to remain in the communities in which they were raised.

The report should therefore be read carefully in Wales, not because England has suddenly found all the answers, but because its central argument is one that Welsh policymakers have too often failed to embrace. Rural policy should not be treated as a specialist branch of agricultural or environmental policy but should be understood as a central part of economic, housing, transport, skills, energy and public-service policy.

That distinction matters because, for too long, discussion about rural Wales has been framed mainly around farming, agricultural support and the management of the landscape. All are important, particularly as the Sustainable Farming Scheme reshapes the relationship between government, land management and food production, but the rural economy is not synonymous with agriculture.

The English report makes that point clearly, noting that agriculture, forestry and fishing account for only a small share of the wider rural economy. Rural areas also contain manufacturers, construction firms, professional services, tourism businesses, technology companies, retailers, public services and hundreds of thousands of small enterprises.

The same is true in Wales and a serious rural economic strategy must support farming while looking beyond it and must recognise rural Wales as a place where productive businesses can be created and grown, not simply as a landscape to be maintained, visited or subsidised. And as someone who was brought up in a rural community, this matters to me, and so you will excuse me for spending some time teasing out some of the main arguments from the England report that may be relevant to my friends and family who still live on the Llyn Peninsula.

Rural growth is national growth

The report’s strongest economic argument is that closing the gap between rural and urban productivity is not simply a matter of fairness but is a source of national growth. Rural England contributes more than £259 billion annually to the economy, yet productivity remains below that of urban areas.

The causes identified are familiar: weaker connectivity, limited access to finance, skills shortages, smaller firms, inadequate housing and poorer transport, and there are obvious parallels with Wales. Welsh productivity has lagged the UK average for decades, but national figures disguise substantial internal differences, with some of the deepest economic challenges found in areas where distance, demographic change and small local markets interact with longstanding weaknesses in infrastructure and investment.

The traditional response has too often been to treat these places as requiring compensation rather than transformation and public money has been used to preserve services, support agriculture or manage decline, but rarely as part of a systematic attempt to raise productivity. That is not to dismiss the importance of social support and rural communities should have fair access to public services irrespective of their contribution to economic output, but an economic strategy that sees rural Wales mainly as a cost will inevitably underestimate its potential.

Most importantly, there are significant opportunities. North-west Wales has strengths in energy, advanced manufacturing, food production, digital innovation and environmental science. Aberystwyth and the surrounding region possess assets in agri-tech, biosciences, veterinary research and earth observation. Pembrokeshire has the potential to develop new energy industries alongside established engineering and port infrastructure. Rural Carmarthenshire and Ceredigion have strong food, tourism and creative sectors and Powys has opportunities in renewable energy, land management, manufacturing and distributed professional services.

The question is whether these assets are being brought together into coherent economic systems, and the English report is useful because it moves beyond the assumption that rural growth means helping existing lower-productivity sectors survive. Instead, it argues that rural communities must also be connected to higher-productivity industries and wider industrial priorities.

Wales should do the same by creating a rural economic strategy that identifies the distinctive growth opportunities of different places rather than imposing a single model across the country. It should connect those opportunities to skills, infrastructure, finance and university expertise while also recognising that some of the most important economic assets may sit just outside conventional rural boundaries but provide employment and supply-chain opportunities across a much wider area.

There is no reason why a village-based engineering company, digital consultancy or specialist food manufacturer should be regarded as economically marginal simply because it is located far from Cardiff. Modern technology, hybrid working and improved digital infrastructure should make location less constraining than it once was, but that potential will not be realised automatically and the basic conditions for business growth still have to be in place.

Entrepreneurship is the missing element

Despite its strengths, the Rural England report has one important weakness, namely that it speaks extensively about SMEs but relatively little about entrepreneurship itself. That distinction matters because, while supporting existing businesses is essential, rural renewal also depends on creating new firms, encouraging innovation and helping ambitious entrepreneurs build companies capable of reaching markets beyond their immediate locality. This should be a central consideration for Wales, because rural areas often have high levels of self-employment, yet that does not necessarily translate into high levels of productive entrepreneurship as some self-employment reflects necessity, limited employment opportunities or a fragmented pattern of low-margin activity.

The aim should be to create a stronger pipeline of businesses capable of innovating, employing people and growing, which requires more than generic start-up workshops and means developing rural entrepreneurial ecosystems around local assets. Universities and colleges have an obvious role and Bangor University, Aberystwyth University, the University of Wales Trinity Saint David and rural further education campuses should operate as anchor institutions for enterprise and innovation, with their expertise, graduates, facilities and networks more closely connected to local businesses.

Rural innovation centres should also provide flexible workspace, technical support, mentoring and access to finance, while local procurement should offer younger businesses opportunities to showcase their products. Experienced entrepreneurs should be encouraged to support emerging founders and schools and colleges should present entrepreneurship as a credible career route.

There is also a need to recognise that rural innovation will not always resemble the venture-capital-backed technology companies associated with London or Cambridge. It may emerge through improved food production, precision agriculture, renewable energy, tourism technology, environmental monitoring, new construction methods, health delivery or the application of artificial intelligence within traditional businesses.

The objective should not be to replicate an urban start-up scene in every market town but to build an entrepreneurial model rooted in the strengths and needs of rural Wales.

Small firms need a different approach

The report places considerable emphasis on the structure of the rural economy, where rural employment is dominated by small and medium-sized enterprises and particularly the smallest firms. Again, the relevance to Wales is obvious because the Welsh economy already has a high proportion of microbusinesses and, in rural Wales, they are even more dominant. These firms are not simply scaled-down versions of larger companies but operate differently, face different constraints and frequently depend on the time, capital and resilience of one or two individuals.

A family-run tourism business, a rural manufacturer employing twelve people or a self-employed professional working from home do not need identical support, yet too much economic policy is still organised around generic programmes and standardised interventions. The English report points to finance, mentoring, business support, business-rate reform and local incubators as part of the answer but also highlights the role of the British Business Bank’s Start Up Loans, Growth Guarantee Scheme and ENABLE programmes.

For Wales, this raises two questions and the first concerns devolved institutions. Wales already has Business Wales and the Development Bank of Wales, alongside local authorities, further education colleges, universities and regional partnerships. The institutional landscape is not empty, but what is less clear is whether those organisations together provide a coherent rural business offer.

A rural entrepreneur should not have to navigate a complex map of agencies, grants and eligibility criteria to find help with finance, digital adoption, exports, skills or premises, nor should a microbusiness be expected to complete an application whose complexity is disproportionate to the money being requested.

The Development Bank of Wales should publish clearer evidence on the geographical distribution of its investment and the extent to which its products meet the needs of rural firms. It should also examine whether smaller and more flexible products are required for businesses that may be viable but lack the collateral, management capacity or growth profile favoured by conventional lenders. Business Wales, meanwhile, should become more closely connected to networks of experienced entrepreneurs, sector specialists and local institutions because advice is useful, but it is most valuable when linked to finance, markets, mentoring and practical delivery.

The second question concerns UK-wide finance and the report identifies major British Business Bank programmes that should, in principle, support rural businesses across the UK. Wales should not assume that a population-based share of this finance will arrive automatically, nor should the existence of the Development Bank of Wales be used as a reason for UK institutions to under-serve Welsh firms.

As noted last month, the Welsh Government needs a more strategic relationship with the British Business Bank, ensuring that rural Welsh businesses understand and can access UK schemes and that the geographical distribution of this support is monitored transparently. This matters because many rural firms do not simply need grants. They need working capital, guarantees, mentoring, patient finance and access to new markets.

Rural proofing must happen before decisions are made

The report begins with an admission that previous approaches to rural proofing have often been retrospective. Policies were developed nationally and their effects on rural communities assessed only later, sometimes after the practical consequences had become clear.

Its proposed alternative is straightforward which is that rural considerations should be built into policy from the outset. That may sound like the sort of administrative commitment governments readily make and just as quickly forget, but it could have profound implications because a policy designed around the conditions of Cardiff, Newport or Swansea will not necessarily work in Ceredigion, Powys, Gwynedd or rural Carmarthenshire.

A public service that assumes regular bus routes, short travel times, reliable broadband and large population concentrations may be rational in an urban setting but inaccessible when applied to dispersed rural communities. The same is true of economic development, where a support programme designed around larger employers, specialist management teams and established advisory networks may be entirely inappropriate for the microbusinesses and family firms that dominate much of rural Wales.

Yet rural proofing in Wales remains inconsistent and responsibility for rural matters tends to sit primarily within the portfolio concerned with farming and the environment, even though decisions taken across health, education, housing, transport and the economy may have an equally significant impact.

Wales should therefore adopt a much stronger and more formal approach, with every major Welsh Government policy required to explain how rural communities have been considered during its development. Spending decisions should set out their geographical effects, regulatory assessments should consider whether compliance costs fall disproportionately on smaller and more remote businesses, and public-service reforms should examine actual travel times and service frequency rather than simply confirming that a service exists somewhere within a health board or local authority boundary.

The Well-being of Future Generations Act already provides a framework for long-term, integrated and preventative thinking, but that has not removed the need for more specific accountability. Rural Wales can still be overlooked even when a policy has been framed in the language of well-being or sustainability and a formal rural impact assessment would therefore add something useful by requiring government to confront the practical consequences of decisions for people living beyond the main urban centres.

The English report proposes annual rural-proofing reports and stronger oversight and Wales should consider an equivalent system, reporting directly to the Senedd and subject to independent scrutiny. The purpose would not be to create another bureaucratic exercise but to reduce the far greater cost of policies failing because they were designed for places fundamentally different from those in which they must operate.

Skills policy must address the problem of opportunity

The report identifies an apparent contradiction in rural education and, while school pupils can perform well academically, progression into higher education and access to specialist training may be weaker because geography, transport and digital connectivity restrict opportunity. This is particularly relevant to Wales, where education, skills and apprenticeships are devolved and the rural skills problem is often described simply as a shortage of suitably trained workers. That is only one part of the story because there is also a shortage of visible career pathways.

Young people may leave rural Wales to study because the courses they want are unavailable locally and many do not return because the jobs, wages and housing they need are not available. Employers then struggle to recruit, which constrains growth and reinforces the perception that rural communities offer limited opportunity.

Breaking that cycle requires economic and skills policy to be designed together, with further education institutions working with employers to provide courses linked to genuine regional opportunities. These might include renewable energy engineering, food technology, retrofitting, digital services, health and social care, construction, land management, hospitality management and advanced manufacturing.

Apprenticeships must also be accessible to small firms rather than structured mainly around the needs of large employers and shared apprenticeship models could enable several businesses collectively to support a trainee. Transport and accommodation support may also be necessary where distances are significant.

Universities should also be rewarded not only for recruiting students but for contributing to the economic development of their regions, and graduate enterprise, placements within local firms and support for spin-outs should form part of a wider rural growth mission.

There is also an important Welsh-language dimension, and the sustainability of Welsh-speaking communities depends, in part, on the availability of skilled, well-paid employment. Language policy cannot be separated from economic policy because, if young Welsh speakers must leave their communities to build careers, no amount of cultural promotion will fully offset the demographic consequences. Indeed, the ability to live, work and raise a family locally is one of the strongest foundations of linguistic sustainability.

Housing is economic infrastructure

The report identifies insufficient affordable housing as one of the greatest threats to rural communities and, importantly, treats housing not simply as a social issue but as part of the infrastructure required for economic growth. Employers cannot recruit nurses, teachers, care workers, hospitality staff or skilled technicians if those workers cannot afford to live nearby and young people cannot remain within their communities if housing supply is constrained or if too much of the available stock is used as second homes and holiday accommodation.

This is amongst the most urgent challenges facing rural Wales and the Welsh Government has introduced measures relating to second homes, council tax premiums and planning use classes. Those interventions reflect a legitimate concern about the loss of housing from local communities, especially in Welsh-speaking areas.

Yet controlling demand is only part of the answer and Wales must also increase the supply of suitable homes in the places where they are needed. Housing and planning are devolved, which gives the Welsh Government considerable scope to act, although delivery depends on local authorities, housing associations, developers, landowners and infrastructure providers.

A stronger rural housing strategy should include small-scale developments within viable settlements, greater use of rural exception sites, community land trusts, public land and partnerships with local builders. It should also examine whether planning policy has become so restrictive in some areas that it unintentionally prevents communities from renewing themselves.

Protecting the countryside does not require freezing every village in time and a refusal to permit carefully designed development can have damaging social and environmental consequences if it forces workers into longer journeys, accelerates demographic ageing and undermines local schools and services.

The objective should be balanced development that enables communities to remain economically, socially and linguistically viable. Housing policy should also be aligned with employment growth and, if new renewable-energy, manufacturing or tourism projects are expected to create jobs, the local housing implications should be considered from the outset.

The English report proposes rural housing enablers to help communities identify sites and advance developments and Wales should consider a similar network, particularly where local capacity is limited and individual schemes are too small to attract major developers.

Rural Wales must benefit from the energy transition

The report identifies another contradiction that is especially relevant to Wales. Rural communities are expected to host much of the infrastructure required for the transition to clean energy, yet they often experience higher fuel poverty, weaker electricity networks and limited local benefit from the assets built around them. Wind farms, solar developments, pylons and energy installations are inevitably concentrated where land and natural resources permit and much of that infrastructure will therefore be located in rural areas.

But hosting national infrastructure does not automatically create local prosperity. A wind farm may generate substantial output while employing relatively few people once construction is complete; energy may be transmitted out of the area while local households continue to face high bills; supply-chain contracts may go elsewhere; and community-benefit payments, while welcome, can be modest in comparison with the value generated.

Wales needs a stronger principle of local economic participation, with communities given opportunities to own shares in developments, receive long-term revenue and influence the use of community funds. Local businesses should have realistic opportunities to enter supply chains, colleges should train workers for construction, maintenance and engineering roles, and planning and consenting processes should consider local employment and economic benefit alongside environmental effects.

The powers in this area are divided and, while the Welsh Government controls planning, economic development, skills, environmental policy and consent for certain projects, electricity regulation, market design and major elements of energy policy remain reserved. That makes cooperation with the UK Government essential, but it does not remove the scope for Welsh action.

The report suggests that clean-energy employment could at least double in Wales by the end of the decade, but whether those jobs materialise in rural communities will depend on decisions being made now about skills, supply chains, infrastructure and ownership. Wales cannot afford to become simply the place where energy is generated for the benefit of others.

Connectivity is the foundation of everything else

The report repeatedly returns to physical and digital connectivity because almost every other policy ambition depends on it. A rural resident cannot take a job, attend college or reach a medical appointment if there is no practical means of transport, while a business cannot adopt digital technology, sell online or support remote workers if broadband and mobile coverage are unreliable. The digital divide remains substantial and the report records clear differences between rural and urban access to gigabit broadband, mobile coverage and standalone 5G and while the precise Welsh figures will differ, the experience will be familiar to many households and businesses.

Telecommunications regulation is reserved and the main broadband and mobile programmes are led at UK level, which means Wales cannot solve every connectivity problem alone. However, the Welsh Government should not treat that reservation as grounds for stepping back. It can map areas of poor provision, coordinate local authorities, support planning permissions, use public-sector estates, assist community schemes and apply sustained pressure on the UK Government and network operators. It can also ensure that business-support and digital-health policies are based on the connectivity that actually exists rather than the coverage claimed in national statistics.

Transport is more directly within Welsh responsibility, particularly bus services and local planning, and the reform of bus services in Wales creates an opportunity to establish minimum standards for rural accessibility. Success should not be judged simply by the number of routes or passengers but by whether people can reach employment, education, healthcare and essential services at the times they need to travel.

Demand-responsive transport, community transport and the integration of school, health and public-service journeys may all be necessary where conventional fixed routes are not viable and the car will remain essential for many rural households. Policy must acknowledge that reality rather than treating rural car dependence as a moral failing, with the challenge being to provide credible alternatives where possible while supporting the transition to lower-emission vehicles and ensuring charging infrastructure reaches rural communities.

Health inequality can be hidden by averages

The report’s discussion of health is equally relevant because rural populations can appear relatively healthy when measured through broad national statistics, yet those averages can conceal serious problems of access. A person may technically have access to a hospital, GP practice or mental health service yet face a long journey, limited public transport and substantial waiting times, while older populations place additional pressure on health and social care and recruiting clinicians and care workers to rural areas can be difficult.

These issues are directly relevant to Wales, where health and social care are devolved, and the answer cannot simply be to replicate an urban healthcare model across a more dispersed geography. Community pharmacies, mobile clinics, multidisciplinary primary-care teams, outreach services and telemedicine can all play a larger role, although digital provision can only work where people have reliable connectivity and should complement rather than replace physical services.

More importantly, assessment of rural health provision needs to reflect actual access rather than administrative availability. Health board averages can obscure substantial differences between coastal towns, market towns, villages and isolated communities, so journey times, transport availability and the real frequency of services should form part of any assessment of health equality.

Wales needs better rural evidence

One of the report’s most practical recommendations is the development of clear measures to assess rural sustainability, service delivery and economic resilience and that is an area where Wales could make rapid progress. Too much Welsh policy is discussed using national averages or broad local authority statistics, which can conceal very different experiences within the same county. A rural economic dashboard should therefore bring together a limited number of measures covering economic performance, business creation and investment alongside housing affordability, connectivity, access to services, demographic change and Welsh-language sustainability.

Its purpose would not be to produce another glossy annual report but to create accountability. If a policy claims to improve rural transport or support rural businesses, we should be able to see whether access has actually improved and where the money has gone, rather than simply being told how much has been spent. Without such evidence, governments can continue to announce initiatives without establishing whether the underlying conditions have changed.

The real challenge is coordination

Perhaps the greatest lesson from the report is that none of these issues can be solved in isolation. A skills programme will fail if businesses cannot grow; businesses will struggle if workers cannot find housing; housing development will be constrained if the electricity grid lacks capacity; digital healthcare will not work without broadband; and new transport services will remain fragile if economic activity continues to decline.

The Welsh Government possesses substantial powers across most of these areas, with economic development, education, skills, health, housing, planning, agriculture, local government, tourism and much of transport devolved. Energy and digital connectivity involve important, reserved responsibilities, while policing and justice remain principally at Westminster. Yet the devolution boundary does not explain the lack of integration between policies that are already controlled in Wales and the fundamental problem is that rural policy remains fragmented across departments and institutions. Each may deliver worthwhile programmes, but their cumulative effect does not necessarily amount to a coherent strategy for place.

Wales therefore needs a National Rural Growth and Communities Plan led from the centre of government rather than contained within a single departmental portfolio. It should establish measurable objectives for productivity, business growth, housing, transport, skills, health access, energy benefit and demographic sustainability, with regional and local institutions then given the flexibility to deliver those objectives according to local circumstances.

This should form part of a wider reform of Welsh economic development and any future National Development Agency for Wales should have an explicit rural mission, ensuring that innovation, finance, university commercialisation and export support reach firms beyond the principal cities. Rural Wales should not be asked to choose between economic development and the protection of its environment, language and culture because the purpose of good policy is to enable them to reinforce one another. A stronger economy can give younger people a reason to remain, new technology can help traditional industries become more productive and renewable energy can generate local income. Better housing can sustain Welsh-speaking communities, successful local firms can preserve services and create the tax base on which public provision depends.

A test of devolution

Ultimately, the Future of Rural England Report poses an awkward question for Wales because its main recommendations include embedding rural proofing, investing in housing and infrastructure, strengthening collaboration, developing better metrics, empowering local institutions and ensuring that communities share in the benefits of major developments.

Most of these actions do not require new powers for Wales but require the more effective use of powers we already possess and there are areas where the current constitutional settlement constrains action. Wales does not control telecommunications regulation, the design of the UK energy market, most taxation, welfare policy or policing and will therefore continue to depend on decisions taken at Westminster and on the quality of cooperation between the two governments.

But it would be intellectually dishonest to blame the devolution settlement for every weakness in rural Wales as the Welsh Government has controlled education, health, economic development, agriculture, housing, planning and much of transport for more than a quarter of a century. If rural communities remain poorly connected, if younger people cannot find homes, if business support remains fragmented and if economic opportunity is concentrated elsewhere, those are increasingly questions of policy, priority and delivery.

That does not mean nothing has been achieved and there have been important investments, programmes and examples of local innovation, but there has not yet been a sufficiently integrated national strategy capable of matching the scale of the challenge.

The English report is not perfect and at times it reads more like a catalogue of existing government programmes than a genuinely new settlement for rural communities. Its treatment of entrepreneurship and innovation is weaker than it should be and some of its ambitions will depend on Whitehall departments working together in ways they have historically found difficult. Nevertheless, its central message is right: rural communities must be placed at the centre of policymaking rather than considered an afterthought. Their economies should be treated as sources of growth rather than permanent recipients of support and housing, transport, skills, health, energy and connectivity must be understood as parts of the same system.

For Wales, that argument is even stronger because rural Wales is central to our food production, energy future, language, environment and national identity. It contains businesses, universities, entrepreneurs and communities with considerable potential, yet that potential will not be realised through agricultural policy alone or through a succession of disconnected grants and initiatives.

What is required is a new national mission for rural prosperity and that mission should begin with a simple principle: a person should not have to leave rural Wales to access opportunity, and a business should not be disadvantaged merely because of where it is located.

A Focused Innovation and Growth Agency for Wales

Back in June, I was asked to produce a paper for a group convened to advise the new Minister for Enterprise, Connectivity and Energy on the proposed National Development Agency for Wales.

I know both the Minister and his civil servants have received the paper, but I have heard nothing since. As he has now appointed a chair for the expert panel designing this new economic development agency, with members of that panel to be named soon, it is up to them to decide the shape and scope of this new body.

Nevertheless, I thought I would post my paper here not only for context and comparison but to show the opportunity that we now have to create something new that can make a real difference. I will pick up on several other themes emerging from the paper over the next few weeks.

A Focused Innovation and Growth Agency for Wales

The First Step Towards a New National Development Agency

Wales should create a focused Innovation and Growth Agency as the first phase of a wider National Development Agency. The model already exists and works, and in 2018 Finland merged its innovation-funding agency and its export and investment promotion body into a single institution, Business Finland, built around one uninterrupted service pathway that takes a firm from product development through to international markets. Wales should build its own version of that engine.

The central argument of this note is that a Business Finland-style agency is the part of the reform that can be created now, without waiting for a settlement on the rest of the economic development system in Wales. It is also the part around which everything else should be built over the next four years. This is not one option among several competing designs for a National Development Agency, it is the core of any such agency, whichever way the wider system eventually develops. Get this institution right, and the remaining functions can be added to it over time, on a proven foundation, rather than being designed from scratch in a single complex reorganisation. The choice is not “this agency or the full agency”; it is “this agency first, and the full agency grown around it.”

The agency would own the parts of the economy most directly linked to long-term productivity: commercialisation, innovation, exports, inward investment, scale-up support and strategic sector development. It would have its own financial firepower through a dedicated investment arm, Wales Innovation Capital, enabling it to back the companies its programmes create rather than simply advise and convene. The Development Bank of Wales should continue to do what it was built to do - development finance - while strategic equity moves into the new agency.

The recommendations are:

1. Establish a focused Innovation and Growth Agency, modelled on Business Finland, as the immediate first step and the permanent core of a wider National Development Agency, created now, with the rest built around it over time.

2. Build it around a single firm-level growth pathway: commercialisation, exports, inward investment, scale-up and sector development.

3. Give it real financial weight through a dedicated investment arm, Wales Innovation Capital, with independent investment governance.

4. Draw a clean line with the Development Bank of Wales, which retains debt and repayable finance.

5. Make it national in mandate but regional in delivery, and judge it on firm-level outcomes, not activity.

Why Wales Should Start Here

Wales has a fragmented economic development landscape, weak productivity, insufficient private-sector R&D, too few scale-up firms, uneven regional growth, low export intensity, and a persistent difficulty in turning research, talent and industrial assets into high-value companies. The evidence is stark and consistent across every relevant measure.

• The enterprise base itself is thin: Wales has around 315 active businesses per 10,000 people, against 413 for the UK, roughly a quarter fewer per head, and equivalent to some 31,000 “missing” businesses if Wales matched the UK rate and the firms it does have tend to underperform.

• Nor are new firms being created fast enough to close the gap: Wales’s business birth rate was 10.1% in 2024 against 11.1% for the UK, and Welsh business births have fallen 27.5% from their 2021 pandemic peak, more than double the UK’s 12.8% decline, and are now below even their 2020 level, while UK business formation has broadly stabilised.

• On the official productivity measure, Welsh output per hour worked stood at 84.9% of the UK average in 2023, the lowest of the twelve UK nations and English regions.

• On innovation, the most recent UK Innovation Survey found that 28% of Welsh businesses were innovation-active, again the lowest of the four UK nations and below England’s 35%, and the proportion has been falling.

• In business R&D, Wales accounted for just 1.6% of all UK business R&D spending in 2024, about a third of what its share of the population would imply.

• In equity finance, the market is heavily concentrated in the Greater South East, with London alone accounting for 61% of UK equity investment in 2024. What reaches Welsh firms is thin and shallow: Wales attracted just £113 million of equity in 2024, around 1% of the UK total and among the lowest per head of any UK nation or region - deals are done, but they are small.

