Socio-Economic Impact of Adfywio



Socio-Economic Impact of Adfywio

Tender no. WHQ/03/2004-05.

Contract no. FC 73-03-201

Draft Final Report submitted by

Socio Economic Research Services Ltd

(Registered Company No. 04863028)

10E Science Park

Cefn Llan

Llanbadarn Fawr

Ceredigion

SY23 3AH

Tel: 01970 632032

tony@.uk

Background

1 Adfywio grant scheme

Adfywio is a £5.2 million grant scheme funded by the Welsh Assembly Government (WAG) to aid in stimulating rural economic recovery following the foot and mouth outbreak. The scheme is managed jointly by the Countryside Council for Wales (CCW) and the Wales Tourist Board (WTB) with additional support from the Forestry Commission (FC). The scheme is intended to provide financial support for projects which help integrate businesses more closely with open air recreation. In doing so, it is intended that the scheme aids in the regeneration and recovery of rural tourism business. Further, through creating close links between the service providers and the clients it aims to ensures longer term viability of the rural tourism businesses.

In particular, projects seek to:

• Help tourism businesses integrate outdoor recreation and enjoyment of the countryside /coast with a better understanding and appreciation of our natural environment and the historic and cultural characteristics of rural communities;

• Improve existing or provide new opportunities for outdoor leisure, public access and accessibility for all people to woodlands, water space and the wider countryside.

Financial support was made available for projects either as capital grants (up to 50% of eligible capital costs for projects costing between £1,250 and £125,000) or revenue grants (up to 80% of eligible costs for projects valued between £800 and £60,000). The two are not mutually exclusive; a combined capital/revenue project could attract both forms of support.

Over the duration of the scheme 194 projects were awarded a total of £5.20 million. Total value of the projects to which Adfywio contributed is £13.64 million. Included are a wide range of projects which fall with the aims of the scheme including new outdoor recreation facilities, tourism facilities, support for projects by tourism providers and a number of events.

Refer to objectives of this study (as in the original project brief)

2 Methodology: theory

A key aim of the scheme was to stimulate social and economic development within rural Wales. Maximum impacts of Adfywio, for a given region, would be achieved when these expenditures (and subsequent spending) are retained in the economy under consideration. Effectively, maximal impacts are obtained when ‘leakage’ of the funding from the economy is minimised. This implies a spatial consideration; first, limiting the boundaries of the economy to a defined ‘local’ area around the grant receiver and, second, to a larger, in this case, national (Welsh) economy. Further leakage occurs to other national economies, whence it impact is considered as lost. Estimation of the scale of local/national impacts is achieved using local economic impact (multiplier) analysis.

The theory of multiplier analysis is outlined in the following section, there follows a section on the specific form employed in this analysis.

1 Multiplier Analysis

Multiplier analysis has two foundations. First, that there is a leak of funds from the local to the wider economy as goods or services are purchased. An injection of funding used to obtain goods and services will be spent at various locations; from the perspective of the local economy its impacts are greatest when local goods and services are purchased. Likewise sourcing from further afield reduces the benefits to the local economy of the initial injection. While it is recognised that the funds, if dispersed are not actually lost, they are effectively lost to the local economy. Dispersal of the original sum is inevitable as money is spent in subsequent transactions. Thus, the second basis of multiplier analysis is in identifying and quantifying those transactions and their impacts on the economy in question.

An initial round of spending is created by the original injection of funds into an economy (i.e. the Adfywio grant or increased tourist spend); this is known as the direct expenditure. As the recipient businesses of the direct expenditure then re-spend this money in successive indirect rounds, the number of transactions rise and the overall output expands. With this expansion in output comes an increase in the wealth of local residents, who consequently increase their consumption expenditure (induced effects). The overall impact on the level of economic activity can be expressed in terms of the changes in output, income or employment that arise in the recipient economy. This is expressed numerically by the ‘multiplier coefficient’, which is calculated as the ratio of the sum of the direct, indirect, and induced effects against the direct effects. The ultimate size of the multiplier coefficient is thus a reflection of the extent to which injections of expenditure are retained within (or alternatively, leak from) the local economy. Various factors will affect the size of an economy’s multiplier coefficient, including the size of the local economy under consideration, the extent of interlinkages within the local economy and the extent of ‘leakages’ from that economy.

Multiplier analysis has been utilised to assess the impact of a range of rural projects within Wales including Welsh NNRs (Christie et al., 1998), the Kite County Project (Grittiths, 1996), community buildings (Bickerton, Christie and Matthews, 2004), and the Royal Welsh Show (Sherwood, 1994). Rayment (1995 and 1997) also provides a comprehensive review of economic impact studies within the UK.

A key issue in this research is the assessment of the size of the local economic impact of different types of projects funded through the Adfywio grant scheme. Traditional Keynesian local multiplier analysis would require a comprehensive (and resource demanding) assessment of all the local money flows stemming from the initial grant expenditures. To overcome this expense, many studies have simply ‘borrowed’ multiplier coefficients from existing research. The method is largely acceptable and surprisingly robust given the selection of appropriate multiplier coefficients. However, as resource efficient such borrowing may be it is applicable only to a broader scale study, for example the gross impact of the scheme funds upon the local and national economies.

As will be discussed subsequently, the range of projects supported by Adfywio funds is great. This variety is evident not only in size but in the means of delivery, intended aims, type of recipient organisation, intended scope of the project and other factors. An important component in assessing Adfywio is to consider these variables as an aid to identifying factors which contribute on the local impact. Thus, the chosen method must function at a more refined scale than that of borrowed coefficients. A useful compromise between survey costs and attaining suitable information comes in the form of the LM3 tool, developed by the New Economics Foundation (2002).

2 Local Multiplier 3 (LM3)

Survey costs in multiplier studies increase dramatically with each subsequent spending round. A single grant payment may be spent with, say, 5 businesses. As each business spends with several others sample sizes for subsequent rounds become considerably larger than the previous round. Clearly there is, as leakage occurs at each round and the remaining sum is distributed among an ever increasing number of traders, a diminishing return for the additional effort. The question for the researcher is how many rounds are appropriate? Local Multiplier 3 (LM3) is a widely used tool which answers that question.

The ‘3’ in LM3 represents the fact that the LM3 tool takes the first three rounds into account[1]. There is sound justification for this; it has been shown that these first three rounds of expenditure account for around 85% of all local expenditures stemming from a project (New Economics Foundation, 2002). LM3, therefore, provides a cost effective indicator of the size of the local economic impacts and, with widespread use offers a consistent method which provides comparable results.

Application of LM3 involves survey work to obtain the raw data. Data used is:

Round 1 initial grant, size and whether revenue, capital or a combination.

Round 2 quantify spending of initial grant including identifying the businesses it was spent with.

Round 3 for each of the businesses identified in Round 2, quantify their subsequent spending of the Adfywio funds. This round is likely to be less specific than the above. For example, a machinery hire company is unlikely to be able to attribute a proportion of the machinery purchase price to a single hirer. Where this occurs respondents were asked to estimate the proportions of their total spend which are

i) local: that is spending within the same economic region[2] as the project; and

ii) not within the same economic region as the project but within any of the other economic regions of Wales.

Once information on the three rounds of spending has been collated, a LM3 coefficient is calculated. The coefficient is in effect the ratio of local spending against the initial input. A value of 3.0 would indicate that all of the money is retained within the local economy over the 3 rounds. However, actual coefficients are considerably less as obligatory payments such as the various forms of tax are, in terms of LM3, leakage from the local economy.

