Business support review

This review provides an assessment of business support provision primarily within the economic portfolio of the Welsh Government, drawing on internal and external analysis, desk research and selected stakeholder engagement. The review identifies strengths in the current system, including adaptability, partnership working and positive impact on business growth and innovation. 

However, it also highlights areas for improvement - the need for a clearer strategy, clarifying and simplifying the range of support available, a narrower focus of key priorities, better integration with skills and employability, continued improvements to the measurement of outcomes, and more inclusive, future-ready support, especially for small and medium-sized enterprises (SMEs), landing inward investment, rural, and underrepresented groups. 

The purpose of this review is a foundational review of current business support provision and what could change or be refocused now with minimal disruption to service delivery, to enhance the support for this government’s priorities and to reflect emerging economic opportunities.

The Cabinet Secretary for the Economy, Energy and Planning commissioned officials to undertake a review of business support primarily provided within her economic portfolio and to include:

• an analysis of the range of business support activities, outcomes and whether these are aligned to current economic opportunities
• recommendations on the relative weight of resources that should be put into various sectors, including the rationale for how resources should be allocated, and options for change
• the impact of UK Government intervention, the extent to which it duplicates existing provision and how best to streamline; and
• an analysis of signposting and co-ordination of the overall business support offered in Wales and opportunities for efficiencies that can be ploughed back into support for the Welsh economy

The review takes stock of the present landscape, clarifies the strengths and limitations of the existing provision and identifies where practical action can be taken to support the government’s priorities. The work is intended to be timely and proportionate, with a focus on areas where positive change can be achieved efficiently, and is informed by evidence, stakeholder views and previous internal and external studies.

A more comprehensive long-term analysis would need more external input, benchmarking, time and resources than this internal review was designed to undertake, but it does consider what steps we can take now to support future in-depth evaluations of how well services align with economic strategy and identify the best options for improvement.

The review has been conducted primarily internally, led by the Economy, Energy and Transport operations team utilising the bank of existing data and evaluations along with existing feedback captured internally. The work has been supported by OB3 Research Ltd who have conducted interviews, validated data and conducted desk-based research into available reports and documents including discussions with a key delivery partner, the Welsh Local Government Association, and the Federation of Small Business Wales (FSB), in light of the work they have been undertaking in business support provision. 

The review team has drawn on existing guidance including the BEIS Business Support Evaluation Framework (2019) and the NAO report on business support schemes (2020) and considered reports published by the Welsh Language Commissioner, Economic Intelligence Wales, Cardiff University impact assessments and the Organisation for Economic Co-operation and Development.

The review team would like to express thanks to all who have contributed to this report. We would like to thank Carys Williams (Welsh Government, Non-executive Director) for her insight and challenge.

Infrastructure is fundamental to the health and growth of the Welsh economy, acting as a key driver for productivity, resilience and inclusivity. Improvements to transport (for example the dualling of the A465 and new train stock), digital connectivity and energy connects people and businesses and facilitates trade.

Wales has approximately 250,000 businesses of which the vast majority are micro-businesses and SMEs which form the backbone of the Welsh economy. Micro-businesses (those employing fewer than 10 people) are particularly prevalent, accounting for over 94% of all Welsh businesses. Larger firms, those employing more than 250 people, constitute a small fraction of the total count but play an outsized role in employment and economic output.

Prior to 2006, the Welsh Development Agency (WDA) was responsible for fostering economic growth in Wales by encouraging business development and investment, providing financial assistance, reclaiming derelict land and developing industrial sites. The agency's activities included attracting foreign direct investment and supporting local businesses. In 2001, Finance Wales was established in 2001 as a subsidiary of the WDA. 

In 2006 the WDA’s functions and responsibilities were transferred to the Welsh Government. Finance Wales became a separate entity owned by the Welsh Government until becoming the Development Bank of Wales in 2017.

Since the transfer of responsibilities, the Welsh Government has developed a broad suite of support mechanisms tailored to the evolving needs of Welsh businesses which includes the provision of information, guidance and support through dedicated digital platforms and a helpline, advisory support and mentoring for start-up businesses and SMEs; support for exporting and international growth; innovation and research and development (R&D) support; inward investment; sector specific and related branding support for the creative and tourism sectors; financial support through the Economy Futures Fund; direct loan support through the Welsh Government arm’s length body the Development Bank of Wales; and support to farmers through Farming Connect.

The economic conditions impacting business support provision in Wales are currently defined by significant uncertainty and rapid transformation. Several factors converge to create a particularly complex situation, most notably, the aftermath of the UK’s exit from the European Union (EU), the Covid-19 pandemic, the current inflationary pressures, the introduction and closure of the UK Shared Prosperity Fund, the loss of an overarching performance framework previously tied to EU funding, and, crucially the absence of a clearly defined regional framework between the UK Government and the Welsh Government regarding the allocation of replacement funding. These dynamics collectively influence the opportunities for clarity on the support available and the challenges faced by Welsh businesses and the Welsh Government.

The UK’s withdrawal from the EU has had profound consequences for Wales’ economic landscape. For years substantial EU structural funds were a mainstay of Welsh business growth, innovation and regional development. Associated with these funds was a robust, agreed performance framework that set shared objectives, benchmarks and a clear logic for evaluating the impact of business support interventions. The loss of this unified oversight, along with the funding itself, has created a significant gap, particularly in the ability to coordinate, measure, and improve support for Welsh businesses and communities previously reliant on European investment.