• Welsh scale-up density stood at 51.5 firms per 100,000 people in 2023, around half London’s rate and below the UK average of roughly 64. In addition, Welsh scale-ups are concentrated in lower-value activity, with just 37% sitting in the high-value Industrial Strategy sectors, the lowest share of any UK nation or region and well below London’s 52%.

Seven headline figures tell the story on their own: a low enterprise base and decreasing number of start-ups, is at the bottom for productivity and innovation, has a fraction of its fair share of business R&D, has seen the sharpest fall in equity investment and is not producing high-value growth firms. The case for a full National Development Agency is therefore strong, but the danger is that a comprehensive reorganisation of the entire business support and finance landscape becomes so complex that it delays action for years.

Business Wales, the Development Bank of Wales, Welsh Government departments, universities, colleges, local authorities, Corporate Joint Committees, City and Growth Deals, UK Government programmes and private investors all occupy parts of the current system. Trying to merge or redesign all of them at once would become a complex, unmanageable and costly machinery-of-government exercise rather than a serious intervention in the economy.

The better approach is to begin where the need is clearest and the potential return greatest: innovation, commercialisation, export growth, inward investment, entrepreneurship, strategic equity and international competitiveness. Wales should not spend another two or three years designing an institution that tries to solve every problem before it has solved the most important ones. A focused agency would let Wales act now, concentrate on the areas where specialist capability is currently weakest, and give the system a new centre of gravity.

The Model: A Business Finland for Wales

Finland faced a similar problem and addressed it with an institutional focus. In 2018, it merged Tekes, its long-established innovation-funding agency, and Finpro, its export and investment promotion body, into a single organisation, Business Finland. The logic was deliberate and rather than make firms navigate two institutions, Business Finland gives them one organisation and one continuous service pathway that runs from the development of a product or business model through to its introduction in international markets, with no break in the chain at any point.

Under one roof, Business Finland brings together innovation funding, export development, inward investment attraction and the promotion of Finland as a place to invest. It employs around 600 specialists, operates a network of offices across some 40 countries, and delivers regionally across Finland through local teams. It is structured so that mission-setting and commercial delivery sit in distinct entities - a government agency alongside a government-owned company - and it carries an equity capability through Business Finland Venture Capital, which invests in early-stage venture funds and co-invests alongside angels to deepen the domestic investor market.

Three features matter for Wales. First, integration: a single body owns the entire growth life cycle, so a firm is not handed off between agencies as it moves from idea to export. Second, international reach is a core function, not an afterthought. Third, finance sits inside the system, so the institution that backs commercialisation also holds the investment tools to follow those companies as they scale.

Wales should build its own version of this engine, and it should build it first. This is the institution that can be established immediately, with the functions and expertise that are hardest to assemble and most directly tied to productivity. Everything else in a future National Development Agency, such as wider business support, regional delivery, productivity and skills functions, can then be added to this core, or aligned with it, once it is working.

The model has been adapted over time in Finland too, and most recently, parts of its overseas export-promotion work were realigned with the foreign ministry, which is itself instructive and shows that an institution can start focused, prove itself, and evolve its boundaries rather than be designed perfectly from the outset. Wales should do the same, beginning with the core and growing the rest around it.

The Core Mission

The agency’s mission should be: To help Welsh firms and sectors become more innovative, export-oriented, investment-ready and internationally competitive by strengthening commercialisation, strategic equity investment, inward investment, export growth, scale-up capability and international partnerships.

This is deliberately focused as the agency would not be responsible for every business in Wales, every town centre, every regeneration programme or every form of local support. Its purpose is to improve the parts of the economy most directly linked to long-term productivity, higher-value employment and global competitiveness.

It should support firms with the potential to innovate, export, raise investment, commercialise intellectual property, scale into new markets or anchor strategic sectors - start-ups and spinouts, high-growth scale-ups, and established mid-sized firms alike. That does not mean only technology companies, as innovation in Wales includes advanced manufacturing, food and drink, tourism, creative industries, energy, medtech, construction, digital services, and parts of the foundational economy where technology, management, and process improvement can increase value.

The test is whether the agency helps firms do things they would otherwise struggle to do, namely develop new products, access R&D, commercialise research, raise equity, enter overseas markets, win international customers, attract talent, build management capability and join stronger sector clusters.

A particular priority should be Wales’s mid-sized firms - the neglected middle of the economy. These established businesses are too large for the start-up and small-business schemes that dominate public support, yet too small and too home-grown to command the attention and resources directed at large corporates and inward investors. They are nonetheless the productivity and export backbone of any advanced economy, the closest equivalent to Germany’s Mittelstand, and the firms most able to raise productivity, deepen R&D, win international customers, and create well-paid jobs at scale.

The Welsh Government rarely designs support around them. The agency should do exactly that: treat mid-sized firms as a core constituency rather than an afterthought, and offer them a coherent package of growth capital, internationalisation, management capability, and innovation support that does not currently exist in any one place in Wales.

The case is not that Wales has too few mid-sized firms, as they make up a similar proportion of enterprises and of employment in Wales as across the UK. The problem is that they are underpowered, and whereas a mid-sized firm in the UK generates around £197,000 of turnover per employee, the figure in Wales is about £138,000 (roughly 70 per cent of the UK level, or some £59,000 less per worker).

The productivity shortfall is concentrated in precisely this tier, as across the economy, Welsh turnover per employee runs at about 88 per cent of the UK average, and Wales’s large firms actually match their UK counterparts. It is the mid-sized segment that loses the most ground and closing that gap by lifting Welsh mid-sized firms to the UK average turnover per employee would add around £9 billion in additional turnover from the existing mid-sized workforce alone, equivalent to roughly £3 billion of GVA. That is the prize, and it sits exactly where this agency could concentrate its effort.

What the Agency Would Do

This is the heart of the proposal. The agency should be organised around five core functions that together form a single growth pathway.

• Entrepreneurship, innovation and commercialisation. This covers the creation of new firms and the translation of knowledge into companies. On entrepreneurship, it means a concerted effort to lift Wales’s low rate of business formation: graduate and student enterprise, spin-out support, accelerators and structured investment-readiness programmes, founder networks and mentoring for high-potential entrepreneurs, and innovation vouchers that connect firms to university expertise. On commercialisation, it means proof-of-concept funding, venture studios, applied and translational research partnerships and stronger university-business collaboration. Wales needs both more new firms and far more firms that turn knowledge into products, services, exports and better-paid jobs.

• Export development and internationalisation. Identifying firms with export potential, providing market intelligence, supporting trade missions, connecting firms with overseas buyers, helping businesses adapt products for new markets, and working with UK and international partners to open doors for Welsh companies.

• Inward investment attraction and aftercare. Not simply counting projects or announcing jobs, but attracting investment that strengthens Welsh supply chains, connects to universities and colleges, embeds R&D activity, draws on Welsh skills provision and contributes to long-term productivity.

• Strategic equity investment through Wales Innovation Capital. This connects finance directly to commercialisation, export growth, sector development and scale-up support, so the agency can shape outcomes rather than only encourage them.

• Mid-sized firms, scale-ups and strategic sectors. Working with established mid-sized businesses, high-growth scale-ups and firms that can innovate, export or attract investment, and with sectors where Wales has credible assets. For mid-sized firms, this means a deliberate agenda that the government usually neglects including raising productivity, building management and leadership capability, deepening R&D, professionalising for growth, and supporting expansion into new markets, i.e. the practical work that turns a solid, established business into an international competitor and a higher-paying employer.

The point of bringing these together exactly as Business Finland did is that they are one journey, not five separate services. A firm should move through commercialisation, investment, scale-up and export within a single institution, not be passed between bodies that do not talk to one another.

Wales Innovation Capital

The agency should include a dedicated investment arm, provisionally named Wales Innovation Capital, to give it real economic weight from day one. Without equity, the agency risks becoming another organisation that advises, convenes and promotes but lacks the tools to shape outcomes. With equity, the agency can support firms from research and proof of concept through venture formation, investment readiness, market entry, export growth and follow-on finance.

Its functions should include seed equity for early-stage, innovation-led businesses; university spin-out investment linked to proof-of-concept and commercialisation support; angel co-investment to strengthen the Welsh private investor market; venture co-investment with UK and international funds; scale-up equity for firms with strong growth and export potential; growth and development capital for established mid-sized firms investing in productivity, expansion or new markets; strategic sector funds where Wales has credible competitive strengths; and portfolio development support to help investee firms access customers, talent, overseas markets and follow-on finance. Finland’s experience is again relevant, and evidence suggests that Business Finland’s venture capital arm works largely by investing in and alongside private funds and angels, crowding in private capital and deepening the domestic investor base rather than displacing it. Wales Innovation Capital should do the same.

This approach is well grounded in international evidence. An OECD benchmarking study of government venture-capital support across nine advanced economies, published in 2025, finds that the most effective public investors work largely through co-investment and fund-of-funds models that draw private and institutional capital in alongside the state rather than displacing it. Finland’s state investment company, Tesi, is a leading example: by anchoring new and early-stage funds and effectively providing a “quality assurance” signal that attracts private investors, it helped grow the market to the point where the public sector’s share of total venture investment has fallen since 2017, as pension funds and other institutions stepped in. That “crowd in, then recede” trajectory is exactly the outcome against which Wales Innovation Capital should be judged. The same body of work carries a warning Wales should heed: a 2023 review of the Finnish system found that its public finance bodies operated too independently of one another, producing fragmented and poorly coordinated support, which reflects criticism of the current funding model in Wales where the British Business Bank, the Development Bank and the Cardiff Capital Region all have funds that are competing against each other.

Wales should go further than Finland by housing strategic equity within the agency itself, integrated with commercialisation, scale-up and export support, rather than leaving it scattered across separate institutions. More importantly, Wales need not design this from first principles. A staged investment model has already been developed in detail for a Welsh region: a single pipeline running from proof-of-concept grants through seed and acceleration support to growth capital, delivered partly through a network of specialist sector funds managed by experienced investors, corporates and sector bodies, with the public body acting as cornerstone limited partner and crowding in private and British Business Bank co-investment. It is built on the principle that investment works best when paired with mentoring and operational support i.e. “money with management” rather than capital alone. Refreshed for current funding conditions and applied nationally, that design could form the core of Wales Innovation Capital, providing the agency with a credible, deliverable starting point rather than a blank sheet.

The critical safeguard is the independence of investment decisions. Ministers should set the strategic mandate, but they should not decide which firms receive investment. Instead, individual decisions must be made by professionals operating within approved fund mandates, subject to independent investment committees, transparent reporting and appropriate commercial return expectations. This protects public money, builds credibility with private investors and avoids political interference.

Removing equity from the Development Bank of Wales

Strategic equity investment should shift from the Development Bank of Wales to the new agency. This is a point about institutional clarity, and it is a decision for the government to take rather than a complex reorganisation to be feared.

Development finance and strategic innovation investment are related yet distinct disciplines. A development bank is well-suited to lending, microfinance, property finance, succession finance, patient debt, green loans, and other repayable products that rely on repayment discipline, credit assessment, and capital preservation. Equity investment in innovation-led firms depends on venture judgement, technical understanding, founder support, university commercialisation, portfolio development, investor syndication, and tolerance of asymmetric risk. It is part of the innovation system, not simply another financial product.

The argument is therefore simple, and the Development Bank of Wales remains the national development finance institution, focused on loans, patient debt, microfinance, property finance, succession and acquisition finance, green finance and co-lending with commercial banks, addressing the market gaps where it adds most value. The new agency becomes Wales’s strategic innovation investor. The relationship between the two should be formalised through a strategic partnership agreement and a joint investment-readiness process, so that firms needing debt are quickly referred to the Bank, firms needing equity and commercialisation support are within the agency’s pathway, and firms needing a blended package are served by both.

Sector Focus

The agency should avoid a generic list of fashionable sectors and instead concentrate firepower where Wales has genuine assets, global demand, export potential, private investment appetite, skills and the possibility of building real clusters. Discipline matters here, as a focused agency backs a manageable set of priorities with real money, rather than spreading itself too thin across the whole economy.

On current evidence, a credible priority set would draw from compound semiconductors, cyber security and fintech; advanced manufacturing and energy, including floating offshore wind; life sciences, health innovation and medtech; and the creative industries. Beyond this core, the agency should remain open to high-potential firms in food and drink, tourism, construction innovation and the foundational economy, where management capability, technology and international markets can move firms up the value chain. The list should be evidence-led and reviewed, not fixed.

Regional Delivery

The agency should be national in mandate but regional in delivery, with teams in North, Mid, South West and South East Wales. As in Finland, where Business Finland delivers nationally through regional teams, these should not be symbolic outreach offices; they should have real responsibility for identifying firms, building relationships with regional investors and universities, supporting clusters, and ensuring national programmes are shaped by local economic intelligence.

• North Wales would focus on advanced manufacturing, energy, tourism, food, ports, cross-border supply chains, renewables and links with the North West of England.

• Mid Wales would focus on rural enterprise, agri-tech, food, tourism, digital connectivity and distributed models of enterprise support.

• South West Wales would focus on energy transition, floating offshore wind, ports, manufacturing, life sciences, universities and industrial renewal.

• South East Wales would focus on compound semiconductors, cyber security, fintech, medtech, creative industries, advanced manufacturing and high-growth entrepreneurship.

This avoids both excessive centralisation in Cardiff and fragmented localism: one national economic mission, delivered through regionally informed teams.

Relationship with Existing Institutions

The agency should work with existing institutions rather than attempt to replace them all. Welsh Government should retain policy responsibility, democratic accountability and budget-setting, with the agency given operational independence within a clear remit. For now and until any decision is made on further integration, Business Wales should continue to provide general business support, but its growth-facing and innovation-facing pathways should be formally aligned with the agency, with a review over time of whether some specialist growth services should transfer into it. On entrepreneurship the boundary should be explicit and the agency should lead growth-oriented enterprise - graduate and spin-out formation, accelerators, investment readiness and support for high-potential founders - while Business Wales, the education system and local authorities lead foundational enterprise, including general start-up advice and schools and community enterprise, coordinated through the agency and informed by its business-intelligence function.

The Development Bank of Wales remains separate and focused on repayable finance. Universities should become formal commercialisation partners, with clear expectations on spin-outs, licensing, proof-of-concept activity and graduate enterprise. Local authorities and Corporate Joint Committees should be regional partners, not displaced actors. Innovate UK, UKRI, the British Business Bank, private investors, sector bodies and international partners should be embedded through formal partnership agreements.

Governance

The agency should be established as an arm’s-length Welsh Government-sponsored body, with the option of statutory status once the model is proven. Following the Business Finland approach, mission-setting and commercial delivery should sit in clearly distinct parts of the organisation, so that the agency can be mission-led while individual investment decisions remain commercially disciplined and protected from political interference.

It should have an independent chair, a commercially credible board with strong private-sector representation, and expertise across innovation, venture capital, exports, inward investment, universities, regional development, industrial strategy and finance. Its chief executive should have genuine delivery and commercial credibility, not simply public-sector administrative experience. The investment arm should have separate investment governance, independent committees and professional fund management. The agency should report annually to ministers and the Senedd, publish performance data, and undergo independent evaluation every three years.

Funding

The agency should not be launched on a symbolic budget; it must be properly resourced to recruit specialist talent, manage strategic funds, operate internationally and support firms effectively. A phased approach is sensible, with year one focusing on establishment, leadership, the transfer of relevant functions, the creation of Wales Innovation Capital, regional teams, data systems, and early flagship programmes. Years two and three expand into proof-of-concept funding, spin-out investment, export development, inward investment aftercare, sector missions and scale-up equity. By year four, the agency operates as the core of a wider National Development Agency.

Funding should come from Welsh Government core funding, transferred equity funds, recycled investment returns where appropriate, UK Government funding, Innovate UK and UKRI leverage, British Business Bank alignment, private-sector co-investment, City and Growth Deal alignment, and institutional partnerships. The agency should set clear leverage targets: public funding should crowd in private investment, not crowd it out.

First 100 Days and Five-Year Roadmap

The first 100 days should be used for decision-making, not for another review. Welsh Government should appoint a shadow chair and a transition board, confirm the remit, identify which innovation, export, inward investment and equity functions transfer or align, begin designing Wales Innovation Capital, map existing funds and programmes, open discussions with universities and investors, and publish the first version of the performance framework. Early flagship interventions should be selected quickly and be deliverable without primary legislation such as a national proof-of-concept fund, a university spin-out investment pathway, an export accelerator for high-potential firms, an inward investment aftercare programme focused on supply-chain embedding, and an angel co-investment mechanism. Two of these can draw directly on models already designed and costed for a Welsh region - a staged innovation-and-growth fund and a management-and-leadership programme for mid-sized firms - which, refreshed for current conditions, could be adapted and launched at pace rather than built from scratch.

Over five years, the agency should move from establishment (year one), to full operation of Wales Innovation Capital, regional teams and university commercialisation partnerships with a published performance dashboard (years two and three), to becoming the platform for wider reform (year four), when government decides which further specialist growth, productivity, sector and regional functions transfer in, remain outside, or are formally commissioned. The aim is to avoid building a large bureaucracy before the culture is right: start with innovation, internationalisation and equity, and build the wider agency around a body that is outward-facing, commercially disciplined and focused on firm-level growth.

Performance Measures

The agency should be judged by outcomes, not activity. Early measures should include private investment leveraged, export growth among supported firms, the number and quality of spinouts, follow-on investment secured, business R&D collaborations, inward investment embedded in Welsh supply chains, high-growth firms supported, new international customers won and commercialisation outcomes from universities. Longer-term measures should include productivity improvement in supported firms, scale-up and survival rates, median wage growth, regional economic impact, increased private-sector R&D, stronger sector clusters and returns from equity investments. It should not be rewarded for meetings held, events organised or businesses contacted unless those activities lead to measurable improvements in firm performance.

Risks and Safeguards

The first risk is that the agency becomes too narrow and fails to address broader productivity weaknesses; this is mitigated by a clear five-year pathway towards broader development-agency status. The second is that equity becomes politicised; this is prevented through independent investment committees, professional fund management, transparent mandates and published portfolio reporting. The third is duplication; this is reduced by clearly defining what transfers, what remains with the Development Bank, what stays with Business Wales and what is governed through partnership agreements. The fourth is regional imbalance, addressed through regional teams with real authority. The fifth, and greatest, is weak private-sector credibility: the agency must recruit people who understand growth firms, investors, international markets, technology, commercialisation and export development. Without that credibility, the institution will not work.

Final Recommendation

Wales should establish a focused Innovation and Growth Agency, modelled on Business Finland, as the first phase of a wider National Development Agency. It should lead on innovation, commercialisation, exports, inward investment, international partnerships, scale-up support and strategic sector development, and carry its own financial firepower through Wales Innovation Capital. The Development Bank of Wales should remain separate and focused on repayable finance, drawing a clear line between development banking and strategic innovation investment.

This avoids the paralysis of redesigning the whole system at once, but it does not settle for incremental coordination. The Business Finland-style agency is what Wales can create now, and it is the core around which any future National Development Agency should be built. It starts with the areas where specialist capability matters most and where the link to productivity, exports, investment and better-paid employment is strongest, and the wider agency is then built around that body once it has established credibility, delivery discipline and a culture focused on firm-level outcomes, rather than being designed in the abstract beforehand.

Wales should not begin by creating an institution that tries to do everything. It should begin by creating the one that does the most important things exceptionally well and treat that as the permanent centre of everything that follows.

Sources

Welsh economic evidence

• Office for National Statistics / Welsh Government, Subregional productivity: GVA per hour worked, 2023 (Wales at 84.9% of the UK average, lowest of the twelve UK nations and English regions).

• Department for Science, Innovation and Technology, UK Innovation Survey 2025 (covering 2022-2024); and Welsh Government, Well-being of Wales 2025 (Welsh businesses least innovation-active in the UK, at 28%).

• Welsh Government / Office for National Statistics, Business Enterprise Research and Development (BERD): 2024 (Welsh business R&D £884 million, 1.6% of the UK total).

• British Business Bank, Small Business Equity Tracker 2025 and Nations and Regions Tracker 2025 (London 61% of UK equity investment in 2024; Welsh equity investment £113 million in 2024, around 1% of the UK total and among the lowest per head of any UK nation or region).

• ScaleUp Institute, ScaleUp Annual Review 2025 (data: ONS Inter-Departmental Business Register, 2010-2023).

• Welsh Government / Office for National Statistics, Business Demography: 2024, and Office for National Statistics, Business Demography, UK: 2024 (business births, deaths, survival and active enterprise stock, by area and industry).

• StatsWales, Size analysis of businesses by size band, area and year (mid-sized firm counts, employment and turnover, Wales and UK).

• Office for National Statistics, Annual Business Survey (approximate gross value added, used for the turnover-to-GVA conversion).

• Office for National Statistics, Mid-year population estimates, mid-2024 (used with active-enterprise counts to derive businesses per 10,000 people).

International comparator

• OECD (2025), Benchmarking government support for venture capital: A comparative analysis, OECD SME and Entrepreneurship Papers No. 71, OECD Publishing, Paris (DOI: 10.1787/81e53985-en), and the accompanying Finland and United Kingdom country notes.

• Business Finland (institutional model: the 2018 merger of Tekes and Finpro, and Business Finland Venture Capital).

Underlying programme designs

• Cardiff Capital Region proposals developed by the author: the CCR Innovation Fund, the B4B management capability programme, the Clusters Fund, and the Entrepreneurship, Productivity and Growth Institute.

How can Wales get a fair share of UK Export Finance?

Thirteen years ago, as part of the Welsh Government’s review into access to finance, I examined the support available to Welsh businesses from both the Welsh and UK Governments.

One of the organisations considered was UK Export Finance, the UK Government’s export credit agency. At the time, UKEF had provided £2.32 billion in guarantees and insurance to UK exporters during 2012 yet when we tried to establish how much of that support had reached businesses in Wales, no separate information was available.

The report was unequivocal and stated that it was unacceptable for a UK Government body such as UK Export Finance to be unable to provide data on its support for Welsh firms. It argued that, after more than a decade of devolution, public bodies operating across the UK should collect and publish information that allowed the devolved nations to understand whether their businesses were benefiting fairly from national programmes.

The final report went further and recommended that the proposed Development Bank for Wales should work with the UK Government to take responsibility for the Welsh delivery of UK Export Finance programmes, bringing export finance alongside other forms of business funding and support. The objective was not to duplicate UKEF or transfer its financial risks to Wales, but to create a coherent Welsh gateway through which firms could understand and access the full range of support available to them.

That recommendation was never fully implemented, and whilst the Development Bank of Wales was established, UKEF remained institutionally separate. Welsh firms can access its products, and there are examples of successful support, but there is still no clearly identifiable Welsh export finance system bringing together UKEF, the Development Bank, Business Wales, commercial banks and the wider export support infrastructure. More significantly, the published headline information still does not provide a simple answer to the question I asked in 2013, namely “How much UKEF support is reaching Wales?”

A far more powerful institution

The importance of that question has increased considerably because UKEF is no longer operating on anything like the scale it was thirteen years ago. During 2024-25, it issued a record £14.5 billion of financial support through loans, guarantees and insurance. This supported 667 exporters, including 496 small and medium-sized businesses, and was estimated to sustain as many as 70,000 UK jobs. UKEF also provided £2.3 billion of support for clean-growth transactions.

These figures need to be understood carefully as the £14.5 billion was not conventional government expenditure or a grant fund distributed among businesses, with much of it consisting of guarantees and insurance that enabled banks to lend, protected firms against export risks or helped overseas buyers finance purchases from UK companies. Nor was it evenly spread, and a single £7.7 billion commitment to Poland’s NAREW air-defence programme accounted for more than half of the year’s total, demonstrating how volatile annual UKEF figures can be and why it would be inappropriate to expect each nation or region to receive an identical percentage every year.

Nevertheless, the scale is extraordinary, and UKEF has subsequently reported that, during 2025-26, it issued £11.2 billion of new loans, guarantees and insurance. Although lower in value than the previous record year, its reach expanded significantly, supporting 937 businesses, of which 616 were classified as SMEs. It also estimated that its activity contributed up to £6.4 billion to UK GDP and supported as many as 85,000 jobs. Even the figure of 616 SMEs requires some explanation. Of these, 291 were directly supported through a UKEF product, 210 were businesses in the supply chains of UKEF customers, and 115 received another form of assistance, such as a referral that helped them win business. All are valid forms of support, but they are not the same thing and should not be presented as though they were.

UKEF’s future financial firepower is greater still, and in March 2026, Parliament agreed to double its statutory limit from £80 billion to £160 billion. It has also allocated £50 billion of capacity to support critical defence exports and has been expanding its role in the automotive, clean-energy and advanced-manufacturing sectors. As a result, UKEF is now one of the most powerful economic development instruments available anywhere in the UK, and that makes the absence of transparent national and regional outcomes increasingly difficult to defend.

What would constitute a fair share for Wales?

There is no Barnett formula for UKEF, nor should there be, as export finance is demand-led. Support depends on the presence of viable exporters, the value of their orders, the countries into which they are selling, the risks involved, and the extent to which commercial finance is available. One large aerospace, defence or infrastructure contract can transform the figures for a particular year.

