Don’t just exclusively focus on Cardiff to grow Wales.

The news that furniture company Triumph has entered administration is a timely reminder that the Welsh economy remains threatened by the unprecedented cuts in public spending. The company blamed a slump in orders from the public sector for its problems, and immediately laid off 110 workers, with a further 186 full time staff at risk. These workers will now be part of the growing ranks of unemployed people, and no doubt labelled as work shy scroungers by those parts of the media eager to run some more negative stories about the valleys.

With public spending set to remain low for the next few years, the influence of the assembly to directly influence employment levels have been reduced. One of the positive factors in the reducing unemployment levels we saw prior to 2007 was no doubt the construction of assembly offices, and subsequent employment of public sector workers,  in North Wales, Aberystwyth and Merthyr amongst others. Unfortunately spreading public sector growth throughout Wales (as opposed to keeping everything in Cardiff) is no longer an option.  The key to reducing unemployment now lies with the private sector, and the growth of SMEs.

But even this will not be enough if efforts to promote private sector growth exclusively focus on Cardiff.  Cardiff is already an attractive location for businesses to locate, and doesn’t necessarily need a sustained effort to create and attract SMEs. Other parts of Wales are a different matter. Young entrepreneurs are likely to continue to choose to set up in Cardiff unless there is a sustained effort aimed at encouraging start ups elsewhere.

Whilst the assembly still lacks some powers over the economy, its influence is hardly negligible. It can play a role directly through reviewing its procurement policies and making it easier for new start-ups to obtain public sector contracts  – actively using its spending power to promote SMEs based outside of Cardiff.  Improved transport is also something that is often called for, but this is a double edged sword as most proposals for improved transport seem to focus on making Cardiff the centre of a network. Making it easier for people and goods to leave the Valleys for Cardiff and the M4 network also makes it easier for consumers to shop in Cardiff and risks leaving the high streets of Merthyr and Ebbw Vale empty.

In a service based economy where businesses trade online,  the investment is simply better used in creating a high speed broadband network (full disclosure: we’ve had problems with the connection in the office this week!), training in industries of the future, and supporting new start-ups locating in places like Mid and West Wales and the valleys.