Adopting LM3, with its relatively low resource demands, permits evaluation of individual projects; a multiplier coefficient for each project is estimated. This permits a number of further analyses including comparisons of individual businesses one to another, through comparison of business types, inter regional assessment and other derived groupings.

3 Methodology: application

The methodology consists of three distinct stages: data collection; estimation of multiplier coefficients and finally, interpretation of results. A sample size of 40 projects was demanded in the specification of the research project. The sample was chosen on a number of criteria apparent in projects in the scheme.

1 Data Collection

Data collection was conducted in two stages. The initial stage was a review of information held by the administering organisations, including application forms and other information provided by the applicant in support of their claim. The aim of this stage was to provide background information to the scheme, identify selection criteria for the sample to be used in the multiplier analysis and, using these criteria, identify the sample projects. An initial sample selected on the identified criteria was then subjected to consultation and amendment with CCW and WTB staff involved with the administration of Adfywio.

Following identification of the sample data was collected from the supported organisation through a combination of questionnaire and, where necessary, by interview. Details included impacts of FMD, aims and objectives of the projects, development of the project and details of spend. This completes Stages 1 and 2 of the LM3 multiplier analysis. Data for the third stage was obtained from contractors who were paid using Adfywio funds. Again this was by questionnaire and where necessary by follow up interview. A simplified version of the grant receivers’ questionnaire was used to obtain data on the contractors spending of the funds. Additional data collected provides the characteristics of projects which can be related to the relative success (indicated by calculated coefficients) on local and Welsh national scales.

An added advantage to the LM3 methodology is that each observation, in this case each project funded, is able to be modelled and an individual multiplier coefficient calculated. Thus, common characteristics of projects with similar coefficients can be determined from the extraneous variables collected on the projects. For example, common characteristics of projects with high or low multiplier coefficients may be identified subsequent to the estimation process.

2 Sample selection

In this research a sample of 40 from the total 193 projects supported was selected for estimation. Given the above observation on LM3 sample selection is an important prerequisite to robustness and precision. In the following section of results the critical sample selection process is expanded on: first a summary of the scheme followed by the sample selection process.

A summary of the projects supported by the scheme is presented below. This serves to identify factors used in sample selection.

1 Summary of Projects

The Adfywio scheme, as a response to the impacts of FMD has a broad remit relating to tourism businesses and outdoor recreation. In total 194 projects were supported at a cost of £5.2 million; this suggests an average of around £27,000. However the variation in size of project and the support provided varied greatly across projects.

The total value of the projects supported through Adfywio amounts to £13,673,941, giving a mean project value of £70,484. Projects range in size from £1,864 for revisions to a web site up to £708,000 for “an ambitious plan to develop a 9.5 mile walking and cycling route…” The value of the largest is over 380 times that of the smallest. Conventional statistics are of little use. Standard deviation of the sample is calculated as £111, 124 suggesting the incomprehensible minimum project value as less than zero and the largest as well below the actual. This suggests some skewing of the data.

The greatest proportion of grants (80 projects, 41% of total) was for capital works; 49 projects (25%) received revenue only grants and 65 projects (34%) were combined revenue/capital. Again, the variation in the size of the awards is clear (Table 1).

Table 1: Value of grant aid by fund type

|Grant Type |Value (£) |

| |Total |Mean |Minimum |Maximum |

|Capital |3,339,392 |23,430 |1,000 |125,000 |

|Revenue |1,921,572 |16,856 |800 |119,934 |

The projects were distributed across the 4 economic regions (see footnote page 3) of Wales as in Table 2.

Logically the more rural regions of mid and north Wales offer the greatest opportunities for outdoor recreation and consequently the greater number of businesses eligible for Adfywio. This is reflected in the proportions of the grants awarded to each region; around two thirds of grants are to businesses located in these two regions. Mid and north Wales differ in that the majority of projects in the former are for capital only while in North Wales combined grants dominate. South east and south west regions follow the same pattern as mid Wales with however very few revenue only grants in each region. There are few projects not attributable to a single region; the vast majority are revenue only grants. The projects are national scale and include travel schemes and guidebooks applicable to all Wales.

Table 2: Regional distribution of projects

|Region* |Number of |As % of Adfywio |Projects (% of projects within the region) |

| |projects |projects | |

| | | |Capital only |Revenue only |Combined |

|North |69 |36 |25 (36) |16 (23) |28 (41) |

|Mid |56 |30 |21 (38) |15 (27) |19 (34) |

|SE |28 |15 |16 (55) |4 (14) |9 (31) |

|SW |27 |14 |17 (63) |3 (11) |7 (26) |

|trans Wales |13 |7 |1 (8) |10 (77) |2 (15) |

The distribution of grants is reflected in the funds awarded in each region (Table 3). Only one small anomaly is evident in comparing Table 2 and Table 3: while 30% of projects are located in mid Wales only 22% of funds are allocated to the region. The difference is not able to be allocated to a single region, rather all other regions obtain a slightly greater proportion of the funds than their proportion of projects would suggest.

Table 3: Regional distribution of Adfywio funds

|Region |Funds allocated in £ |

| |Capital |Revenue |Total |

| |(% of regional total) |(% of regional total) |(% of Adfywio total) |

|North |1,313,138 (67) |753,615 (33) |1,956,113 (38) |

|Mid |744,093 (65) |397,104 (35) |1,141,257 (22) |

|South east |576,695 (75) |187,414 (25) |764,109 (15) |

|South west |627,562 (73) |229,258 (27) |856,820 (16) |

|trans Wales |135,904 (28) |354,181 (72) |491,085 (9) |

Mid Wales is also the region with the lowest average size of award (Table 4). The region has neither the largest or smallest supported projects; the claim to both is made by North Wales. The largest average project size is in south west Wales which are also home to the smallest of the maximum grants. This may suggest a tendency to larger grants in the area.

The trans Wales grants are on average the largest; it is also the ‘area’ with the largest minimum grant size. It is also the only area in which the majority of spending was on revenue projects.

Table 4: Summary of total funding by region

|Region |All grants (£) |

| |Mean |Minimum |Maximum |

|North |28,349 |932 |171,849 |

|Mid |20,380 |1,277 |139,800 |

|South east |25,958 |2,876 |182,091 |

|South west |31,734 |2,000 |108,000 |

|Trans Wales |37,776 |4,000 |129,764 |

A stated aim of the Adfywio scheme is the promotion of outdoor leisure; it is no surprise then, that the majority of projects provide facilities for those activities. A summary of the projects which relate to the sports covered in Activity Action Plans (AAP) is provided in Table 5. Only those projects which directly relate to an activity are included. Examples include provision of cycle storage facilities at accommodation, bunkhouses, guides and access arrangements directly contributing to the pursuit of one of the listed activities. It does not include projects which are broader in their aims such as general improvements to accommodation in rural areas.

