Pwyllgor yr Economi, Seilwaith a Sgiliau - Y Bumed Senedd
Economy, Infrastructure and Skills Committee - Fifth Senedd11/05/2020
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Hefin David MS|
|Helen Mary Jones MS|
|Joyce Watson MS|
|Mohammad Asghar MS|
|Russell George MS||Cadeirydd y Pwyllgor|
|Vikki Howells MS|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Emma Watkins||Dirprwy Gyfarwyddwr Polisi Economaidd, Llywodraeth Cymru|
|Deputy Director Economic Policy, Welsh Government|
|Huw Morris||Cyfarwyddwr, Sgiliau, Addysg Uwch a Dysgu Gydol Oes, Llywodraeth Cymru|
|Director, Skills, Higher Education and Lifelong Learning, Welsh Government|
|Ken Skates MS||Gweinidog yr Economi, Trafnidiaeth a Gogledd Cymru|
|Minister for Economy, Transport and North Wales|
|Simon Jones||Cyfarwyddwr ar gyfer Seilwaith yr Economi, Llywodraeth Cymru|
|Director, Economic Infrastructure, Welsh Government|
|Sioned Evans||Cyfarwyddwr, Busnes a Rhanbarthau, Llywodraeth Cymru|
|Director, Business and Regions, Welsh Government|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Lara Date||Ail Glerc|
|Robert Lloyd-Williams||Dirprwy Glerc|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Cyfarfu'r pwyllgor drwy gynhadledd fideo.
Dechreuodd y cyfarfod am 13:00.
The committee met by video-conference.
The meeting began at 13:00.
Croeso. I'd like to welcome Members to the Economy, Infrastructure and Skills Committee this afternoon. This is the first committee of the Welsh Parliament, the Senedd's Economy, Infrastrucutre and Skills Committee since, of course, the name change took place last week.
So, if I could first of all, in accordance with Standing Order 34.19, say that I have determined that the public are excluded from the committee's meeting in order to protect public health? This meeting will be broadcast live on Senedd.tv.
There are no apologies or substitutions. If Members do have any declarations of interest, please say so now.
In that case, I move to item 2 and we have a couple of papers to note. We have one from the Chair of the Culture, Welsh Language and Communications Committee, Helen Mary Jones, who's also a member of this committee. That paper is to note.
We also have a letter from me to the Minister for the Economy, Transport and North Wales, who's also in this session this afternoon, regarding our response to business and job support, which is the subject of our meeting this afternoon.
In that case, I do move to item 3, and item 3 is our session this afternoon. So, I'd like to welcome the Minister and his officials to the meeting this afternoon. This is in regard to ministerial scrutiny and in regard to business support in regard to the situation that we're currently in with the COVID-19 pandemic. Minister, shall I ask your officials to introduce themselves or would you like to introduce them?
That would be great. If they could introduce themselves, we'll check that the sound systems are working and so on.
Lovely. So, I'll come to you first, Emma.
Prynhawn da. Good afternoon. I'm Emma Watkins, I'm deputy director for economic policy within the Welsh Government.
Hi, everyone, my name's Simon Jones. I'm director of economic infrastructure in Welsh Government.
Okay. Can I just check, as my sound was a little quite there when you spoke—can you just repeat that again, Simon?
Okay. Good afternoon, everyone, my name's Simon Jones. I'm the director of economic infrastructure in Welsh Government.
Okay. I can hear okay, but it's a little quieter than normal. So, I'll just ask IT just to see if they can do anything with that. Sioned.
Prynhawn da. Good afternoon. Sioned Evans, director of business and regions in the Welsh Government.
Prynhawn da. Good afternoon. I'm Huw Morris. I'm the director for skills, higher education and lifelong learning in Welsh Government.
Thank you, all, for being with us this afternoon. Minister, I don't expect large, long answers to my initial questions because they're just very broad questions, but I wonder if you could perhaps give an overview of how you've managed to liaise with business and the unions, the wider workforce, in developing your response to the crisis that we're currently in.
Thanks, Chair. I think we're fortunate in Wales in that we work in social partnership with employer organisations and with trade unions. We're also fortunate that we've got a system in place now within Welsh Government that has regional teams across the length and breadth of the country. During the course of this crisis, we've had fortnightly calls with trade unions, we've also had fortnightly calls with rail unions, very regular calls as well with employer groups, including activities such as business webinars and so forth. We have a social partnership council taking place this coming Thursday, and, in addition to this, our chief regional officers and their teams have been actively engaged with businesses across their respective regions. So, the level of dialogue, the level of communication generally, and the level of collaboration has been pretty unprecedented as far as I'm concerned, and indeed, it has to be said, with local government and with UK Government.
So, you don't think that there is anything further you can do in terms of improving that liaison with the stakeholder groups? You're satisfied that the liaison has been at the correct level.
I think it's been proportionate. I think it's resulted in some very positive outcomes, particularly in regard to the development of the economic resilience fund, and I think it's something that we've been able to demonstrate to other Governments that has worked incredibly well. Now, in terms of our dialogue and engagement with the other devolved administrations and UK Government, we've been able to flag up our social partnership approach and how beneficial that's been.
Okay. Thank you, Minister. You've announced a number of schemes and, obviously, there's finance attached to those schemes. I'm happy if your officials want to come in with some more detail on this, but I wonder if you could give an overview of where the funding has come from to fund the Welsh Government schemes that you have announced.