Brexit has also resulted in new trade barriers, tariffs and regulatory divergence, complicating export and import activities for Welsh firms, especially within manufacturing, agriculture and services sectors that historically depended on EU markets. In addition, the impacts of the Covid-19 pandemic and inflationary pressures as well as trade barriers at the macroeconomic level have applied significant pressure on the Welsh economy and employment creating significant uncertainty in the decisions around investment for businesses.

Against this backdrop, the Welsh Government has worked with the UK Government to shape the development of an Industrial Strategy, which was launched in June 2025. This includes ensuring the strategy has aligned with Wales’s Economic Mission and regional strengths. The Welsh Government is working with the UK Government to focus on delivery for Wales. This includes across areas such as the National Wealth Fund, an AI Growth Zone, a Defence Deal and Cluster for Wales, reducing energy costs for businesses and delivery of funding in areas such as Local Innovation Partnerships and Industrial Strategy Zones.

Wales has a high proportion of micro and small enterprises, over 94%, which often lack capacity for growth, innovation and exporting. Productivity levels remain below the UK average. The productivity challenge in Wales has been extensively documented. Manufacturing for example contributes 15.6% to Wales’ Gross Value Added (GVA) which exceeds the UK average of 9.2%. However, productivity within the manufacturing sector is declining due to sector fragmentation, low R&D investment and skills gaps. 

Geographic challenges include the rural landscape, poor infrastructure and uneven digital access. Historic legacies of post-industrial decline have left regions with low business density, economic inactivity and skills shortages. Labour market pressures require targeted job creation, retention, and upskilling interventions.

The role of the Welsh Government in business support is at a simple level twofold - supporting delivery of strategic policy direction and business conditions; and delivering a wide range of support services on a pan Wales and regional basis. At the strategic level, the Welsh Government’s Economic Mission sets out four priorities:

1. A just transition and green prosperity.
2. A platform for young people, fair work, skills and success.
3. Stronger partnerships for stronger regions and the everyday economy.
4. Investing for growth.

The Economic Mission is underpinned by a range of policy intentions focused on creating the conditions and opportunities to deliver on the four priorities.

The Welsh Government designs, coordinates, and delivers a broad spectrum of support services tailored to the needs of Welsh businesses and communities:

• information, guidance and advice; on areas such as business planning, HR and fair work, decarbonisation, export, supply chain activity and best practices via Business Wales. Support for SMEs to secure contracts and reduce costs via Sell2Wales
• access to finance: the Development Bank of Wales, an arm’s length body of the Welsh Government, bridges finance gaps through loans and equity, especially for SMEs and micro businesses underserved by mainstream lenders. The Welsh Government also has a dedicated fund through the Economy Futures Fund
• innovation and technology: support for digitalisation, R&D and the adoption of new technologies
• export and Internationalisation: a range of export support services connecting businesses to global opportunities, offering tailored guidance and practical tools to help Welsh firms expand internationally
• networking and collaboration: events, clusters, and sector forums, often convened by the Welsh Government, encourage knowledge-sharing, fostering partnerships between businesses, academia and the public sector
• signposting: initiatives like Business Wales deliver a single point of contact, ensuring businesses can swiftly access the most relevant support without unnecessary duplication or confusion
• sector-specific programmes: food, creative, tourism, construction, foundational economy
• skills and innovation: Flexible Skills Programme, SMART Cymru, Circular Economy Fund
• place-based growth: regional teams, property investment, foundational economy initiatives
• specific project-based intervention from Arfor to GCRE
• Farming Connect: support for farm businesses and rural communities
• more broadly the government also supports businesses with significant wider levers notably Non-Domestic Rates relief to all small businesses with rateable premises

Strategic sectors such as advanced manufacturing, life sciences, tourism and creative industries are currently prioritised. Tailored packages are developed for high-growth sectors, while investment in everyday services supports local economies. Recognising Wales’s diverse regions, the Welsh Government delivers place-based support to address local inequalities and challenges, from the south Wales Valleys to rural heartlands. Regional Economic Frameworks guide targeted investment in infrastructure, local skills, and bespoke business support, helping all communities participate in economic growth.

The objective of business support is to encourage and stimulate economic growth, entrepreneurship and innovation. At its core the Welsh Government business support aims to:

• boost employment and create quality jobs, especially in areas with persistent economic challenges
• close the productivity gap with the rest of the UK by investing in innovation and workforce skills
• empower micro enterprises to start, grow and scale, innovate and survive in a changing landscape
• reduce regional disparities by ensuring targeted, place-sensitive support for all communities
• strengthening resilience, enabling Welsh businesses to adapt to global shifts (such as Brexit and the transition to net zero) and seize new opportunities, including in international markets

Some of the key tools and policies in the Welsh Government’s business support system include:

• Business Wales portal: the primary government gateway for advice, guidance and support
• Farming Connect: dedicated support for farm businesses and the rural community
• Development Bank of Wales: providing Welsh businesses with critical access to capital and expertise
• Economic Action Plan: the strategic framework setting priorities for inclusive growth, resilience and sustainability
• digital support platforms: online resources and diagnostic tools to streamline access and tailor support efficiently
• export and Internationalisation: programmes devised to help businesses enter and thrive in overseas markets

Job creation

The First Minister’s ‘more jobs’ priority reflects the Welsh Government’s commitment to increasing employment opportunities across Wales. This priority is advanced through a range of targeted interventions and cross-government approaches that support job creation, safeguard existing employment and lay the groundwork for future opportunities. Whilst this is not a Programme for Government target, it is a cross-government commitment to increasing employment opportunities for people across Wales. 