Table 5: Projects relating to AAPs by region

|Region |No. activity |No of Projects providing facilities for (% of total activity related projects in |

| |related projects* |region) |

| |(% of area total) | |

| | |Cycle |Walk |Horse Ride |Fish |Other |Multi active |

|All Wales |118 (61) |35 (30) |30 (25) |12 (10) |7 (6) |15 (13) |19 (16) |

|North |43 (62) |12 (28) |12 (28) |4 (9) |2 (5) |8 (19) |5 (12) |

|Mid |33 (59) |11 (33) |4 (12) |4 (12) |2 (6) |5 (15) |7 (21) |

|South east |18 (62) |6 (33) |7 (39) |0 (0) |2 (11) |0 (0) |3 (17) |

|South west |15 (56) |4 (27) |2 (13) |4 (27) |1 (7) |0 (0) |4 (27) |

|Trans Wales |10 (77) |3 (30) |5 (50) |0 (0) |0 (0) |2 (20) |0 (0) |

Nationally, projects relating to cycling and walking are most common (55% of activity related projects). The proportion would be larger with the inclusion of the multi-activity projects many of which were the provision of facilities common to both walkers and cyclists. Examples include drying rooms, storage, access, accommodation, and guide books.

Largely the national trends are repeated in the economic regions. Exceptions are the lack of horse riding and other projects in the south east and the relatively large proportion of horse riding projects in the south west. Eighty percent of Trans Wales projects are related to walking and cycling.

In total 118 projects (61% of total) can be directly linked to AAPs. The remainder are summarised as follows:

• Wildlife; 17 projects, examples include tree planting and upgrading of visitor facilities at a wildlife park;

• Gardens/parks 6 projects, examples include restoration of an historic garden and improved access to a garden by the erection of a footbridge;

• Heritage 15 projects, examples include funding for a working mill/museum and updating of exhibits in a museum;

• Events 2 projects; the projects are Lllyn watercolour competition and the employment of an events manager.

• Multi functional 10 projects, several projects link a number of aims such as the development of land adjacent a footpath for visitors to include a number of visitor facilities/disabled access components

• Generic tourism 37 projects, includes those projects which are not specifically tailored to an activity or interest. These projects include accommodation, catering and other ‘general tourism’ facilities such as places to visit.

2 Summary

The allocation of Adfywio funds throughout Wales is characterised by several factors; first, capital grants constitute the greater proportion, they are on average larger than revenue grants and have a greater maximum and minimum size. Almost two thirds of all grants are related to active pursuits included in the Activity Action Plans. Cycling and Walking are the activities most commonly catered for. A large proportion of grants are combined, that is they include capital and revenue components.

However, as previously noted, there is noticeably large variation in the size of grants, a limited number of relatively large projects serves to distort any calculated statistics. This has a bearing on sample selection based on financial data; it is of little use to select on the basis of such data. Further examination of the characteristics of the projects is used.

Considered geographically, two regions have between them obtained around 60% of the total funding; north and mid Wales. These two regions are also home to 66% of all supported projects. In terms of number of projects and funds allocated north Wales is the greater of the two. It is home to 36% of projects and receives 38% of total Adfywio funds. Mid Wales has 30% of projects but receives proportionately less funding, only 22% of the total. Proportions of funds allocated to capital and revenue only projects are similar, however north Wales has a relatively large amount of combined grants.

South east- and south west Wales together obtain 31% of total funds and are home to 29% of projects. In terms of amount of funds and number of projects the two are very similar. They differ in types of project funded; the south east having proportionately more combined grants, the south west more capital funding.

Trans Wales is the smallest ‘area’ at 7% of projects and 9% of funds. It also differs in the allocation of funds, the vast majority (77%) being revenue only.

Throughout Wales the majority of projects are related to walking and cycling followed by, in order of magnitude, multi activity, other activities, horse riding and fishing. North Wales most closely follows this order. The other regions, placing activities in order of the number of projects (greatest first) and omitting activities where no projects are supported, vary as follows:

North Wales; cycling and walking joint first, other, multi activity, horse riding, fishing.

Mid Wales; cycling, multi activity, other, horse riding joint with walking, fishing:

South east Wales; walking, cycling, multi activity, fishing;

South west Wales; cycling, multi activity and horse riding all equal followed by walking then fishing;

Trans Wales projects are walking, cycling and other.

In conclusion a number of characteristics serve to differentiate the projects. They are: economic region; whether it is AAP related (or not); type of activity (or other non AAP pursuit); type of grant whether capital revenue of combined; size of grant. Finally the broad remit of Adfywio has engendered an often eclectic mix of projects. Not only is the financial range great, as demonstrated above, but also the variety of technologies, aims, objectives and organisations. The scheme includes all types of accommodation from a small bed and breakfast to a large hotel, organisations as diverse as the self employed, networks of similar interest, charities, local authorities and the strictly commercial. Objectives range from the redesign of a web site to large scale capital development. This variety is difficult to quantify, but quite clearly a component of Adfywio.

3 Sample Selection

Adfywio is an all Wales project aimed at tourism businesses and in particular those serving outdoor activities. While tourism occurs throughout the country the more rural areas more closely aligned with these objectives. It is not surprising that there is a geographical element to the distribution of Adfywio resources, both in terms of the number of projects and in the funds allocated. Accordingly the economic development regions of north, mid, south east and south west Wales have demonstrably different allocations of projects/funds. The initial criterion for sample selection is therefore by economic region; a similar proportion of sample projects are drawn from each region. Numbers of projects per region is shown in Table 6.

Table 6: Sample selection criterion 1: economic region

|Region |Adfywio Projects |Proportion of Adfywio |Sample |

| |(No.) |(%) |(No.) |

|North |69 |36 |14 |

|Mid |56 |30 |12 |

|South east |29 |15 |5 |

|South west |27 |14 |6 |

|Trans Wales |13 |7 |3 |

| | |Total |40 |

Within each region around 60% of projects are AAP related. This second criterion dictates that AAP related projects are selected in the regions as follows: North 8 projects; mid 7 projects; south east and south west 4 projects. Trans Wales is an exception at almost 80% AAP related projects; therefore all trans Wales sample projects are selected as AAP related.

Whilst the financial support the projects receive varies greatly, the third selection criterion attempts to capture this range. For example the projects selected in mid Wales consist of 2 projects close to the mean, 1 each of a large and small project and the remaining 8 projects equally divided between larger and smaller values than the mean whilst retaining the proportion of capital: revenue: combined grants. The sample was drawn so that average was similar to the regional mean, in the case of mid Wales £20,380.

Based on the foregoing the sample captures regional variation in terms of distribution of projects, active and non active projects and the total project values. The final selection criterion is the more ambiguous diversity of projects supported by Adfywio. In practice, given the intended sample size of 40 projects, much of the diversity was already captured. A selection of 50 projects was subjected to consideration and discussion with CCW and WTB staff for final selection.

The initial selection of 50 projects was reduced through a process of elimination, largely on the grounds of longer lead times for projects. A number of projects were yet to be completed, others had completed but lead times for probable impacts were yet to be realised. A number of suggested projects were added for reasons of their interest; for example a project which upgraded existing access to a fishing lake to include facilities for disabled patrons.

The final selection of 40 projects is presented in Appendix B

Survey: administration and response

The Adfywio scheme is assessed using 4 methods: a qualitative assessment by the grant receivers regarding their expectations and the actual outcomes of their projects; evaluation of jobs created directly by the scheme, estimation of the LM3 coefficients and finally an estimation of the value of investment which would have been lost without Adfywio.

The qualitative assessment, evaluation of jobs created and estimation of lost investment were addressed in the Round 1 questionnaire to grant receivers. The multiplier analysis required two further rounds of inquiry. These were directed towards contractors and sub-contractors to the projects.

A final assessment employs the findings of the previous methods in an investigation to ascertain any common factors which may be employed as indicators of successful projects.

1 Survey administration

Data collection was made using a postal questionnaire and follow up telephone call. The follow up telephone call was made to address issues any potential issues including low response rates, reluctance to respond, reluctance to divulge financial information, to help respondents complete the more detailed questions and, importantly, to obtain any supplementary information from respondents.