Sure. So, there's something in the order of £1.7 billion being provided to businesses in Wales by the Welsh Government—£1.2 billion of that has come as a result of consequentials, and then a further £500 million that we've been able to, if you like, rake from across Government departments. This is money for a fund that is in addition to what exists across the border.
Okay. And can I ask you, as well, how you're liaising with colleagues across the border—the Westminster Government Ministers? Is that a good relationship? Is there anything you can say in terms of your dialogue with them?
Well, we've never had as much dialogue as we have had in the past seven weeks, not just with UK Government but also with the other DAs. I speak every week with the Secretary of State for Wales, and I have to say that the relationship that I have with him and with the Wales Office has been incredibly helpful.
I have weekly calls with Nadhim Zahawi in the Department for Business, Energy and Industrial Strategy. Again, he's been incredibly responsive to our calls for amendments to UK Government employment schemes and some of the business support schemes as well. We have regular calls with Department for Transport Ministers; the last took place just on Friday, in fact. I speak very regularly indeed, as well, with Ministers across the DAs, and we have quadrilateral calls on a weekly basis as well.
I speak regularly with the local authority lead members for transport, for economic development and, indeed, the leaders as well. So, I think the level of dialogue has been exceptional. It has resulted in some positive changes to certain schemes. For example, the lifting of the cap from £25 million in regard to the coronavirus business interruption loan scheme came as a result of our call. We're now making a very strong pitch for additional support to be offered through the job retention scheme. I'm hopeful that the UK Government will respond well to that. We've made various representations on behalf of sectors as well, which are being considered by UK Government.
And in terms of our engagement with local authorities at a regional level, it's worked brilliantly. We're seeing an unprecedented degree of regional collaboration right now, not just between local authorities, but also between Welsh Government and local authorities. I think the key thing, though, is that whilst our engagement has been pretty exceptional with local authorities, with DAs, with UK Government, it's essential that we drive meaningful outcomes as a result of that. That sometimes hasn't happened, as you could probably predict, but, by and large, I've been pretty satisfied with the way that I've been able to engage with my counterparts across the UK and with local authorities in Wales.
Okay. Thank you, Minister. I should have said at the beginning to the officials that if you feel that you want to add to anything the Minister's said, or come in at any point, if you just raise your hand, then I will indicate back to note that I've seen you, then bring you in. Is there anything any officials or Simon Jones wanted to add? No. Okay. If no other Members have indicated to come in at this point, then I'll move to the next set of questions, which is from Mohammad Asghar.
[Inaudible.]—the panel there. My question is just regarding the changes needed to address any gaps in this, during COVID-19. Minister, can you give any details of the specific type of support you intend to put in place in phase 2 of COVID-19? I mean the economic resilience fund for which you have set aside £400 million.
Yes, thanks Mohammad. A paper is going to be submitted to my office this week, and we'll then be able to make an announcement regarding the further support that we're making available. I think it's worth saying that we've been able to take stock of some of the recent announcements by UK Government in shaping some of the support that we're offering, particularly the announcement about the bounce-back scheme. That is very important. It's essential that we consider how effective that has been, as we look to what gaps we prioritise our funding with. I don't want to give any specific detail today, because the announcement on the second phase is due over the course of the next week. So, I think, with respect, it may be best just to show a little patience right now, because, as I say, it's vital that we take stock of those UK Government schemes and the effectiveness of them.
Thank you very much, Minister. Will any further support be available via the Development Bank of Wales, the £100 million COVID-19 loan use fund—fully subscribed within the first week of operation—so how are you going to—?
Yes, we're looking at further support. Subject to the appropriate clearances being given, then we'd expect the development bank to be able to go on responding to business needs that relate to the coronavirus epidemic. But it's also worth adding that there are other existing funds that the development bank still have available to businesses, including those microbusiness loans, the start-up loans and so forth.
I should have said, actually, in terms of our engagement with colleagues across the UK, we've been able to point to Business Wales, to point to the development bank as bodies that are able to support businesses swiftly. So, for example, within the development bank, the pod model that's adopted for considering loan applications and then for administering them has been incredibly effective in making sure that we get the money out of the development bank as swiftly as possible, and, as I said, I think it was just last week, pretty much all of that £100 million that was offered up has been allocated to the businesses that had applied for it and virtually all of that money is now out of the door in the hands of businesses. That's supporting about 14,500 jobs that would possibly have otherwise been lost.
Thank you very much, Minister. I'm very pleased at the job you're doing at the moment, anyway, but concerns have been raised by the tourism sector regarding the financial support for self-catering businesses and the different approaches being used by individual local authorities in locating this support.
Also, another area that I would like to add, Minister, is one nobody's mentioned yet: the racing industry in Wales. It's nearly £4 billion-worth, and I think we have to put something—because that also attracts a lot of Irish and English supporters and these horse-race-loving people to come and join the festivities in Wales. So, how are you trying to help them out, please?
In terms of the tourism sector as a whole, we're giving local authorities discretionary powers to be able to support certain businesses. We're arguing for an extension to the job retention scheme in certain sectors, including tourism, recognising that most businesses within the tourism sector are really going to struggle to generate enough revenue in 2020 to be able to continue with the sort of employment levels that they've enjoyed in recent years.
I'm acutely aware of the difficulty that the racing industry is facing right now. As you're aware, Bangor-on-Dee races are based in my own constituency, so I'm aware of the pressure that that particular sector is under, but that's one of many sectors that I feel will be supported through an extension of the job retention scheme.
