What makes a city competitive?

South Wales Evening Post - 19 November 2013

You could well have missed it, but a report published last week contained some bad news for Swansea. It seems that we've ended up in 42nd spot out of a league table of 45 UK cities when it comes to overall competitiveness.

I must confess I had not heard of the Centre for International Competitiveness who produced the report. Having said that, there's no faulting their methodology which includes measurements of economic activity, business start-ups, local educational levels, proportion of knowledge-based firms, productivity, employment figures and so on.

What's most galling about our low standing is that it is unchanged from our position in 2010 when the index was last produced. You'd think we'd have made some sort of progress in recent times with all the new economic activity, but not so, it appears.

Of course, we'd have recorded a better score if everyone else had stayed still; but that's not the nature of competition when all is said and done.

So what do we do about it? Well, we could argue the toss back and fore about what competitiveness means and whether it makes any difference. Or we could rehearse the same old blather about more effective branding. Or maybe we could play to a few of our undoubted strengths.

The campaign to become UK City of Culture 2017 has been a formative period. If the decision goes the right way tomorrow (fingers crossed) then we have a great opportunity on our hands.

But whatever the outcome we will have benefited hugely from reminding ourselves as a region what it is that makes Swansea Bay distinctive. And if we're smart then we'll also begin to put our energies into exploiting those advantages.

The knowledge economy is a key potential growth area for us. It brings a new mobility to investment and employment. The telling factor in attracting firms in that kind of business and keeping them is going to be our ability to make Swansea Bay a place where people choose to live, visit and work.

For me, that's where competitiveness starts.

Continuing the theme of competitiveness, one of the most common complaints from business in Wales, and especially in the regeneration industry, is that finance is either too hard to come by or else too expensive.

This is not exactly a new message and it is one of the reasons the Welsh government originally set up a body over a decade ago known as Finance Wales.

Created within the ambit of the former Welsh Development Agency, the aim was to provide a source of alternative funding for companies struggling to find investment.

Their role became even more important when the private banking sector went into meltdown in the financial crisis of 2008. In many instances they were seen as the lender of last resort, especially as the grants regime has also tapered off considerably.

However, the findings of a recent inquiry have confirmed what has been evident for some time, which is that Finance Wales is actually a highly risk-averse outfit unsuited to supporting new ventures or sustaining existing ones. Another accusation is that the agency has been charging interest on loans to SMEs at levels much higher than required under EU state aid rules.

Having read the details of a study by Professor Dylan Jones-Evans and commissioned by Business Minister Edwina Hart, I'm delighted this long-standing problem has been finally dragged into the light.

To state the obvious at this point though, the real challenge is what happens next. Groups such as the Federation of Small Businesses are keen for AMs to address the reported failings of Finance Wales. Professor Jones-Evans on the other hand wants the agency scrapped and replaced by a Development Bank for Wales.

All well and good, but in the meantime I'm sure the majority of firms would prefer some clarity on the claim that Finance Wales, as a stated-owned bank, would be able offset interest rates to firms by up to (£167,460 over three years without it being deemed state aid.

In other words, the whole of Wales – or alternatively only what are called ''convergence'' areas – could be eligible for interest free loans.

This is the kind of stimulus package that could make a real difference to any strategy aimed at economic recovery. It remains to be seen if ministers think so too.