Though not an exhaustive list, there are several key policies and programmes supporting the more jobs’ agenda through focused programmes such as the Development Bank of Wales, Business Wales and the Economy Futures Fund.

Initiatives such as Business Wales, Farming Connect and Visit Wales all provide support to businesses to build long-term sustainability, embedding fair work principles, strengthen workforce management and access new supply chains.

Programmes including Freeports and Investment Zones are designed to unlock long-term employment potential, support the transition to a net-zero economy and create the conditions for future job growth.

Whilst all these efforts often result in new job creation and safeguard existing roles, not all areas collate jobs as a metric, there is inconsistent methodology on the definition of job creation and inconsistency in how this data is collected. However, we did find consistency within the Cabinet Secretary’s portfolio in relation to Business Wales, Economies Future Fund, Innovation and the Development Bank of Wales.

The business support ecosystem in Wales is broad and multifaceted, encompassing a range of partners who deliver support for businesses. While the Welsh Government is a central stakeholder, a significant number of other organisations also play roles in supporting Welsh businesses at local, regional and national levels.

Corporate Joint Committees bring together multiple local authorities to plan and are beginning to deliver on economic development, strategic transport and land use at a regional level. Their focus includes:

• strategic economic planning and coordination of regional development priorities
• pooling of funding, resources and expertise to enhance the impact of business support initiatives
• facilitating large-scale regional projects in infrastructure, innovation and skills

Regional economic partnerships including the Cardiff Capital Region, Swansea Bay City Deal, North Wales Growth Deal and Mid Wales Growth Deal, coordinate public, private and academic investment in economic infrastructure, innovation and sectoral development. They typically include:

• investment in digital transformation, low-carbon technologies and sectoral strengths.
• dedicated business support and innovation programmes.
• Regional Skills Partnerships aligning skills provision with business needs.

Universities and colleges support business growth and innovation through:

• Knowledge Transfer Partnerships (KTPs) connecting businesses with academic expertise and graduate talent, delivered by the Welsh Government
• incubators, accelerators and enterprise hubs for start-ups and entrepreneurs are often delivered in collaboration
• research collaboration, R&D support and specialist advice in areas such as digital, engineering and low carbon

Chambers of Commerce, CBI, and FSB provide advocacy, business advice, networking, and training and represent business interests to government and funders.

Social enterprise through Social Business Wales and representative organisations such as Cwmpas, Social Firms Wales, Unlimited, DTAW and the WCVA support socially driven and community-led business models. Sector councils, trade bodies, and industry clusters such as Food & Drink Wales, Creative Wales and Tourism Wales, deliver targeted support, sector advocacy and access to funding for innovation and market expansion.

High street banks, accountancy firms, challenger banks, and venture capital offer additional finance and investment options, with a growing emphasis on sustainability and social value.

This landscape is further complicated as the UK Government’s suite of policy interventions and funding streams that shape the business environment in Wales are often based on the England policy position without specific reference to the Welsh ecosystem. Notable programmes and agencies include:

• UK Shared Prosperity Fund provides replacement funding after the end of EU structural funds, with its own priorities and allocation mechanisms
• Innovate UK and the British Business Bank offer innovation funding, loans and growth support available to Welsh businesses
• sectoral and export programmes, UK-wide initiatives in manufacturing, technology and export support, often coordinated by the Department for Business and Trade

These initiatives introduce additional resources and policy direction and where coordinated (for example via the MOU with Innovate UK) provide significant additional resource, but more broadly come with varying criteria and strategic priorities compared to devolved approaches. Local authorities have also been able to support businesses, especially through the UK Shared Prosperity Funding with primary activities including:

• direct grants and business advice through the economic development team, supporting SMEs, start-ups and social enterprises
• regeneration projects and place-based initiatives focused on infrastructure, property development and the revitalisation of high streets and enterprise zones
• skills and employability programmes in partnership with colleges and training providers addressing local workforce needs

UK Government strategy and policy has significant impacts on Wales.  The Internal Market Act, when not used in collaboration for added value, provides legislative cover to deliver devolved activity in Wales often conflicting with local delivery so often missing the opportunity that joint working provides. The UK Government is also establishing an Industrial Strategy Board and Wealth Fund, with six bills already introduced to the UK Parliament. The Welsh Government is highlighting the strategic importance to both the UK and Wales of securing investment for the construction of wind farms in the Celtic Sea and associated infrastructure around Port Talbot. The UK Government is also legislating on the railways; two of three bills affect Wales. The first is already in Parliament and will require Welsh Ministers to procure a public-sector operator, this meets our long-term ambition. The second expected later this year, will create Great British Railways uniting services with infrastructure, and delivering other reforms.

It will be important to understand how Great British Energy works in partnership with the Welsh Government delivery companies, Trydan Gwyrdd Cymru and Ynni Cymru, in delivering the ambition to scaling up renewable energy in Wales. It will also be important to understand how the National Wealth Fund, Crown Estates and GB Nuclear work in partnership with the Welsh Government.