Now, I think some evidence out there published recently suggests that in parts of the UK, including Scotland, for example, unemployment could hit 30 per cent if there is a sudden removal of the job retention support scheme. So, it's absolutely vital that we don't hit a cliff edge at the end of June, that that scheme progresses into a second phase.
I've written, with my colleague the Minister for Finance today to the Chancellor regarding the furlough scheme, and, Chair, if I may, I'll happily share that letter with you and with members of the committee, because it highlights where we think that improvements could be made to the scheme, and how it should be administered and supported moving beyond the end of June. We do recognise that this scheme has been a godsend for many businesses, and I congratulate the Chancellor and his team in developing a scheme that has been so instrumental in keeping people with a degree of income that they would otherwise not have had. So it's vitally important now that that scheme is not removed prematurely.
Thank you very much, Minister.
Thank you, Minister. Can I just press you on phase 2? I understand entirely the reasons why you don't want to make any announcements today. That's understood. You mentioned you're going to get a paper from officials. Can you just give us some indication of a timeline? Are you expecting an announcement later this week, or when may that be?
The paper will go through a number of processes. First of all there's the options paper that's considered by a group of senior officials. That then results in what's called an MA, ministerial advice, formally being submitted to me. That's going to be with me by the middle of this week, I believe, and then, depending on my thoughts and considerations, and the observations of some of my colleagues, we'll sign it off or ask for further tweaks to be made. I recognise that we need to get an announcement as soon as we possibly can, but we really do need to carefully consider this next phase, because having spent already around about £400 million of the economic resilience fund, we're now reaching the point of the final £100 million. So, we need to ensure that this final tranche of money that we know is available to us—and we might be able to draw out more; there may be more through consequentials—this final sum of money that's available to us is put to very best use . So, I'll carefully consider it, but I'll do so in the swiftest possible way. So, if I can get an announcement out by the end of this week, if it's based on my immediate approval, then that may be possible. But I don't want to rush to this, because, as I say, this is vitally important money. It's a finite resource and we have to make sure that we get this second phase absolutely right.
Okay, well, thank you for explaining that timeline. That's helpful for us to know. I'll move on—unless Helen Mary wanted to come in, I'll move to Vikki Howells.
Thank you, Chair, and thank you, Minister, for sparing the time to be with us today. I've got some questions around what additional Government support is needed in the coming months, and, of course, with the Prime Minister's statement last night, I'm sure there's plenty for us to get our teeth into there. So, thinking about the next phase of the pandemic, and also for the longer term as well, what support can the Welsh Government provide to safeguard businesses and jobs in Wales?
Thanks, Vikki. I think it's worth stressing that some of our big strategic aims have not shifted because of coronavirus. We're still committed to decarbonisation, to fair work, and to ensuring that we would balance the economy across all of the regions, and indeed within the regions. In order to do that—there is an opportunity, as we recover from the coronavirus, to do just that, but in order to do it, though, we have to make sure that some of our big stimulus packages, the infrastructure packages, for example, are used to drive growth and decarbonisation. But alongside our investment in infrastructure and the ongoing support that we'll be able to offer through Business Wales, through direct Welsh Government support through the development bank, there is, without a shadow of a doubt, a need for the job retention scheme to be prolonged, because that will make a decisive difference to the success or failure of certain sectors, including tourism. We've heard already that the aviation sector as well requires ongoing support, so in addition to what we can do in Welsh Government, the UK Government's support schemes that are already operating really do need to be extended still further into the future.
And on that note, Minister, we took evidence last week from trade unions, and they were very firmly of the opinion that there need to be designated approaches for particular sectors such as tourism, aviation, manufacturing, retail, as you've outlined there. What is your view on that and do you see that kind of sectoral support coming from UK Government, Welsh Government or a mixture of the two?
Our support to date has been pan Wales and pan sectors, but the UK Government, when we've asked for certain sector-specific support, principally for aviation, tourism and also for the steel sector, the UK Government has by far the deepest pockets, and therefore the greatest ability to intervene in order to support those sectors that are going to require a further period of hibernation, or a greater degree of nursing into the future. So, whilst we'll be able to make investments through the business and regions budget, that budget does not come anywhere near to what is available to UK Government Ministers. And I think the Institute for Fiscal Studies have only recently recommended that as a result of coronavirus, there should be more funding made available to the devolved administrations to support business development, and to support the economy. And that was another factor that drove myself and Rebecca Evans to write to the Chancellor.
And aside from that letter, have you had any further discussions yet with the UK Government about the scale of additional funding that will be needed in the longer term?
We don't know exactly what sort of scale of funding is going to be required in terms of business support, because it's going to depend in part on how long the furlough scheme can operate. If the furlough scheme was to be removed at the end of June, we may see unemployment rise to levels that we've not seen since the 1930s, and that would, in turn, require a massive economic stimulus package that would have to last many, many years, if not decades, in order to recover from this. If the furlough scheme can be extended still further after 30 June, then the package of support for supporting the economy as a whole may well be actually less. So, it's my view that the furlough scheme could actually be an investment today in order to save longer term.
And a final question from me with regard to our real big hitters in the Welsh economy in this field. So, I'm talking about Tata, Airbus, GE. Can you confirm to us that you are in discussions with them about the kind of sectoral support that will be needed for those areas?
Yes, we most certainly are—we're in very regular communication, constant communication at an official level; the weekly calls with the Wales Office and with the Department for Business, Energy and Industrial Strategy cover these sectors, and the very specific businesses that you've highlighted. We're also in direct communication with some of the headquarters for those businesses, as you can imagine, and we're working with regional leaders and local authority leaders as well, because, of course, they're being approached by a number of those big employers.
