A NATIONAL BANK OF WALES

A Plaid Cymru government will seek to establish a National Bank of Wales (NBW), a publicly-owned bank similar to the German Landeskreditbanken, providing debt finance to Welsh businesses and taking longer-term equity stakes to help plug the estimated funding gap of £500m a year faced by Welsh SMEs. Finance Wales operations will be merged into new institution.

This institution will work with Welsh Government and the new WDA to grow Welsh Mittelstand companies; it will in particular offer succession and equity release planning specialists, involving the use of management buyouts and employee ownership trusts, and the adoption of long-term equity stakes as a public bank, providing a source of patient finance on the German model in successful Welsh companies in order to maintain Welsh ownership, preventing the ownership churn that has damaged so many successful Welsh companies, and therefore safeguarding jobs.

The term Mittelstand mostly applies to small to mid-sized firms in German speaking countries. Most importantly Mittelstand companies are characterized by a common set of values and management practices. What defines the Mittelstand, is a broad set of values such as: Family-like corporate culture; long-term focus; independence; nimbleness; emotional attachment, investment into the workforce; flexibility; innovativeness; customer focus; social responsibility; strong regional ties.

The owner or owners take the business decisions largely on their own – and assume the risks and liability. In these companies, the boss usually has close ties with the business and the employees and bears a particular responsibility for ensuring job security. Mittelstand companies are often hailed for providing the backbone of the world’s fourth-largest economy. They tend to be family-owned, tucked away in small towns and familiar only to the businesses that buy their specialised machinery and components.

The Mittelstand also appears to offer a solution to some of the biggest worries of the capitalist system. One being the centralisation of wealth and the other is unemployment. The combination of medium-sized companies with deep local roots and a strong apprenticeship system means that in Germany only 7.8% of those aged 25 or under are unemployed, compared with 22.1% in Sweden and 54% in Spain. Mittelstand firms inspire extraordinary loyalty in their workers: on average only 2.7% of them leave each year, compared with the 30% turnover at some big American companies.

Over time NBW will develop into a deposit taking institution, involved in mainstream business banking, and providing banking facilities to the Welsh public sector, allowing it to use fractional reserve banking to expand its lending capacity. It will separately create a series of sector specific and independently managed seed and risk capital funds for high-growth innovation-based businesses.

Plaid Cymru will also look to build on the work of the Sector Panels, Industry Wales and other existing industry fora to support the development of sector associations to help us develop strategies in every area of the economy. We will do everything we can to support the steel industry in Wales, pressing the UK Government and EU to take radical action to protects the industry from unfair competition, procuring Welsh steel wherever possible as part of our infrastructure investment programme and actively exploring the possibility of a joint venture investment to improve the long-term competitiveness of the Port Talbot steelworks.