Montgomeryshire Assembly Member, Russell George, has said that the body that the Welsh Government set up over a decade ago to help finance small business is Wales, has been a hindrance and is not ‘fit for purpose’.
The AM made his comments in the same week that a Welsh Government commissioned report into funding small and medium sized business in Wales said that Finance Wales should be scrapped.
Business expert and author of the report, Prof Dylan Jones-Evans, said Finance Wales has focused more on generating profits than developing the Welsh economy.
Finance Wales was set up in 2001 to lend money to or buy shares in Welsh companies, investing £31m last year.
Commenting, Mr George said:
“I have had a number of small business owners and those wanting to start their own business complain to me about the rates Finance Wales were charging and I’m pleased Prof Jones-Evans report vindicates their view.
“It appears that Welsh Government’s small business lending body has been a complete hindrance to Welsh businesses for a decade, by charging over-inflated interest rates.
“Yet only last month, the First Minister defended the exorbitant interest rates charged by Finance Wales, which are punitive to small businesses struggling to stay out of the red.
“Small businesses in Wales must be able to access funding at affordable rates to allow them to compete with firms in other parts of the UK and in emerging markets overseas.
“Clearly Finance Wales is not fit for purpose and should be scrapped, with a new responsive facility put in its place.
“Ministers should now come clean about the damage inflated interest rates did to the Welsh economy and how many businesses were driven out of business, only adding to Wales’ already high vacancy rate.
“They must now consider how small businesses can be compensated for subsidising Finance Wales, perhaps through reductions in business rates.”