Nevertheless, proportional benchmarks are useful. They show whether Wales is operating within a reasonable range over several years and, more importantly, whether Welsh firms are accessing UKEF at anything approaching the rate that might be expected. Wales had an estimated population of 3,186,581 in mid-2024, representing almost exactly 4.6 per cent of the UK population of 69.28 million. It also had approximately 194,000 private-sector businesses at the beginning of 2025, equivalent to around 3.4 per cent of the UK business population..

The same calculation can be applied to the number of firms and to the 937 businesses supported in 2025-26. The Welsh benchmark would be approximately 32 businesses based on firm numbers and 43 based on population. For the 616 SMEs included in UKEF’s wider measure, the figure would be between 21 and 28, but because fewer than half of those 616 SMEs received a UKEF product directly, the more meaningful benchmark may be the 291 direct recipients. On that measure, Wales might reasonably expect around 10 to 13 SMEs a year to receive direct UKEF support, with additional Welsh firms benefiting through supply chains and referrals. Unfortunately, we do not currently have a sufficiently clear published breakdown to determine whether Wales is meeting any of these benchmarks, and that is the problem.

However, it could be argued that Wales’s share should not be judged simply by its 3.4 per cent of UK businesses. Manufacturing represents a larger proportion of the Welsh business base than it does across the UK, while Wales generated £16.5 billion of goods exports in 2024, equivalent to around 4.7 per cent of the UK total. Given that UKEF’s portfolio is concentrated in sectors such as manufacturing, aerospace, energy, transport and defence, it could be argued that a more meaningful benchmark for Wales is therefore likely to be closer to 4.6-4.7 per cent of UKEF activity or around £670 million of the £14.5 billion provided in 2024–25 rather than the £493 million implied by business numbers alone.

This should not be treated as an annual entitlement, since one exceptionally large transaction can transform the figures in any individual year, but it provides a credible benchmark against which Wales’s performance can be assessed over a rolling three- or five-year period.

The Welsh successes we can identify

There have certainly been important UKEF interventions in Wales, and the most prominent recent example is Shotton Mill in Deeside where a £136 million UKEF Export Development Guarantee helped secure an investment of more than £1 billion by the Turkish-owned Eren Holding Group. The redevelopment will make Shotton the UK’s largest recycled paper manufacturing facility, safeguarding 147 jobs and creating a further 220 when fully commissioned.

This is precisely the type of strategic investment UKEF should support as it combines inward investment, industrial renewal, export capability, decarbonisation and well-paid employment in an area with a strong manufacturing heritage. There is also Dulas, the renewable-energy technology business based in Wales which supplies solar-powered vaccine refrigeration equipment to more than 80 countries. Support from UKEF and HSBC has enabled the company to scale production and meet growing international demand.

Both these examples demonstrate that UKEF can work for Wales, but case studies are not the same as comprehensive data and the £136 million associated with Shotton should not be assumed to represent the total received by Wales in 2024-25. There may be other direct beneficiaries, businesses receiving guarantees through commercial banks and Welsh suppliers benefiting from contracts elsewhere in the UK. Equally, one flagship transaction should not obscure the experience of the wider Welsh business population.

A large project at Shotton is valuable, but it tells us little about whether a manufacturer in Swansea, a food producer in Carmarthenshire, a medtech company in Cardiff, a marine-energy business in Pembrokeshire or an advanced-engineering firm in north-east Wales can find and access the right export finance.

The same structural problem identified in 2013

The access-to-finance review found a recurring divide between the availability of funding to larger businesses and the experience of smaller firms, and although the overall Welsh SME loan book had performed relatively well between 2011 and 2013, the lending position of small firms was considerably worse. The value of loans outstanding to Welsh businesses with turnover below £1 million fell by £232 million, or 10.5 per cent, over two years and that decline accounted for around 40 per cent of the total fall in small-business lending across the UK. The lesson was that a healthy aggregate figure could conceal serious gaps beneath the surface and the same caution must be applied to UKEF today.

A record national total does not demonstrate that firms across the UK are benefiting, nor does the statement that 85 per cent of the SMEs supported in 2025–26 were located outside London. “Outside London” is not a meaningful regional economic policy; it combines Wales, Scotland, Northern Ireland, and every English region into one enormous category and tells Welsh policymakers almost nothing about what is happening here. Wales may be performing well or may be performing poorly but the point is that we should not have to guess.

Why Wales may be missing out

There are several reasons why Wales could receive less UKEF support than its economic potential would justify. The first is awareness, as UKEF remains poorly understood by many business owners and even parts of the professional advisory community. Few of us have any idea about export credit insurance, buyer finance, bond support, working-capital guarantees and export development guarantees, which are all specialist products. A business will not seek support from a body it has never heard of or whose offer it does not understand.

The second is intermediation, and many UKEF products are delivered through commercial lenders, and the enthusiasm, knowledge and risk appetite of a company’s bank can therefore make a considerable difference, and firms with sophisticated finance teams and established banking relationships are more likely to navigate the system successfully than smaller exporters seeking their first substantial international contract.

The third is pipeline development, and whilst UKEF can finance a credible export proposition, it does not create one from nothing. Wales needs more firms with the management capacity, productivity, market knowledge and ambition to sell internationally and any export finance must therefore be integrated with wider support for innovation, investment readiness, leadership, technology adoption and market development.

The fourth is supply-chain visibility, and Welsh businesses may benefit indirectly from UKEF-backed contracts led by companies elsewhere in the UK. This is especially relevant in aerospace, defence, automotive manufacturing, energy and infrastructure, yet without detailed supply-chain mapping, those benefits remain largely invisible, and there is no way of knowing whether Welsh procurement opportunities are being maximised.

Finally, there is institutional fragmentation - the Development Bank of Wales provides debt and equity finance, Business Wales offers advice, the Welsh Government undertakes trade missions, UKEF provides export finance, the British Business Bank operates UK-wide programmes and commercial lenders provide the customer relationship through which many guarantees are delivered. Each may be doing useful work, but the Welsh exporter experiences the system as a whole and unless those organisations share information, identify prospects together and take collective responsibility for converting potential exporters into successful applicants, firms will continue to fall between institutional boundaries.

What should happen now?

The first requirement is transparency, and UKEF should publish an annual nations-and-regions dashboard showing the number of businesses supported directly, the number benefiting through supply chains or export assists, the value and type of support issued, the sectors involved and the estimated employment and economic impact.

This should distinguish between the location of the principal exporter and the location of suppliers. A guarantee to a large company headquartered in London may support factories and supply-chain jobs across several parts of the UK. Conversely, a guarantee associated with a facility in Wales should not automatically be treated as wholly Welsh if much of the resulting economic activity occurs elsewhere. Perfect attribution may be impossible, but that is not an argument for publishing almost nothing.

Second, the Welsh and UK Governments should agree a rolling three-year fair-access framework. It should not impose a rigid quota but should assess whether Wales is operating within a reasonable corridor based on its population, business base, export profile and sector strengths. If Wales is persistently below the 3.4 to 4.6 per cent range, the governments should be required to explain why and set out corrective action.

Third, there should be a formal Wales Export Finance Compact involving UKEF, the Welsh Government, the Development Bank of Wales, Business Wales, the British Business Bank and participating lenders. This compact should create one shared pipeline of potential exporters, with named responsibility for moving each firm from initial enquiry through investment readiness, market development and, where appropriate, a UKEF application. The recently announced UKEF-British Business Bank initiative to widen SME access provides an immediate opportunity to establish such an arrangement in Wales rather than simply adding another layer to the existing landscape.

Fourth, Wales needs to focus on sectors where UKEF can make a material difference, including aerospace and advanced manufacturing in north-east Wales, compound semiconductors, defence technologies, steel and downstream manufacturing, floating offshore wind and marine energy, food and drink, life sciences, medtech and internationally traded digital services. This should not become another generic sector list and the task is to identify specific firms, contracts, overseas buyers and investment requirements, and then to construct financeable propositions around them.

Finally, if the Welsh Government proceeds with the creation of a new National Development Agency for Wales, responsibility for developing the Welsh UKEF pipeline should sit within it, ensuring that Wales has an institution responsible for connecting innovation, business growth, inward investment, exporting and finance.

Thirteen years is long enough

In 2013, the concern was that UK Export Finance could not tell us how much support was reaching Welsh businesses and my review’s response was not to demand the devolution of every UK financial institution or to insist that money be allocated mechanically according to population. It was to argue for transparency, coordination and clear Welsh responsibility for ensuring that firms here could access every source of finance available to them.

Thirteen years later, UKEF has grown from providing £2.32 billion of annual support to an institution with a statutory capacity of £160 billion and its guarantees and insurance can unlock major investments, win international contracts and sustain tens of thousands of jobs. The opportunity for Wales is therefore much greater than in 2013, and so is the cost of failing to engage with it properly and given this, the Welsh Government should now ask UKEF three straightforward questions. How many Welsh firms have been supported? What is the total value and economic impact of that support? And what joint plan exists to ensure that Wales receives a fair share in future? Until those questions are answered, nobody can credibly claim that the current system is working as effectively as it should.

Wales does not require a guaranteed percentage of every transaction, but it does require transparent data, a robust pipeline of export-ready companies, and an institution prepared to take responsibility for turning UK financial firepower into Welsh investment, international orders, and well-paid jobs.

Wales has an innovation opportunity worth billions, but who will take responsibility for securing it?

UK Research and Innovation is becoming one of the most powerful economic development institutions in Britain and its new strategy offers Wales a rare opportunity to close part of its productivity gap, but only if the proposed National Development Agency is given the authority, commercial focus and resources to turn research into companies, investment and growth.

Every so often, a strategy appears that seems technical and specialist but has implications far beyond the institutions directly involved. The new five-year strategy from UK Research and Innovation is one of those documents. UKRI accounts for around two-fifths of public investment in research and innovation across the UK and, between 2026-27 and 2029-30, will control a budget of £38.6 billion. The significance lies not only in the scale of that budget but also in how it intends to use it.

Almost half of UKRI’s investment will continue to support discovery and curiosity-driven research. However, the new strategy is much more explicitly concerned with what happens afterwards i.e. which technologies are commercialised, which companies are created, where they scale, whether they attract capital and whether the intellectual property generated through public investment remains in Britain.

Its priorities are to support discovery research, address major strategic and societal challenges, and help companies start, grow and remain in the UK, and these are presented as parts of a single system in which academic discovery leads to commercial application, company formation and economic growth. That makes UKRI more than a research funder and instead it is now becoming an industrial policy institution, a business development agency and a major influence on the economic geography of Britain.

For Wales, this presents both an opportunity and a warning as the strategy aligns with some of our strongest capabilities, particularly compound semiconductors, advanced materials, energy and the creative industries. Yet UKRI also intends to be more selective, concentrate resources on fewer priorities and secure significant private investment alongside public funding, which will naturally favour places already possessing well-funded universities, experienced commercialisation teams and deep pools of venture capital.

The central question is who will take responsibility for assembling the partnerships, investment and delivery capability needed to secure those opportunities, and that is why UKRI’s new direction should become the first major mission of the National Development Agency for Wales announced by the Welsh Government. UKRI is reorganising around the journey from research to commercial growth at precisely the moment when Wales is proposing a new institution to tackle its productivity gap and failing to connect the two would be an extraordinary missed opportunity.

Wales starts from a weak position

Any serious strategy must begin with an honest assessment of where Wales currently stands. In 2023-24, UKRI invested £168 million in Wales out of a UK total of more than £9.1 billion which represented just 2% of total expenditure and around 3% once funding distributed exclusively to English universities through Research England was removed. Investment amounted to £53 per person in Wales, compared with £134 across the UK and £145 in England. Relative to the size of the economy, it was equivalent to 0.25% of Welsh gross value added, compared with 0.45% across the UK and 0.48% in England. Only Northern Ireland received less relative to the size of its economy.

To be fair, there has been progress in cash terms and UKRI investment in Wales rose from £137 million in 2021-22 to £168 million in 2023-24. However, because the overall UKRI budget also increased, the Welsh share remained broadly unchanged which means Wales received more money without materially improving its relative position.

The new agency should establish a national objective to increase Wales’s share of UKRI investment. Moving from approximately 3% to 4% of genuinely cross-UK funding would not be revolutionary, but across a programme of this scale, it could be worth hundreds of millions of pounds. Research investment also attracts people, equipment, businesses and private capital, strengthening institutions and improving their ability to win again and this cumulative advantage helps explain why regional inequalities persist.

The agency should therefore publish an annual research and innovation scorecard showing Wales’s share of UKRI funding, investment per head and relative to GVA, private capital attracted and economic outcomes achieved. Without that transparency, it will remain too easy to claim success while the underlying imbalance continues.

The opportunity is based on genuine strengths

The argument for a larger Welsh share is not that research funding should be distributed according to population, as UKRI exists to support excellence and economic potential, and Wales must demonstrate both.

Fortunately, the strategy does identify areas where that case has already been made with UKRI highlighting the advanced semiconductor cluster in South Wales as an example of the full innovation chain operating successfully, from discovery research to market-ready products. In particular, it points to the Centre for Integrated Semiconductor Materials at Swansea University and its work on next-generation gallium oxide technologies with potential applications in electric vehicles, renewable energy, communications and lower-energy artificial intelligence infrastructure. UKRI estimates that the wider South Wales semiconductor cluster has generated £436 million for the Welsh economy and created more than 3,000 jobs. It also identifies compound semiconductors and the creative industries in the Cardiff Capital Region, as well as energy and materials security in South West Wales. These are not merely examples inserted for geographical balance but show where UKRI believes Wales already possesses credible assets capable of contributing to national priorities.

The strategic funding involved is substantial andUKRI plans to direct £11.9 billion towards Industrial Strategy sectors and wider government priorities, including artificial intelligence, advanced manufacturing, clean energy, life sciences, semiconductors, defence and the creative industries. It intends to launch fifteen Priority Programmes during 2026 alone and Wales must decide whether to treat these as a succession of funding competitions or as the basis for long-term industrial development.

Compound semiconductors provide the clearest example, and Wales already has internationally significant research, specialist infrastructure and companies operating across parts of the value chain. But the opportunity is much greater than that of another research centre or temporary programme, as semiconductor technologies are central to electric vehicles, energy systems, telecommunications, defence, medical equipment, advanced manufacturing and artificial intelligence. The economic prize lies in the companies, intellectual property and supply chains built around that research, and Wales therefore needs a ten-year industrial proposition that combines infrastructure, skills, finance, procurement and international business development.

A similar approach is required in South West Wales, where offshore renewables, ports, steel, hydrogen, industrial decarbonisation and advanced materials could form a mutually reinforcing industrial ecosystem. The creative industries should also be viewed through the lens of technological change, as artificial intelligence, virtual production and immersive media reshape the sector.

These opportunities cannot be captured through conventional grant administration and require an organisation capable of building complex propositions involving universities, companies, investors, public bodies and regional leaders and that should be the purpose of the new agency.

More than a rebranding exercise

The Welsh Government has set a goal of halving the productivity gap with the rest of the UK, with Welsh productivity remaining around 15% below the UK average, and ministers stating the new agency will help make Wales the easiest place in Britain in which to start, grow and invest in a business.

The danger is that the agency becomes a new name attached to existing programmes and distributes relatively small grants across too many sectors and a genuinely new agency must not simply administer programmes but take responsibility for economic outcomes. Its purpose should be to improve productivity by helping Welsh businesses innovate, commercialise, scale and compete internationally but currently, responsibility for innovation-led growth is divided among Welsh Government departments, Business Wales, the Development Bank of Wales, Medr, universities, regional bodies, Innovate UK and the British Business Bank. Each may perform a useful function, but no single organisation is responsible for ensuring that promising Welsh research becomes a well-capitalised company employing people in Wales. Therefore, the new agency should occupy that space and take responsibility for the journey from innovation to economic value.

A permanent UKRI function

The traditional Welsh approach to UK research funding has often been reactive i.e. programme is announced, a consortium is assembled and an application is prepared against the deadline. That model will become increasingly inadequate as UKRI’s Priority Programmes are intended to be co-created with governments, industries, researchers and places and boards will help shape their direction and investments will be constructed around longer-term portfolios and by the time a formal call appears, many of the important relationships and assumptions may already have been established. This means that the places most likely to succeed will be those that engage early, influence programme design, identify relevant companies and research teams, and assemble co-investment in advance.

The new agency should therefore maintain a permanent UKRI function working across the research councils and Innovate UK and should understand which programmes are emerging, where Welsh capability is relevant and what gaps must be addressed to make a proposition competitive. Of course, some will argue that universities and businesses must remain free to pursue their own opportunities, but the agency could coordinate those propositions of national or regional significance that no single institution can deliver alone.

It should also seek Welsh representation on relevant advisory and programme boards as Wales cannot afford to wait until priorities have already been settled elsewhere. This is especially important as UKRI’s place agenda develops around English mayoral structures. Wales has no equivalent system, and responsibility is divided among the Welsh Government, Corporate Joint Committees, city and growth deal bodies, local authorities and universities. The agency should become UKRI’s principal strategic counterpart in Wales, working with regional institutions rather than displacing them otherwise Wales risks arriving at each discussion with several organisations claiming overlapping responsibilities and none able to commit the system as a whole.

Backing companies through to scale

One of the most important elements of the UKRI strategy is its move towards integrated support for high-potential businesses. UKRI accepts that Britain has been relatively successful in producing research and creating spin-outs but much less successful in growing those businesses into global firms. Its new Velocity service will identify promising companies earlier and provide account-managed support in areas such as commercialisation, finance, procurement, technology transfer and regulation.

Wales needs its own mechanism for connecting companies into that system and the agency should maintain a national portfolio of high-potential Welsh businesses, spin-outs and commercially promising technologies. Each should have a named relationship manager responsible for identifying what is preventing it from reaching the next stage and coordinating the organisations able to help. The barrier may be finance, manufacturing facilities, regulation, management or procurement but the aim would be to stop companies being passed between programmes without anyone taking responsibility for the result as has happened too much in the past.

General assistance should remain available to the wider SME population, but intensive support must be reserved for businesses capable of entering international markets and creating high-value jobs. Selection should be transparent, independently reviewed and open to firms in every part of Wales and the agency should be judged partly by how many of these companies achieve scale while retaining meaningful economic activity here.

Capital and economic anchoring

UKRI’s ambition to attract at least £3 of additional private investment for every £1 of public funding creates a particular challenge for Wales because private capital is even more geographically concentrated than public research funding. Evidence to the House of Commons Science, Innovation and Technology Committee showed that 56% of private equity and venture capital investment went to London and the South East, while just 0.4% went to Wales. The ability to demonstrate private leverage is therefore partly a consequence of geography, not simply the quality of an opportunity and whilst Cambridge and Oxford enter funding competitions with networks of investors, advisers, experienced founders and specialist professional services developed over decades, Welsh institutions do not start from the same position.

If UKRI gives greatest weight to propositions able to show immediate private backing, it could reinforce the concentration it is seeking to address and places with the deepest pools of capital will secure more public funding because they can attract more private money, making them even more attractive in future. Breaking that cycle should be a core responsibility of the agency and, unless it develops its own equity funds, should ensure that the Development Bank works with the British Business Bank, university funds, corporate investors, family offices, and specialist venture capital firms to assemble finance for Welsh priority sectors. Co-investment must be designed into propositions from the beginning rather than treated as a problem to solve after public funding has been secured.

The agency must also focus on where economic value is retained and a company can remain in the UK while moving its headquarters from Wales to London, raising finance in the South East and placing its senior management, research or production elsewhere. That may count as a British success while delivering limited benefit to Wales, and the agency should track where intellectual property is owned, where companies are headquartered, where research and production take place and how much of the supply chain is based in Wales. The objective should not be to restrict growing businesses but to create compelling commercial reasons for them to keep their core activity here.

Economic anchoring depends on specialist skills, suitable premises, research facilities, follow-on finance and credible customers and it is achieved by building an environment companies do not want to leave.

Universities, diffusion and procurement

Welsh universities will remain central to this mission and competitive success requires strong research teams, laboratories, doctoral students, commercialisation expertise and time to build partnerships. If the underlying Welsh research base weakens, winning UKRI investment will become progressively more difficult.

The agency cannot solve university finances or determine academic priorities but it should, however, work with Medr and universities to identify fields where Wales can build sufficient scale to compete internationally and where research capability aligns with credible economic opportunities. That will require greater collaboration and Wales cannot expect every university to maintain world-leading depth in every discipline or duplicate specialist technology-transfer, legal and investment functions. There is a strong case for shared national commercialisation capability in intellectual property, company formation, management recruitment and investor engagement, while universities retain ownership of their academic relationships and assets. Curiosity-driven research remains essential because future discoveries cannot always be predicted but when commercial potential emerges, Wales must possess the expertise and finance to develop it.

The agency must also ensure that innovation reaches the wider economy, and that Wales will not close its productivity gap solely by creating a small number of semiconductor, energy, or life-science businesses. Much of the economy consists of established SMEs that need to adopt technology rather than invent it and for many companies, innovation will mean using automation, data, artificial intelligence, robotics or more efficient energy systems i.e. manufacturers may gain from adopting sensors developed within the Welsh semiconductor cluster, a tourism business may use artificial intelligence to improve pricing and marketing, and a food producer may achieve more through robotics and energy efficiency than through a research project of its own.

Every major UKRI-backed cluster should therefore include a diffusion programme showing how its technologies, skills and supply chains will benefit businesses beyond the immediate research community otherwise Wales could host impressive centres of scientific excellence while seeing little improvement in the wider economy.

Public procurement should form part of that process and a medical technology company may benefit more from a credible NHS Wales contract than from another small grant or an energy business may need a public building or industrial site where its technology can be demonstrated. As noted previously, Wales should use procurement more deliberately to create markets for innovation, and whilst this does not mean buying inferior products because they are Welsh, it does mean identifying public challenges, inviting businesses to develop solutions and creating a pathway from testing to commercial adoption when those solutions work.

As a small country with devolved responsibility for major public services, Wales could become an effective national testbed but that advantage will only be realised if innovation and procurement are treated as connected parts of economic development.

A focused and accountable institution

The case for a new development agency is strong, but so is the risk that it becomes another layer of bureaucracy. It therefore needs a tightly defined mission, an arm’s-length structure and measurable objectives and its board should contain genuine commercial, scientific and investment expertise. Ministers should set its overall direction and hold it accountable, but operational decisions should not be subject to constant political intervention and its performance should be judged by additional UKRI funding secured, private investment attracted, businesses reaching scale, research commercialised, exports generated, productivity improved and high-value activity retained in Wales.

The agency should run a limited number of strategic programmes rather than trying to satisfy every sector and every region simultaneously. That does not mean neglecting North and Mid Wales, which need help to convert strengths in areas such as advanced manufacturing, energy, agritech, food systems and rural technology into coherent investment propositions. However, it must resist the temptation to divide every programme equally across Wales and the objective should be to help every region develop its strongest opportunities, not to pretend that every sector has the same potential everywhere.

The agency’s first test

The Welsh Government is right to place productivity at the centre of its economic mission and a new agency will not close the gap on its own, but innovation cuts across skills, infrastructure, management, investment and industrial development, making it one of the few areas where coordinated action can produce economy-wide benefits.

The new UKRI strategy provides an immediate test of whether Wales is serious about doing economic development differently as here is a UK institution investing £38.6 billion over four years and reorganising itself around research, industrial priorities, commercialisation and company growth. It has recognised Welsh strengths and intends to work with places capable of assembling research, business leadership, infrastructure and private capital. At the same time, Wales is creating an agency intended to improve productivity through innovation and business growth so the alignment could hardly be clearer. So what could that agency do to maximise this opportunity?

The agency’s first task should be to produce a Welsh UKRI and commercialisation plan setting out how our share of investment will increase, which clusters will be prioritised, how co-investment will be assembled and how companies will be supported from research through to international growth.

Secondly, should establish a portfolio of high-potential businesses and university technologies, build permanent relationships with UKRI programme leaders, coordinate finance with the Development Bank and British Business Bank, strengthen commercialisation capability and use public procurement to create markets for innovation.

Most importantly, it should define success in Welsh economic terms and that cannot be limited to grants secured or spin-outs created but must include companies remaining and growing in Wales, intellectual property being developed in Wales, and high-value employment being created in Wales.

UKRI’s new direction recognises that research cannot be separated from commercialisation, capital and place, and that Britain has often been better at generating ideas than building companies of global scale. Wales also possesses genuine advantages and its capabilities in compound semiconductors, energy, advanced materials and creative technologies are recognised assets with the potential to generate considerable value.

But none of this guarantees a Welsh dividend as UKRI’s strategy is competitive and selective and will reward places able to present coherent propositions, attract investment and deliver at speed. Those characteristics are currently strongest in the parts of Britain that have benefited from decades of concentrated research, infrastructure and capital.

Wales could use this strategy to secure hundreds of millions of pounds of additional investment, strengthen its universities, develop internationally significant clusters and create a new generation of high-growth companies. It could equally reach the end of the period with several impressive announcements, an unchanged share of UKRI funding and too many Welsh-created businesses generating their greatest economic value elsewhere.

The difference will be institutional capacity and accountability, and for too long, Wales has had strategies without clear responsibility for delivery and programmes without anyone accountable for the journey from idea to economic outcome. A properly designed Innovation and Growth Agency would provide the institution currently missing, namely one able to connect research, commercialisation, finance, procurement, technology adoption and international growth around a common productivity mission.