In addition, work continues on Freeports and Investment Zones and the anticipated expansion of the defence and nuclear power sectors is expected to provide new opportunities for Welsh businesses.

This plethora of support available has resulted in a more fragmented and complex business support environment. Rather than a single, unified system with agreed performance measures, businesses and organisations now navigate an array of separate initiatives, each with its own eligibility, timelines, reporting requirements and approaches to accountability. It also complicates the alignment of programmes and risks duplication, while making it harder to ensure that support reaches those most in need.

To simplify the business support offer in Wales, we recommend the announcement of a round of seminars, between now and the end of this Senedd term, bringing together the major business support providers.  The aim being to clarify the range of support, removing duplication and identifying any gaps in provision; resulting in a refreshed and customised approach to businesses in Wales.   

Furthermore, we recommend the outcome be tested in a series of workshops direct with key stakeholders and businesses. 

During the review, the possibility of using an arm’s length body (ALB) to lead and manage business support services in Wales was raised. However, the review team also found that business support services are well regarded as they stand, and that potential improvements identified can be addressed without the overheads and disruption of introducing a new organisation.  We also heard that the view that an ALB would be another addition to a landscape that is already crowded with players that would not be part of that ALB (including local government, UK Government, City Deals, etc.).

Additionally, the review team heard positive references made to the business support models in other countries such as Canada and Sweden. Whilst not remitted to provide a full analysis of international business support models, top line research was undertaken. 

The desktop research noted that business support can be described as the ecosystem of services, advice, funding, infrastructure and mentorship available to help businesses start, survive and grow. While models may differ in detail, common models of business support include:

• government-led support agencies: centralised or regional agencies established by governments to provide grants, loans, advisory services and training
• incubators and accelerators: organisations, sometimes backed by public funds, sometimes private, that offer structured programs, mentorship, investment and workspace to startups
• Chambers of Commerce and representative organisations: member-led organisations that advocate, network, and deliver support
• banks and microfinance institutions: providing credit, loans and financial advice
• venture capital and angel networks: private investors or groups investing capital and expertise, often in exchange for equity
• university and research institutions: supporting spinouts, innovation, and commercialisation of research
• online platforms and digital networks: technology-enabled support via virtual mentorship, resources and funding platforms

Examples of models elsewhere include:

Scotland

Scotland possesses a robust and integrated system of business support, recognised for its strong public leadership and partnership with private and third-sector organisations.

• Scottish Enterprise: Scotland’s national economic development agency delivers funding, investment, export support and advice to businesses at various growth stages. It targets high growth sectors and offers innovation funding and internationalisation support
• Business Gateway: operates at a more local level, providing free advice, workshops, and resources for start-ups and SMEs across Scotland’s local authorities; Business Gateway is often the first point of contact for new entrepreneurs
• Highlands and Islands Enterprise: focuses on the distinctive needs of businesses in northern and rural regions, with bespoke support tailored to local economic priorities
• Innovation centres: sector specific entities that foster collaboration between industry and academia to spur innovation

Scotland’s support model is notable for its layered approach, national agencies set strategic direction, while local agencies deliver tailored support, all within a framework that values innovation, inclusivity and sustainable growth.

Ireland 

Ireland’s business support ecosystem is internationally recognised, particularly for its success in attracting foreign direct investment and fostering a vibrant start-up culture.

• Enterprise Ireland: the primary government agency for indigenous business development and export growth. It provides funding, advisory services and internationalisation support, with a focus on scaling Irish companies globally
• Local Enterprise Offices (LEOs): distributed throughout the country, LEOs are the backbone of local business support, assisting micro and small enterprises with grants, training and mentoring
• IDA Ireland : focused on attracting and supporting inward investment from multinational corporations
• Accelerators and venture networks: Ireland boasts a vibrant network of accelerators and angel investors that complement state support and connect start-ups with capital and expertise

Ireland’s approach combines centralised strategic agencies with localised support and a strong emphasis on internationalisation and high-value sectors such as technology, pharmaceuticals and finance.

Canada

Canada employs a multi-layered business support model, combining federal, provincial and municipal initiatives.

• Innovation, Science and Economic Development Canada: the federal department responsible for driving innovation, supporting SMEs, and funding research and development initiatives
• Regional development agencies: including Western Economic Diversification Canada, FedDev Ontario, Canada Economic Development for Quebec Regions and others; these agencies provide region-specific support and funding to reflect local economic priorities
• Business Development Bank of Canada: a Crown corporation offering financing, advisory services and capital to SMEs unable to access traditional bank financing
• MaRS Discovery District, Communitech, and other incubators: Canada has a rich landscape of university-linked and independent incubators and accelerators that nurture early-stage companies, especially in technology and life sciences
• Export Development Canada: supports Canadian businesses in expanding internationally through financing, insurance, and market intelligence

Canada’s model emphasises inclusivity, with dedicated programs for women, Indigenous, and immigrant entrepreneurs, as well as a strong focus on cleantech, digital innovation and inclusivity.

Sweden

Sweden is widely regarded as a leader in fostering innovation and entrepreneurship, underpinned by substantial state involvement and a collaborative culture.