Thank you very much.
Thank you, Chair, and thank you, Minister. It's also a further opportunity to thank you for the way in which you've worked cross-party with the spokespeople in this; it's been very helpful.
Can I just give you an opportunity to put on record the approach that you have been taking specifically with the other Governments in the UK around tourism? I think you mentioned before that there are discussions ongoing at that level about a long-term package of support, potentially, for tourism and hospitality businesses, particularly those businesses that might lose their whole season this year the way things are going. And can you confirm as well that you are asking the UK Government to distribute any support that they may be giving, not on the basis of the Barnett formula, but on the basis of the significance of tourism to the economies of the different nations of the UK? I think we're all very aware that tourism is a more important and more significant part of the Welsh economy than would be true, for example, of many regions of England.
Thank you, Helen Mary, and thanks for your kind comments. I'd agree entirely that we've engaged very constructively over the course of the past few months over this crisis and how to respond to it. And you're absolutely right about the regular calls that have taken place across the nations regarding a common approach to supporting the tourism sector, and the need for a prolonged period of support from the UK Government in order to hibernate a lot of those businesses that are not going to be able to generate revenue until at least the spring of 2021. And if public confidence does not return until after that point, then it may be even further into 2021 before significant revenues can be generated.
I don't want to step on the toes of my colleague the Deputy Minister for Culture, Sport and Tourism, but I do know that he has had a quadrilateral call in the last week concerning the approach that could be taken to support the tourism sector. It's our view that there has to be a prolonged period of support for tourism and, as you rightly point out, I wouldn't wish to see any funding for sectors that are particularly prominent in Wales to be Barnettised, because that would essentially leave us with less funding per active enterprise than we might expect on the basis of a proportion of businesses engaged in that particular sector. And there's a precedent for our call for this to be made, in that we said in the days when we were offered a Barnett consequential of the industrial energy transformation fund that we would actually rather be part of the UK programme, but with one very, very strong caveat, which is that we would expect, as an absolute bare minimum, a Barnettised equivalent of funding for steel businesses in Wales. But our expectation would be that those businesses in the steel sector would draw down a much larger proportion of the amount of money that was available through that fund.
So, I'd be quite keen to apply the same principles to support for other sectors that are particularly significant within the Welsh economy. We could include perhaps tourism in that; we could include perhaps the aerospace industry. The automotive industry as well is critically important. It supports tens of thousands of jobs across Wales. It's already facing a huge challenge, in terms of the move from the internal combustion engine to electrification and changes in consumer behaviours. I think there's a call for the automotive sector to be treated with special attention as well.
Before I move to Hefin David, Joyce Watson, did you have a question?
Yes, just very quickly, Minister. Good afternoon. One area that hasn't been mentioned at all is the oil industry and, of course, in Milford Haven particularly a negative impact on that for the jobs more locally will be felt harshly because there's an awful lot of supporting jobs around that. But the other side, of course, is the revenue that is paid to the Welsh Government at a time when we can ill afford to lose any revenue also. So, what sort of discussions have you had with regard to the oil industry particularly here in Milford Haven?
Well, this has been raised on numerous occasions—the point that you make about Milford Haven being very well made with UK Government Ministers. But, in addition to that, the oil industry, as you can imagine, given the Scottish Government's interest in it, is raised on a weekly basis during quadrilateral calls as well. I think it may be worth saying—it's just made me think actually, Chair—that, as we emerge from this particular crisis, the role of the city and the growth deals is going to become even more important in supporting not just the recovery, but long-term priorities in terms of decarbonisation and fair growth. And I think, in particular, in some of those parts of Wales that are really feeling the consequences of coronavirus because they have certain sectors so badly affected, those growth and city deals are going to be critically important.
I think there has to be a significant change in terms of the growth deals and city deals that are already in place and are coming on stream, such as the north and mid Wales. There's going to have be a significant reshape of some of the deals.
I'm not sure there'll need to be a significant reshaping of all or any of the deals, but I am aware that those regional leaders are paying very close attention to the projects that are project based and to what additional support could be given to certain projects that have been left exposed by coronavirus. I know also that on a cross-government basis—local government working with Welsh Government basis—recovery plans are beginning to be formed in some of the regions. I'd like this work to be consistent across all of the regions. I've encouraged, you know, those growth and city deal arrangements to really focus on how they can make growth and city deals coronavirus recovery deals in the short term, but not losing track of the long-term objectives of each of the deals.
Yes, I suppose there is a difference in that some of the deals have already got projects that are established and some of the deals haven't yet been even formulated as projects. So, I suppose there's an issue of some of the deals moving at different stages.
The Minister's asked for the UK Government to publish a league table on high-street bank lending. First of all, how's that data going to be used? But also, what other UK-wide indicators need to be reported at a Wales level?
Thanks, Hefin. I think that it's important that there is some sort of transparency around the high-street banks' administration of the coronavirus business interruption loan scheme to ensure that they're all administrating it in a fair and consistent way. We're hearing from businesses that might not be the case. Now, unless we have the data to justify anecdotal evidence, then we simply do not know whether that scheme's being administered properly, fairly and appropriately by all of the high-street banks. So, I am still hopeful that data will be available and that it will be available on a Welsh basis. We've asked for disaggregated data concerning the coronavirus business interruption loan scheme. I'd like to know what data is available as well regarding Wales in terms of the bounce-back loan scheme. I think that would be very helpful.