It should not become another general business support body or another source of grants, but a commercially focused organisation judged by whether it turns Welsh capabilities into Welsh companies, investment, jobs and higher productivity. And if the new agency cannot take responsibility for maximising a £38.6 billion UK research and innovation opportunity, it is difficult to know what purpose it would serve.

Wales Needs a Proper Relationship with the British Business Bank

Thirteen years ago, before the British Business Bank had become fully operational, I conducted an independent review of access to finance for the Welsh Government.

The first recommendation in that report could hardly have been clearer “Welsh Government needs to ensure that Wales, and Welsh businesses, gets a fair share of funding from the new Business Bank given concerns that the funding will not be distributed regionally across the UK and may be concentrated in the more prosperous areas of the UK.”

The report went further, concluding that it was critical for Welsh firms to receive their fair share of UK funding programmes more generally and, just as importantly, that there should be far greater coordination between the different sources of finance operating at UK and Welsh levels. That warning was made in 2013, when the British Business Bank was still an emerging institution with a relatively limited portfolio. Today, it has permanent financial capacity of £25.6 billion and operates across almost every stage of the business finance market, from Start Up Loans and commercial guarantees to regional funds, angel investment, venture capital, patient capital and direct investment in scale-up businesses.

Yet the fundamental question remains unanswered. What is the Welsh Government’s strategy for ensuring that Welsh businesses obtain full and fair access to that portfolio?

Earlier this month, the UK Government announced a £6.5 billion expansion of the British Business Bank’s Growth Guarantee Scheme, with around 33,000 businesses across the United Kingdom expected to benefit from government-backed finance over the next four years. The announcement also included up to £500 million of ENABLE Guarantee capacity for intellectual property-rich businesses and plans for a joint British Business Bank and UK Export Finance scheme to support smaller exporters.

For Wales, where weak productivity, low levels of business investment and a shortage of growth capital have remained stubborn features of the economy for decades, this should be very good news. However, the most important question was largely absent from the initial coverage, namely how much of this £6.5 billion should reasonably be expected to reach Welsh businesses?

At present, there is no clear answer, as there is no dedicated Welsh allocation, no published target and no agreed measure against which the scheme’s performance in Wales can eventually be judged. Instead, the funding will be distributed through accredited lenders, with decisions based on demand, commercial assessments and financial institutions’ willingness to lend.

That may be understandable from the perspective of the British Business Bank, as the Growth Guarantee Scheme is not a grant programme and is not a pot of money to be divided administratively across the UK’s nations and regions. Businesses will still have to apply for finance and demonstrate that they are viable and can repay what they borrow. The government provides lenders with a guarantee covering 70 per cent of the outstanding facility, although the business remains fully responsible for repaying its debt.

However, that does not mean the Welsh Government simply stands back and waits to see what happens. Given the scale of the scheme, the weaknesses in the Welsh economy, and the longstanding shortage of business finance, this should be a test of whether the Welsh Government is capable of developing a serious and strategic relationship with the British Business Bank.

Such a relationship should not be based merely on occasional meetings, joint appearances or general expressions of support. It should be built on a shared understanding of the Welsh finance market, the level of lending and investment to be achieved, where the gaps in provision lie, and what both institutions will do if Wales begins to fall behind.

The British Business Bank is one of the most important public institutions influencing access to finance across the UK, while the Welsh Government is responsible for economic development in Wales. It should therefore be obvious that a purposeful relationship between the two is essential. The challenge is for the Welsh Government to move beyond being an observer of the British Business Bank’s activity and become an active partner in ensuring its programmes reach Welsh firms.

What should Wales receive?

Before any meaningful relationship can be established, Wales needs to define what a fair outcome would look like. The simplest calculation is based on population, and as Wales accounts for around 4.6 per cent of the UK population, a proportionate share of the £6.5 billion expansion would amount to almost £300 million over the life of the programme. A second method would be to use the number of private-sector businesses and Wales has approximately 194,000 firms, or around 3.4 per cent of the UK total, which would suggest a Welsh share of roughly £220 million.

A third, and perhaps more realistic, approach is to examine how the Growth Guarantee Scheme and its immediate predecessor have performed so far. By the end of March 2026, the scheme had supported 21,194 facilities worth £3.64 billion across the UK. Welsh firms had received £129.78 million through 850 facilities, representing around 3.6 per cent of lending by value and 4 per cent by number.

If Wales were to maintain that share of lending by value under the expanded programme, Welsh businesses might expect to receive approximately £232 million over the next four years. Maintaining the existing share of facilities would support around 1,320 Welsh businesses, while a population-based outcome would increase the figures to approximately £300 million and 1,500 businesses. On that basis, a sensible minimum ambition would be £250 million over four years, with the population-based figure of approximately £300 million representing the benchmark against which a genuinely strong performance should be judged.

This should not be misunderstood as a demand for a rigid territorial quota or an instruction to lenders to provide finance to companies that cannot repay it, as the Growth Guarantee Scheme remains a commercially delivered programme, and that commercial discipline is necessary.

Nevertheless, setting a benchmark would enable Wales to judge whether businesses here are enjoying comparable access to the scheme and, if they are not, to establish the reasons. These could include a shortage of genuinely active lenders, lower awareness among Welsh firms, weaker referral networks, regional differences in rejection rates or an insufficient level of support to help otherwise viable companies become finance ready. Indeed, the appropriate response to underperformance would therefore not be to lower lending standards but to address the obstacles preventing suitable Welsh firms from reaching lenders and submitting successful applications.

These figures should now form the basis for a direct discussion between the Welsh Government and the British Business Bank and Welsh ministers should ask what level of lending the Bank expects to reach in Wales, how that estimate has been calculated, which lenders will deliver it and how performance will be monitored.

Without such a benchmark, almost any outcome can be presented as a success. If Welsh businesses receive only £100 million over four years, will that be regarded as acceptable or what about £150 million or £200 million? Unless an expectation is established from the outset, there will be no credible basis for judging whether Wales has benefited fairly.

How does this compare with existing Welsh business finance?

The potential scale becomes clearer when compared with the Development Bank of Wales’s existing business investment activity. During 2024-25, the Development Bank invested £152 million, of which approximately £105 million was in direct debt and equity investments, with the remainder in property. A Welsh share of £250 million from the expanded Growth Guarantee Scheme would be equivalent to £62.5 million of supported lending each year, representing around 60 per cent of the Development Bank’s annual non-property business investment. A population-based share of £300 million would provide an annual equivalent of £75 million, or more than 70 per cent. This is therefore not a minor UK programme operating at the margins of Welsh economic policy as it could generate an annual flow of supported commercial finance equivalent to between three-fifths and nearly three-quarters of the Development Bank’s existing debt-and-equity business investment.

There is also an important distinction between the two forms of support as the Development Bank’s portfolio is heavily focused on micro and small businesses, reflecting the structure of the Welsh economy and the difficulties that very small firms can experience in accessing conventional finance i.e. In 2024-25, microbusinesses received almost 43 per cent of its debt and equity investment by value.

The Growth Guarantee Scheme is delivered through banks and other accredited commercial lenders and can support term loans, overdrafts, asset finance, invoice finance and asset-based lending and therefore has the potential to broaden the finance market, particularly for established firms seeking larger sums to invest in equipment, technology, recruitment, exports and productivity.

The schemes should not, therefore, be regarded as direct substitutes as Wales needs both a strong source of finance for micro and small firms and an effective commercial market capable of supporting established businesses with greater ambitions for growth. What matters is whether those different sources of finance operate as part of a coherent Welsh system or merely as a collection of separate programmes.

An existing relationship that should now go further

Interestingly, there is already an important working relationship between the British Business Bank and the Development Bank of Wales group through the £130 million Investment Fund for Wales. The fund provides smaller loans between £25,000 and £100,000, debt finance between £100,000 and £2 million, and equity investment of up to £5 million. Its delivery partners include BCRS Business Loans, FW Capital and Foresight, with FW Capital forming part of the Development Bank of Wales group. (

This is not, therefore, a case of two institutions operating entirely separately or merely meeting occasionally to discuss the wider finance market as a company within the Development Bank group is already delivering part of a British Business Bank fund in Wales.

By February 2026, the Investment Fund for Wales had invested more than £37 million into 93 Welsh businesses and attracted a further £9.5 million of co-investment. That is a worthwhile start, although it also suggests that much of the fund’s £130 million capacity remains to be deployed.

The existing delivery relationship provides a far stronger foundation than might initially appear, but it also raises a more important question and if the two institutions can work together to deliver the Investment Fund for Wales, why should that relationship not now be developed more strategically around the Growth Guarantee Scheme and the wider provision of business finance in Wales?

The issue is not the complete absence of cooperation but its scope, visibility and ambition as there is no published Welsh target for lending through the Growth Guarantee Scheme, no obvious joint plan for ensuring that Welsh firms receive between £250 million and £300 million over the next four years and no transparent framework setting out how the Welsh Government and the British Business Bank will monitor delivery.

The existing relationship through FW Capital shows that collaboration is possible, and the challenge is to build on it by moving from cooperation on an individual fund to a broader strategic partnership covering the whole Welsh finance market. That should include a shared assessment of gaps in provision, agreed ambitions for lending volumes, coordinated engagement with accredited lenders and regular publication of Welsh performance data. It should also examine how businesses can be referred more effectively between Development Bank products, the Investment Fund for Wales and lenders participating in the Growth Guarantee Scheme.

Rather than starting from scratch, Wales has an existing institutional bridge and the task now is to use that bridge to build a much deeper relationship with the British Business Bank and ensure that UK-wide programmes are aligned with the particular needs of the Welsh economy.

The Growth Guarantee Scheme is only the beginning

Yet the Growth Guarantee Scheme should be regarded as the starting point rather than the limit of this discussion, as the British Business Bank now operates across almost every stage of the business finance market. Its £25.6 billion of financial capacity includes £17.6 billion for funded debt and equity products and £8 billion of guarantee capacity. In fact, over its current five-year strategy, it expects to make approximately £12.7 billion of funded commitments and issue £10.4 billion of guarantees.

The Bank expects its activities over that period to support around 180,000 businesses, catalyse approximately £26 billion in additional private capital, unlock £10 billion in additional lending, and support the creation of 370,000 jobs. More importantly, it expects 83 per cent of the businesses reached to be located outside London.

That makes it far more than the administrator of a single loan-guarantee programme and its decisions will help determine where businesses are created, where venture funds invest, which university spinouts secure backing, which firms obtain the capital to scale and whether promising companies can continue growing in the UK without having to sell prematurely or relocate.

At the beginning of the business journey, the Bank plans to deliver at least 85,000 Start Up Loans over the next five years, extend eligibility to businesses that have been trading for up to five years and increase the average loan size. It has also committed an initial £150 million to Community Development Finance Institutions, which provide finance to businesses and founders who struggle to access mainstream lending.

For innovative and high-growth firms, the Bank operates through Enterprise Capital Funds, the Regional Angels Programme, specialist venture funds and direct company investments. The Regional Angels Programme alone has committed £276 million through 23 delivery partners, with an explicit objective of reducing regional imbalances in early-stage equity finance. There are examples of Welsh firms benefiting. Space Forge received a £2 million investment through the Regional Angels Programme as part of its £22.6 million Series A round, demonstrating that Welsh companies can access significant national growth capital when the business, investors and institutions align.

However, individual successes should not be mistaken for a functioning system and the question is not whether a handful of exceptional Welsh companies can occasionally secure investment, but whether there is a visible and reliable pathway through which a much larger number of ambitious firms can progress from early-stage finance to angel investment, venture capital and later-stage growth funding.

The question for Wales is therefore much bigger than whether Welsh firms obtain £250 million or £300 million from the Growth Guarantee Scheme, it is whether Wales has a strategy for engaging with the British Business Bank’s entire portfolio and ensuring that Welsh businesses participate fully at every stage, from starting a company and securing its first loan through to raising venture capital, entering export markets and obtaining the investment required to scale internationally.

Availability is not the same as accessibility

Not every British Business Bank programme should be assessed through a simple population-share calculation. Whilst such a benchmark is meaningful for high-volume programmes including Start Up Loans and the Growth Guarantee Scheme, where thousands of broadly comparable transactions take place across the UK, it is less appropriate for venture capital, specialist sector funds and direct scale-up investments, where individual deals are larger, less frequent and dependent on the maturity and quality of the available businesses.

Nevertheless, the absence of a simple population formula cannot become an excuse for accepting whatever geographical distribution happens to emerge and when the British Business Bank invests in a venture fund based in London, Manchester or Cambridge, the important Welsh question is not merely where that fund is headquartered but whether the fund is actively sourcing opportunities in Wales, whether it has relationships with Welsh universities, incubators and professional advisers, how many Welsh companies it considers and how many ultimately receive investment.

The same applies to angel investment and it is not enough for a programme to be technically available across the UK and Wales needs to know whether it is helping to increase the number of active angel investors here, supporting Welsh syndicates and raising the number and size of investments in Welsh businesses. This is particularly important because finance does not flow evenly through the economy simply because it has been made available nationally.

Financial markets tend to be strongest in places where business density is already high, where there are extensive networks of lenders, brokers and professional advisers and where management teams are more familiar with using external finance. Venture capital and private equity funds are similarly drawn towards places where strong networks and established deal flow already exist.

Regions with weaker financial ecosystems can therefore receive less, even when their economic need is greater and if finance is distributed mainly according to where businesses are already most numerous, financially connected and visible to investors, the strongest economies will continue to attract the greatest volume of lending and equity.

The logic then becomes circular and as Wales has fewer businesses and a weaker finance market, so it receives less lending and investment. Because it receives less finance, it remains less able to create and grow the firms needed to close the economic gap.

A strategic relationship between the Welsh Government and the British Business Bank should exist precisely to break that cycle and the role of public policy should not simply be to reproduce the existing economic geography of the United Kingdom but to change it by tackling the market failures that prevent viable firms from accessing the capital they need.

What would a proper strategic relationship look like?

A proper relationship would begin with agreed objectives. For the Growth Guarantee Scheme, the Welsh Government and the British Business Bank should establish a shared ambition for the value of lending, the number and type of businesses supported and the geographical spread of activity. The starting target should be at least £250 million over four years, supporting around 1,300 businesses, with an aspiration to reach the population-based figure of approximately £300 million and 1,500 firms.

However, the relationship should extend across the Bank’s entire portfolio and the Welsh Government should seek an annual Welsh portfolio account setting out the amount of British Business Bank-supported finance reaching Wales through each major programme. This should include Start Up Loans, the Growth Guarantee Scheme, ENABLE programmes, community finance, the Investment Fund for Wales, Enterprise Capital Funds, the Regional Angels Programme, specialist venture funds and direct company investments.

That account should show the number, value, size, sector and location of the Welsh businesses supported, together with the amount of private investment attracted alongside public capital. It should also report, where possible, on applications, approval rates, businesses considered but not funded and the principal reasons why otherwise promising companies did not progress.

For lending programmes, the British Business Bank should publish regular Welsh figures showing the value of finance, the number of facilities, the average facility size, sector, business size, location, and the purpose of investment. If performance falls behind the expected trajectory, both institutions should explain why and set out what they intend to do about it.

The Welsh Government should also seek a clear account of lender coverage and should know how many accredited lenders are genuinely active in Wales, whether they have local relationship managers or business development teams, where the geographical gaps exist and whether firms outside Cardiff and the larger urban centres enjoy equal access.

For equity and growth capital, different measures will be required and these should include the number of Welsh businesses entering investor pipelines, the number receiving investment, the value of initial and follow-on rounds, the number of participating funds actively sourcing opportunities in Wales and the extent to which promising firms are being connected with investors before they reach a funding crisis. There should also be coordinated communication involving banks, accountants, solicitors, brokers, universities, investors, business organisations and regional networks.

Many viable businesses will never apply for finance because they are unaware of the available schemes, assume they will be rejected or lack a trusted adviser to help them navigate the market. That is not simply a failure by the individual business but a weakness in the wider economic ecosystem, and one that a proper institutional partnership should seek to overcome.

Most importantly, there should be a joint pipeline mechanism through which the Welsh Government, Development Bank of Wales, British Business Bank, universities, incubators and private investors identify businesses capable of progressing from one source of finance to another.

A company receiving a Start Up Loan should not disappear from view once the money has been advanced and a promising business backed by the Investment Fund for Wales should have a route towards angel investment, an Enterprise Capital Fund, specialist growth capital or direct scale-up finance.

In other words, the system should be designed around the development of businesses rather than around the administrative boundaries between separate funds and institutions.

A test of whether Wales has learned

Too often, Wales waits until a UK-wide programme has ended before asking how much of it came here and by then, the opportunity to influence delivery has passed. The figures are published, disappointment is expressed and explanations are offered about weaker demand, fewer applications or difficult market conditions. Everyone promises to learn lessons, and the same process begins again with the next announcement but that approach is no longer good enough.

For the Growth Guarantee Scheme, the Welsh Government should set the benchmark now, agree a delivery framework with the British Business Bank and publish performance throughout the four-year life of the programme but it should also use this opportunity to develop a much wider relationship covering the Bank’s complete portfolio, including start-up finance, community lending, commercial guarantees, regional investment funds, angel investment, venture capital, export finance and direct growth capital.

The British Business Bank should not be treated as a remote UK institution that occasionally announces schemes relevant to Wales. Given its permanent financial capacity of £25.6 billion and its increasing influence across debt, equity and scale-up finance, it should be regarded as one of the Welsh Government’s most important economic partners.

Equally, the Bank should be expected to demonstrate that its UK-wide mission is generating fair and meaningful outcomes in Wales. That does not mean imposing a mechanical Welsh quota on every programme, but it does mean setting appropriate benchmarks, measuring access and outcomes and intervening when Welsh businesses are being left behind.

And it’s not just about one programme such as the expanded Growth Guarantee Scheme and the larger prize is to ensure that Welsh entrepreneurs and businesses have effective access to the entire range of British Business Bank activity, from the first Start Up Loan to the tens of millions of pounds that may be required to build and retain the next generation of successful Welsh companies.

That was also the wider purpose of the recommendations I made in 2013 and the Access to Finance Review argued not only that Wales should receive its fair share of UK programmes, but that there needed to be far greater joined-up thinking between funding operating at Welsh and UK levels. In fact, it proposed that the new Development Bank for Wales should act as a gateway, connecting businesses with the appropriate source of public or private finance rather than becoming another institution operating within an already fragmented landscape.

That review was based on five principles: that viable Welsh businesses should be able to access affordable finance; that public funding should support economic development; that it should address rather than displace market provision; that finance should be accompanied by appropriate business support; and that the system should be designed around the needs of the business rather than the convenience of the institutions providing it.

Those principles remain as relevant today as they were thirteen years ago and the creation of the Development Bank of Wales represented a substantial response to that earlier work. But the original ambition was never that Wales should simply create its own source of finance and then operate in isolation from the rest of the UK funding system but that Wales should build a coherent financial ecosystem capable of drawing together Welsh, UK and private capital and directing it towards businesses capable of creating growth.

That is why the relationship with the British Business Bank matters, and the question is no longer whether Wales has its own development bank or whether individual UK schemes are technically available here but whether those institutions and programmes operate together as a genuine system, with clear routes from start-up funding through to growth and scale-up capital.

I warned at the time that funding from the new Business Bank could become concentrated in the more prosperous parts of the UK unless the Welsh Government acted to ensure that Wales was fairly served. Whilst the scale of the institution has changed enormously since then, the underlying risk has not and the challenge for the Welsh Government is therefore not simply to repeat the discussions that followed the original review, it is to finish the work that began in 2013 by establishing a permanent strategic relationship with the British Business Bank, agreeing measurable ambitions across its portfolio and creating a joined-up system in which Welsh businesses can progress from one source of finance to the next.

Otherwise, in a few years’ time, another review may conclude that the warning was clearly made, the opportunity was substantial and Wales once again failed to organise itself to secure the full benefit for its businesses and the economy as a whole

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Life beyond retail: a town-centre plan for the new Wales

For most people in Wales, the economy is not an abstract concept measured in GVA tables or quarterly growth statistics. Instead, it is the walk down their local high street, the question of whether the bank is still open, whether the unit on the corner is let or shuttered, whether there is somewhere to take the children on a wet Saturday, and whether the independent coffee shop that opened with such optimism last spring is still trading by Christmas. The high street is the most visible, most democratic barometer of economic health we have, and for too long the reading in too many Welsh towns has been bleak.

That makes town-centre renewal an unusually good early test for the new Plaid Cymru government, as the minority administration under Rhun ap Iorwerth, conscious of the need to demonstrate competence quickly, needs deliverable, place-based wins that people can actually see and touch.

Few policy areas are as devolved, as visible, or as ready for action, given that planning, local government, transport and business rates all sit firmly in Cardiff Bay’s hands. Unlike so much of Welsh economic life, where the most powerful levers remain in Whitehall, the high street is a problem that Wales is genuinely equipped to address on its own terms. Our politicians do not need to wait for Westminster and can choose to act now.

The scale of the problem and the wrong diagnosis

The hard numbers are sobering, and the DWF’s Securing the Future for Britain’s High Streets notes that roughly one in twelve shops across England and Wales closed within five years, a rate of attrition that would be treated as a crisis in any other sector.

In Wales, the picture was set out starkly in Professor Karel Williams’ Small Towns, Big Issues study and the accompanying Audit Wales review, Regenerating Town Centres in Wales. Tellingly, that work took Bangor, Bridgend and Haverfordwest as its case studies, ordinary, representative Welsh towns, and the diagnosis that applied to them applies, with local variations, to most of the country.

The instinctive response is to treat all of this as a retail problem with a retail solution: fill the empty shops, restore footfall, job done. But the single most useful insight running through the recent thinking in this area is that this diagnosis is wrong and that acting on it wastes money.

The House of Lords Built Environment Committee titled its inquiry “High Streets: Life beyond retail?” quite deliberately. While retail will always remain part of the mix, communities increasingly want restaurants, leisure, public services and green space at the heart of their towns. Accessibility, parking and business-rates reform were central concerns rather than peripheral ones. The committee also backed England’s new High Street Rental Auction powers, which let local authorities auction off persistently vacant units. Whilst that specific mechanism is an English creation under the Levelling Up and Regeneration Act and is not available in Wales, the principle - that the public sector should have teeth to deal with landlords who sit on empty property and drag a whole street down - is one Wales should study closely.

The Future Spaces Foundation goes further, explicitly framing the high street as a community asset and directly challenging the assumption that retail can be the engine of regeneration. Drawing on a panel spanning planning, transport, retail, economics and the arts, its work organises the question around five themes that retail-led thinking ignores: the challenges facing town centres; public services and community cohesion; commercial drivers and employment; transport and accessibility; and health and wellbeing. A town centre is a place to live, work, learn, access services, socialise and be cared for, and only incidentally a place to buy things that, increasingly, can be bought more cheaply online.

This reframing matters for Wales because, in principle, it is already our policy. The Town Centre First principle is embedded in Future Wales: The National Plan 2040, and the sequential test in Planning Policy Wales now applies to uses well beyond retail, including workplaces, services and leisure. On paper, Wales has been ahead of England in philosophy, but the problem has never been the diagnosis, but delivery.

Good architecture, uneven delivery

The Welsh framework is better than it is given credit for and the Transforming Towns programme, launched in 2020 with a £100m commitment and a loan fund, does many of the right things by repurposing empty and run-down property, encouraging mixed use - towns as places to live, work, visit and stay rather than simply shop - and supporting the relocating of public services back into the centre rather than out to the ring road.

But three weaknesses recur, and the new government should be honest about them.

1. The first is fragmentation, as there are too many overlapping funding streams, application processes that exhaust the limited capacity of smaller local authorities, and a persistent reliance on whichever council happens to have the officers and institutional appetite to put together a strong bid. The result is a postcode lottery in which already capable places pull further ahead, while those struggling towns that most need help fall further behind because they cannot mobilise the bid in the first place. In other words, we have a system that rewards bidding capacity rather than need, thereby entrenching inequality between towns.

2. The second is that the money has skewed heavily towards capital buildings, public realm, frontages, the visible and photographable, when the harder problem lies on the revenue and occupier side. A beautifully refurbished unit is worth little if it stands empty, or if the business that takes it on cannot survive its second winter. Who fills the space, on what terms, and whether they last determines whether public investment compounds or evaporates, and it gets the least attention, precisely because it is harder to put on a ministerial visit.

3. The third, and the one I want to dwell on, is the near-total absence of the small-business voice from the centre of the programme. Regeneration is too often done to a high street by planners, developers and councils, and too rarely with the people who actually trade on it, and that is the gap that matters most, because it is on the high street that the Welsh economy renews itself.

The entrepreneurial high street

A high street is not merely where established firms trade; it is where new firms are born and the cheapest, most visible, lowest-barrier place to test whether an idea has customers, whether that means a shop window, a market stall or a unit with a three-month lease. Drag a high street down, and you do not simply lose the shops that close; you lose the next generation of businesses that would have started there. This is the dimension that conventional regeneration thinking consistently underweights, and where the new government has most to gain.

The FSB’s Future of the High Street report begins from the founder’s point of view. Built on a large-scale survey of small firms and organised around destination, transformation, experience, infrastructure and competitiveness, it reads less like a lament than a to-do list. Three findings should be required reading in the Cardiff area.