• Swedish Agency for Economic and Regional Growth (Tillväxtverket): supports regional development, entrepreneurship and innovation through funding, knowledge transfer and coordination with municipalities
• Vinnova: Sweden’s innovation agency funds research, development and public-private innovation partnerships, with a mandate to boost sustainable growth
• Almi Företagspartner: provides loans, venture capital and business development advice, with a special focus on early-stage and high-growth companies
• Incubators and science parks: Sweden has a dense network of science parks often linked to universities, fostering collaboration and commercialisation of research

Sweden’s support system is characterised by its integration with the welfare state, emphasis on sustainability, and deep partnership between government, academia and the private sector. 

Denmark

Denmark’s business support model is decentralised and strongly oriented toward fostering innovation, digitalisation and green growth.

• Danish Business Authority (Erhvervsstyrelsen): oversees national policy, regulatory environment, and offers digital advisory tools and programs for start-ups and established companies
• Regional Business Development Centres: provide local advice, training and network-building for SMEs, with services tailored to regional needs.
• Innovation Fund Denmark: supports research and innovation, enabling collaboration across sectors and funding high-potential projects
• Vækstfonden: the Danish state’s investment fund, providing venture capital and growth loans to entrepreneurs and innovative businesses
• Cluster Organisations: Denmark’s industry clusters foster cross-pollination of ideas and technology, particularly in sectors like cleantech, biotech and food innovation

Denmark is renowned for its ‘one-stop shop’ approach, where digital platforms streamline access to government services for businesses. The support model encourages sustainable development, digital transformation and export growth. 

Iceland

Iceland’s business support landscape, though smaller in scale, is dynamic and responsive to its unique economic context.

• Innovation Center Iceland: the leading public agency for innovation and entrepreneurial support, offering incubation, R&D consultancy, prototyping facilities and access to networks
• Icelandic Startups: provides accelerators, mentorship and funding connections for new ventures, particularly in creative industries and technology
• NSA Ventures: the state’s venture capital fund, investing in early-stage Icelandic companies and supporting growth through strategic partnership
• Regional Development Institutes: promote entrepreneurship outside Reykjavik, ensuring that rural and coastal regions benefit from economic development initiatives

Iceland’s approach is characterised by agility, with support often tailored to sectoral strengths such as renewable energy, fishing, tourism and IT. Collaboration between public institutions, universities and the private sector is a defining feature.

Singapore

Singapore stands as a gold standard for state-driven business support, with an emphasis on efficiency, transparency and internationalisation.

• Enterprise Singapore: this government agency supports businesses in scaling up, driving innovation and expanding overseas
• Startup SG: a national framework offering funding, mentorship and accelerator partnerships; it also facilitates access to international markets through a network of Global Innovation Alliance partners
• favourable regulation and infrastructure: ease of doing business is enhanced by a transparent legal system, world-class infrastructure and straightforward tax incentives
• talent development: initiatives support lifelong learning and the upskilling of the workforce, ensuring access to top tier talent

Germany

Germany’s business support model is deeply rooted in its industrial heritage, with a strong emphasis on supporting SMEs, known as the Mittelstand.

• KfW Development Bank: a key pillar, offering low-interest loans and grants for start-ups and SMEs, and funding green and digital transformation projects
• industry clusters and chambers: regional clusters, such as those in automotive and engineering, provide networking, training and innovation transfer. The Chambers of Commerce (IHK) are vital in supporting business creation and internationalisation
• vocational training: Germany’s dual education system ensures businesses can tap into a continuous stream of skilled workers
• strong legal protections: regulatory clarity and protection for innovation and intellectual property encourage R&D investment

Across these nations, several key trends emerge:

• integration of national and local support: successful models harmonise national strategy with local delivery (Scotland, Ireland, Denmark, Canada)
• emphasis on innovation and sustainability: funding and support prioritise innovation, digitalisation and green growth (Sweden, Denmark, Iceland).
• inclusive support programmes: special initiatives target underrepresented groups, reflecting a commitment to diversity and social equity (Canada, Scotland)
• public-private collaboration: most systems are marked by cooperation between government, academia and the private sector
• streamlining and digitalization: one-stop digital platforms are increasingly common, making government support more accessible (Denmark, Sweden)

Common threads in successful models

While business support models vary according to national context, certain similarities emerge among the world’s leaders:

• proactive and well-funded government involvement
• access to capital across stages of business growth
• a culture that celebrates entrepreneurship and innovation
• strong legal and regulatory frameworks
• collaboration between public, private and academic sectors
• inclusive policies that nurture diversity and resilience

This is primarily an internal review, and we have not looked at the possibility of fundamental structural changes. However, we do recommend that as part of the Welsh Government’s normal continuous improvement efforts, further work be undertaken to explore international business support models and keep an ongoing watch on what evidence base there may be for further changes and options for the future delivery of business support services in Wales.

OB3 Research Ltd

The following sets out the findings and considerations from research undertaken by OB3 Research Ltd.  This comprised a desktop review of recent research and evaluation reports from a wide range of sources, along with interviews with senior officials within the Welsh Government and key external stakeholders. The desktop research synthesises the key findings from recent studies on Welsh Government business support provision. Of the eighteen sources considered, two were industry sector survey reports (creative and tourism sectors), and three focused on the finance market sector, notably the Development Bank of Wales. 

