Economy and Transport update
The Welsh Government have called upon the UK Government to make a major intervention in the economy so that businesses, employers and employees, the self employed and their families can be supported to survive the covid-19 pandemic.
Ken Skates AM Minister for Economy and Transport has made this statement in the Senedd.
|DATE||17 March 2020|
|BY||Ken Skates AM, Minister for Economy, Transport and North Wales|
There is no doubt that we are facing unprecedented pressures on our economy as a result of the Coronavirus outbreak.
There will be many companies in Wales – small and large – dealing with the fallout of this virus. From contract cancellations to increasing staff sickness rates; from major supply chain disruptions to significant cash flow challenges, this crisis will have a significant impact on the way our economy works over the coming days, weeks and months.
A significant proportion of the working population may now be off work at any one time during the outbreak and with Wales particularly dependent on small and medium-sized businesses, the impact on our economy will be significant.
As a Welsh Government we are doing everything we can to support businesses to deal with the impact of coronavirus. My advice to all businesses is to use the help and advice that is available.
Any business affected should contact the Business Wales telephone helpline on 03000 603000. They can help with practical advice – from staffing to financial planning as well as supply chain support.
The Development Bank of Wales is also available to help – it has equity and loan funding it can make available immediately to otherwise healthy small businesses to them through the cash flow and other challenges they may face in next, difficult, few weeks and months.
On Monday I announced that the Development Bank of Wales will give a three-month capital repayment holiday to the businesses it supports. The Bank currently supports around 1,000 businesses and this will help them – some of our smallest SMEs ranging from small food retailers to the creative industries – get the vital help they need.
Today I spoke with the Development Bank Chair to discuss potential further measures we may need to take in the coming weeks.
On Thursday I will be having further discussions with high street banks and the British Business Bank. I will also be convening an emergency Council for Economic Development on Thursday this week to provide a forum for the sharing of business intelligence and to discuss practical solutions to the challenges we all face.
I have been having a series of conversations with business organisations and social partners and through our three regional offices we are utilising our collating business intelligence to inform our mitigation and next steps. I have met with my senior leadership team in the Economy and Transport department yesterday and confirmed that the regional response taskforce teams established during our Brexit preparations will now be operational to support the redundancy and skills needs as they emerge. Our React and Careers Wales advice is being made available and I am actively exploring ways in which these tools can be enhanced in the coming weeks.
Our discussions with business groups and the intelligence we have received has helped to shape the £200m package of support announced by the Minister for Finance earlier today. As part of that package retail, leisure and hospitality businesses with a rateable value of £51,000 or less will receive 100% business rate relief and pubs with a rateable value of between £51,000 and £100,000 will receive a £5,000 reduction on their bill. A further £100m will be available for a new grant scheme for small businesses
Whatever further consequential funding the Welsh Government receives from the UK Government as a result of support for businesses we will ring-fence for support to businesses here in Wales through an enhancement of our package of support.
The Welsh economy could be particularly affected because of the prevalence of manufacturing and the prominence of the automotive, aviation and tourism sectors. As well as this, workers will be affected ranging from employee illness/isolation and looking after children may not be able to attend school. Areas of the economy where home-working is not possible will face a significant challenge.
We welcome the actions taken by the Bank of England, however the scope for monetary policy levers to help is limited, not least because interest rates were already at very low levels. The scale of this challenge is now so large and so urgent that only a massive fiscal policy intervention by the UK Government can now help businesses and individuals bear the burden of what is to come.
Furthermore, a response co-ordinated with other major economies is now urgent and likely to be more effective in reducing uncertainty and maintaining consumer and business confidence than countries taking individual actions. Avoiding a major recession and long-term structural damage to our economy should be the UK Government’s major economic priority. That requires a genuine, four nation approach to supporting the economy and the lack of information from the UK Government is currently hampering this effort.
As devolved government we will play our part in helping to utilise that significant fiscal stimulus in the most effective way. Collectively we need to find a way to hibernate viable businesses affected by this crisis; protect vital supply chains and give individuals impacted by this outbreak the financial support they need to get through. That was very much the ask I made of UK Government during my discussion with the Secretary of State for BEIS this morning and the letter the First Minister sent to the UK Government earlier today.
The UK Government needs to work with the Bank of England to ensure that the banking system has the required amount of funding in place, and the level of flexibility needed, to ensure the survival of viable businesses experiencing cash flow problems. I will be stressing in my meeting with Banks here in Wales the need to ensure liquidity it available.
On statutory sick pay, the UK Government is bringing forward legislation to allow small- and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. This will be available to businesses in Wales and we will work with partners to ensure that employers over the coming months set up the right repayment mechanisms as soon as possible. I strongly urge the UK Government to use this system to support the most economically exposed and vulnerable individuals.
The UK Government announced a temporary Coronavirus Business Interruption Loan Scheme to be delivered by the British Business Bank. This will be available to businesses in Wales via the British Business Bank.
A Time to Pay scheme has also been announced whereby all businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service. This is also available to businesses in Wales.
Out transport providers are also facing incredibly difficult challenges. I have been holding urgent conversations with senior figures across the industry as fewer fares are putting significant pressure on the finances of our major rail, bus and airport services.
I have spoken a number of times to the Chief Executive of Transport for Wales. Across the UK, including in Wales, rail passenger numbers have fallen by up to 18% on certain lines already. Elsewhere, Network Rail has launched a survey of its suppliers over fears of material shortages due to the coronavirus.
Despite the economic impact, all our operators are continuing to follow the most up to date guidance from the public health authorities and industry bodies. Contingency plans are in place and TfW are examining future mitigations such as staffing, stocking as well as issuing additional sanitizer, personal protective equipment, reviewing cleaning regimes.
Regular advice is issued to passengers including the “catch it, bin it, kill it” campaign by displaying posters at key stations and sending out messages through twitter and other social media channels.
A cross industry action team has been stood up with daily communications to ensure they are ready to respond if the situation changes including planning for a range of different scenarios.
The same can be said for the bus industry with additional cleaning of buses and regular reminders to staff about hygiene good practice and additional cleaning materials such as personal hand sanitiser has been issued for frontline employees, depots and work areas. Officials have met with the bus industry group and I spoke with the senior figures from the industry yesterday.
In terms of Cardiff Airport, I spoke to the Chief Executive Officer and her team over the weekend and my officials continue to be in close contact through this week. The demise of Flybe left a 5.6% gap in its revenue and this crisis will severely test the sustainability of all airports across the world as the number of flights decline sharply. In recent times Cardiff Airport has diversified its business base and carries less debt into this crisis than many of its UK neighbours.
However, as in other sectors we should be under no illusion about the scale of the challenge ahead. Tui has said it will suspend the “majority” of its operations and there may be other operators taking the same action in the coming weeks. My thoughts are with all affected employees and passengers who have had their travel plans disrupted.
I will remain in regular contact with Cardiff Airport and the Department for Transport on aviation and other visitor-related issues.
I hope this statement assures Assembly Members that we are doing all we can to protect the Welsh economy and limit the impact on individuals and businesses across the length and breadth of Wales.
When the worst of this crisis is over we must soon look to the future – to the fairer, more compassionate and more equal economy we need to build. As a Welsh Government we will play our full part in that work.