1. First, the availability and affordability of space and around two in five high-street small businesses told the FSB that affordable commercial space is critical to an area’s future, and the report’s central recommendation is a dedicated fund for pop-ups, markets and temporary “meanwhile” use, aimed squarely at first-time businesses. Wales already permits “meanwhile” uses under Transforming Towns and publishes best-practice guidance on them and on street markets. What it lacks is a simple, fast, founder-facing scheme that turns a vacant unit into a three-month trading opportunity without a lawyer and a six-month wait. This is the single highest-leverage intervention available to the new government because it attacks two problems at once by reducing visible vacancy and manufacturing new-firm formation. A town centre full of people trying things is a town centre with a future.

2. Second, business rates. Almost half of high-street small firms told the FSB they would not survive without Small Business Rates Relief, and a clear majority said they would invest or grow if the threshold were raised. In England, this is a debate about lifting the threshold from £12,000 to £25,000 of rateable value, but for Wales, those figures are a comparator, not a constraint, because non-domestic rates are fully devolved. The opportunity is more interesting than simply matching England, Wales could design relief that actively rewards occupation by making it demonstrably cheaper to take on an empty unit than to leave it dark, and that treats a new business taking a first lease differently from an established chain. A rates system is not neutral plumbing, but an instrument for change, and most important of all, Wales controls it.

3. Third, the softer infrastructure that determines whether anyone turns up at all, including transport links, parking that is actively managed rather than merely charged for, decent public toilets, and family-friendly facilities. Footfall is the oxygen every independent trader breathes, and the FSB found that transport and well-managed parking rank among the things small firms most value, while crime, falling footfall and weak consumer spending rank among the things they most fear. Its “high street hop” idea, which consists of free bus travel on key routes on peak days, and its call for usable parking are unglamorous, but they go to the heart of the matter, and accessibility is a competitiveness issue, not a nicety.

The FSB floats two further ideas worth piloting in Wales. One is shared digital infrastructure, a mobile loyalty scheme, say, that lets a town’s independents collaborate rather than compete one-by-one against the retail park and the online giant; a community marketplace showcasing local traders complements the physical high street rather than threatening it. The other is a named “high-street chief” responsible for an area’s vacancy rate, promotion and growth, working with traders, landlords, BIDs and community groups. A Welsh version, namely a town-centre manager funded jointly through Transforming Towns and the local BID, would replace diffuse, committee-based responsibility with a single accountable person for each priority town as accountability concentrated in one role tends to deliver in a way shared responsibility across a partnership rarely does.

Decide with data, not anecdote

If there is one discipline Welsh regeneration policy has consistently lacked, it is rigorous, comparable evidence. Too many decisions about which town gets what are taken on the strength of a persuasive councillor, a developer’s glossy prospectus or the loudest local campaign, rather than a clear reading of where intervention will actually work. Having argued for years that Welsh economic policy is too often made in the near-absence of decent data, I regard this as a serious failure that underpins it.

The work of the Consumer Data Research Centre on Future High Streets, developed with the London Borough of Camden, points to a better way. Rather than treating each town as a one-off, the CDRC assembled data across six categories - high-street boundaries, mobility, the local economy, retail mix, social and demographic profile, and sustainability - and used it to measure the resilience of a high street over time and to compare one place against another. The point is not data for its own sake but is the ability to ask, before spending a pound, whether an intervention is likely to work, and afterwards whether it did.

Wales is small enough to do this at a national scale, and a single, open, comparable evidence base focusing on footfall, vacancy, tenant mix, transport access, and deprivation, and covering every priority town, would turn Transforming Towns from a series of discrete grant decisions into a coherent, accountable strategy. It would let money follow evidence rather than bidding capacity, and let the government hold itself to account: did vacancy fall, did footfall rise, did the businesses we backed survive? It is the difference between spending on town centres and investing in them, and it is achievable within the current term.

Anchors, services and living above the shop

One further lever ties the agenda together, following from the “life beyond retail” reframing. If the future high street is mixed-use rather than a retail monoculture, two things must happen alongside the small-business agenda.

First, public bodies must lead by example. Where a council, health board, college or government office locates its staff and services has a major impact on a town centre’s footfall and therefore its commercial viability. Pulling those anchor functions back into the centre creates the daytime population that independent cafés and shops depend on, and Town Centre First already requires this in planning terms. Second, town-centre living, which converts empty upper floors and redundant units into homes, brings residents and their spending back, makes use of decaying buildings, and eases housing pressure. The Transforming Towns loan fund already supports this, but it remains marginal where it should be central and a high street with people living on it in the evening is safer, busier and more viable than one that empties at six o’clock.

A short list for the new government

None of what follows requires new powers from Westminster, only sequencing, focus and the will to spend the first hundred days well. If I were advising the incoming administration, I would press for five things:

1. A founder-facing “meanwhile” scheme that turns vacant town-centre units into short, low-friction trading opportunities for new businesses, delivered through Transforming Towns but designed around the entrepreneur rather than the council bidding cycle.

2. A business-rates regime that rewards occupation, using Wales’s devolved control of non-domestic rates to make taking on an empty high-street unit demonstrably cheaper than leaving it dark, and to favour first-time and independent traders.

3. One accountable town-centre lead per priority town, with a published vacancy and footfall target, replacing diffuse partnership responsibility with a single named person.

4. National high-street data platform, built on the CDRC model, so that funding follows evidence and outcomes are measured rather than assumed.

5. A decisive shift from capital to occupier, rebalancing the programme so that as much energy goes into who trades and survives and into bringing anchor services and residents back into the centre as goes into bricks, public realm and ribbon-cuttings.

The heart of the matter

The deeper point is that town centres carry a weight far beyond commerce and the DWF is right that they are bound up with people’s sense of place and local identity, and in Wales that identity is layered in a way it is not everywhere, namely bilingual, rooted in market towns and former industrial communities, fiercely local and often carried in the Welsh language itself. A high street is where a community sees and recognises itself, and when it empties, the loss is not only economic but is a loss of confidence, of meeting places, of the small daily encounters that hold a town together. The boarding up of a landmark shop signals a place that no amount of economic strategy can offset.

A new government looking to prove that devolution can still deliver tangible, felt change could do far worse than start here, on the streets where Welsh people actually live their economy. The intellectual work has been done by a range of organisations, including Wales’s own Town Centre First framework, which remains one of the better pieces of place policy anywhere in the UK. What has been missing is not ideas but the will to choose the high street as a genuine priority and then follow through with the patience and discipline delivery requires.

That choice is now available to be made, and the question for the new Wales is whether it will be.

If Welsh Government wants to buy Welsh, it first has to change how Wales buys

Since I began writing as a business columnist over twenty-four years ago, one theme I have constantly returned to is buying locally.

In one of my first articles in 2002, I referred to various initiatives in the United States of America that encouraged organisations to support their local communities by buying local produce, noting that ten US states had passed laws requiring schools, prisons and other state institutions to buy a percentage of their food from local farmers. Since then, I have written various pieces urging the Welsh Government to do everything possible to use public procurement as an economic development tool by increasing the share of its annual spend with local Welsh firms.

For example, in 2004, I wrote that the public sector in Wales spent approximately £3 billion on services, yet very few small firms seemed able to access this spend. At the time, I argued that if we could improve the process by which local firms accessed public-sector contracts, the impact would far outweigh the effect of the £60 million in grants then awarded annually by the Assembly Government.

In 2008, I argued that the Assembly should ask every local body to provide a list of all the contracts they managed and to find imaginative ways of ensuring that local firms were given priority for the supply of goods and services, such as utilising a “food miles” or local sustainability clause in the marking criteria for contracts. In 2012, I suggested that the Welsh Government should promote targets for spending public budgets with local small firms, as is the case with the US Office of Government, which sets targets for every government department on the proportion of expenditure that will go to SMEs and requires the public sector to conduct a variety of procurements reserved exclusively for SMEs.

That is why I was particularly taken by one of the clearest economic promises in the Plaid Cymru manifesto, which was to “increase the level spent on procuring goods and services from Wales-based suppliers from the current 55% to at least 70% of total Welsh public procurement expenditure - creating upwards of 35,000 jobs”.

That is a striking commitment, as Welsh public bodies spend more than £8 billion annually on procurement, almost a third of total Welsh public expenditure. If that money is spent more intelligently, it could become one of the most powerful economic development tools available to any Welsh Government.

This is not because it requires a wholly new pot of money, but because it demands a more disciplined use of money already being spent. There is a difference between a manifesto promise and a delivery system, and turning that ambition into reality will require far more than goodwill, targets, or revised guidance for public bodies. It will require a fundamental change in how Wales buys, how contracts are designed, how suppliers are measured, how data is used, and how public spending is linked to the wider task of building Welsh business capacity.

A recent Amazon Business report on the future of procurement may not have been written with Wales in mind, but it should be read carefully by the new Welsh Government. Its central argument is that procurement is changing rapidly, as organisations are being asked to do more with less. Budgets are under pressure, supply chains are more fragile, and procurement teams are increasingly turning to managed spend, real-time data, supplier visibility, digital platforms and AI-powered analytics to gain better control over what they buy and from whom.

That is why the Amazon Business report is useful. Although it is written from the perspective of business procurement rather than public policy, the lessons are highly relevant. It shows that modern procurement is no longer just about securing the cheapest compliant bid but is about visibility, control, supplier resilience, data, process design and strategic outcomes. If Wales wants procurement to become an engine of economic development, it cannot be treated simply as a compliance function but has to become a strategic capability at the centre of government.

The jobs claim needs testing

Before looking at implementation, there is an important question about the job figures. On a procurement base of more than £8 billion, increasing Welsh supplier retention from 55% to 70% would shift around £1.2 billion of annual expenditure towards Wales-based firms, and generating 35,000 jobs from that would require roughly 29 jobs for every £1 million of additional retained spend.

That is not impossible in some sectors, but it is a demanding assumption across public procurement as a whole. Previous work on green investment has identified very high employment multipliers for specific interventions such as retrofitting, building renovation, active travel and reforestation. Those are precisely the kinds of interventions that create many jobs because they are labour-intensive, local and difficult to offshore.

But they are not necessarily a reasonable average for the whole procurement mix, which includes food, technology, agriculture, construction, professional services, transport, facilities management, digital support and general supplies. Some of these are labour-intensive, but others have supply chains that leak quickly outside Wales. This suggests that a more cautious estimate might be that an additional £1.2 billion retained in Wales could support somewhere between 12,000 and 24,000 gross jobs, with a central range of perhaps 15,000 to 20,000. Even that would be a major achievement, and 20,000 jobs would still represent a significant economic gain for Wales.

The problem is not ambition but precision, and it would be more credible to show how jobs are produced sector by sector rather than to attach one large number to procurement as a whole. Smarter procurement in retrofit, Welsh food purchasing, social housing, public building maintenance, digital services, active travel, timber, care, creative industries, and local supply chain development could together create a substantial employment impact.

But that impact will depend entirely on implementation, on which sectors benefit, and on how labour-intensive they are. It will also need to consider whether Welsh firms have the capacity to scale, how much of their own supply chain is genuinely Welsh, and whether public procurement is used to build capacity rather than simply redirect contracts.

Wales cannot buy local if it cannot see local

The first lesson from the Amazon Business report is visibility, and one of the most important lines in the report is not about AI, technology or online marketplaces but about knowing what is being spent and with whom. As one procurement director puts it, if organisations do not have visibility and transparency over what they are spending and who they are spending it with, they are “walking in blind”.

That applies directly to Wales. Before the new Welsh Government can credibly promise that more public money will be spent with Welsh firms, it needs to know how much is currently spent with Welsh firms, in which sectors, by which public bodies, through which frameworks, and at what level of the supply chain. It also needs to know which Welsh firms are losing out, not because they are uncompetitive, but because procurement systems are too complex, contracts are too large, payment terms are too slow, or opportunities are too difficult to find.

At present, the public debate often focuses on headline contracts, yet much of the opportunity lies in the less visible areas of spend, such as facilities management, maintenance, food, professional services, digital support, training, consultancy, transport, marketing, office supplies and construction sub-contracting. Indeed, thousands of smaller purchasing decisions are made across the public sector every week, and in the private sector, the Amazon report calls this non-production or indirect spend. In Welsh Government terms, it is the long tail of public expenditure, and whilst it may not attract political attention in the same way as major infrastructure contracts, collectively it is large, recurring and capable of supporting hundreds, if not thousands, of local businesses.

The first reform should therefore be a public procurement dashboard for Wales that tracks spend by geography, sector, contract size, supplier type, SME participation, payment performance and Welsh economic impact. This should not be a public relations exercise but a management tool used by ministers, permanent secretaries, local authorities, health boards, universities and other public bodies to understand where money is going and where leakage from the Welsh economy is occurring.

Managed spend must be managed for Welsh outcomes

Another strong theme in the Amazon report is the shift from unmanaged to managed spend. In business, this means bringing scattered, low-value and often poorly controlled purchasing into structured arrangements, enabling organisations to negotiate better prices, reduce duplication, improve compliance and gain better data.

There is a clear lesson here for the Welsh public sector, as too much procurement remains fragmented. Different public bodies buy similar goods from different suppliers on different terms, often without sufficient intelligence on price, quality, supplier performance or local economic impact. That fragmentation creates inefficiency for the public sector and confusion for businesses.

However, Wales has to be careful about how it interprets this lesson, as managed spend should not simply mean centralising everything into large frameworks that only national or multinational suppliers can realistically access. That would reduce administrative complexity for the government while making it harder for Welsh SMEs to compete. The real challenge is to manage spend intelligently, and that means identifying where aggregation makes sense and where disaggregation is essential. It may be sensible to aggregate demand for some standard goods and services where scale genuinely reduces cost, but in areas such as food supply, maintenance, construction trades, digital support, creative services, community care or professional advice, smaller lots may deliver better value by enabling Welsh firms to compete.

The objective should not be centralisation for its own sake but should be disciplined procurement design, and every major contract should be tested against a simple question:

Does the way this contract is structured increase or reduce the ability of Welsh firms to win work?

That question should be mandatory before procurement begins, not asked after the contract has already been designed to exclude most local suppliers.

Tendering must be simplified

The Amazon report also highlights the frustration many procurement teams face with traditional tendering, particularly for lower-value areas of spend, especially as tenders can be slow, time-consuming, difficult to compare and administratively heavy.

That is especially true for small businesses, and while a complex tender is an inconvenience for many large companies, for a small firm, it can be a barrier to entry. Many Welsh SMEs simply do not have the internal capacity to complete long procurement documents, navigate multiple portals, provide extensive compliance evidence or wait months for a decision. The result is that the system filters out precisely the businesses government claims it wants to support.

If the Welsh Government is serious about improving local procurement, it should introduce a proportionality rule across the public sector. The burden on suppliers should be proportionate to the value and risk of the contract, and a small local business should not be required to complete a process designed for a multinational infrastructure provider when bidding for a modest contract. There should also be greater use of standard documentation, common supplier registration, simplified pre-qualification, plain-English tender specifications and shorter decision times.

Those working in the public sector often underestimate the cost of bidding, and every unnecessary form, duplication and delay is effectively a tax on small-business participation. Procurement reform is therefore not only about where contracts are advertised but also about whether Welsh firms can realistically engage with the system once they find them.

Supplier consolidation must not become SME exclusion

Another important finding from the report is the growing use of supplier consolidation. In business, reducing the number of suppliers can strengthen negotiating power, simplify analysis, reduce the administrative burden and improve supplier relationships.

This makes sense, as no public body wants thousands of unmanaged suppliers, inconsistent pricing and unnecessary duplication. However, supplier consolidation in Wales carries a significant risk, and if handled badly, it will push more public spending towards larger external suppliers and away from Welsh SMEs.

This is a central tension in procurement policy. The finance director prioritises efficiency, the procurement team seeks fewer relationships to manage, and ministers want more Welsh businesses to win contracts. Unless these objectives are deliberately reconciled, efficiency will usually prevail, as it is easier to measure.

The answer is not to reject consolidation, but to design it differently. Supplier consolidation should focus on reducing unnecessary duplication while preserving market diversity. Public bodies should be encouraged to consolidate data, standards, contract management and payment systems, but not necessarily reduce the supplier base to a handful of large firms.

In some cases, the right model may be a prime contractor with enforceable requirements for Welsh SME sub-contracting. In others, it may be regional lots, dynamic purchasing systems, approved supplier pools or framework structures that allow smaller firms to participate without carrying the administrative burden of a full-scale tender each time.

The Welsh Government should also require transparent reporting on sub-contracting, as it is simply not good enough for a major supplier to win a Welsh public contract and make vague commitments about local supply chains. Public bodies should know which Welsh firms are receiving work, how much they are being paid, and whether payment terms are fair because if public money is to build Welsh capacity, the supply chain has to be visible beyond the first-tier contractor.

AI and data should support Welsh firms, not just cut costs

The Amazon report points to the growing role of AI-powered spend analytics, and businesses are using technology to identify patterns, compare suppliers, analyse invoices, monitor prices and predict future purchasing needs.

Wales should not fall behind this trend, and a modern public procurement system should be able to analyse expenditure in real time, identify categories where Welsh firms are underrepresented, detect repeated purchases that could be brought into better frameworks, compare prices across public bodies and flag opportunities where local suppliers could be developed.

For example, if several health boards, councils and colleges are buying similar services from outside Wales, that should trigger a market development question such as: is there no Welsh supplier capable of providing this service? If not, could one be supported to enter the market? If there are Welsh suppliers, why are they not winning? Is the issue price, quality, awareness, contract size, insurance requirements, accreditation or procurement design?

This is where procurement connects directly to economic development, and the purpose of data should not simply be to reduce costs but to identify gaps in the Welsh economy and use public demand to help fill them. That requires a much closer relationship between procurement officials, economic development teams, business support organisations and industry bodies. At present, these functions are too often separated. Whilst procurement buys what is needed today, economic development talks about the businesses Wales would like to have tomorrow. A serious government would bring those two functions together.

Wales needs its own public interest procurement marketplace

The Amazon report places significant emphasis on online marketplaces as a way to manage spend, improve flexibility and allow users to buy within controlled parameters. There are clear lessons here, particularly for low-value, high-volume purchasing where traditional tendering is too cumbersome, but the Welsh Government should not simply interpret this as a case for routing more public expenditure through large global platforms, as that would be the opposite of the stated objective.

If the aim is to increase spending with Welsh firms, the platform question has to be approached differently, and Wales needs a modern digital procurement marketplace that makes it easier for public bodies to find Welsh suppliers and for Welsh suppliers to sell to the public sector. This should not be a clunky directory that no one uses but should be integrated into procurement workflows, linked to verified supplier data, searchable by capability and geography, and capable of supporting quotations, mini-competitions, contract management, payment tracking and performance feedback.

The best version would not replace competition or compliance but would make both easier by enabling a school, council department, college, health board team or government unit to identify approved Welsh suppliers for relevant spend categories, while still ensuring transparency, value for money and proper governance. It would also help address one of the biggest frustrations for small firms, namely the sense that opportunities are technically public but practically invisible. A Welsh procurement marketplace should make demand visible before contracts are written, not only after the procurement process has begun.

Prompt payment is economic development

One of the simplest ways to make public procurement more SME-friendly is to pay suppliers quickly. Whilst late payment is an irritation for large firms, it can be existential for small firms.

If Welsh Government wants more Welsh SMEs to bid for public contracts, it has to recognise the cashflow realities of smaller businesses. Long payment terms, slow approval processes and delayed payments do not only discourage participation but shift working capital pressure from the public sector to private businesses that are often least able to absorb it.

Prompt payment should therefore be a core part of procurement reform, and public bodies should publish payment performance. Major contractors should be required to pay subcontractors promptly, and persistent late payment should affect future contract eligibility. There should also be mechanisms for smaller firms to raise concerns without fear of damaging future relationships.

Social value must become measurable economic value

Wales has rightly talked about social value, community benefit and the foundational economy, but the danger is that these concepts become vague enough to mean everything and therefore operationally mean very little.

If more public spending is to reach Welsh firms, social value criteria need to be sharper, more measurable and more closely linked to economic outcomes. That means tracking Welsh jobs, apprenticeships, local supply chains, fair work, decarbonisation, skills development, community reinvestment and business growth. It also means measuring what actually happens after the contract is awarded, as too often procurement systems place weight on promises made during the bidding process but devote insufficient attention to delivery. A bidder can write an impressive social value statement and then underdeliver with limited consequences. That has to change, and social value should be contractual, monitored and enforceable, not a nice-to-have paragraph in a tender response.

Capacity inside government matters

Perhaps the most uncomfortable lesson is that better procurement requires better procurement capability. It is easy for politicians to announce a new approach but much harder to change the behaviour of hundreds of buyers across government, local authorities, health boards, education institutions and public agencies.

The Amazon report shows procurement teams under pressure to do more with fewer resources, and the same is true across the public sector. If Wales wants procurement to deliver economic development, net zero, social value, resilience, SME participation and value for money, then procurement teams need the tools, training, data and authority to do that work.

This may require a central procurement intelligence unit within Welsh Government. It should not control every purchasing decision, but should set standards, analyse spend, support public bodies, identify opportunities for Welsh suppliers, monitor outcomes and spread best practice. It should work alongside, rather than above, local public bodies to combine local knowledge with national intelligence. Local buyers often understand their markets better than the central government, but the central government can see patterns, duplication, leakage and opportunities that individual bodies cannot. That combination is essential if procurement is to become an economic development tool rather than a compliance exercise.

The real test is implementation

Therefore, the promise to spend more public money with Welsh firms is politically attractive and economically sensible, but it will only be delivered through the detailed and often boring work of changing systems. That means knowing where public money currently goes, designing contracts that Welsh firms can bid for, simplifying tendering, using data intelligently, preventing supplier consolidation from excluding SMEs, creating digital routes to market, enforcing prompt payment and measuring social value properly. Above all, it means treating procurement as a core economic development function rather than a back-office compliance process.

There is a wider point here which I have made so many times previously, which is that Wales does not lack ambition but, too often, lacks discipline in execution. Procurement is a perfect example, and the policy intent has existed for years, but the operating model has not been strong enough to deliver change at scale. If the new Welsh Government wants to be judged differently, it should start by making public procurement one of its first major delivery tests.

Every year, public bodies in Wales spend billions of pounds, and the question is whether that spending simply buys goods and services or whether it also builds Welsh businesses, strengthens local economies and creates the capacity Wales will need in the future. That is the real opportunity, as public procurement should not be about paying a little more to be local, nor about protecting firms from competition. It should be about using the state’s purchasing power intelligently to create more competitive Welsh businesses.

And if ministers can get that right, the promise to spend more with Welsh firms could become more than a line in a manifesto. It could become one of the most important economic reforms of the next Welsh Government.

The prize for Wales - Start, Scale, Strengthen

Wales has a start-up problem, a scale-up problem and a productivity problem. Here is how we begin to fix all three quickly.

Every few weeks, another statistic lands, confirming what most people working in the Welsh economy already sense: that something in the engine room is not firing as it should. Productivity sits stubbornly at the bottom of the UK league table, the latest innovation survey puts Welsh businesses last among the four nations, and our share of business research and development is a fraction of what our population would justify. These headlines are real, but they are symptoms rather than causes. If we want to understand why the Welsh economy underperforms and, more importantly, what to do about it, we have to look past the aggregate numbers and at the businesses themselves.

In particular, we have to look at three groups of firms whose health determines almost everything else. The start-ups that should be replenishing the economy with new ideas and new competition, the scale-ups that should be turning a handful of those young firms into companies of real consequence, and the mid-sized firms that should be the productive, exporting backbone of the whole economy. When you line up the evidence for these three groups, a remarkably consistent picture emerges: Wales creates too few new businesses, too few of them grow, and the established ones are not productive enough, with each weakness feeding the next.

The good news is that none of this is set in stone, and much of it could be changed faster than many responsible for Welsh economic policy assume, as the designs exist. The evidence is clear, but what has been missing is focus.

The start-up problem: too few, and falling

It’s always best to start with the foundation, because everything else is built on it. A healthy economy is constantly renewing itself with new firms forming, testing ideas, competing, and occasionally growing into something larger. Unfortunately, on this most basic measure, Wales is running short.

Wales has around 315 active businesses for every 10,000 people, whereas the figure for the UK as a whole is 413. That gap, which equates to roughly a quarter fewer firms per head, is not a rounding error. If Wales simply matched the UK rate, it would have something in the order of 31,000 additional businesses, and that is the scale of the missing enterprise base, and it shapes everything downstream: fewer firms means fewer that can innovate, fewer that can export, and fewer that can grow into the scale-ups and mid-sized companies we so badly need.

It would be one thing if this gap were slowly closing, but it is not; Wales’s business birth rate in 2024 was 10.1 per cent, compared with 11.1 per cent for the UK. More worrying is the trajectory - and new business formation across the UK surged during the pandemic and peaked in 2021, but since then it has fallen back everywhere.

But in Wales, the fall has been far steeper, with Welsh business births down more than 27 per cent from that 2021 peak, more than double the UK’s decline of around 13 per cent, and are now below even their 2020 level. The number of active enterprises in Wales has shrunk from a high of around 106,000 in 2021 to roughly 100,000 in 2024. We are not just starting fewer businesses than the rest of the UK but our business base is contracting while others stabilise.