Can I ask you?
Just before you go on to other data you might need, what do you do if you receive information that a high-street bank isn't adequately supportive?
So, I have a fortnightly call at the moment with the high-street banks. I invite each of the banks to report on their performance and I have to say, you know, when they report back on how they are performing, it sounds very, very impressive, but it doesn’t necessarily tally on all occasions with what employer organisations are telling us. And so, if we had disaggregated data concerning CBILS, we'd then know exactly, and if there was a league table published for the banks, we'd know exactly whether or not the performance that we're being presented with—
But what would you do? What would you do?
We'd challenge the banks directly, which we've done already, but we'd be able to be challenging them with hard data at our fingertips.
What does a challenge look like?
Well, it comes in the form of a discussion with the banks regarding their performance compared to others, recognising that they're in a competitive market. One of the benefits of having a league table in terms of CBILS would be that it would drive competitiveness within the high-street banking industry as well.
Are there any sanctions that you'd deploy?
We wouldn't be able to deploy sanctions, I don't think, against high-street banks over the administration of a UK Government scheme.
And that's why, really, I think the only way that we can ensure that this scheme is being operated in a fair way in Wales is by publishing data and bringing a good degree of transparency to it.
Embarrass them into behaving themselves. Can I ask: are there other pieces of data that you need on a Wales-wide level in order to carry out your function?
I think the more data we can get at a Wales level the better. In terms of CBILS, that's been particularly important. We continue to make that call for Wales data. We have already, I can tell Members, sectoral and regional impacts of coronavirus, which are proving very helpful in shaping our interventions. But any sort of scheme, including the job retention scheme, that can be broken down on a regions-and-nations basis is very valuable in terms of shaping our interventions. I'm not sure whether either Emma or Sioned have a view on what other specific schemes could be disaggregated in terms of the data.
I suppose the thing I would say about the data, really, is that what’s particularly important for us, Minister, going back to the earlier points, and to the committee and to the Chair, is that having a better understanding of the impact of the interventions that we're making as a Welsh Government will absolutely be able to help us in shaping the direction of any support moving forward. So, actually, the bank data just provides us with another source of information to help us to build on the impact we've made already with the support that we've given. So, any data is good data in this situation, but it has proved really quite difficult to, at the moment, extrapolate the information just for Wales, but I do feel we're on the cusp of perhaps receiving some of that in order to help us even fine tune our support even more.
The data regarding the job retention scheme is really interesting. That demonstrates—and other schemes, for that matter—the data that's been made available to us on a Wales basis would show that Wales is more dependent on Government interventions than Scotland, Northern Ireland or England. With regard to the job retention scheme, 74 per cent of businesses have applied for that particular support stream. That's an incredible proportion of businesses. It compares to, I believe, around about 67 per cent in England. So, it does show the value in making sure that we get Welsh data and it also shows why the JRS is just so important to the future of the economy.
Sioned wanted to just come back in, I think, Hefin.
Thank you very much, Chair. I just want to come back in and say, in terms of the ERF, we had 9,500 applications in for that within a very short period of time; around about a figure of £210 million-worth. That's been opened in the middle of April and already—I'm just looking at the latest stats from this morning—as of this morning, 5,200 offers had been made to almost £70 million. So, the speed at which we're able to support has been really, really quick and really, really responsive, and as the Minister pointed out in terms of the next phase, understanding the impact that is having and how we can tailor what is actually a very small amount of money potentially available compared to the UK Government on this is incredibly important. So, the more data we can gather—. And we are actively attempting to get hold of that data as much as possible to make sure that we've got a very rounded offer for businesses in Wales. Diolch.
Okay. And with that information, we would obviously like to scrutinise you and monitor the economic impact of the pandemic here in Wales. How are you going to report on the economic impact and also how are you going to cover the effectiveness of the support schemes that you've deployed thus far?
Well, in terms of monitoring and checking the performance, the criteria is very important for the ERF regarding job retention requirements. Also we get regular—as I said just a few moments ago—sectoral and regional impacts that enable us to monitor how effective our systems have been and, indeed, how successful the UK Government's support schemes have been as well.
And finally, I had a constituent who received £10,000 with the council tax business tax grant, and one of the things that he said is that he'd noticed other small businesses around him in the community were receiving the money but were still operating and were still trading. Obviously, that doesn't necessarily say that they don't need the money, but it does suggest that there's been a blanket approach to distributing grant funding to different businesses. How can you be confident that money has gone where it's needed and that fraud will be prevented as money is being distributed in the business community?
I don't think we should allow the perfect to be the enemy of the good in terms of the immediate interventions that we've made. It was absolutely vital that we got as much support to businesses as soon as we possibly could do. The risk when you enter into a crisis of this type isn't in taking a good amount of time and then making carefully considered decisions; the risk is that you don't do enough fast enough, that your response is too small or too slow. And as a result of the immediate response by us and the UK Government's funding via the UK Government directly with the JRS, we've been able to avoid huge losses of jobs. But in terms of being able to ensure that we do target our resources as carefully as we can, we're making sure that that next round of ERF is carefully considered, and that's why I didn't want to rush into it without taking stock of how effective CBILS and how effective the bounce-back loan scheme are, how effective JRS is across all sectors, whether there are businesses that are operating as normal but are also getting grants, as you've highlighted, and so, as I say, that's why it's really important that we take time to consider the next round of ERF.