The LM3 process is conducted in 3 Rounds. Round 1 was an enquiry of the grant supported projects using a comprehensive questionnaire (see appendix xxx). This includes details of the project undertaken and contact details for the contractors employed on the project.

Those contractors are surveyed in the Round 2, again using a postal questionnaire and follow up call. The process was repeated for Round 3 using the named sub contractors and suppliers named by the respondents to Round 2. Data collected from the contractors is less comprehensive than that from the projects. For the LM3 investigation the critical information is a breakdown of payment originating from the project and, for the subsequent round, contact details of suppliers and sub contractors.

2 Response to survey

The response rates for each of the three survey rounds are reported and discussed in the following sections.

1 Response to survey: Round 1

Fourty projects were selected through the process outlined above. Projects were selected to represent their distribution across the economic regions and, within each of those regions to be representative of the range of values, types of grant and related activity of the projects.

Of the sample 39 completed and usable responses were obtained; response rate is therefore a commendable 98%. The rate of response would be considered unusually high for a postal questionnaire but is explained by the subject. Respondents were all in receipt of financial support, they were informed the questionnaire was a part of the mandatory review of the grant by the administering authority and, while the information they gave was confidential, it would be used to feed back and improve future grant schemes.

Most responses were returned promptly, particularly those from smaller businesses with little or no departmentalisation, from those with relatively simple financial accounts and from clearly defined small projects with few contractors and materials. Thus, for example the reply from a small bed and breakfast, managed by the proprietor who had a building project completed by a single contractor was received sooner than that from a national charity. With a large scale project involving many contractors and departmentalisation (financial details were completed by the accounts department, aims and objectives by the project manager and so on) response times for organisations such as this charity often ran to weeks.

It is worth mentioning the reasons for the non-response. The business, formerly a partnership between husband and wife was, as part of divorce proceedings subject to a court order; settlement was not imminent. The proprietors were willing but unable to provide details at the time of survey.

While most questionnaires were returned completed, follow up calls were made to most to confirm details and to expand on any points raised or on incomplete replies.

2 Response to survey: Round 2

Contractors identified by the grant holders were contacted in Round 2. In total 183 contractors were identified, an average of 4.7 Wales based contractors per project Two further points are worthy of brief discussion. First, the number of transactions is greater than the number of contractors: several contractors were used by a number of projects MWL Printers, and the Western Mail provided services to 4 and 6 projects respectively, several smaller companies provided services to 2 projects. Further increasing the number of transactions is multiple use of a contractor for a single project, for example ongoing advertising over an extended period. Calculated response rates are based on identified contractors.

The definition of contractor, as used to describe those identified as supplying goods or services in Round 2, is broad. It covers, at the one extreme the self employed consultant paid a daily rate, up to bodies such as The Welsh Development Agency. The majority are, however, SMEs located in the same economic region as the projects. In addition to the consultants and national bodies are builders, plumbers, web designers, sign makers and other businesses of the self employed.

Initial response rate to the postal questionnaire was low, only 25% (46/183). All the contractors were subsequently called, both to complete the questionnaire and to ascertain reasons for non response. Reasons for non response were, in order of frequency: too busy/little incentive to respond, unwilling to disclose clients’ details and inability to provide the information. Telephone calls overcame the first reason, respondents were mostly able to obtain the information but unwilling to take the time to complete a written form. The second issue was equally simple to overcome with assurances of confidentiality and, rarely, confirmation from the recipient of the grant. The final issue was usually associated with larger organisations with centralised purchasing, accounting and supply. There is, it appears, a genuine inability to provide information on individual contracts. Printers, for example order all materials in bulk and machinery purchases often runs to millions of pounds. For advertising in the press, costs are often calculated across products such as issues of a newspaper rather than individual accounts. While there are only few such cases in Round 2 the problem is more prevalent in the following Round.

Following telephone calls genuine response rates rose from 25% to 119/183 = 65% (this total includes the original 46 responses). These are responses that give details of costs and identified their suppliers and/or sub-contractors. These were predominantly from the self employed, smaller business and others able to use accountancy systems which allocate costs directly to individual transactions. A further 24 (13%) business provided estimates of costs and details of suppliers. A small proportion (6 businesses, 3%) made estimates of local, Welsh national and other spending without identifying suppliers. Total response rate is 81%.

3 Response to survey: Round 3

Round two respondents identified 381 sub contractors as suppliers of goods and services, an average of 9.8 Wales based sub-contractors per project or approximately 2 Wales based sub contractors per contractor. Response rate to Round 3 is substantially lower than previous rounds. This, in part at least, is due to increasing diversity. While Round 2 consisted largely of SMEs located near the project, Round 3 is populated by what were the exceptions of Round 2, the suppliers to those SMEs and the people who work for them. Round 3 is therefore one of extremes, on the one hand large, national companies, for example suppliers to the building trade and printing industry, on the other the employees in the building and printing industries. Response rate to the questionnaire fell to around 15%; almost all responses were from employees.

Table 7: summary of response rates, all rounds

|Round |Total sample |Response rate |Number respondents |

|1 |40 |98% |39 |

|2 |183 |81% |149 |

|3 |381 |46% |175 |

Although the follow up telephone calls raised the total response rate to 46% much of the information from the larger companies in particular was informed estimates. Again, client confidentiality and a genuine inability to obtain data on specific transactions/products/contracts were cited. Commonly, suppliers were branches of a national company: personnel in the branch could not provide any product pricing information, whilst central accounts departments worked on a scale and in a manner which would does not lend itself to analysis on the scale needed in this research. Several were willing to make estimates of the proportions of Welsh and non-Welsh spend.

Self assessment of scheme by grant receivers

Pre- and post-FMDS attitudes and intentions are reported in Table 8. The differences are statistically significant[3] One issue stands out; prior to FMD none of those interviewed intended to close their business, the option as a result was not ranked. Post FMD 9 owners considered this option. The significance of this change in intentions is demonstrated by the option being ranked second of the post FMD options.

Table 8: Impact of FMD on business intentions

| |Pre-FMD |post-FMD |

| |No. |% |Rank |No. |% | |

|Continue without any substantial |13 |33 |1 |11 |28 |1 |

|changes to the business | | | | | | |

|Expand the business |12 |31 |2 |4 |10 |5 |

|Diversify the business |6 |15 |3 |8 |21 |3 |

|Obtain training for proprietors or |4 |10 |4 |8 |21 |3 |

|staff | | | | | | |

|Implement marketing plan |3 |8 |5 |4 |10 |5 |

|Open a new enterprise or business |2 |5 |6 |4 |10 |5 |

|Consider closing the business |0 |0 |Not ranked |9 |23 |2 |

This highly negative response to FMD is however by no means typical, rather it may be one extreme of a range of responses. Somewhat less negative is the second biggest impact, a reduction inn the number of businesses planning to expand.

Of a more positive effect are the changes to intentions which may be a reflection of FMD highlighting underlying weaknesses in the business. The third largest change in intentions is an increase in the number of businesses intending to obtain training. This is followed by intentions to diversify the business and intentions to open a new enterprise or business.

Lying between these two extremes is the proportionately largest group; those intending to continue without any substantial changes to their business.