The scale of what is at stake here is easy to underestimate and matching the UK’s rate of business formation would mean roughly 4,500 more new businesses created in Wales every year - close to half as many again as we manage now - and, sustained over time, would close most of the gap of around 31,000 “missing” businesses that separates our enterprise base from the UK norm.

This is the least discussed of the three problems because business formation rarely makes headlines, but it may be the most corrosive. An economy that is not generating new firms is slowly narrowing its own options.

What could be done quickly? More than people assume, because the levers here are not capital-intensive and do not require a single new piece of legislation. The first is to treat our universities and colleges as engines of new-firm formation rather than as bystanders. Wales educates tens of thousands of talented graduates every year, yet only a tiny fraction ever start a business; a concerted graduate and student enterprise programme - proper pre-incubation, founder stipends, access to first customers and first investors - could change that within a single academic cycle. The second is to build a visible, well-signposted pipeline from idea to investment: accelerators, structured investment-readiness support, and founder networks that connect first-time entrepreneurs with those a few years ahead. The third is to reach earlier still, into schools, so that starting a business is presented as a normal and attainable ambition rather than an exotic one.

None of this is expensive relative to the prize, and all of it can begin now.

The scale-up problem: too few grow, and too late

If formation is the foundation, scaling is where the economic value is actually created. Scale-ups - the small minority of firms growing rapidly in turnover or employment - generate a hugely disproportionate share of new jobs, exports and productivity gains. A country’s prosperity depends less on how many businesses it starts than on how many of those businesses grow and here Wales has both a genuine bright spot and a stubborn problem.

As someone who has been working with fast growing firms for over 27 years through the Wales Fast Growth 50 Index, I know that there are some incredible businesses in Wales. And the data shows that Welsh scale-up density has risen markedly, from around 38 firms per 100,000 people in 2022 to 51.5 in 2023, and Wales was among the parts of the UK that added the most scale-ups in absolute terms.

That is real progress and worth acknowledging, but the level still tells a sobering story, and at 51.5 per 100,000, Welsh scale-up density is roughly half London’s rate of about 104, below the UK average of around 64, and sits in the bottom third of UK areas.

The deeper issue is not how many scale-ups we have, but what kind, and how they are financed. Only 37 per cent of Welsh scale-ups operate in the high-value Industrial Strategy sectors, the lowest share of any UK nation or region, and well below London’s 52 per cent. In other words, even our fastest-growing firms are concentrated in lower-value activity, and they raise growth capital late: the median Welsh scaling firm does not raise equity until it is around five years old, against just two years in London and such late, thin funding is the enemy of ambition as firms that cannot raise when they need to either stall, sell early, or leave.

That funding problem is compounded by where the money sits. Equity investment in the UK is heavily concentrated in the Greater South East, with London alone accounting for 61 per cent of all UK equity investment in 2024 and what reaches Welsh firms is thin and shallow: deals get done, but they are small. A scale-up economy cannot be built on a shallow equity market.

Closing that gap would count twice over and matching the UK’s average scale-up density would give Wales around 2,050 high-growth firms rather than 1,630, roughly 420 more. Matching the UK’s sector mix would also lift the number of Welsh scale-ups in high-value Industrial Strategy sectors from about 600 today to around 860, some 260 more high-value, high-growth companies, with the shortfall greater still when measured against London.

So the scale-up challenge is really three challenges braided together: too few high-growth firms, too many in low-value sectors, and a growth-capital market that fails them precisely when they need it most. The quick responses follow directly from that diagnosis. The most urgent task is to rebuild the supply of growth capital in a way that attracts private money rather than substitutes for it: angel co-investment to deepen the domestic investor base, and venture co-investment alongside UK and international funds, so that public capital acts as a magnet rather than a crutch.

The international evidence on government-backed venture capital is unambiguous that this “crowd in, don’t crowd out” model works. Alongside the money, scale-ups need active relationship management - the “concierge” or account-management approach that the best ecosystems now use to spot high-growth firms early and fast-track them to the investors, customers and talent they need. And capital should never travel alone, as the firms that scale best are those backed with mentoring and operational support as well as money.

Get those three things moving, and you do not have to wait years to see scale-ups raising earlier, growing faster, and staying in Wales.

The mid-sized problem: enough firms, not enough power

The third group is the one Welsh policy most consistently overlooks: the mid-sized firms that sit between the small-business schemes and the attention lavished on large corporates and inward investors. These are the established companies - too big for start-up support, too home-grown to court like a multinational - that in every advanced economy form the productive, exporting backbone. They are the closest thing we have to Germany’s Mittelstand, and they are exactly the firms most able to raise productivity, deepen research and development, win international customers and create well-paid jobs at scale.

Here the data delivers a genuinely surprising and important message, and the problem is not, as some have claimed, that Wales has too few mid-sized firms. Indeed, according to the official business-structure data, mid-sized firms make up a similar proportion of enterprises and employment in Wales as they do across the UK. We have a normal number of them. The problem is that they are underpowered. A mid-sized firm in the UK generates around £197,000 of turnover per employee. In Wales the figure is about £138,000 or roughly 70 per cent of the UK level, or some £59,000 less per worker.

What makes this finding so significant is where the productivity gap sits and across the whole economy, Welsh turnover per employee runs at about 88 per cent of the UK average, and our large firms actually match their UK counterparts. It is the mid-sized tier, specifically, that loses the most ground meaning that the Welsh productivity problem is not evenly spread but is concentrated in the neglected middle.

And because it is concentrated, it is addressable and if Welsh mid-sized firms simply performed at the UK average for turnover per employee, they would generate in the order of £9 billion of additional turnover from their existing workforce alone — roughly £4 million per firm, equivalent to around £3 billion of additional gross value added. That is a prize measured not in vague aspiration but in hard output, and it sits precisely where a focused effort could reach it.

The quick actions here are well understood because the gap is one of capability and capital, not numbers. Mid-sized firms respond to management and leadership development and structured executive education for senior teams, peer-learning networks among non-competing firms, an annual leaders’ forum, and high-quality mentoring, which is the sort of practical work that turns a solid, profitable business into an internationally competitive one. They need patient growth and development capital tailored to expansion, new markets and productivity-raising investment, which the current finance landscape does not provide in any coherent form. And they need real internationalisation support, because exporting is one of the strongest predictors of productivity. A deliberate, joined-up programme for this group (because the single offer that does not currently exist anywhere in Wales) could begin to move the productivity needle faster than almost any other intervention, simply because the firms are already there and already trading.

The common thread: finance

Step back from the three groups, and one constraint runs through all of them. Start-ups need seed and angel finance to form and survive; scale-ups need growth and follow-on equity to keep expanding here rather than selling early or moving away; and mid-sized firms need patient growth capital that no Welsh institution currently provides in any coherent form.

It is one finance failure expressed three ways and the numbers are stark. Welsh businesses attracted just £113 million of equity investment in 2024 or around 1 per cent of the UK’s £10.8 billion, in a nation with some 4.6 per cent of the population. Per head, that is among the lowest of any UK nation or region. London alone accounted for 61 per cent of the total. Welsh firms are not, in fact, short of deals, as deal numbers held up in 2024, but the deals are small, meaning the capital reaching Welsh companies is shallow and thins out precisely when firms need to scale. If Wales simply attracted equity in line with its population, that would mean around £500 million a year rather than £113 million, close to £400 million more, roughly four times today’s level.

The answer is not simply more public money; it is using what already exists far better. Wales allegedly has the raw materials: the Development Bank of Wales, the Investment Fund for Wales, the British Business Bank’s programmes, regional and angel funds, yet they too often operate as separate, sub-scale pools that compete rather than compound. Coordinated into a single growth-capital capability under a new Development Agency for Wales that crowds in private and institutional money rather than replacing is the type of model the OECD finds works best internationally, and paired with management as well as money, that same effort could begin to close the gap quickly, without waiting for any wider reorganisation.

How we change things quickly

It is tempting to treat these as three separate problems, each requiring a separate strategy. That would be a mistake, as they are one problem seen at three stages of the same journey: a business base that is too thin at the bottom, too narrow in the middle, and too under-powered at the top. A firm that never starts cannot scale, a scale-up starved of capital never becomes a strong mid-sized employer and a mid-sized firm that cannot raise its game never becomes the anchor that spins out the next generation of start-ups. Fix one stage in isolation, and the others will leak the gains away.

That is why the response has to be coherent namely a single pathway that takes a firm from formation through to international scale, rather than a patchwork of disconnected schemes that hand businesses from one body to another. It is also why I keep returning, in this work, to the idea of a focused Welsh institution built to own that pathway: an innovation and growth agency, modelled on the kind of body Finland created when it merged its innovation and export agencies into a single organisation that backs a firm from product development all the way to global markets. Wales needs that focus, and it needs it to carry real financial firepower of its own rather than simply to advise and convene.

But here is the point that matters most for anyone impatient for change: we do not have to wait for the full institution to be built before we start. Almost everything described above can be launched as a programme NOW. The blueprints already exist - staged investment funds running from proof-of-concept through to growth capital, management-capability programmes for mid-sized firms, cluster and sector funds - designed in detail for a Welsh region and ready to be refreshed for current conditions and applied nationally. None of the early flagship interventions requires primary legislation and a national proof-of-concept fund, a university spin-out pathway, an angel co-investment mechanism, an export accelerator, a mid-sized management programme: each could be stood up inside a year, and each would start producing results long before any wider reorganisation was complete.

The unifying principle across all of it is simple, and it is one the evidence keeps confirming: money works best when it travels with management, and support works best when it follows the firm rather than the scheme. Capital without capability is wasted; capability without capital is frustrated; and both, delivered without anyone taking responsibility for the firm’s whole journey, are dissipated.

The prize

It is easy, looking at the league tables, to conclude that Welsh underperformance is structural and slow to shift. The firm-level data tells a more hopeful story. The start-up gap is real, but the levers to close it are cheap and within our gift. The scale-up base is already growing, and what it most needs - earlier, better-connected growth capital - is exactly the kind of intervention that can be designed and deployed quickly. And the mid-sized productivity gap, far from being diffuse and intractable, turns out to be concentrated in a group of firms that already exist, already employ people across Wales, already trade and is a £3 billion prize hiding in plain sight.

Wales does not need to wait for a grand reorganisation or for permission to begin, as it needs to start more firms, help more of them scale, and make the ones it already has more productive, and it needs to treat those three things as one task, not three. We know what to do, we know how to do it, and the only question is whether we choose to move at the speed the situation demands.

What Wales can learn from Finland’s growth machine

When we have talked about the Basque Country, the comparison has been about institutional confidence and industrial patience, namely what happens when regional government, industry, finance, technology centres and civic leadership pull in the same direction over decades rather than electoral cycles.

That remains a useful lesson for Wales, but Finland offers a different one, and it is not about culture or national identity or the virtues of being a small country. It is about the public machinery that sits between ambition and delivery, between an innovation strategy and internationally competitive firms, between research capability and private investment, and between a country’s economic story and the practical support that helps businesses sell, scale and succeed abroad.

I have been fortunate to have worked in Finland, examining innovation and entrepreneurship for over thirty years and studying the mechanisms that have made this small nation one of the most competitive in the world. I may therefore be biased, but the point of looking at it is not to admire another country from a distance, but to ask whether we have the machinery to turn our own ambitions into measurable outcomes.

The machinery between strategy and growth

Business Finland is the country’s national agency for innovation funding, internationalisation, investment promotion, tourism and talent attraction. It is not merely a funder but is a joined-up economic development platform whose stated purpose is to create prosperity by promoting renewal, sustainable growth and the diffusion of knowledge, and whose goals for 2030 centre on more productivity-enhancing private R&D, higher-ambition innovation, and a sharper focus on where Finland can compete globally.

This matters because Wales’s recurring weakness has never been a shortage of capable firms, good universities or ambitious entrepreneurs. The problem is that these assets sit in separate compartments, connected by aspiration rather than by a system that relentlessly turns ideas into commercial growth. Business Finland brings together functions that in Wales are fragmented across departments, agencies and programmes by linking innovation funding to export support, foreign investment to ecosystem development, and talent attraction to the wider competitiveness agenda.

The lesson is not that we should import another country’s agency wholesale as that would be naïve given Finland’s different powers, fiscal environment and innovation history. The deeper point is that Finland has built an operating system for economic development, while Wales still relies too heavily on individual initiatives, short-term programmes and institutional goodwill – in other words, an approach that simply has not worked.

What Finland built

The reason Business Finland matters is not that it looks good on paper, but that it has helped reshape an economy over decades. Before it existed in its current form, Tekes - the funding agency for technology and innovation - built the country’s business R&D capability. Then, in 2018, Tekes was merged with Finpro, the body responsible for internationalisation and inward investment. That merger itself tells us something important namely that in the Finnish approach, innovation and international growth are not separate policy worlds.

Take the games industry, where Rovio and Supercell did not emerge because a government department designed them on a whiteboard, but from an environment in which technical talent, digital culture, start-up finance, international ambition, and public innovation support were increasingly connected. The lesson is not that public agencies manufacture unicorns, as they cannot, but that well-designed ones improve the odds by reducing risk, connecting talent, supporting R&D and helping firms reach international markets earlier.

The same discipline is evident in health technology, clean technology, digitalisation, and defence-related sectors, where Finland backs firms because it sees a viable path to global competitiveness. The significance lies not in the size of the grants but in the discipline behind them, where public support is used to build international advantage rather than spread money thinly across worthy causes. That is the difference between administering innovation funds and using them as an economic development tool.

The three priorities Wales should take seriously

Business Finland’s strategy towards 2030 rests on three priorities that expose three Welsh weaknesses: mobilising private capital, raising the ambition of R&D, and concentrating resources where the country can genuinely compete.

1. The first is private capital. Wales has never had enough risk finance flowing into its most ambitious growth businesses, and the recent contraction in equity activity has been among the sharpest anywhere in the UK. I say this not as an outside observer, but as someone who, more than a decade ago, led the review of access to finance for Welsh SMEs and chaired the group that created the Development Bank of Wales. The central lesson of that work has still not been absorbed, as the task was never simply to lend or invest more public money, but to use public money to draw private capital in behind it, to support firms through each stage of growth, and to stop businesses with genuine potential from leaving Wales because the funding, advice, or networks they need are stronger elsewhere. If a public finance institution becomes too heavily weighted towards lower-risk middle-market debt, and too cautious about the high-risk equity that attracts co-investors, it cannot fully perform that catalytic role, however much money passes through it.

2. The second is ambition in R&D. Wales has talked about innovation for years, but too much of that talk has been broad, worthy and insufficiently commercial. Innovation has been defined so widely that almost everything counts, which means too little is prioritised, and business investment in research sits well below the level our share of the UK economy would imply. Business Finland’s strategy is more demanding and is explicitly concerned with raising the level of R&D ambition and supporting breakthroughs that can compete internationally which is a very different approach to what is currently happening in Wales.

3. The third is focus, as small countries cannot do everything, and so they must choose where they have the greatest capability, credibility and international potential. Wales has long struggled with this, as every region, sector and institution understandably wants its share. But if everything is a priority, nothing is, and the real discipline lies in making choices, not in expanding the list. Wales should identify three or four areas where industrial strength, research excellence and market demand clearly align, and resist adding more until that focus is lost. Currently, the strongest candidates are compound semiconductors, cyber and fintech, clean and renewable energy, and health innovation, and once the list grows beyond a handful, the strategy has already begun to fail.

It is worth being precise here, because Finland actually teaches two separate things, and confusing them would be a mistake. The first is focus, namely, narrowing our sectoral bets, and the second is integration, which is joining up the fragmented machinery of support. These are not the same, and they can pull against each other, resulting in a large integrated agency becoming its own version of “everything is a priority”. The way to hold both is to be wide in function but ruthlessly selective in priority, integrating the plumbing - finance, R&D support, export help, ecosystem building and investor introductions - so no firm has to assemble it alone, while regularly reviewing, ending or reshaping programmes that no longer serve the central mission.

From fragmented support to complete pathways

Business Finland’s individual functions are not revolutionary, and most exist somewhere in many countries. What is distinctive is the integration, and Finland understands that growth comes not from a single intervention but from the interaction of many. Our weakness is not that nothing exists, but that too much exists separately. A firm with real potential may have to navigate Business Wales, the Development Bank of Wales, local authorities, university expertise, Innovate UK schemes, export advice, regional structures, and private investors, with no single entity owning the full journey from innovation to international scale. That is not a system but a complex and sometimes unintelligible map that businesses have to decode for themselves.

The relevance of Business Finland is also that it continues to change to serve businesses and its latest programme reforms are designed to make its activities more focused, more customer-oriented and more closely aligned with strategically selected growth areas. Existing programmes are being ended or reshaped, while new activities will be built around both Business Finland-led and partner-led models, with funding, attraction, growth and internationalisation services brought together into clearer service pathways. That is precisely the kind of discipline Wales lacks - not a permanent accumulation of programmes, but a willingness to stop, refocus and redesign support around where the greatest economic impact can be achieved. When was the last time we saw Business Wales do that?

Wales talks endlessly about partnership, but partnership without machinery is just goodwill. For example, a Welsh firm developing new technology should not have to work it out alone and should have one route in, one growth lead coordinating its support, and access through that single door to R&D funding, university expertise, investor readiness, introductions to private capital, export help, and the relevant clusters. Success would be measured not by whether the firm received advice or completed an application, but by whether it raised investment, entered new markets, lifted productivity, created high-value jobs and stayed rooted in Wales while competing abroad.

And fragmentation is not an administrative footnote to be dismissed, as it wastes time, rewards those who can navigate the system over those with the greatest potential and makes it harder for government to see which firms can scale and what they need next.

What a Welsh “Business Finland” should do

A Welsh version need not look exactly like the Finnish one, but it would start from the same principle: Wales needs a single national growth platform for innovation-led firms, with five core responsibilities.

1. First, it should lead innovation and R&D support for business, with a far stronger emphasis on commercialisation, private-sector leverage and global market potential. This should include grants, challenge funds, collaborative R&D, proof-of-concept funding and spin-out support, but with much clearer expectations about routes to market and private investment.

2. Second, it should integrate export and internationalisation into the same system. Too many firms are helped to innovate without being pushed hard enough towards international customers, and for an economy whose domestic market is too small to sustain the growth we need, that is a major weakness. A serious Welsh agency must be as focused on global sales as on research.

3. Third, it should take ownership of growth equity and build a proper funding escalator. I say this as the person who came up with the concept of the Development Bank of Wales, and whose task and finish group specified a genuine venture capability, staffed by experienced investors willing to back high-risk, high-potential firms, particularly in technology, that drive an economy. In practice, that venture capability has never been developed at the scale or with the specialist investment culture originally envisaged, and equity has remained a minor part of what the bank does, shaped by a culture that appears closer to cautious middle-market banking than to the venture-minded posture the original brief demanded. Therefore, the Development Bank’s growth-equity function needs to be moved into the national platform, so that every equity decision is made by the body that already understands the firm’s R&D pipeline, export readiness, and ecosystem. The bank keeps its debt and SME lending but growth equity belongs under a single owner, not scattered across competing funds. Crucially, it should be built to crowd in private capital, ensuring public co-investment alongside angels, venture capital, and growth funds, tied to investor readiness, with the agency acting as a broker, pulling specialist funds towards Welsh firms. Indeed, the measure that should matter is not public money deployed, but private capital leveraged per public pound. I will clearly have more to say about the Development Bank in further articles this summer.

4. Fourth, it should own ecosystem development, the most important yet least understood role as ecosystems do not appear because a government declares a cluster. They need anchor firms, research capability, supply chains, skilled people, investors, customers, and repeated interaction; a Welsh agency should deliberately build these and measure progress, rather than funding isolated projects. Despite the scale of investment through City and Growth Deals, Wales still lacks the coherent regional innovation ecosystems that such interventions should have helped to build. Given their importance to the future of the Welsh economy, this has to be addressed urgently through this new body.

5. Fifth, it should bring talent attraction, inward investment and place promotion into the same story. Wales cannot build a high-productivity economy without attracting people, companies and capital from outside. Finland does not separate talent from competitiveness, and nor should we. If we want graduates to stay, entrepreneurs to relocate and investors to take Wales seriously, then talent, investment and innovation policy have to be part of one offer. That is also why Business Finland houses tourism within its remit: the national brand, visitor economy, investment proposition and talent agenda are linked, and Wales should treat its most visible international asset in the same way.

This requires a change in mindset as much as structure, as Wales has always been more comfortable talking about support than performance. A Business Finland-style model would be judged not by firms advised, grants awarded or events held, but by private investment leveraged, exports grown, R&D intensity raised, scale-ups created, productivity improved, spin-outs formed and high-value jobs generated. That may be uncomfortable for some in Wales’s economic development agencies but it is critical for the future success of the economy.

The real test is not whether Wales creates a new organisation, but whether it creates a new operating discipline. If existing institutions can be aligned around a single pathway for high-potential firms, then reform may be enough but if they cannot, then a new body becomes unavoidable. What matters is not the name above the door, but whether ambitious Welsh firms experience the system as one coherent route to investment, innovation and international growth.

Managing the risks

It also requires political patience, as a chronic weakness of Welsh policy is the urge to rebrand and reorganise before initiatives have had time to deliver. No agency can guarantee growth, and innovation bodies can become bureaucratic, favour the same firms or overstate their impact. Finland is not immune to any of this, but its underlying idea, namely a coordinated national platform for innovation and international growth, has a consistency Wales should envy.

If Wales moved this way, governance would matter enormously, and a new body could not be another unit inside government with a fresh brand and a new website. It would need a clear remit, an independent board with real business, investor and commercialisation expertise, published outcome targets, and the freedom to take long-term decisions. This is also why the focus discipline matters so much: a body of this breadth will avoid becoming unwieldy only if its sectoral priorities stay narrow and its performance is measured ruthlessly. It should concentrate above all on the firms that matter most to future productivity, including scale-ups too advanced for generic start-up support but not yet able to navigate international markets and major investment rounds alone, and university spinouts whose research strength Wales has never consistently converted into high-growth companies.

A Welsh growth system with Finnish coherence

None of this means pretending to be Finland, a sovereign state with a stronger R&D tradition, globally recognised technology firms and a national target of raising R&D to 4% of GDP by 2030. Wales does not have the same powers or resources, but it can choose to organise itself better to integrate finance, innovation, exports and inward investment, to build a real bridge between universities and firms; to measure outcomes rather than activity, and to back ambitious firms rather than administer programmes. That would require ministers to be honest about the gaps, officials to work across departmental boundaries, universities to treat commercialisation as a national responsibility rather than a side activity, and the private sector to be treated not as a consultee but as the central customer of innovation policy.

The Basque Country teaches Wales about long-term industrial discipline, but Finland teaches it about the actual machinery of innovation-led growth. Together, they point to the same conclusion: that Wales probably has many of the ingredients it needs to succeed but has not built the system that connects them with enough urgency, ambition, or commercial focus.

Perhaps the most important lesson lies not only in Business Finland’s structures but also in the values that underpin them and its strategy is built around four simple ideas: working with passion, acting all together, being willing to think big, and doing so with sisu - the Finnish word that captures determination, resilience and the refusal to give up when circumstances are difficult.

Wales could certainly do worse than start there, because until we build an economic development system with more ambition, more alignment, more courage, and more persistence, we will keep admiring other small nations for doing what we have too often promised but failed to deliver: turning national potential into economic performance.

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Wales is failing at innovation

According to the latest UK Innovation Survey published last week, the proportion of Welsh businesses classified as innovation-active fell by 15.8 percentage points between 2018 and 2024, a decline nearly half the size of the UK average. That single statistic should stop Welsh policymakers in their tracks, and it means that the gap between Wales and the rest of the UK on the measure most directly connected to productivity is not just persisting but widening fast. Certainly, it gives Adam Price, the new Minister for Enterprise, Connectivity and Transport, a precise and uncomfortable picture of the scale of the challenge he has inherited.

In the 2018-20 survey period, 43.5 per cent of Welsh businesses were classified as innovation-active, compared with 44.9 per cent in the UK. In other words, Wales was slightly behind, but broadly in the same place. By 2022–24, however, the picture had changed significantly: across the UK, the proportion of innovation-active businesses had fallen to 34 per cent, but in Wales it had fallen to just 27.7 per cent.

That is not a marginal difference, as it means that Wales has moved from near parity with the UK average to a clear and worrying gap. In 2018-20, Wales was only 1.4 percentage points behind the UK, but by 2022–24, it was 6.3 percentage points behind. In practical terms, for every 1,000 businesses, the UK average would suggest around 340 innovation-active firms, whilst in Wales, the equivalent figure is around 63 fewer innovation-active businesses per 1,000 firms than the UK average. For a country that needs more productive firms, stronger exports, better-paid jobs and a broader base of high-value activity, that is a serious warning sign.

It is worth noting that the previous Welsh Government’s own economic strategy commits explicitly to closing the productivity gap with the rest of the UK, and ministers had cited innovation as central to that ambition. Yet the UK Innovation Survey shows that over the very period in which that commitment has been made, Wales’s innovation performance has not held steady or improved but it has deteriorated sharply and at a faster rate than anywhere else in the UK.

The Welsh decline has been sharper than the UK decline

Of course, the UK’s innovation performance is itself not strong, and this reflects a period in which many firms were hit by the pandemic, supply chain disruption, inflation, higher energy costs, rising interest rates, and general uncertainty. But Wales has not simply followed the UK downwards but has fallen faster, with a decline of 15.8 percentage points between 2018-20 and 2022-24, equivalent to a fall around 45 per cent larger than the UK average.