In terms of fraud, our appetite to take risk has certainly increased, there's no doubt about that, and it had to; we're in a crisis. But we've done all we can to ensure that the risk of fraud is minimised. And as I've said before, we've introduced certain criteria within the economic resilience fund that has reduced risk to as low a level as possible, and if we find that fraud has been committed after an award has been made, we can guarantee that we will go back and ensure that that award is clawed back for the public purse.
And then, finally, Chair, many, many grants—tens of thousands of grants, including the £10,000 grant that Hefin referred to—are being administered by local authorities and so, some of the responsibility for avoiding fraud sits with local authorities, but as far as I can ascertain, again, local authorities behaved incredibly well. Yes, they got the money out to businesses very swiftly indeed, but they've also done it in a way that absolutely minimises the risk of fraud.
Oscar Asghar, you wanted to come in, I think.
Thank you very much, Chair. Minister, you just mentioned earlier that you get a report from the banks quarterly, and that's very impressive. In fact, you're absolutely right, because banks are getting this £10,000 grant straight to businesses' bank accounts and they know who's getting the money, and the businesses should be supported in this COVID-19 time. My question is a very short one: the people who started businesses within the last year, they're on the backburner—that is the problem. So, some businesses and the companies that started businesses very late last year after 5 April 2019, they are the ones having a bit of a problem with the banks, and the grant availability to those, so what are you going to do about that, and discussing with the banks?
Forgive me, I'm not entirely sure what the question was fully alluding to. Sorry.
I think the question is about the grant funding made available to those businesses that can't produce a set of accounts.
Yes. Existing businesses, but new—
Okay, and the risk of fraud. Well, with the ERF, the economic resilience fund, any business that applies for support has to sign up to their details being published. If they get a grant, their details will be published. They'll be available to the public and therefore, they risk exposing themselves as frauds if they are indeed fraudulent. So, as we work through the list of applications and awards, we're obviously making checks of our own, but once awards are made, the public will be able to scrutinise that list of businesses that have received—
I think the second part of Mohammad Asghar's question was about businesses that are recently established businesses not having access under the current economic resilience fund, and whether phase 2 will address that not.
We're looking at whether the UK Government schemes and any further schemes may be able to support this. We recognise that it is a problem, I can assure you, Oscar. And we may be in a position that we'll be able to pick up those—and it is a small number of businesses, there aren't many—but we may well be able to be in a position where we can assist them through phase 2 of the ERF.
Okay. I certainly hope that that is the case. I've got a number of constituents raising that very issue. Helen Mary Jones.
We need to think, obviously—. Sorry, am I on mute?
No, we can hear you.
I'm sorry. I'm getting odd messages up on my screen—the joys of remote meetings.
Obviously, we need to proceed with great caution when it comes to people returning to work, but we also do want that to be possible and, obviously, in the context of last night's announcement by the Prime Minister, this will become perhaps more urgent. Can you tell us what in your view needs to be done in order to prepare businesses and workers for potential new working practices that will need to be adopted as the lockdown eases?
Thank you. I think what's vitally important is that crystal-clear guidance is made available in a timely fashion to businesses, and we've been in discussion with the Department for Business, Energy and Industrial Strategy regarding working safer practices and guidance for certain workplaces. There are, obviously, differences between England and Wales as far as the regulations are concerned. I think it puts us in an advanced position compared to England in terms of the 2m rule, and it has consequently prepared many businesses for the recovery period. But, for those businesses that have not been operating during the course of the crisis, the working places guidance is going to be vitally important, and that's something that I'll be considering with social partners at the social partnership council this week. I want to make sure that unions and employer groups are all brought into the guidance that we publish for all workplaces.
Thank you, that's very helpful. My next question really spills out of that. I'm sure you'll hear from unions in that partnership council what we heard as a committee last week from Wales TUC and the other unions. I think it was their view that, in any workforce moving to exit lockdown, every employer should be required to undertake a COVID-19 risk assessment, and that that should be developed in consultation with unions and the workers. I wonder if you've got a view on that.
So, we'll be discussing this on Thursday. Through the regulations that have already been published, there is a three-phased approach to dealing with any lack of adherence to the regulations. First and foremost, employees should engage with management or, if they're unionised, should engage through their union, and then, secondly, it can be escalated to local authorities and to the Health and Safety Executive. And then, thirdly, if it requires further action, then it can be elevated even further to the police.
In terms of how we ensure that risk that employees are exposed to is minimised, the guidance should be highly effective in ensuring that that happens across various work settings. But, we are keen, in addition, to highlight good practice. Very recently, working practices at CAF in Newport I highlighted as exemplary, but, equally, we will call out bad practice as well, and we're working with the Wales TUC and individual unions in addressing reports and, I have to say, Chair, the reports are relatively small, compared to how many businesses we have, of bad practice.
Thank you, Minister. That's heartening to hear and, I think, you know, we probably all understand that most businesses are really trying to get this right and they do need that clarity and guidance. But, as you mentioned, there will be sometimes a need for implementation. You've spoken a bit about how effectively the existing 2m rule has been implemented and how that’s been monitored, but I'm sure you'd agree with me that, as we have more workplaces going back, there's going to be a greater need for monitoring and, sadly, that will mean that there is, on some occasions, a greater degree of a need to enforce those rules.
Are you confident that those responsible for the enforcement—and I'm thinking particularly at local government level—will have the capacity to enforce effectively and hopefully, prevent businesses getting to the stage where they might need to be criminal reporting. And what discussions have you had with your colleague, the Minister, for local government, to see whether additional resources might be required for local authorities to enable them to undertake that enforcement work on all of our behalves?