The remaining sources were evaluation reports covering grant and loan funding, Business Wales advisory provision and third sector support.  Although this work primarily focused on project or programme level issues rather than strategic recommendations, their insights could inform a more detailed strategic programme, including stakeholder interviews and broader policy and economic analysis.

The review collates evidence of the roles played by the Welsh Government and its partners (including the Development Bank of Wales and third sector bodies) in business support over recent years. It also summarises the impact of different support structures, though the data quality varies between studies. Areas of least impact, such as value, productivity and investment were identified, and the review notes that more consistent use of key performance indicators (KPIs) would allow for more meaningful programme comparison in the future.

The key findings were: 

Alignment with policy and flexibility

Business support in Wales is closely aligned with the Welsh Government’s economic priorities, such as increasing GVA, supporting exports and promoting sustainable development. Programmes showed significant adaptability in response to crises like Brexit and the Covid-19 pandemic - the Wales Business Fund for example, shifted focus from growth to survival support. Flexible resource allocation and responsive programme management were identified as best practices for future initiatives.

Delivery models and client experience

The adoption of hybrid delivery models during the pandemic improved the reach and efficiency of business support. Retaining these models is recommended due to their positive impact. Business Wales is recognised as a trusted one-stop shop, with a strong brand and high accessibility for new and hard-to-reach entrepreneurs. Client satisfaction is high (84% overall), especially regarding the expertise and impartiality of advisers. Further improvements could be made to service timeliness and communication. Targeted outreach, including Enterprise Hubs and the Business Wales Barriers Grant, have been effective in reaching groups less likely to access mainstream services.

Outcomes, achievements and value for money

Most assessed programmes exceeded their quantitative targets, particularly for innovation, job creation and safeguarding jobs. Notably, the Wales Business Fund contributed to 58% of supported employment growth, and the Business Wales Accelerated Growth Programme met nearly all job creation objectives. Support from Business Wales has led to higher business survival rates, four-year survivability for supported businesses is more than double that of non-supported businesses. 

Grant programmes such as the Barriers Grant, have delivered substantial GVA gains, and social business initiatives have improved financial sustainability, turnover and job creation. These programmes have also demonstrated strong value for money, with actual costs per job created often below planned targets and performing well compared to similar interventions elsewhere.

However, there is inconsistency in how programmes set and report key KPIs. This makes it challenging to compare outcomes and measure the true impact of different interventions. The lack of consistent and comparable KPIs across interventions limits the ability to assess value for money and return on investment.

Where data is available, however, the results are encouraging: Business Wales generates an estimated up to £18 in gross value added (GVA) for every £1 invested. Export Support Programmes yielded a ratio of gross export value to direct programme costs of 20.5 (£20 per £1 spent), with the Helix food and drink programme reporting up to £15 per £1. The cost-effectiveness of job creation also varies, with the AGP standing out as particularly efficient.

Programme design and management

The review found that well-structured application and monitoring processes, such as two-stage grant assessments and dedicated account management, have contributed to the effective and transparent administration of funding. Loan-based support, including that provided through the Wales Business Fund, has helped to transition the business support culture away from grant dependency towards a model based on sustainable, repayable finance, building long-term expertise and legacy funds. Programmes that embedded cross-cutting priorities such as equality, sustainability and social value within their core delivery, rather than treating them as add-ons, were found to generate more meaningful outcomes. Nevertheless, challenges remain including the slow start-up of new programmes, the need for improved monitoring data and the importance of aligning KPIs with the full range of programme outcomes.

However, the system is not without its challenges. There is a prevailing sense of fragmentation with three levels of government, further and higher education, and the private sector all delivering business support of some form. At times this demonstrates overlap and a lack of coordination, particularly between business support, loan finance, skills development, branding and employability services. This complexity can make navigation difficult for businesses, particularly those in rural or emerging sectors without access to walk-in support. It remains a common theme for business that simple connected and visible support is essential where in effect there is ‘no wrong door’ to access support available.

Collaboration and referrals

While the review identified improvements in referral networks between providers such as Business Wales, the Development Bank of Wales and local authorities, there remains significant scope for further integration, data sharing and incentivisation to provide seamless journeys for clients. The report suggests that future provision should focus on increasing co-location and the use of incubation spaces to strengthen collaboration, shared customer management software and support.

Sector-specific insights

Sectoral analysis reveals that the creative sector in the aftermath of the pandemic, is adjusting its focus towards profitability and sustainability, although the sector continues to face skills gaps particularly in specialist and Welsh language capabilities. The finance market has become more diverse yet regional disparities and access barriers for certain demographics persist. The tourism sector meanwhile remains sensitive to external factors such as weather and economic trends, and there are ongoing concerns regarding operating costs and the quality of amenities relative to other regions of the UK.