This matters because innovation and productivity are closely linked, and productivity improves when firms use technology more effectively, introduce better processes, develop new products, improve management systems, use data more effectively, adopt automation, invest in skills, redesign services, and sell into higher-value markets. These are not abstract concepts but are the practical routes through which businesses become more competitive and generate more value from each hour worked.

If the proportion of firms doing those things is falling faster in Wales than elsewhere, then the productivity gap is unlikely to close, and it may even become harder to close over time because innovation gaps compound. A business that delays investment in new systems, equipment, training, or products does not simply lose one year but risks falling further behind competitors that are continually improving.

Wales is now at the bottom of the UK nations

England’s innovation-active rate in 2022-24 was 34.8 per cent, while Northern Ireland stood at 30.3 per cent. Scotland was at 29.4 per cent, and Wales was last at 27.7 per cent. The comparison with Northern Ireland is particularly striking, as Wales was ahead by 5.1 percentage points. So Wales has not only slipped below the UK average; it has also been overtaken by another devolved nation that has faced deep structural economic challenges.

The English regional comparison is no more comfortable, as Wales is below every English region in the latest survey. North West England, often a more relevant comparator than London or South East England, recorded an innovation-active rate of 30.4 per cent, the South West was at 32.3 per cent, and London was at 33.8 per cent. Even the North East of England - the region with the lowest GVA per head in the UK and often regarded as the closest English comparator to Wales in terms of structural economic challenge - recorded an innovation-active rate of 36.6 per cent, nearly nine percentage points ahead of Wales. That should trouble Welsh policymakers because it suggests that the problem is not simply one of being outside the overheated economy of London and South East England, and Wales lags behind every region.

A low-innovation economy cannot become a high-productivity economy

The reason this matters is that productivity is not created by aspiration but by businesses adopting better technology, investing in people, moving into higher-value activities, and developing products and services that customers are willing to pay more for. Innovation is one of the main ways this happens, and the UK Innovation Survey shows that innovation-active firms are more likely to invest in the tools and capabilities that drive productivity. But the data also shows that several of those activities have weakened across the UK, with the proportion of businesses investing in computer software, computer hardware, internal research and development, and design as part of innovation activity falling between 2018-20 and 2022–24.

These figures matter for Wales because they describe the very activities that many Welsh firms need to undertake to become more productive. Software, hardware, R&D, equipment, training and design are not optional extras in a modern economy but are the infrastructure of firm-level improvement. If the UK as a whole is seeing a decline in innovation investment, and Wales is seeing an even greater decline in innovation-active firms, then the Welsh economy faces a double problem namely a weaker national environment and a weaker Welsh business response within it.

The issue is not only high-tech innovation

One of the mistakes in recent Welsh economic policy has been to treat innovation too narrowly. When innovation is discussed, attention often quickly turns to universities, research commercialisation, advanced manufacturing, and sectors such as compound semiconductors, life sciences or clean energy. These are important, and Wales has genuine strengths in some of them but if innovation policy is limited to these areas, it will never reach enough firms to close the productivity gap.

The survey data show why and only 18.9 per cent of UK businesses were product innovators. However, broader innovation encompasses much more than new products, including process improvements, technology adoption, organisational change, and investment in systems that improve performance. For Wales, this broader definition is critical, and many Welsh SMEs will not employ scientists, file patents, or create intellectual property in the narrow sense. Yet they can still innovate by adopting AI tools, introducing CRM systems, improving production processes, implementing better project management systems, strengthening digital marketing, and developing new services.

This is where productivity will be won or lost for much of the Welsh economy. Whilst it may be sexy to focus on laboratories or university spinouts, there also needs to be an equal, if not greater, effort to support the thousands of firms that need to become incrementally better, more digital, more efficient and more ambitious.

Technology adoption is now central to the productivity challenge

The survey makes clear the link between innovation and technology adoption. Among businesses using production-enhancing technologies in 2024, broader innovators were far more likely than non-broader innovators to use artificial intelligence, cybersecurity tools, robotics and advanced digital connectivity. Broader innovators in management technologies were much more likely to use CRM software, ERP systems, HR management software, project management software and electronic invoicing. This is highly relevant to Wales, where productivity is often lost in firms’ basic systems, such as weak customer management, manual processes, slow invoicing, inconsistent project management and limited use of digital tools.

If Welsh firms are less innovative, they are also less likely to make the technological and managerial changes that raise output per worker. That is why innovation policy has to become much more practical. It has to help firms adopt the tools that make them better businesses.

The structure of the Welsh economy makes the challenge harder

The survey also confirms that larger firms are more likely to innovate, and in 2022-24, 47 per cent of large UK businesses were innovation active, compared with 34 per cent of SMEs. Large firms were also more likely to be product innovators, broader innovators and innovation investors. This creates a particular problem for Wales because the Welsh economy is dominated by small and medium-sized businesses and has fewer large private-sector headquarters than many stronger-performing regions. Larger firms often play an important role in innovation ecosystems as they invest in R&D, pull innovation through supply chains, train people, provide demand for specialist suppliers, adopt new technologies at scale and expose smaller firms to more demanding standards.

Of course, Wales has important anchor firms in sectors such as aerospace, automotive, energy, steel, semiconductors, food and advanced manufacturing, but it does not have enough of them, and in many local economies, the business base is made up of small firms operating in relatively local markets with limited capacity to invest.

That does not mean Welsh SMEs lack potential, but it does mean the support system around them has to be stronger. A small firm with ten or twenty employees may recognise the need to improve its systems, adopt AI, redesign its processes or develop a new product, but it may not have the time, capital or internal expertise to do so. The owner-manager is often also the finance, sales and operations directors, so innovation is not ignored because it is unimportant but postponed because the daily pressures of running the business take priority.

Finance is not a side issue

The survey data show that cost and access to finance remain major barriers to innovation, and among broader innovators in 2022–24, 21.6 per cent identified the cost of finance as a barrier, 20.3 per cent identified the availability of finance, and 19.6 per cent said the direct cost of innovation was too high. These numbers are important because they show that innovation is constrained by practical realities, and while businesses may have ideas, they need money to act on them. In Wales, where the private investment market is thinner and many firms are smaller, these barriers are likely to be even more significant, and the question which the Minister has promised to answer is whether the Development Bank of Wales has helped to address this gap. Regardless of its role, Wales still needs a deeper and broader innovation finance ecosystem, which means more angel investment, more seed funding, more patient growth capital, more sector-specific finance, more innovation loans, and more support that links capital to capability.

Too often, finance is treated separately from business improvement but for many firms, the question is not simply whether they can borrow or raise money. It is whether they have a credible innovation plan that makes finance investable, and Wales needs more support that helps businesses identify the opportunity, design the project, understand the productivity gain, access expertise and then secure the right form of finance.

Universities are not yet connected enough to everyday business innovation

Wales has long placed universities at the centre of its innovation ambitions, which makes sense in one respect, as universities generate knowledge, attract talent, conduct research and support spinouts. However, the survey data should make us pause before assuming that universities are currently functioning as a major innovation engine for the average business.

Across the UK, businesses that cooperate on innovation are much more likely to work with suppliers, customers, other businesses in their group, competitors and private-sector clients than with universities. Even more tellingly, only 4.3 per cent of broader innovators rated universities or higher education institutions as highly important sources of information for innovation in 2022-24. This does not mean universities are irrelevant, but it does mean that, for most firms, they are not the first place they turn when they need to innovate. For Wales, that is a major policy issue, and if the country has a relatively weak private innovation base, then universities should be playing an even more important role in helping firms access knowledge, adopt technology, develop products and improve processes, but that will not happen if engagement remains fragmented, difficult to navigate or too dependent on short-term funded projects.

The resource base available to Welsh universities compounds this problem. Data from UKRI’s geographical distribution report for 2023-24 shows that Wales received just 2% of total UKRI funding, with investment per person of £53 in 2023-24 compared to a UK average of £134 and £101 in Scotland. As a share of local economic output, Wales received UKRI investment equivalent to just 0.25% of GVA, the joint-lowest of any UK nation, compared with 0.48% in England. It should be noted that UKRI does not directly fund devolved higher education institutions in the same way as in England, and Welsh Government funding through Medr sits alongside these figures, so direct comparison requires care. But even accounting for that, Welsh universities are competing for national research and innovation resources from a structurally weaker position than their counterparts elsewhere in the UK, and that has consequences for the depth of knowledge, capability and capacity they can bring to bear in supporting business innovation across the Welsh economy.

Notably, this is not primarily a question of application quality, as Wales’s UKRI competitive award rate of 23% in 2023-24 was broadly in line with most English regions, suggesting that Welsh institutions are not being disproportionately rejected on merit. The deeper problem is one of appetite and capacity to engage, and Welsh universities and firms are simply applying for less, which means the pipeline of funded research, knowledge transfer and innovation activity that could flow into the business base is narrower than it should be, and narrower than Wales’s economic needs require.

Therefore, the challenge is not simply to commercialise university intellectual property but to make university expertise useful to thousands of Welsh businesses that need help with productivity, digital adoption, design, management, sustainability, automation, data and market development. That requires a different model of university-business collaboration that is simpler, faster, more business-facing, and less shaped by institutional structures.

Innovation and exports should be treated as one agenda

Another important finding from the survey is the relationship between innovation and exporting. In 2024, 28.3 per cent of broader innovators exported, compared with only 9.2 per cent of non-broader innovators. This matters enormously for Wales, as a small economy cannot become significantly more prosperous by selling mainly to itself, and Wales needs more firms selling beyond Wales, beyond the UK and into higher-value markets.

However, exporting requires more than encouragement; firms need products, services, systems, and capabilities that enable them to compete, and innovation helps create those capabilities. A firm that develops a better product, adopts stronger management systems, improves quality, uses data, invests in design, and increases production efficiency is more likely to export. In contrast, a firm that does none of those things is more likely to remain dependent on local markets, and this is why innovation policy and export policy should not sit in separate boxes, something which Finland addressed by creating Business Finland, a single national agency that combines innovation funding, export promotion and internationalisation support under one roof, rather than dividing them across separate policy silos.

The danger is a low-innovation equilibrium

The greatest risk is that Wales becomes trapped in a low-innovation equilibrium in which many firms operate on tight margins, have limited management capacity, and invest little. Because they do not invest, productivity remains low; because productivity is low, wages remain constrained; because wages are constrained, local demand remains weaker; because demand is weaker, firms remain cautious; and because firms are cautious, innovation is delayed again.

The latest data suggest that Wales may be drifting further into this pattern, and the fall in the proportion of innovation-active firms between 2018–20 and 2022–24 is not merely a statistical fluctuation but reflects many businesses stepping back from activities that could make them more productive. Breaking that cycle requires more than another economic strategy, and Wales needs a much more disciplined approach to firm-level innovation. That means technology adoption support that reaches SMEs; finance linked to productivity improvement and management capability programmes that are practical rather than generic. It means universities organised around business problems, procurement being used to stimulate new solutions, and export support linked directly to innovation.

The evidence base for existing Welsh business support does not inspire confidence that current provision is equal to this challenge and the Welsh Government’s own final evaluation of Business Wales, published earlier this year, found that real productivity remained largely static across the programme as a whole, and that growth in digital maturity among supported firms has been modest and was concentrated in website development and social media rather than the deeper technology adoption that drives genuine productivity gains. The evaluation also found that the Accelerated Growth Programme, the most intensive strand of support, consistently underreached rural and geographically peripheral businesses, which in Wales means a significant share of the SME base most in need of help. A programme designed explicitly to address Wales’s productivity gap has not yet demonstrably closed it, and the evaluation’s own recommendation that future programmes place less emphasis on process indicators and more on productivity and sales outcomes is an acknowledgement that the current model has been measuring the wrong things.

Wales needs more firms doing more and doing it better and the temptation in innovation policy is always to focus resources on the exceptional - the spinout, the high-growth technology company, the advanced manufacturer, the venture-backed start-up. Wales needs those firms and it needs more of them but the productivity gap will not be closed by exceptional firms alone, and the more fundamental problem is one of proportion and reach. The Business Wales evaluation found that the most intensive support served a relatively small number of growth-oriented businesses, while the typical SME received an average of six hours of advisory support. If innovation policy continues to concentrate its best resources on firms that are already on a growth trajectory, whilst the broad mass of Welsh SMEs receive light-touch, process-driven support, the aggregate effect on the economy will remain marginal.

Moving in the wrong direction

The UK Innovation Survey tells us that Wales is moving in the wrong direction, and it is the worst-performing part of the UK at precisely the moment when innovation should be central to responding to AI, digital transformation, net zero, demographic change, skills shortages and global competition. Certainly, Wales cannot close its productivity gap while its innovation performance is falling and productivity will not improve without more firms adopting better technology, investing in people, improving their processes and competing in wider markets. Innovation is the mechanism through which that happens and on every available measure, the proportion of innovation-active firms, investment in R&D, technology adoption, digital maturity, engagement with knowledge institutions, access to innovation finance, Wales is moving in the wrong direction.

What we have seen in the last four weeks is the new Welsh Government has the ambition but what it does not yet have is a programme of support equal to the scale of the problem, a business base that is responding to that support, or an honest reckoning with the evidence that current provision has not worked. Until those three things change, the productivity gap will not close and the latest data does not just show how far Wales has to go.

It shows that without a fundamental change in approach, the gap is more likely to grow wider and over the next few months, I’ll be examining whether there are innovation programmes and interventions that Wales could learn from elsewhere in the World to help close this gap.

What lessons can Wales learn from the Basque Country?

When Adam Price delivered his first major business speech as Wales’s new Cabinet Minister for Enterprise, Connectivity and Energy, he made one observation that should sit at the heart of every serious discussion about the Welsh economy over the next five years, namely that prosperity is not simply a collection of assets but the way those assets connect.

It was a telling phrase because Wales has spent much of the past quarter-century doing precisely the opposite. We have listed our assets, celebrated our potential and repeatedly pointed to our universities, industrial inheritance, natural resources, ports, energy opportunities, people, landscapes, language and emerging technology clusters, yet never quite turned that inventory of promise into the productivity, firm growth and national prosperity that should have followed.

That is why the reported reference at the same CBI Wales lunch to the Basque Country matters, because the advice attributed to Adam Price’s Basque counterpart - “all together, or not at all” - should not be treated as a convenient slogan, or as another example of international best practice to be admired for a few days before being quietly absorbed into the language of Welsh policy.

The uncomfortable comparison

Some comparisons are uncomfortable precisely because they reveal not only where we are, but also what we might have become had different choices been made consistently over a long period of time. The comparison between Wales and the Basque Country is one of them, not because the Basque region is perfect or because Wales is uniquely incapable, but because both are places with strong identities, proud industrial histories, distinctive languages, and economies shaped by globalisation, technological change, and the restructuring of heavy industry.

Yet one has done more than the other to turn those shared characteristics into a coherent economic model. Since the end of the 1990s, the Basque economy has grown more strongly, recovered more effectively from shocks, and retained a more productive industrial base than Wales. It entered the financial crisis after years of strong expansion, suffered a severe contraction, recovered, was hit again by Covid, and then bounced back with a resilience that Wales has not matched. While Wales has certainly grown, it has not been transformed, achieving progress that has too often been modest, uneven, and insufficient to close the gap with the rest of the UK, let alone with comparable small European nations.

The lesson is the system, not the slogan

I was fortunate to be involved in a number of research projects comparing Wales and the Basque Country in the 1990s in partnership with the Universidad del País Vasco. What we found then is the same as now, namely that the essential difference is not that the Basque Country has discovered a simple policy formula that Wales has missed, nor that a single institution, such as Mondragon, its technology centres, its vocational system, its manufacturing clusters, or its finance structures, can simply be lifted from one context and inserted into another. The difference is that the Basque Country has done something that Wales has repeatedly struggled to do, namely, align government, industry, finance, skills, innovation, and local institutions around a long-term mission to improve firms’ competitiveness.

That is the real lesson, and it is the one Wales must take seriously if Adam Price’s reference to the Basque Country is to become more than a passing line in a ministerial speech. The point is not to copy another country’s institutional architecture, but to understand the discipline behind it, including the patience to choose priorities, the seriousness to build capability around those priorities, and the humility to learn from firms as well as to announce policies to them.

Adam Price himself made a similar argument in a 2014 Nesta essay, How to Change a Country, where he described Basque success not as the product of a single institution or policy trick, but as an example of “country-scale innovation” rooted in collaboration, identity and social solidarity. His point then was that the Basque Country had recovered from the collapse of shipbuilding and steel by treating innovation not merely as science and technology, but as a wider social, cultural and institutional process, with organisations such as Innobasque, Mondragon and Euskaltel acting as the “organisational arteries” through which that collaborative innovation flowed. That earlier analysis gives his ministerial comments added significance, because it suggests that the Basque comparison is not a passing reference, but a long-standing view that small nations can change their economic trajectory when they build the institutions, networks and shared purpose needed to act at national scale.

Wales has the pieces, but not yet the discipline

Wales already has a number of the elements that should make such an approach possible, yet too often these assets sit alongside one another rather than being organised into a coherent national economic system. That is why the Basque comparison is useful only if we are honest about both its appeal and its limits. Wales cannot simply become the Basque Country, as the Basque Country has a different fiscal settlement, stronger tax autonomy, a different industrial heritage, and decades of institutional continuity that Wales lacks. Its devolved institutions operate with a level of fiscal responsibility and economic accountability that gives growth a far more direct consequence for regional government than it does in Wales, where the block grant still dominates and too many of the key levers over taxation, investment and economic policy remain constrained.

But constitutional difference cannot become the latest excuse for inaction, because the parts of the Basque approach that Wales can learn from are precisely those that do not require constitutional miracles. They require political discipline, institutional alignment and a refusal to keep mistaking activity for transformation.

From potential to performance.

That starts with a much clearer view of what Wales is genuinely good at, where it can build future advantage, and where public policy can make the greatest difference. For too long, Welsh economic strategies have tried to be broad enough to include almost every sector, every place and every aspiration, but the inevitable result has been a language of ambition that lacks the sharpness needed to improve the performance of particular firms, industries or regions.

Real cluster development is not a press release, nor is it achieved by naming a sector in a strategy and assuming that an ecosystem will somehow emerge around it. It is a long-term commitment to technology, skills, supply chains, management capability, exports, finance and growth in areas where Wales can compete, and it requires the discipline to accept that if everything is a priority, nothing is.

That is why the debate about Welsh economic development has to move beyond the familiar catalogue of sectors and into the much harder territory of execution. Compound semiconductors, renewable energy, advanced manufacturing, food and cyber all have potential, but potential is not the same as performance, and unless the institutions around those sectors are aligned with the needs of firms, the result will be more strategies but not enough companies growing faster, exporting more, investing more deeply and paying higher wages.

This also means placing further education much closer to the centre of Welsh economic policy than it has been in the past. One of the strongest features of the Basque system is how vocational and technical education connects directly with the needs of firms and sectors, whereas in Wales, FE colleges are still too often discussed mainly in terms of training, access and social mobility. Of course, all of this is vital, but not enough if we fail to recognise them as productivity institutions that should work with SMEs every day to help them adopt new technologies, improve management practices, raise wages and become more competitive.

For too long, Wales has talked about skills as though the main challenge is qualification attainment, and while that matters enormously, the deeper issue is whether skills are embedded in firms, whether they help companies innovate, digitise, export, automate and grow, and whether the relationship between colleges and employers is strong enough to become part of the everyday machinery of productivity improvement rather than a separate training offer that sits alongside the economy rather than inside it.

The same argument applies to finance. Whilst the Development Bank of Wales’ role in filling finance gaps remains important, if Wales is serious about building more ambitious, Welsh-owned firms, then patient capital has to be connected more explicitly to the sectors, technologies and capabilities where we want to build long-term advantage.

There is a difference between access to finance and strategic economic development. The first helps businesses survive and grow, while the second asks what kind of economy we are trying to build, which firms have the potential to change that economy, and how public finance can support them without becoming passive, scattered or reactive. If Wales wants more indigenous scale-ups, more companies with intellectual property, more exporters and more firms capable of anchoring supply chains here, then finance has to be part of a wider national mission rather than a standalone intervention.

The missing middle of Welsh economic development.

This is where Wales has also lacked the intermediary institutions that make serious economic development work in practice. The Basque model depends on organisations that sit between government and firms, translating strategy into practical work with businesses, while Wales has too often relied either on central government programmes or on broad representative bodies that may speak for parts of the business community but do not always have the capacity, mandate or technical depth to drive productivity sector by sector.

A Welsh version of this approach would require cluster organisations with real expertise, clear leadership and measurable outcomes, not merely networks that meet occasionally, produce reports and create the impression of movement without changing very much on the ground, because the hard work of economic development happens in the space between policy and practice, where firms need trusted institutions that understand their sectors, know their supply chains, can connect them to finance and expertise, and can help them become more competitive over time.

None of this will work without institutional memory, and this may be the hardest part of all for Wales. We have spent too much of the last quarter century reorganising the machinery of economic development, renaming programmes, launching frameworks, creating boards and mistaking new structures for new capability, whereas the Basque lesson is that serious economic development is cumulative, built over years through trust, repetition, learning and focus, and cannot be recreated every few years because a minister wants a new announcement or a government wants to put its own stamp on the system.

This is where Wales has done itself real damage, and too often we have treated economic development as a sequence of initiatives rather than as the patient construction of capability, with programmes coming and going, agencies being created, abolished or reshaped, strategies being published, reviewed and replaced, institutional knowledge being lost, relationships with firms being weakened and the system continually starting again under a different name.

Each time, we convince ourselves that the new framework will finally make the difference, but economic transformation does not come from the constant invention of new language. It comes from the disciplined execution of a small number of priorities over a long period of time, and the uncomfortable truth is that Wales has not lacked ambition in its rhetoric, but consistency in delivery.

The real Basque lesson

That is why the Basque comparison should not be used as another abstract exercise in international best practice, but as a mirror, because it shows that small nations can do more when they align their institutions around productive growth, that industrial economies can modernise rather than simply decline, and that vocational skills, technology, finance and firm-level support can be joined together in a way that raises productivity and resilience.

It also shows that culture matters, not culture in the shallow sense of national branding, but institutional culture: the habits, expectations and disciplines that determine how economic policy is actually delivered. That is why the phrase “all together, or not at all” should resonate in Wales, where we have often had partnership language without partnership discipline, strategies without sufficient institutional alignment, and assets without sufficient connection between them.

For the new Minister, this is both an opportunity and a warning. The opportunity is that he enters office at a moment when Wales badly needs a more serious economic conversation, because the old model of broad business support, scattered priorities and periodic institutional reshuffling has reached the limits of what it can achieve. The warning is that admiring the Basque Country is easy, whereas learning from it will require saying no to some things, focusing resources, challenging comfortable yet underperforming institutions, and asking not whether a programme is well-intentioned but whether it improves firms’ competitiveness.

Above all, it will require patience, which may be the most unfashionable word in politics but remains one of the most important in economic development, because Wales does not need another short burst of enthusiasm followed by another reorganisation, but a long-term productive mission that survives ministerial reshuffles, electoral cycles and institutional fashions.

Wales cannot copy another region or nation wholesale, and anyone pretending otherwise is avoiding the complexity of the task, but Wales can learn from that region or nation’s discipline, patience, and seriousness about a productive economy. In fact, the Basque lesson is not that Wales should become someone else but whether we finally build the institutions, sectors, firms and skills base that a serious Welsh economy deserves.

Wales does not need to recreate the WDA. It needs a national economic agency focused on productivity, innovation and execution.

Few ideas in Welsh economic policy recur as often, or with as much emotional force, as calls to recreate the Welsh Development Agency.

For many, the WDA still evokes a period when Wales seemed more confident about its economic future, more visible internationally, and more willing to go out into the world and sell itself. It had a recognisable brand, offered investors a single front door, and, at its best, projected a sense of national economic purpose that has too often been missing since devolution.

Whether that is true or not is open to debate, but it is easy to see why Plaid Cymru’s 2026 manifesto places the creation of a new National Development Agency for Wales at the heart of its economic offer. It proposes a business-led agency, operating at arm’s length from the Welsh Government, to support Welsh business growth, innovation, trade, inward investment and regional prosperity. It would act as a one-stop shop for business support, prioritise Welsh-owned SMEs, coordinate regional growth, connect firms to finance, and help build stronger local supply chains.

That is an important commitment because it recognises what many in business have quietly said for years: that Wales lacks a clear, authoritative, business-facing economic institution with the commercial credibility, technical expertise and political authority to align ambition with delivery. Plaid is also right to link the agency to wider reforms, including a Fiscal and Economic Commission, a national skills audit, reform of the Development Bank of Wales and a stronger focus on Welsh ownership.

Yet the most difficult question is whether the Welsh Government would genuinely allow such a body to operate with commercial independence. Welsh economic institutions can start with autonomy but gradually become absorbed into ministerial priorities, departmental processes and a short-term announcement culture.

If the new agency is to work, “arm’s length” cannot simply be a phrase in a manifesto - it must entail an independent board, published performance metrics, multi-year funding, the freedom to recruit commercial talent, and protection from day-to-day political interference.