These results are interesting, while 9 proprietors considered closing their business, as recipients of Adfywio they quite clearly have not done so. At least in part, the decision to continue trading may be attributable to the support of the grant scheme; as reported below one respondent said the scheme funded the changes he knew his business needed to go through to become viable in the future. In short, at best the scheme may indeed have permitted businesses to continue trading; at the least it has provided the encouragement and focus to address underlying issues affecting viability. Supporting this is the intentions expressed regarding training, diversification and new enterprises. All of these contribute to future viability, Adfwyio clearly has a role in supporting these intentions.

In these terms the measure of success of the scheme is its impact on these intentions, namely has it changed the negative intentions around? Has it supported businesses in their aims of achieving viability through diversification?

To this end grant receivers were asked to evaluate the impact of Adfywwio on their business. Results are reported in Table 9.

Table 9: Reported effects of Adfywio

|Effect |Companies reporting effect |Total reporting|

| |(No.) |positive |

| | |effects |

|Number of customers |strong |11 |25 |

| |weak |14 | |

| |neg |0 | |

|community links |strong |13 |24 |

| |weak |11 | |

| |neg |0 | |

|Increase range of clients |strong |9 |21 |

| |weak |12 | |

| |neg |0 | |

|range of services |strong |8 |17 |

| |weak |9 | |

| |neg |0 | |

|Improve environmental standards |strong |7 |16 |

| |weak |9 | |

| |neg |0 | |

|financial viability |strong |4 |15 |

| |weak |11 | |

| |neg |0 | |

|Extend operating season |strong |6 |14 |

| |weak |8 | |

| |neg |0 | |

| Increase profitability |strong |2 |12 |

| |weak |10 | |

| |neg |0 | |

|Extend daily opening times |strong |4 |5 |

| |weak |1 | |

| |neg |0 | |

Replies would suggest that the scheme is an effective response to the identified need of improved viability. The strongest effects are to be seen in increasing the number of customers, creating wider links to the community, expanding the range of clients and enlarging the range of services the business offers. Together these effects indicate some broadening of the businesses. Effectively it may indicate a diversification which reduces reliance on both a narrow customer base and few enterprises. In the longer term these factors may be instrumental in giving some the businesses some ‘shock resistance’ to future disturbances. While this is suggested it is difficult to empirically test. In part the longer opening hours and extended operating season addresses these issues of financial viability and broader customer base.

Commonly, respondents commented that the lead time to benefits, especially by word of mouth, is necessarily in excess of 1 year; of those mentioning this most expected to see more substantial gains in subsequent years. In general respondents reported a more optimistic outlook. This may demonstrate a negation of the very negative attitudes encapsulated in the proprietors who considered closing their business.

The financial self assessments were made through enquiries on the impacts on profitability and financial viability. Responses to both suggest significant numbers of mainly weak impacts at the time of the research. It is important to note that respondents spoke of the long leads times for the impacts to be felt, and the wider impacts on their industry of overcoming the “…lingering stigma on the countryside caused by FMD” and a weak dollar encouraging foreign travel.

A further benefit which may accrue longer term benefits to tourist businesses is the improvement in environmental standards noted by 16 businesses. That these can be achieved in conjunction with the benefits already outlined is encouraging.

It is notable that none report any negative impacts. Further benefits mooted by respondents were:

• Personal/project gains engendered by regional development. Many of the grant receivers first heard of the scheme from others in receipt of Adfywio funds. They were aware of the development of other tourist businesses in their area and surmised that they would benefit from the general development.

• Many of the projects were, in the words of one respondent, “pipe dreams, what I would have liked to do if I had the money” Another was more forceful, it was what he “knew needed to be done” Whichever motivation many of the projects addressed identified and often long standing problems. All acknowledged FMD as a major issue, but more importantly it had clearly illustrated vulnerabilities and underlying problems in businesses. Adfywio was considered by most as help to address those issues, not as a response to FMD per se.

• The application process was considered straightforward, simple and accessible. Importantly it could be completed without the need for specialist input for which many would have been unable or unwilling to have paid. The ease of application is attested to by the sources of advice used: the grant administrators were the main source of advice, 19 projects did not use any other sources and 15 used other sources of business and technical advice.

Many of the projects addressed vulnerabilities in the business: the responses reported earlier were restricted to actual effects. Consistently responses included comments on the long lead times and long term viability the projects were intended to address. Respondents were invited to comment on the long term effects of the issues discussed above (Table 10).

As would be expected from the previous assessment, the financial viability and profitability are among the long term impacts expected. The expansion of the range of services in the long term serves to confirm the longer lead times expected of many projects. Similarly improved environmental standards are an expected long term effect of the projects.

While the foregoing may be largely expected the two highest rated long term effects are perhaps less so: community links and links to other businesses. The former was ranked 2nd in the reported effects and 1st in the expected long term benefits; the latter was not ranked in the reported effects but is ranked 2nd in the expected long term benefits.

Some explanation for the growth in community links may exist in the nature of projects reporting theses effects. Byways (footpaths and cycleways) and open access to sites such as woodlands provide not only attractions for visitors but desirable features for the resident community. These feature, by their nature, are available throughout the year and are permanent. The provider of the feature is in effect the provider to their surrounding community. This is only a partial explanation, only 13 of the 24 projects reporting improved community links can be explained. Some clue to further explanation may be provided by the comments of 1 respondent; he felt the problems of FMD were common to all rural people and a “sort of shared suffering might have brought people together” The effect was largely unforeseen and while it is noted further investigation falls outside the remit of this investigation.

Table 10: projects expecting long term benefits

|Issue addressed |effect |No of projects|% of sample |% reporting effect |

|community links |strong |13 |33 |61 |

| |weak |11 |28 | |

|link to other businesses |strong |10 |26 |49 |

| |weak |9 |23 | |

|range of services offered |strong |8 |21 |44 |

| |weak |9 |23 | |

|environmental standards |strong |7 |18 |41 |

| |weak |9 |23 | |

|financial viability |strong |4 |10 |38 |

| |weak |11 |28 | |

|Profitability |strong |2 |5 |31 |

| |weak |10 |26 | |

Improved links to other businesses may have some similarity to the respondents “shared suffering” While tourist businesses are perhaps the most notable victims of disruptions to trade due to FMD, other businesses were also affected. The injection of funds from Adfywio, as discussed in the LM3 investigation, would bring clear benefits to those businesses in the second and third rounds. In particular it is noted that large proportions of the funds were spent with local (to the project) contractors in round two. In short the funded projects may have acted as a catalyst for businesses to develop relationships they would not have considered (bear in mind a large proportion of businesses stated they would have carried on without making significant changes). Some corroboration for this is available from the statements made by respondents. The application process demanded several quotes for goods and services: one respondent mentioned that he had “lived here all my life and didn’t know there were so many businesses like mine…one man bands…making a living…probably looking for a bit more work…its strange, but whatever you need there’s probably someone can do it if only you knew it…” Occasionally the opposite was true, some goods and services were to be found outside the locality of the project. However given the “shared suffering” and the “pressures on the small business man’s time” dealing local was preferred.

This propensity to deal local, whether it is imposed or through a choice has a bearing on the multiplier coefficients; its effect is that where it can be enacted multipliers are high, where conditions limit this option the coefficients are as a consequence lower. This will be discussed in more detail later.

Results: Job Creation

Thirteen of the businesses (33%) in the sample report the creation of one or more new jobs, 7 companies (18%) report the creation of part time posts and a further 7 (18%) have created seasonal jobs.

Total numbers of jobs are reported in Table 11.