Findings from the FSB’s Report on the Business Support Landscape in Wales 

• The FSB Wales regularly reviews how support for small businesses is delivered across the country. The report sought to understand the effectiveness of business support in fostering an ‘entrepreneurial ecosystem’ in Wales, identify areas for improvement and consider its future direction.
• The central finding of the report is that Wales’s business support ecosystem represents a significant strategic and competitive advantage. Notably the high brand recognition of business support institutions within Wales provides a considerable strategic advantage for shaping and implementing future policy.
• The research also highlighted clear areas for improvement in the delivery of business support across various institutions, notably the need for strengthened oversight and scrutiny, with the key findings of the report being that many small businesses struggle to find and access the right support.
• Information is often confusing and hard to navigate, especially for those in rural areas or disadvantaged regions.  
• Business support can feel generic and sometimes excludes microbusinesses or traditional sectors. Tailored advice is needed.
• Access to funding remains a major challenge with application processes described as complicated and time-consuming. Some businesses prefer long-term loans or tax relief over grants.
• External challenges like the aftermath of Covid-19, Brexit and rising costs add further pressure, especially for exporting businesses and those outside urban centres.
• There are gaps in support for skills development, with many small firms struggling to access training and apprenticeships.

Short-term review of SME productivity Wales

In early 2025, the Welsh Government commissioned a short-term review to determine how best to support SMEs in Wales to increase productivity. Recognising the vital role SMEs play in the economy, the review sought practical actions to boost productivity and promote economic resilience and inclusive growth.

The review aimed to identify actionable, evidence-based steps that the Welsh Government could implement in the short to medium term to help SMEs enhance their productivity over time. To this end a panel of external experts and practitioners with direct SME experience was convened, tasked with developing feasible recommendations and collaborating with the government to explore effective solutions for Welsh SMEs.

Key findings:

• Welsh SMEs may face challenges accessing finance and may lag behind larger firms in innovation
• boosting innovation and improving workforce skills emerged as critical strategies for closing the productivity gap in Wales
• external factors such as regional infrastructure, regulatory frameworks and market conditions, also significantly influence productivity
• the review identified seven core themes as firm-level drivers of SME productivity

Short-term review of artificial intelligence (AI)

The short-term review of AI in Wales was conducted to identify immediate and medium-term actions that the Welsh Government could take to accelerate economic growth through AI adoption. The review was set against the backdrop of rapid expansion in the UK AI sector, valued at £72.3 billion and projected to exceed £800 billion by 2035. Wales is uniquely positioned to benefit from this growth due to its existing infrastructure, strong academic base and data-rich public sector. 

The review brought together leaders from academia, industry, government and trade unions to explore five core themes - data centres and infrastructure, AI ecosystem development, business support, education and skills, and leadership and messaging.

The key findings of the review were:

• data centres and infrastructure: Wales is emerging as a hub for AI infrastructure, with significant investments from firms like Vantage Data Centres and Microsoft. Nine new data centres are in the pipeline supported by initiatives such as the AI Growth Zones. While this presents huge opportunities for job creation and economic growth, challenges remain around energy supply, grid connectivity and ensuring that communities and local businesses benefit
• AI ecosystem and public data assets: the review highlighted Wales’s robust legal and governance framework and its academic strengths in AI-related fields. There is strong potential to build on these assets by creating collaborative environments where sharing expertise and access to public sector datasets can drive innovation and commercialisation. Governance, data security and public trust were noted as essential foundations for success
• business support: many Welsh businesses are eager to adopt AI but need greater guidance, support and access to best practices. Challenges include data quality, skills shortages, costs and legal/ethical concerns. While there are existing initiatives, like Business Wales and the Hartree Centre, support is fragmented and not always tailored to AI. There is an urgent need for a more coordinated and proactive approach, especially for SMEs, to boost AI awareness, reduce risk and scale up adoption
• education and skills: by 2035, millions of UK roles will require some AI literacy or direct involvement. Wales must invest in education and lifelong learning to remain competitive, focusing on both technical AI skills and broader human skills such as creativity and ethical reasoning Partnerships between education providers and industry will be vital.
• leadership and messaging: effective leadership from the Welsh Government and clear public messaging are crucial to drive AI adoption, ensure ethical governance and build public trust. There must be explicit strategies for public sector AI use and support for industry in navigating the AI transition

Organisation for Economic Co-operation and Development (OCED)

The OECD has done a significant amount of work on regional governance. Their 2024 report ‘Regional Governance and Public Investment in Wales’ draws on that broad international knowledge and comparative experience. The OECD report does not identify any one system from another country or region that could simply be transposed into Wales but rather draws on those lessons learned and its detailed knowledge of Wales (which was built on a considerable amount of fieldwork and face-to-face discussion). The report emphasises regional development as a key to improving business support and productivity and the importance of the following factors:

• strategic coherence: the Welsh Government should establish a coherent strategic thread for regional development activities across the national government
• coordination mechanisms: creating an office for regional development coordination in the Welsh Government, a key recommendation of the OECD 2020 report, becomes more critical with the dissolution of the Welsh European Funding Office within Welsh Government which served as the de facto regional development coordinator given its EU funding role. The Welsh Government can explore other ways to adjust existing processes to strengthen co-ordination for regional development
• strengthening and diversifying coordination mechanisms across the Welsh Government can further bolster cooperation across government departments. This starts with designating a dedicated team for the coordination of the Welsh Government's regional development efforts
• ways of working must support collaboration across different teams and departments within the Welsh Government. Clear expectations, formalised in a Ways of Working Charter, can help overcome bureaucratic obstacles that impede collaboration
• empowerment of regional structures: strengthen Corporate Joint Committees with clear roles, accountability and visibility, and use of regional data dashboards to guide evidence-based planning
• improving government-local authority relations: promote face-to-face engagement and transparent decision-making