The danger of recreating the past

The question, therefore, is not whether Wales needs stronger economic development capacity, as it clearly does, but what kind of institution is now needed to deliver it. And here we must be careful, as a National Development Agency must not return Wales to the economic development model of the 1980s and 1990s, when success was too often measured by inward investment announcements, factory openings and the ability to attract mobile manufacturing capital.

The old WDA was strong at pursuing projects, administering grants and marketing Wales, but less effective at embedding long-term indigenous capability. Many inward investment projects created jobs but did not always build deep Welsh supply chains, locally rooted ownership, or innovation capacity. By the time the WDA was brought into the Welsh Government in 2006, there were serious criticisms of duplication, accountability and insufficient support for Welsh-owned firms, which some argue were not resolved by its integration into the civil service.

That matters because the economic challenge facing Wales in 2026 is different from the one it faced in 1986. Then, the task was partly to replace lost heavy industry and attract employment at scale but today, the deeper challenge is to create, scale and retain more high-value firms in sectors where knowledge, intellectual property, data and creativity increasingly determine prosperity.

Plaid’s manifesto gestures towards this modern agenda by identifying renewables and green technology, digital and artificial intelligence, medical technologies, food systems and agri-tech, and the creative industries as growth sectors. It also proposes that the new agency should support university-business connections, help start-ups scale sustainably, and ensure that Wales captures more benefit from data campuses, supply chains and skills development.

That is where the opportunity lies, but also where the danger lies. If the new agency tries to be everything to everyone, from a general business support body to a trade agency, an inward investment agency, a regional growth agency, a sector body, a skills broker, and a finance signpost, it will simply become another layer in an already crowded landscape.

Wales already has the Development Bank of Wales, Business Wales, regional deals, local authorities, universities, Corporate Joint Committees, UK Government-backed zones, and numerous sector initiatives. Plaid’s manifesto acknowledges that Wales has become a patchwork of overlapping regional initiatives with conflicting priorities, and the worst outcome would be to create a new agency that adds to that clutter rather than cutting through it.

In my opinion, the design principle should be simple, with the new National Development Agency having a clear mission, a limited set of measurable objectives, and the authority to align the rest of the system behind it. Its purpose should not be to recreate the WDA but to build the next generation of Welsh-owned, innovation-led, export-capable firms.

That distinction is crucial as traditional development agencies ask how we attract investment, support businesses and promote Wales. A growth-focused national agency should ask a sharper question, which is how do we take the most promising Welsh firms and help a meaningful number achieve sustained growth, enter international markets, secure follow-on investment and retain headquarters in Wales?

Why productivity must be the test

Above all, the test must be productivity, and for all the debate about agencies, structures and strategies, Wales’s central economic weakness remains its relatively low productivity, with too many firms operating in low-margin sectors, too few having the capital to invest in new technology, uneven management capability, limited export intensity and innovation still not embedded deeply enough across the economy.

A National Development Agency will only matter if it improves underlying performance, and its purpose should not be simply to create more firms, announce more projects, or support more jobs, although all of these are important (and we’ll discuss the importance of entrepreneurship in the Welsh economy in a later post). Its deeper purpose should be to help Welsh businesses generate more value from each hour worked, each pound invested, and each idea generated.

That means the agency must be judged by productivity outcomes, not by activity measures. For example, will it help firms adopt new technologies? Will it improve management capability? Will it increase investment in research and development? Will it help companies move into higher-value markets? Will it strengthen supply chains so that more value is retained in Wales? Will it help medium-sized firms become exporters, innovators and anchors in their local economies?

For too long, Welsh economic policy has mistaken the reorganisation of business support for progress, and we have had countless strategies, reviews, initiatives, pilots, boards, networks and programmes. What we have not had is a disciplined system for turning ideas into investable companies and investable companies into scaling Welsh firms.

The missing link between ideas and scale

The evidence from the UK spin-out and venture ecosystem makes this impossible to ignore, as investment remains heavily concentrated around Oxford, Cambridge and London. As we all know, Wales can generate ideas, research and technical capability, but it too often lacks the capital, commercial expertise and investor networks to turn those opportunities into globally competitive businesses.

Universities must therefore sit closer to the centre of this agenda as Wales has research strengths, talented graduates and areas of genuine technical capability, but it has not consistently converted that knowledge base into investable companies, licensing income, management teams or venture-backed spin-outs. A new agency should treat universities not as peripheral partners but as core economic institutions with clear expectations regarding commercialisation, founder support, intellectual property, investor readiness, and industry collaboration.

That is why the model for Wales should not be the old WDA but something closer in spirit to Business Finland, which combines innovation funding, internationalisation, investment attraction and export support. That requires a very different culture from traditional public-sector programme administration and needs commercial judgement, sector expertise, a willingness to take calculated risks, and an acceptance that some companies will inevitably fail. It also requires independence from day-to-day political churn, a strong board, private-sector credibility and transparent performance measures focused on outcomes rather than announcements.

This is where Plaid’s manifesto needs further development, and its proposal for a Fiscal and Economic Commission is sensible, but the targets must be hard-edged and its performance should be judged by the number of Welsh firms moving from start-up to scale-up, follow-on capital raised, export growth, productivity improvements, private investment crowded in, supply chain value retained in Wales, and the number of Welsh-headquartered medium-sized firms created over time.

Plaid is also right to focus on medium-sized businesses, as these tend to be more resilient than microbusinesses, more locally rooted than branch plants, and more likely to provide good jobs, develop supply chains and reinvest in their communities. Not only are there not enough firms of this size in Wales, but those that are based here underperform in generating both employment and wealth. However, Mittelstand-style firms cannot be summoned into existence by rhetoric and must emerge from patient capital, strong management, long-term customer relationships and ecosystem depth.

Where the Development Bank and Business Wales fit

Any creation of a new agency raises an unavoidable question about the Development Bank of Wales, which I helped create 12 years ago following my review of its predecessor Finance Wales which found it unfit for purpose. Plaid’s commitment to reform the Development Bank and its financial products suggests it has reached the same conclusion about the current organisation.

This suggests that Wales needs clarity on DBW’s purpose and its place within the new institutional architecture, and I will return to this in more detail in the next few weeks, but one point is clear: we cannot afford a new development agency on one side and an unreformed development bank on the other, each partly responsible for growth yet neither fully accountable for results.

The same principle applies to Business Wales, which plays an important role in helping local businesses, start-ups and micro firms access advice, mentoring and practical support. It should not be casually dismantled, nor should its value to many smaller firms be ignored. However, there is a legitimate question about whether a structure based heavily on contracted delivery, workshops, advisory provision and programme outputs is delivering for Welsh businesses and whether it works as effectively for the firms being supported as it does for those delivering the support.

Business Wales can continue to provide a broad front door for general advice and early-stage support although it could and should be delivered very differently in an age of AI. The new National Development Agency should not duplicate that function and instead, it should build on it, with its primary role to identify those firms with real growth potential and to build bespoke pathways around them, combining finance, management capability, technology adoption, export support, procurement access and investor readiness. The test should not be how many businesses pass through the system, but how many emerge stronger and better able to compete beyond Wales.

Where Wales already has the foundations

This is particularly important for sectors where Wales has genuine but underdeveloped strengths. The South Wales semiconductor cluster is the obvious example, as it is internationally significant and frequently cited as one of Wales’s most important technology assets.

Yet despite hundreds of millions of pounds of public money spent on it, it has not produced enough Welsh-owned spin-outs, scale-ups, supplier firms and venture-backed companies. A cluster cannot simply be a concentration of assets; but must become a machine for creating firms and there should be an imperative now to redesign the support system around this world-class asset.

The same applies to renewable energy, and Plaid rightly argues that Wales must capture more value from its natural resources and ensure renewable energy creates Welsh jobs, community benefits and local ownership. But this will not happen automatically, and without a strong development institution, Wales risks hosting infrastructure while other places capture intellectual property, engineering contracts, ownership returns, and higher-value supply chain opportunities.

There is also a regional dimension, and Plaid rightly argues that Wales must move beyond fragmented, overlapping initiatives and adopt a new National Development Framework. That matters because economic development cannot be directed solely from Cardiff or reduced to disconnected local projects. The new agency should combine a national mission with strong regional insight, recognising North Wales’s industrial strengths, the west’s rural and food economy, the south-east’s advanced manufacturing and semiconductor base, energy opportunities around ports and freeports, and the creative and digital potential across the country.

Of course, regionalism should not mean that every region gets the same programme and the jury is still out on the poor performance of the City and Growth Deals to date but that should not mean that each region can build on its own assets, with common national standards for performance and accountability, as Wales is too small to tolerate duplicated structures and too poor to waste money on initiatives that do not deliver.

The real test of success

The creation of a National Development Agency could therefore be one of the most important economic reforms of the next Senedd term, but only if it is designed for the economy Wales needs to build, rather than the economy some still fondly remember through rose-tinted glasses.

The old WDA belonged to an era when Wales sought to attract jobs from elsewhere, but any new agency must embrace an era in which Wales creates, grows and retains more productive Welsh firms that invest, export, innovate, pay higher wages and deepen the nation’s economic base.

It must be judged not by how many glossy strategies it publishes, how many press announcements are released or how often ministers announce investments, but by whether more Welsh companies reach scale, raise substantial capital, export successfully, build supply chains, improve productivity, and keep their decision-making rooted here in Wales.

That is the discipline that Welsh economic policy has too often lacked and if the new Agency can achieve this, it will be one of the most important nation-building institutions Wales has created since devolution. If it cannot and merely becomes a rehash of what we already have had in the past, then this Welsh Government will have done what its predecessors did too often before, namely, rename the machinery of support, rearrange the deckchairs of economic development, and mistake reorganisation for real and lasting change.

Plaid Cymru’s first 100 days: ten economic tests for a government that wants to change Wales

For the next Welsh Government, its first 100 days will matter far more than the usual choreography of ministerial visits, symbolic announcements and statements of intent. It will be the moment when Plaid Cymru, a party that has long argued that Wales needs a different economic model, will have to demonstrate that it can begin to build one.

Its manifesto contains many of the right ingredients: a National Development Agency, a stronger focus on Welsh-owned firms, public and business rates reform, childcare, skills, housing, energy, transport, universities, and fairer funding. It also makes an explicit commitment to begin realigning Welsh Government spending with its priorities within the first 100 days, which matters because the central question for Plaid will not be whether it has ideas, but whether it can turn them into an operating programme for government.

This is critical because Wales has too often lacked the ability to focus political energy, institutional capacity and public money on a small number of priorities that can genuinely change the country’s economic trajectory. As Plaid Cymru enters government, these are the ten economic and business issues that should define its first 100 days.

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1. Turn the National Development Agency into the central economic delivery vehicle

The proposed National Development Agency FOR Wales is likely the most significant economic commitment in the manifesto, but it must not become another arm’s-length body with a logo, a board and a vague remit. Its purpose should be clear: to grow Welsh-owned businesses, increase productivity, improve export performance, attract investment that strengthens local supply chains, and ensure that more of the profits generated in Wales remain in Wales.

Within the first 100 days, Plaid should publish the agency’s mission, governance model, first-year budget, regional footprint and measurable targets. It should also decide what functions move out of Welsh Government, what remains inside government, and how the new agency relates to the Development Bank of Wales, Business Wales, and the existing regional growth structures, as Wales has had too many economic bodies with overlapping responsibilities and insufficient authority.

Certainly, the review of the Development Bank promised by Plaid Cymru will show how serious it is about change to Wales’s economic infrastructure.

And, let’s finally be honest and admit that business support in Wales has been a failure for over two decades and has done little to make any real difference to most Welsh businesses except those in receipt of Welsh Government funding to deliver these services.

2. Make Welsh ownership a serious economic objective

For too long, Welsh economic policy has been too relaxed about ownership. We rightly celebrate jobs created by inward investment, but we have paid too little attention to who owns the businesses, where strategic decisions are made, where profits go, and whether supply chains become embedded in Welsh communities.

A stronger Welsh economy will require more indigenous firms with the ambition and capacity to scale. It will also require more entrepreneurs starting businesses and more medium-sized businesses rooted in Wales. For the former, it will need proper funding mechanisms and supporting infrastructure; for the latter, it will require succession finance, management buyouts, employee ownership, patient capital, and a willingness to intervene before successful Welsh firms are sold too early or lost to external ownership.

Some have argued that this is not important, but I disagree. If more businesses are created, owned, and led in Wales, more decisions will be made here, more profits will be recycled here, and more supply chains are likely to be anchored here.

In the first 100 days, Plaid should commission a comprehensive Welsh ownership audit to identify key medium-sized firms that could be supported to grow, succession risks, acquisition threats, employee ownership opportunities, and businesses with potential to scale.

3. Use procurement as an economic development tool

The manifesto’s ambition to increase the share of Welsh public procurement awarded to Wales-based suppliers from around 55 per cent to at least 70 per cent could be one of the most powerful economic levers available to a devolved government. Public procurement is not a marginal administrative process and is one of the largest tools available to Wales.

But this will only work if it is done intelligently, and it cannot mean simply adding a vague “local” clause to tenders. It means breaking contracts into accessible lots, building supplier capacity before contracts are issued, training procurement officers, measuring where money actually lands, and ensuring that Welsh SMEs can collaborate to bid for larger contracts.

In the first 100 days, Plaid should identify the high-spend areas where Welsh supplier capacity can be expanded quickly, such as food, construction, retrofit, digital services, social care, professional services, creative services, transport, facilities management and public sector technology.

Most importantly, the aim should not be protectionism and a closed shop, but building real capability, because if Welsh firms are to win more public contracts, they must be helped to meet the standards, scale, quality and consistency that public bodies require.

4. Reform business rates before more high streets are hollowed out

Business rates remain one of the great unresolved problems in Welsh economic policy, and the current system too often penalises visible, place-based businesses while failing to reflect the rise of online commerce, logistics parks and out-of-town retail. If we are serious about reviving the high street in towns across Wales, the tax system must stop working against the very businesses that give those places life.

Plaid’s commitment to rebalance business rates in favour of high-street hospitality, leisure and retail is right, but the first 100 days should be used to move from principle to design. Ministers should publish an options paper setting out how relief will be targeted, how out-of-town retail will contribute more fairly, how empty properties will be treated, and how the system can support town-centre living, independent retail and evening economies.

The high street cannot be revived by nostalgia and looking to the past, as it needs a new economic function. That means more homes above shops, more flexible planning, more independent businesses, better transport links, more cultural activity, access to banking, and a tax system that recognises the social and economic value of town-centre businesses.

5. Treat childcare as labour market infrastructure

One of the more contentious debates during the election campaign was how Plaid Cymru could afford its childcare policies. That seemed to conveniently ignore the fact that childcare should not be seen only as a social policy, as it allows parents, especially mothers, to return to work, increase their hours, retrain, start businesses and progress in their careers. It also gives children a better start and supports household incomes at a time when many families are under severe pressure.

The manifesto’s offer of 20 hours a week for children aged 9 months to 4 years, delivered over 48 weeks, should sit at the heart of the government’s economic strategy, not at the margins of education policy. But the biggest risk is delivery, and Wales will need more childcare workers, more rural provision, more flexible provision and a sustainable funding rate for providers. Without that, a generous entitlement on paper could become another postcode lottery in practice.

This means that in the first 100 days, Plaid should publish the rollout timetable, workforce plan, provider funding model and capital requirements. The promise is significant, but implementation will determine whether it becomes transformational or frustrating.

6. Build a skills system around real economic demand

Wales has spent years talking about skills, yet employers continue to report gaps, young people struggle to navigate options, and too many programmes are shaped by institutional supply rather than economic demand. Plaid’s proposal for a national skills audit is sensible, but it must be swift, practical and directly linked to funding decisions. In the first 100 days, the government should identify the first wave of priority sectors: renewable energy, housing retrofit, construction, digital and AI, semiconductors, health and social care, food and drink, advanced manufacturing, tourism and the creative industries.

The real test is whether colleges, universities, schools, training providers and employers are brought into a coherent system, as Wales needs more visible routes into good work, with every young person understanding the academic, technical and vocational pathways available to them. Every region should know which sectors it is backing, and every major public investment should have a skills plan attached to it.

7. Put energy wealth at the centre of Wales’s economic future

Wales has wind, water, land, ports, industrial sites and communities that could benefit from the green transition, but the lesson of previous economic eras is clear: owning resources is not enough. The question is who captures the value.

That is why the proposals on the Crown Estate, a Wales Wealth Fund, community ownership, Trydan Gwyrdd Cymru and renewable energy benefits are central to the economic future of Wales. The first 100 days should be used to set out a National Energy Strategy that maps generation, grid constraints, port opportunities, supply chain gaps, skills needs and community benefit mechanisms.

This should not be framed simply as climate policy, but rather as an industrial policy for the nation’s economic future. If floating offshore wind, hydrogen, grid infrastructure, retrofit, heat networks and community energy are treated as separate initiatives, Wales will miss the moment. If they are brought together as part of a single national mission, they could become a foundation of a more prosperous Welsh economy.

8. Treat housing as economic infrastructure

Housing is not only a social issue; it also affects labour mobility, household spending, health outcomes, construction capacity, town-centre regeneration, and whether young people can remain in their communities.

Plaid’s target of at least 20,000 new social homes by 2030, alongside the proposed body to enable social housing delivery, should be treated as part of an economic programme as well as a housing programme. The first 100 days should focus on land assembly, planning barriers, funding models, Welsh supply chains, modern methods of construction, and the role of pension fund investment.

The same applies to retrofit. A serious area-based retrofit programme could reduce fuel poverty, improve health, cut emissions, and create skilled local jobs, but only if it is designed with delivery capacity in mind. Wales cannot announce a retrofit revolution and then discover it lacks enough assessors, installers, electricians, plumbers, project managers, or trusted local firms to do the work.

9. Create a credible plan for transport and digital connectivity

An economy cannot function properly if people cannot get to work, goods cannot move efficiently, rural communities are isolated, and businesses lack reliable digital infrastructure.

Plaid is right to focus on rail funding, bus integration, fairer fares, active travel, EV charging, and broadband gaps, but the first 100 days should avoid producing another long wish list. The priority should be sequencing, i.e., what can be done immediately, what depends on Westminster, what requires capital, what requires planning reform, what Transport for Wales can deliver, and what must local authorities deliver.

Regarding digital infrastructure, those parts of Wales that still lack reliable broadband should be treated as an economic inclusion issue. A business in rural Wales without reliable broadband is not operating on a level playing field; a student without connectivity is disadvantaged; and a household unable to access digital public services is excluded from the modern state.

In other words, connectivity concerns whether people and businesses can participate fully in the economy wherever they live.

10. Put universities back at the heart of economic renewal

Wales’s universities are not simply educational providers; they are major employers, regional anchors, research institutions, talent magnets, and one of the few parts of Welsh civic life with genuine international reach. That is why the decision to appoint a Deputy Minister for skills and tertiary education is so important as there will a focus, quite rightly, on this critical area over the next for years.

Plaid’s manifesto rightly proposes an independent review of higher education funding, but this should not become another slow institutional exercise. In the first 100 days, the new government should make clear that universities are central to Wales’s economic future. This means asking how they can help retain more young talent in Wales, support Welsh-owned businesses, attract research investment, commercialise ideas, strengthen innovation, and work more closely with colleges and employers. It also means recognising that a financially weakened university sector will damage towns and cities across Wales if it is allowed to decline further.

The review should therefore be framed not only by funding but also by purpose. What kind of university system does Wales need over the next twenty years? How can it support productivity, skills, start-ups, public services and regional growth? And how can more of the money spent on higher education in Wales remain in Wales?

What can be done within the existing budget?

The question is not whether Plaid can deliver everything in its manifesto within the existing Welsh budget, because it plainly cannot. The more serious question is whether it can use its first 100 days to distinguish what can be done immediately, what must be phased through reprioritisation, and what depends on winning new powers or resources from Westminster.

A surprising amount of the first 100 days’ agenda can begin within the existing budget. The mission and structure of the National Development Agency, a Welsh ownership audit, a higher education review, a national skills audit, a business rates review, a procurement pipeline, an energy mapping exercise, and a clearer economic delivery plan are largely matters of political direction, institutional design, and administrative focus. They require capacity and discipline more than large amounts of new money.

A second group of commitments can begin within the existing budget but will require serious reprioritisation. Childcare, retrofit, social housing, transport improvements, university renewal and business support all fall into this category. Plaid can start, phase and design them in the first 100 days, but it cannot pretend they are cost-free. The manifesto’s commitment to realign spending with its priorities is therefore not a technical detail. It is where the hard choices begin. A third group cannot be delivered properly without powers or money from elsewhere, and rail funding, HS2 consequential, the Crown Estate, wider borrowing powers, tax reform and full control over natural resource revenues all require negotiation with Westminster. Plaid can make these central demands from day one, but it cannot bank them as guaranteed income.

That distinction is critical, as the early test of a Plaid government will not be whether it can spend money it does not have, but whether it can stop spreading existing money too thinly, end programmes that no longer deliver, redirect resources towards priorities that matter, and be honest about what requires a wider fiscal or constitutional settlement.

Where could other parties support Plaid?

The political arithmetic may be difficult, but the economic agenda need not be wholly partisan. If we take the manifestos at face value, there should be potential cross-party support for several elements of this programme, including business rates reform, procurement reform, support for small businesses, town-centre regeneration, skills and apprenticeships, broadband, housing delivery, university sustainability, and better use of public money.

Even parties that disagree strongly on constitutional questions may find common ground on practical economic delivery. Conservatives are likely to support elements of business rates reform, small-business support and procurement access, whilst Labour may be open to childcare, housing and public-service reform, especially where these build on existing policy directions. Liberal Democrats would likely be constructive on education, childcare, local government, and housing, and the Greens would be natural allies on energy, retrofitting, active travel, and community wealth.

The sharper dividing lines will come on taxation, borrowing, roads, net zero, the Crown Estate, independence-related structures, and the scale of state intervention in the economy. As a result, perhaps Plaid will not get everything through easily. That means the first 100 days should be politically astute as well as economically ambitious, and the new Welsh Government should avoid bundling practical economic reforms with measures that make agreement harder than necessary. It should separate what can command broad support from what will inevitably become a constitutional fight, building alliances around delivery while making the wider argument for powers and funding in parallel.

The discipline of Welsh Government

Yet none of these ten priorities will matter unless Plaid also changes the way the Welsh Government works, and the central challenge for a first Plaid government will not be the absence of ideas but focus, and in the past, Wales too often lacked disciplined execution. More importantly, many have suggested that the Welsh civil service has essentially become an extension of the Labour Party over the last two and a half decades and that maintaining the status quo has been the overriding priority within Cathays Park.

So rather than procrastination, ministers need to ensure that the first 100 days conclude with a clear economic delivery plan that outlines what will be done in year one, who is responsible, how it will be funded, and how progress will be measured. Some commitments will require legislation, some will require negotiation with Westminster, and some will require new institutions. Others will simply require existing funds to be spent more effectively.

The test of Plaid in government will be whether it can move beyond ambition to delivery. If it tries to do everything at once, it risks disappointing quickly but if it concentrates on a small number of economic missions, it has a chance to show that Wales can be governed differently.

The first 100 days should therefore be about discipline as much as about direction - not another statement of national ambition, but the beginning of a government that knows what it is trying to achieve, measures whether it is achieving it, and is willing to stop doing things that no longer work.

If the new Welsh Government wants to prove that Wales can be governed differently, this is where it starts - not with slogans about change, but with the disciplined, practical work of building the institutions, incentives and investment pipelines that can transform the Welsh economy over the next decade.

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Welcome to What Wales Could Do Next

In the days after a Senedd election, much of the attention will inevitably be on parties, coalitions, personalities and parliamentary arithmetic. That matters, of course, because politics shapes priorities, determines resources and sets the tone for the next five years.

But the bigger question is what Wales now does with the powers, institutions and assets it already has. Not only do we have a new and different government in place, but we have 67 Senedd members who have never held office before.

That is why I am launching What Wales Could Do Next, a new weekly newsletter exploring practical ideas for strengthening the Welsh economy. It will not be party-political, and nor will it be another exercise in calling for more ambition without asking how that ambition might actually be delivered.

Having been a business columnist for the Western Mail for over 22 years, the aim of this newsletter is simple: to create a serious but accessible space to test ideas, challenge assumptions, and ask what Wales could actually do next.

Some editions will look at innovation, entrepreneurship, scale-ups, procurement, universities, funding, the green economy, skills, towns, regions and public institutions. Others will ask what Wales can learn from elsewhere, and how those lessons could be adapted to our own economic reality.

But every edition will return to the same basic question: how do we turn good ideas into practical action here that makes a real difference to our economy?

The starting point is that Wales does not lack talent, ideas or commitment, and across the country, there are entrepreneurs building businesses, scientists developing new technologies, communities trying to regenerate local economies, and public servants working hard within systems that are often more fragmented than they need to be.

But if Wales is to become a more prosperous, productive and confident economy, then we need to move beyond the language of potential and have a more serious conversation about delivery, execution, commercialisation, investment, procurement, exports, institutional accountability and the practical machinery of growth.

That is what this newsletter is about - not simply what Wales should want but what Wales could actually do next.

If that is a conversation you want to be part of, please subscribe, share it with others, and send me your thoughts, challenges and ideas for future editions.

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