Table 11: No of jobs created by Adfwyio projects

| |Number of jobs (No.) |

| |Part time |Full time |seasonal |Total |

| Existing jobs prior to |67 |571 |24 |662 |

|Adfwyio project | | | | |

|Jobs after Adfwyio project |77 |588 |54 |719 |

|new jobs created by project|10 |17 |30 |57 |

|jobs/project |0.256 |0.436 |0.769 |1.462 |

In common with most of the tourism industry the majority (53%) of jobs, both numerically and in terms of jobs per project, are seasonal, full time jobs are next (30%) and part time jobs (18%) the fewest.

One third of projects created one or more full time jobs, this equates to 64 companies within the scheme reporting job creation. Full time jobs were created at the rate of 0.256 jobs per project or 50 jobs over the 194 scheme projects.

Almost 1 part time job per 2 projects (0.436jobs per project) were created; approximately 85 part time jobs in total. A greater rate of seasonal job creation was calculated at 0.769 jobs per project: approximately 150 seasonal jobs created in total.

However, while it is evident that it generates new employment, in terms of jobs per pound invested it may appear poor poor: 50 full time jobs created through £5.2million of investment equates to around £100,000 per job created. The figure is of course considerably lower for full time equivalents (FTE): actual figures of 50 full time, 85 part time and 150 seasonal jobs equates to around 130 FTEs[4] and reduces cost per job to £40,000. This cost per FTE compares favourable with other schemes which include job creation as a component of a suite of objectives such as Tir Gofal and environmental based projects (see, for example Hill and O’Sullivan, 2003; Agra CEAS Consulting, 2005). The cost per job created in Tir Gofal was estimated to be around £54,000. Given that job creation is not an overt aim of the Adfywio scheme, similar to Tir Gofal, then the costs are comparable. Thus the estimated costs of job creation in Adfywio appear favourable Furthermore these 130 FTEs are the direct employment created by projects supported by the scheme.

The induced effect of the scheme, that is the value of projects supported, amounts to £32.87million. While it is tempting to make some estimate of jobs created using total project value based on similar costs per job this would be incorrect. The actual number of jobs created remains the same whether scheme value or project value is considered: the calculated result would differ onlt in whether they were job per pound of support or job per pound of total investment. It may be more appropriate to calculate the induced investment through the multiplier coefficient and calculate jobs created based on this estimate of induced investment. This however is likely undermined by the use of an inappropriate assumption: with each subsequent round of the multiplier the type of business becomes further removed from those generating jobs at the rate of 1FTE/£40,000 investment.

In a like for like comparison, using the mean multiplier coefficient (reported below) of 2.14 give a totals induced support payment in Wales of £11.28million. Assuming similar cost per job exist then Adfywio support is estimated to have created £11.28m/£40000 per job = 282 jobs.

There are distinctly different job creation rates across the economic regions (Table 12).

Table 12: Direct job creation by economic region

|Region |Type of employment |jobs (No.) |jobs/project |

|south west |Full time |4 |0.667 |

| |Part time |4 |0.667 |

| |Seasonal |14 |2.333 |

|north |Full time |8 |0.571 |

| |Part time |3 |0.214 |

| |Seasonal |5 |0.357 |

|mid |Full time |2 |0.182 |

| |Part time |1 |0.091 |

| |Seasonal |2 |0.182 |

|south east |Full time |0 |0.000 |

| |Part time |2 |0.400 |

| |Seasonal |9 |1.800 |

|trans Wales |Full time |3 |1.000 |

| |Part time |0 |0.000 |

| |Seasonal |0 |0.000 |

Of the four economic regions, the south west returns the highest rates of job creation for all types of employment, next in all categories of employment is the north Wales region. The mid Wales region is third, however there is a considerable drop in jobs/project in all forms of employment; other than the creation of seasonal jobs the south east region has very low rates of job creation. The reasons for this may be related to the importance of the South East as a primary supplier to the other parts of Wales (Hill and O’Sullivan, 2003).

Businesses were allocated to one of four categories by the respondents:

• public bodies includes Local Authorities, National Parks and similar organisations with a remit to the public

• Trusts includes charities and other voluntary organisations

• Private companies are those privately owned businesses

• Others are the businesses which do not fit any of the above, it includes self employed

Table 13: job creation by type of organisation

|Type of organisation|Type of job |Jobs created |number of |jobs/project |

| | |(No.) |projects | |

|Private companies |full |10.00 |15.00 |0.67 |

| |part |7.00 | |0.47 |

| |seas |14.00 | |0.93 |

|public bodies |full |4.00 |9.00 |0.44 |

| |part |1.00 | |0.11 |

| |seas |16.00 | |1.78 |

|trust |full |2.00 |7.00 |0.29 |

| |part |2.00 | |0.29 |

| |seas |0.00 | |0.00 |

|other |full |1.00 |8.00 |0.13 |

| |part |0.00 | |0.00 |

| |seas |0.00 | |0.00 |

Private companies return the highest rate of job creation for full and part time jobs while public bodies create proportionally and numerically more seasonal jobs.

Of the 57 jobs, 54% were with the private sector and 37% with the public sector. One in three private sector jobs were full time, compared with only one-in-five in the public sector. Three quarters of public sector jobs were seasonal.

Multiplier Analysis

The multiplier analysis was conducted over three rounds of surveying. The following sections discuss the calculated multiplier coefficients. Following an assessment of the application of LM3 the coefficients are evaluated against a range of factors including locality and business type to ascertain any influencing factors on their magnitude.

1 Estimation of LM3 coefficients

Estimation of LM3 coefficients for the Adfwyio grant supported projects are made through the simple formulation outlined above. It is repeated below:

LM3 = Adfywio grant + spend with contractors + spend with sub-contractors

Adfywio grant

Theory and practical application suggests that there is likely to be little gain in precision obtained by further rounds of data collection. This is due to leakage (or loss from the local economy) reducing the gross amount in each round and a geometric increase in members in each round sharing this reduced capital. Consequently, data collection becomes a major undertaking for which there are negligible gains.

Data collection for this survey illustrates this point. It is also evident that with an increasing number of rounds the recipients become either larger organisations to which the sums are difficult to trace, or individuals. However, whilst in detail the capital is difficult to trace in application of LM3 the need for precision become less critical in later rounds. Further, with the large numbers of organisations/individuals sharing proportionally less capital with subsequent rounds the actions of individuals has proportionately less impact on precision. To overcome missing data, estimates were made per industry. For example, there are 9 printers in Round 3; five printers supplied estimates of their spending. Estimates for the remaining four were calculated as the average of those supplying information. Thus the mean is not altered, estimation of coefficients is facilitated and, due to the declining significance apparent as the number of rounds increases, the overall effect on calculation of multipliers is minimal. In statistical terms this is the quality of ‘robustness’, that estimation is not unduly sensitive to the data it is made on. It may be tested through a sensitivity test, a robust model will return a smaller change in estimates than the adjustment driving that change.

A sensitivity test was made by adjusting all the estimated spending streams by 10%. That is the spending outside Wales was increased by 10% thereby reducing spending in Wales proportionately. The resultant impact of such gross change on calculated multiplier coefficients was under 3% on average. Assuming that there is both over- and under-estimation resulting from the use of mean spending the impact is likely to be less 3%, well within accepted statistical standards. The robustness of LM3 is due to the declining importance of the individuals’ contribution in later rounds. As incomplete data collection was only noted in the third round sensitivity to gross changes is acceptably small.

Coefficients were calculated for each project thereby permitting a range of comparisons according to variables of interest.

