Welsh Conservatives today accused the Welsh Government of presiding over its own LIBOR scandal, as a report into access to finance by Prof Dylan Jones-Evans OBE concludes that Finance Wales has been lending to businesses at inflated interest rates.
Last month, the First Minister defended Finance Wales’ high interest rates saying “we cannot afford to subsidise interest rate payments” and that rates were “set at a level where Finance Wales can sustain itself as a financial entity”.
The report also advocates the establishment of a Development Bank for Wales to bring together both financial and non-financial support for small and medium sized enterprises.
In January 2013, Welsh Conservatives called for the establishment of Invest Wales, a network of regional investment banks embedded in local communities to lend to small businesses and provide advice and support.
Nick Ramsay AM, Shadow Minister for Business, said, “It appears that Carwyn Jones’ small business lending body has been ripping off Welsh businesses for a decade by charging over-inflated interest rates in Welsh Labour’s equivalent of the LIBOR scandal.
“Only last month, Carwyn Jones 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.
“Labour Ministers must 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. Labour Ministers should now consider how small businesses can be compensated for subsidising Finance Wales, perhaps through reductions in business rates.”
Commenting on the recommendation to establish a Development Bank for Wales, Nick Ramsay said:
“A year ago, Welsh Conservatives said that Finance Wales was not fit for purpose and that Wales needed a new network of local investment banks embedded in communities to improve access to lending and provide independent business advice.
“We welcome the backing of the principle of local business banking, which we proposed in our Invest Wales, as opposed to the Welsh Government’s centralised structure of Finance Wales.
“I hope Carwyn Jones’ Minister will digest this report and swiftly move to adopt the Invest Wales-style proposals of business banking to help small businesses in Wales can expand, prosper and create new jobs.
“I am grateful to Prof Dylan Jones-Evans for his forensic analysis of access to finance, which is critical to the viability and future expansion of many small businesses in Wales.”
