£4.5million experiment to shore up Wales’ economic foundations

(Title Image: National Assembly of Wales)

Yesterday, Deputy Minister for Economy & Transport, Lee Waters (Lab, Llanelli), updated AMs on the Welsh Government’s plans for the foundational economy – which has been discussed in the Senedd several times in recent years.

Movement for change

The Deputy Minister said this was a move away from the traditional approach of supporting specific economic sectors towards longer-term economic growth rooted in communities and more resistant to economic shocks.

“….we’ve created a £4.5 million foundational economy challenge fund to trial ways of growing and improving this part of the economy. Over recent weeks, we’ve announced 52 innovative projects across Wales that we are supporting, from food and social care to construction and regeneration, and from applicants in the public, private and third sectors. They are now experimenting with different approaches, and we’ll be creating strong communities of practice to spread what works, and to learn from what doesn’t.”
– Deputy Minister for Economy & Transport, Lee Waters

This is being done with one eye on improvements to public procurement (citing a Carmarthenshire project to supply local schools and hospitals with local food), the potential economic consequences of Brexit and also to retain the so-called “Missing Mittelstand” – the lack of mid-sized, locally-rooted companies which in Wales have historically been taken over by larger foreign companies.

Shadow Economy Minister, Russell George AM (Con, Montgomery) warned that good practice often doesn’t travel well in Wales. He suggested this project was spread too thinly and will be difficult to monitor.

Some of the project was brought about with Plaid Cymru support at the last budget and Rhun ap Iorwerth AM (Plaid, Ynys Môn) was pleased to see it move forward. He brought up the issue of a local foundational economy company involved in construction and home maintainance which wants to stay put but is being persuaded to move away to grow.

While the Deputy Minister said it would be ideal for companies to stay where they’re rooted, moving to another place within a broader region wasn’t necessarily a bad thing and the Welsh Government is pressing for regional collaboration – which didn’t satisfy Rhun ap Iorwerth.

Rooted in communities

Jenny Rathbone AM (Lab, Cardiff Central) raised the matter of community council reserves and asked whether they could play a greater role in public procurement on a smaller scale – for example, community-owned energy schemes.

David Rowlands AM (BXP, South Wales East) said none of this was any good without the necessary infrastructure in place to enable the efficient movement of goods and services.

Vikki Howells AM (Lab, Cynon Valley) criticised the lack of any mention of the foundational economy in the Welsh Government’s draft National Development Framework – and the Deputy Minister accepted there was more to be done to ensure the foundational economy is fully embedded in all government thinking.

Huw Irranca-Davies AM (Lab, Ogmore) thought there was room for a greater role for community organisations and co-operatives, raising examples such as Project Skyline (community management of uplands in the Valleys) – a project the Deputy Minister said was “very exciting”.

Dawn Bowden AM (Lab, Merthyr Tydfil & Rhymney) added to this by mentioning a Bevan Foundation community regeneration think-tank, which the Deputy Minister confirmed has received funding for two projects and he expected the Foundation to ask difficult questions to fix some of the problems in the foundational economy like low pay and low productivity.

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