2 Results: LM3 Coefficients

Estimated LM3 coefficients and grant size for individual projects are presented in Appendix C: Grant value and multiplier coefficients.

The mean multiplier coefficient is 2.14[5]. The minimum project coefficient is 1.12 indicating that little is spent in Wales, the maximum at 2.94 suggests there is little spent outside of Wales. Both extremes belong to large public organisations: the former to a Local Authority, the later to a National Park Authority.

The minimum coefficient is estimated for a project which involved the production of publicity material for the promotion of a cycling network. A great deal of the printing work, the major cost, was carried out by a company located outside of Wales. Effectively it was only the cycling network and the management of the project but not the work supported by Adfywio that were located in Wales. Thus the vast majority of the funds leaked out of Wales in Round 2.

The project with the highest coefficient requires some explanation. It is the Pembrokeshire Coast National Park (PCNP), and is elevated due to a conscious policy to use local materials and labour and retaining management within the Authority. This self containment leads to little leakage. The main sources of leakage are through the spending of the labour force involved, a relatively small proportion of the total spend compared to materials. The use of in-house labour, materials supply and expertise however is unique to the PCNP: similar bodies would be subject to competitive tendering procedures. This compresses the multiplier rounds as the grant receiver (Round 1) is effectively the contractor (Round 2) and so measurable leakage does not occur until Round 3. The involvement of national companies so prevalent in other projects by Round 3 does not occur.

Factors specific to projects are investigated below.

1 Size of Grant

The Adfywio scheme, as previously discussed, supports a diverse range of projects. One reflection of this diversity is the range of size of projects, from £2,000 to £377,000. Grant size echoes this range; in the sample projects this range spans £2,000 to £139,800.

Correlation coefficients were calculated to examine the relationship between multiplier coefficient and size of grant. Calculated coefficients are reported in Appendix D: Correlation coefficients of grant size and multiplier coefficient.

In all cases the calculated value is less than the critical value and the null hypothesis of no relationship is upheld. Grant size and multiplier coefficients are not related. This is important and more emphasis is needed to bring this out

2 Grant Size: Local versus Welsh multipliers

Two forms of the multiplier coefficients are presented in Table 14. The local spend multiplier is calculated using spending made only in the same NAW economic region (see footnote page 3) as the project. The Wales multipliers are calculated on all spending made in Wales which includes local spending. Clearly the former is a component of the latter; lower multipliers would be expected. However of interest is the difference in the two which gives an indication of the propensity to spend locally; small difference indicates a greater propensity to spend in the locality of the project.

Table 14: Welsh and Local multiplier coefficients by grant size

The Wales multipliers are, logically, larger than the regional coefficients as the larger area captures part of the smaller areas leakage.

There are two issue to investigate; whether the difference in local and Wales multipliers correlates with grant size, and if not, what factors do influence this.

Grant size and magnitude of difference do not correlate[6] which indicates that the propensity to spend locally is not influenced by grant size. In the following sections this measure of difference is employed to examine the impact of other factors on the propensity to spend locally.

3 Type of Grant

Two types of grant were offered in the Adfywio scheme: Capital works up to 50% of costs, Revenue up to 80% of costs. A third form of grant was a combination of the two, each portion subject to the same limits as previously stated.

Table 15: multiplier coefficients by grant type and geographic coverage

|  |Multiplier coefficients by grant type and geographic coverage |

| |Capital |Revenue |Combined |

| |local |Wales |Diff |

Notes:

Dif denotes the difference between local and Wales multiplier coefficients

s.d. is the standard deviation

n is the number of projects

Within the grant types (capital, revenue and combined), differences between local and Wales multiplier coefficients are significant for both the capital and combined grants[7]. Despite the largest numerical mean difference between local and Wales multipliers the difference is not significant for revenue grants[8]. This may indicate that the recipients of both capital and combined grants, because the difference between local and Wales coefficients are large, have a lower propensity to spend locally than the recipients of revenue grant. It would therefore appear logical to conclude that this is likely to be a function of the capital grant, (as it is a component of the combined grant) and that stimulating local economic effects is best achieved through revenue grants. However this may be incorrect. Difference in the impacts of revenue grants at local and Wales levels is likely not to be significant due to a large standard deviation at the local level and a smaller standard deviation for Wales. This is reflected in the largest differences between both minimum and maximum coefficients for the revenue grant. In other words the difference is masked by widely varying spending behaviour of revenue funding at the local level.

In effect the results suggest that there are significant differences in local and national spending of capital funds which are most likely consistent throughout Wales. However, regarding the spending of revenue funds there are relatively large disparities in the propensity to spend locally throughout the regions. This may be driven by the availability of goods and services, a finding which in part concurs with Hill and O’Sullivan when they conclude that “of the 51,700 FTE jobs in Wales that are dependent on the activities of the environmentally-related sectors, almost a half are in the South East region, reflecting the importance of the South East as a primary supplier to the other parts of Wales.”

Thus the targeting of support to stimulate local (within economic region) effects, it appears axiomatic to say, must necessarily be based on the presence or lack of resources. If, for example, there are no printers in mid Wales then those needing printing in the area must source the service elsewhere, say south east Wales. The local effect of printing work would be minimised in mid Wales but maximised in south east Wales while the national effect of both would be similar.

This is further examined in the following section.

4 Economic Region

As previously noted sample projects were selected to correspond with the proportion of the total in each economic region. Calculated multipliers coefficients are reported below (Table 16).

Table 16: Multiplier coefficients by economic region

| | |mean |sd |min |max |n |

|north |local |1.902 |0.429 |1.000 |2.316 |14 |

| |Wales |2.262 |0.484 |1.124 |2.845 | |

| |Difference |0.359 |0.427 |0.009 |1.595 | |

|mid |local |1.698 |0.409 |1.248 |2.469 |11 |

| |Wales |2.159 |0.350 |1.435 |2.731 | |

| |Difference |0.461 |0.371 |0.000 |0.993 | |

|south west |local |1.788 |0.465 |1.282 |2.586 |6 |

| |Wales |1.915 |0.569 |1.328 |2.940 | |

| |Difference |0.127 |0.120 |0.043 |0.355 | |

|south east |local |2.038 |0.396 |1.534 |2.597 |5 |

| |Wales |2.117 |0.368 |1.607 |2.611 | |

| |Difference |0.079 |0.055 |0.014 |0.155 | |

|trans Wales |local |1.360 |0.623 |1.000 |2.079 |3 |

| |Wales |1.972 |0.113 |1.893 |2.101 | |

| |Difference |0.612 |0.511 |0.022 |0.921 | |

Can you have a table with the mean and the differences main body of the report and have the detailed table in the annex (and with tables 18, 19, 20 below).

Multiplier coefficients, both local and Wales, are not statistically different between the regions. Again so what is the importance of this – needs more emphasis

South west and south east Wales economic regions would appear to have the greatest propensity to spend locally: both have remarkably low mean differences between local and Wales multiplier coefficients of 0.127 and 0.079 respectively. The standard deviation of the differences for both the southern regions is also small, indicating that the propensity to spend locally is consistent across projects.

Excluding the trans Wales projects, North Wales shows the greatest standard deviation, but not the largest mean difference. This would indicate much variation in the rate of local spending across the projects: a fact confirmed by the range of multiplier coefficients. Local coefficients, for example range from 1.000 (no local spending) to 2.316.