Well, we've checked—because I think this is a vitally important consideration as we move towards restarting parts of the economy that have been in hibernation. We've spoken with local authorities and we've engaged with colleagues in the housing local government department regarding capacity within local government to support enforcement.
It appears that local authorities are able to manage things fine at this moment in time, but, of course, we'll be monitoring very closely the capacity that's available as we see more businesses return to more normal activities. I'll be raising this again at the social partnership council, recognising that, if we're going to have confidence in the guidance being adhered to and it being incorporated into working practices across the country, then we need to have confidence that enforcement systems are going to be adequate as well, should there be a significant number of businesses that do not comply with that guidance. That'll be discussed on Thursday, but I can tell committee that, to date, it appears that local authority enforcement capacity has been adequate.
I'm grateful, thank you.
Joyce Watson, did you want to come in at this point?
Thank you. Thank you, Minister. We know now that, yesterday, there was an announcement that people need to go back to work in England, but, of course, we've got some people who live in Wales but who work in England and vice versa. So, what considerations are you giving to clarifying those messages to the people who live and work across borders? That's one point.
The other point is, of course, testing and tracing. If people are going back to the workforce at a time, I assume, when the pandemic is levelling off locally, are you intending, then, if you ease transition into work, that the workplace will be testing and tracing people so that we don't see a spike again?
My very final question is: we've all seen the panic buying, because some people have been at work all along—we've all seen the panic buying that happened in the supermarkets, primarily. Has there been any work done to evaluate whether shop workers are increased in number and are affected disproportionately, then, as workers outside the healthcare sector as a consequence of their workplace?
That's a really interesting question. I think it's worth investigating, but I'd need to liaise with colleagues in different departments regarding that particular matter, principally, officials and ministerial colleagues in health. But, certainly, I'll try to ascertain any figures that may be able to answer that last question.
In terms of cross-border issues, as you can imagine, I represent a border constituency, so I've already been e-mailed by a number of people asking the very same question. But, actually, it's very clear on both sides of the border which businesses can reopen and which businesses must remain closed. The message about getting back to work, actually, has applied to those people who are employed in businesses that could operate until now, but where it was decided they should, essentially, go into a period of hibernation.
I think what's happened is that some people have got the impression that there's a whole raft of businesses that were not allowed to open during the course of the initial part of the crisis that will suddenly spring open now. That's not the case. The guidance and regulations are very, very clear indeed over which businesses can reopen and which cannot, and it's pretty much consistent on both sides of the border. That information is available through a frequently-asked-questions section on the Business Wales website, and it's available on the gov.wales website as well.
But, there will be some businesses where there are differences. For example, we've heard that certain leisure activities may resume from the middle of this week in England that may not resume in Wales. Those leisure activities will also have jobs attached to them, for example, tennis clubs, as one example. So, there may well be a small number of people who live in Wales, but who are employed in those leisure facilities just across the border, who will be asking the question, 'Should I—do I need to go into work now?' For that reason, we are looking at how we can provide that very clear guidance through the Business Wales website. By and large, it's already there, and I'd urge everybody to point any business that is concerned about this, and any individual, to the Business Wales online service.
Thank you. Back to you, Helen Mary Jones.
This is a different set of questions around apprenticeships and training programmes.
Can I begin by asking whether you've been able to make an assessment of the number of apprentices who may have been made redundant or furloughed during this period? And what's been done to ensure that they're able to complete their apprenticeships?
I don't know whether Huw Morris has a number. I don't believe we have that figure as of yet, because providers are obliged to ensure that apprentices complete their frameworks. They're also required to use their best endeavours to ensure that alternative work, an alternative employer, is secured. We stepped in immediately to provide some surety to apprenticeship providers, to training providers, right at the start of this crisis. And as a result of that we've been able to maintain as best as possible a training provision for apprentices during a really, really challenging period. I don't know if there's anything more that Huw would like to offer on this point.
No, just to confirm what you've said, Minister. We don't have firm figures at this point, but there is an obligation on providers to provide alternatives where apprentices are displaced.
Thank you. So, further to that, Minister, you mentioned the initial support, the arrangements you came to—can you tell us a bit more about the details of the funding arrangements that were made with work-based learning contractors, and the impact that that will have on their provision and their staff?
Yes, sure. This was support based on an average of funding over a period of time. I think Huw will be able to give details about the specific figures, but our objective has been to ensure that we can avoid job losses as much as possible. Where furlough takes place, then so be it, but we wish to see a very minimum increase in unemployment, and so that's why we ensured that there was funding available to providers to guarantee that further funding, to guarantee that further activity and to prevent the loss of jobs. Huw, are you able to give an outline of the support, how the support was reached?
Well, just to confirm again some of the things you said, Minister, the payment was based on the average of payments between August of 2019 and March of 2020. The funding is there to maintain the provision. We fully anticipate there'll be a greater demand for work-based learning support going into the autumn, because of the need for people to either retrain for slightly different roles in their current employers or to retrain for other roles with other employers.
Thank you. And you'll be aware, Minister—obviously, Huw Morris will be—that there has been some concern about the impact of these funding arrangements on the 100 or so really small subcontractors. That's a concern, that some of that—. I'm not clear in my own mind what the expectation is with regard to funding being passed on from main contractors to the sub contractors. I wonder if you've made any assessment about that or whether there were expectations with regard to that pass on from yourselves.
Yes, I can confirm that we require providers to pay their subcontractors in the very same way that they've received payment from Welsh Government.