Welsh language

The Commission for Welsh-Speaking Communities was established to address challenges facing Welsh-speaking areas, including youth outmigration and limited job opportunities, which threaten the sustainability of the language and community life. The Commission’s report highlights that supporting local economies is vital for maintaining Welsh-speaking heartlands. The report recommends creating a dedicated business support programme for Welsh-speaking communities, designed to help local enterprises grow, provide jobs and encourage Welsh-language use in business. This includes:

• mentoring and grants for Welsh-language business initiatives
• incentives for using Welsh in business operations
• partnerships to boost entrepreneurship and tackle unique local challenges

The report urges the Welsh Government to review its business support schemes to make them more responsive to Welsh-speaking communities. Priorities should include:

• designing policies that recognise the value of bilingual businesses
• targeted funding for projects that support the Welsh language in the workplace
• improving access to support in rural and Welsh-speaking areas

By focusing on economic measures alongside language and cultural initiatives, the Commission believes Welsh-speaking communities can remain vibrant for generations to come.

The Welsh Government recognises the importance of the Commissioner’s economic recommendations and has outlined steps to address them including increased levels of funding for Welsh language training and dedicated support for new businesses working in Welsh, including access to information, guidance and support and support and embedding the integration of the Welsh language into national and regional tourism strategies, marketing campaigns and promotional materials.

From all the evidence analysed as part of this review we have made a number of recommendations.

The Welsh Government’s business support system is widely valued for its adaptability, partnership working and positive impact on business growth and innovation. However, the evidence suggests the need for clearer strategy, better integration with skills and employability, improved measurement of outcomes and more future-ready support for a number of sectors. The following recommendations are designed to address these challenges and position Wales for sustainable, inclusive economic growth.

1. Announce a round of seminars, between now and the end of this Senedd term, bringing together the major business providers. The aim being to clarify and simplify the range of support, removing duplication and identifying any gaps in provision, resulting in a refreshed and customised approach to businesses in Wales. Reviewing and targeting support would feed into considerations around priority areas for Local Growth Funding.  Furthermore, we recommend the outcome be tested in a series of workshops direct with key stakeholders and businesses.
    
2. Adopt a “no wrong door approach” to increase accessibility by creating an online hub using technological advances in artificial intelligence (AI), building on Business Wales, Trade and Invest and Visit Wales portals.
    
3. To support major investors at the Investment Summit, and for all significant new investors in Wales, provide a dedicated point of contact to enable them to access the most appropriate support required.
    
4. Enhance our dedicated account management function or strategic investors and larger SMEs, provided via regional teams, Business Wales and Visit Wales.
    
5. Improve data collection and reporting across all programmes and establish a unified performance framework for all interventions, with clear and relevant KPIs. 
    
6. Consider adopting a two-tier model for job creation and safeguarding:

• Primary: jobs created or safeguarded with a direct link to government intervention (e.g. Development Bank of Wales, Business Wales, Economy Futures Fund).
• Secondary: jobs supported through indirect intervention (e.g. Farming Connect, Creative Wales).

7. Continue to enhance those actions already in place and further consider how best to work with the UK Government to avoid gaps and duplication in service provision. 
    
8. Strengthening dedicated support for new businesses working in Welsh, including access to information, guidance and support and embedding the integration of Welsh language into business support provision across the Welsh Government.
    
9. Expand digital and hybrid delivery models to improve reach and efficiency, while maintaining local knowledge and relationships, particularly in rural areas.
    
10. Continue to strengthen collaboration between Business Wales, Creative Wales, Visit Wales, Trade and Invest Wales, local authorities, the Development Bank of Wales and third sector organisations.
     
11. Develop a clear pathway including dedicated support, for SMEs to adopt AI, including tailored tools, advice and awareness campaigns.
     
12. Provide targeted support for specific sectors such as energy (particularly FLOW), the defence sector and nuclear sector.
     
13. Make fuller use of the Business Wales brand and consider aligning Welsh Government business support for businesses based in Wales under this banner.
     
14. Consider how to simplify and develop specific sectors and support based on a rage of evidence and sector intelligence.
     
15. Consideration should be given to developing a narrower focus of key priorities in order to better concentrate resources. 
     
16. Undertake a full review of delivery mechanisms’ options based on best practice, customer requirement, the economic conditions and value for money for internal, directly funded and connected Welsh Government business support provision to identify the most effective and sustainable models for business support.
     
17. Use robust data and performance measures to inform future investment and delivery decisions.
     
18. Address physical (e.g. property), energy and digital infrastructure gaps, especially in rural areas.
     
19. Make support more inclusive for rural areas and underrepresented groups and increase in-person assistance where digital access is limited.
     
20. Develop a strategic approach to rapid response support for future crises and help businesses plan for uncertainty.
     
21. Improve coordination between the Welsh Government, local authorities and support organisations.
     
22. Co-design a single, overarching national business support strategy, underpinned by regional planning and oversight from a stakeholder advisory board.
     
23. Integrate business support more closely with skills and employability services.

In conclusion, the Welsh Government’s business support system is well regarded and has delivered strong outcomes. By implementing the recommendations set out in this review Wales can further strengthen its business support ecosystem, ensuring it is more integrated, responsive, and inclusive; well placed to meet future economic challenges and opportunities.