There is a large difference between the mean of the Local and Wales multiplier coefficients for the mid Wales region. In association with a relatively small standard deviation it is an indication of consistent behaviour, a tendency towards non local spending.

Local spending in the Trans Wales projects was defined as that made around the grant holders contact or business address. Spending appears to be predominantly on the national scale. However this may be a distortion caused by the small sample size and 1 grant holder in the regional classification based outside of Wales.

An explanation for the low difference in coefficients in the southern economic compared to north and mid-Wales regions may lie in the availability of goods and services within the locality. For example North and mid Wales projects requiring printing services and national advertising in the press had no other recourse than to use non-local suppliers; often the suppliers located in the southern regions. Clearly the same issue does not apply to those projects located in the southern economic regions. I will send you another research report that you can refer to that backs this up

5 Type of organisation in receipt of grant

Businesses in receipt of Adfwyio funds categorised their businesses as in Table 17 below. Local and Wales multiplier coefficients are reported as in previous sections.

Table 17: Multiplier coefficients by business type

|Type of organization| |mean |s.d. |min |max |N |

|public body |Local |1.595 |0.436 |1.115 |2.586 |9 |

| |Wales |1.864 |0.529 |1.124 |2.940 | |

| |Dif |0.269 |0.287 |0.009 |0.988 | |

|trust |Local |1.873 |0.416 |1.282 |2.316 |7 |

| |Wales |2.069 |0.419 |1.328 |2.456 | |

| |Dif |0.196 |0.232 |0.046 |0.715 | |

|private owned |Local |2.019 |0.380 |1.000 |2.597 |15 |

| |Wales |2.267 |0.345 |1.760 |2.845 | |

| |Dif |0.265 |0.310 |0.014 |0.893 | |

|other |Local |1.569 |0.467 |1.000 |2.247 |8 |

| |Wales |2.268 |0.379 |1.607 |2.796 | |

| |Dif |0.699 |0.494 |0.073 |1.595 | |

The Category ‘other’ has the largest local-to-Wales difference in multiplier coefficients. Standard deviation of the difference is also substantially greater than the other categories, suggesting great variability. This may be a function of the non-specific nature of the category: members include the author of a guide book and the organisers of a watercolour exhibition.

Public bodies in this research were, without exception, local authorities. They demonstrate consistently low multipliers compared to other types of organisation, trusts return larger average multipliers and private organisations the largest of the three. It is probable that the increase in multiplier coefficients is related to the degree of autonomy enjoyed by the organisation. Local authorities, due to the imposition of Compulsory Competitive Tendering may be the least able to direct funds in a desired direction while privately owned, and particularly the smaller private businesses, are either constrained by resources or prefer to trade locally. For example, several local authorities in the sample had little choice but to award construction contracts to outside contractors due to the competitive tendering. Lacking the resources to conduct extensive searches, many smaller businesses commented on a preference to trade with local businesses; most were able to exercise this preference.

6 Project planning

Projects were categorised by the grant receivers according to the level of planning. Each is described below:

• Well Developed Strategy: projects which are part of or integral to a overall strategy but are yet to be developed in detail;

• Basic strategy: projects which are part of an ongoing though less precise strategy:

• Well developed project plan: refers to a project in the advanced stages of planning

• An idea only: projects which have been or were being considered but not advanced beyond the preliminary planning stages

• Money first: are the more opportunist projects, those which are produced because of the available funds.

Table 18: Categorisation of project according to level planning

|Project as part of… | |mean |sd |min |max |n |

|well developed strategy |Local |1.598 |0.330 |1.000 |2.101 |9 |

| |Wales |2.048 |0.412 |1.328 |2.845 | |

| |diff |0.450 |0.341 |0.043 |0.921 | |

|basic strategy |Local |1.869 |0.474 |1.293 |2.597 |8 |

| |Wales |2.308 |0.368 |1.716 |2.844 | |

| |diff |0.439 |0.416 |0.014 |0.993 | |

|well developed project plan |Local |1.806 |0.530 |1.000 |2.586 |11 |

| |Wales |2.116 |0.579 |1.124 |2.940 | |

| |diff |0.310 |0.467 |0.009 |1.595 | |

|an idea only |Local |1.767 |0.564 |1.000 |2.469 |5 |

| |Wales |2.085 |0.401 |1.793 |2.731 | |

| |diff |0.318 |0.329 |0.072 |0.893 | |

|money first |Local |2.156 |0.018 |2.143 |2.169 |2 |

| |Wales |2.210 |0.058 |2.169 |2.250 | |

| |diff |0.054 |0.076 |0.000 |0.107 | |

Note: 4 projects were not classified by respondents, total number of projects classified = 35

With regard to the level of planning (Table 18) multiplier coefficients show some similarity to the categorisation by organisation type (Table 17). Coefficients were seen to increase with a greater degree of autonomy in the organisation, a similar effect is related to level of planning, the greater coefficients belong to the least planned projects. This reaches its peak in the most opportunist (money first) category.

The cause is unclear, suggestions include

• Larger organisations are more likely to have well developed plans and strategies. These larger organisations are also the more likely to have the resources and abilities to source products and services at least cost

• Local authorities are among those with well developed strategies but are constrained by Compulsory Competitive Tendering

• Smaller businesses have the flexibility to respond to the availability of grant funds, these business have a preference to trade locally.

7 Designated areas

Fifteen of the projects supported by Adfwyio were located in designated areas, 12 were in National Parks (7 in the Brecon Beacons, 1 in the Pembrokeshire Coast National Park and 4 in Snowdonia), the remaining 4 projects were located in the Llyn Area of Outstanding Natural Beauty (AONB).

Two issues are examined for effect on the projects: investment in terms of grant support and project size and multiplier coefficients.

Invest ment is projects in the designated and non-designated areas is shown in Table 19.

Table 19: Investment in projects: designated and non-designated areas

|area | |mean |s.d. |min |max |n |

|not designated |project value |£ 79,184.33 |£ 73,394.21 |£ 5,560.00 |£ 280,000.00 |24 |

| |grant |£ 35,827.04 |£ 33,711.35 |£ 2,780.00 |£ 129,764.00 |24 |

| |cap |£ 32,303.91 |£ 33,401.03 |£ 2,720.00 |£ 90,000.00 |11 |

| |rev |£ 23,165.25 |£ 18,850.67 |£ 8,940.00 |£ 50,000.00 |4 |

| |comb |£ 45,753.89 |£ 39,139.82 |£ 9,467.00 |£ 129,764.00 |9 |

|designated area |proj val |£ 79,847.00 |£115,773.90 |£ 4,000.00 |£ 377,000.00 |15 |

| |grant |£ 32,550.73 |£ 39,963.39 |£ 2,000.00 |£ 139,800.00 |15 |

| |cap |£ 35,033.67 |£ 34,716.88 |£ 2,175.00 |£ 71,350.00 |3 |

| |rev |£ 9,234.50 |£ 9,838.50 |£ 2,000.00 |£ 28,440.00 |6 |

| |comb |£ 54,625.50 |£ 51,498.28 |£11,484.00 |£ 139,800.00 |6 |

There is little visible difference in the two types of area. Average project sizes and grant sizes are similar, a fact supported by the lack of significant difference detected through statistical tests of the means (Table 20).

Table 20: calculated t-value project investment (this can go in an annex)

| |Project value |All grants |Capital grant |Revenue grant |Combined grant |

|t value |0.022 |0.275 |0.125 |1.550 |0.380 |

|d.f. |37 |37 |12 |8 |13 |

|Critical value (p ................
................

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