Good. And if that wasn't happening, you would wish to be made aware of that, I imagine.
Yes. I thought that would be the case. A couple of slightly more specific questions. Almost a quarter of apprenticeship programmes are in health and social care, and some of these are very young people, aged 17 to 19. What steps have you made to ensure that these apprentices are kept safe, and I'm thinking particularly about the provision of protective equipment, particularly for those perhaps doing placements in care homes?
Well, apprentices are classed as employees, and therefore they're protected by law going back to the mid 1970s, and that includes protection for their health as well and their well-being. So, that would cover the provision of PPE, but I do recognise the PPE demand is pretty intense. But that's not to say that any different approach should be taken to supporting apprentices with protective equipment than would be taken with ordinary employees. Those apprentices must be treated in exactly the same way.
Thank you, Minister. To look at traineeships now for young people aged 16 to 18, and of course some of those—well, many of those—will be young people who we might otherwise risk losing from employment, education and training, this is obviously a difficult time in terms of staying in contact with those young people. What specific support is being offered to this group, and what steps are being made to ensure that we don't lose them at this very difficult time?
So, there's online support that's being offered and online learning that's being offered to apprentices and learners who are going through traineeships. They've also—. People who have taken up traineeship opportunities are also still getting their training allowance. I don't know whether the committee has been offered yet the COVID continuity planning that's being developed by work-based learning providers and further education institutions. What I'll do, then, if I may, is perhaps arrange for that continuity plan to be shared with you; I think it'd be worth you scrutinising it.
That'd be really useful. Finally on this area from me, obviously, I think we can expect there to be considerable increased demand for employability support programmes, both during this emergency and as we come out of it. Can you tell us a bit about how provision is being delivered now and what plans there are to upscale that support as, unfortunately, we may face significant redundancies as the next phase of the crisis proceeds?
Well, you're absolutely right, there could be immense demand for support. We've got very well established interventions, including Jobs Growth Wales shared apprenticeships. We've got the Wales Union Learning Fund as well, which is being shaped to provide online learning and skills training for workers. We've got the Working Wales service as well, which is acting as a single point of contact for individual, and we've also got Communities for Work, which is ready to be ramped up, and we've got ReAct, of course. So, all of these interventions that are tried and tested are ready to go.
Any additional funding that would be required to increase provision would have to be secured from central finance, and we'll clearly be making that approach to colleagues for that funding at the earliest possible stage. But, in order to reach the point where we would have overwhelming demand, we need to have surety about the job retention scheme. I keep going back to this scheme, but it is just so important to the economy. It is so important to Welsh workers that, if it was to be withdrawn at the end of June, if we were to be thrown over that cliff edge, then we would be facing the prospect of up to one in three people in Wales being unemployed, and that is something that none of us have ever witnessed. Even in the worst of times in the most challenged communities we have not witnessed that sort of rate of unemployment, and so it's vitally important that the job retention scheme is continued. I'm hopeful, I'm very hopeful, that it will be. I applauded the Chancellor when he announced that scheme—it was absolutely right, and I'm hopeful that he's going to do the right thing and extend it further.
That's really positive to hear, Minister. Just finally, is there likely, do you think, as he makes a fresh announcement about this, to be anything that we can be hopeful about for some of those people who were lost in the first tranche, some of the people who were changing jobs, starting new jobs at the time—particularly important for our tourism industry seasonal workers? Obviously, it's not in your gift, but I'm just interested to hear—I know you've been having those conversations—what the tone of those conversations has been, and whether you are optimistic for that group of people, as well as for a potential extension beyond the end of June.
We've done everything we can to convey the concerns that have been expressed to us by yourself, by other members of the committee, by individuals who have been affected by this, by economic analysts as well. Repeatedly we've flagged up the need to address those gaps that emerged after the first announcement, and the need to make sure that the second phase of the job retention scheme is based on the lessons learnt from the first phase, just as the CBILS revisions were based on early lessons learnt. So, we've made the case as strongly as we possibly can. I do believe that it's being recognised by BEIS colleagues, and it's now for the UK Treasury to then determine whether to apply those lessons that have been learnt and whether to make the necessary changes to the scheme as it enters a second phase. I sincerely hope they do that.
Okay. Thank you, Helen Mary. Mohammad Asghar.
Chair, my question relates to Cardiff Airport and some of the aviation industry. Minister, there are some implications of funding long-term and short-term assistance to Cardiff Airport, which you're kindly doing and floating the airport, rather than it going under, for a long, long time. So, what are the plans in the short term during COVID-19, and, in the long term, how are you going to deal with it? You've also asked—because aviation is not devolved, so you've asked the UK Government to change the policies regarding aviation urgently. So, which area would you like to see changes in? So, a couple of questions in one, rather than ask you so many on the airport.
Okay. So, Mohammad, the aviation sector is perhaps in the deepest crisis it has ever experienced. This is, in all probability, going to be worse than the fallout from 9/11 was. We've already seen British Airways announce 12,000 redundancies. We've heard how difficult other carriers such as Virgin and Ryanair are finding this period. No part of the sector anywhere on the planet is immune from coronavirus and its effects right now, and Cardiff Airport, of course, is no different.
In terms of interventions that need to be made in the short and the long term, first of all, we need an aviation strategy from the UK Government that recognises the value of regional airports, that recognises that in, hopefully, the not-too-distant future, there will be a recovery in the aviation sector, but that between now and that point of the recovery beginning, a very strong bridge has to be created to support as many people as possible who are employed in the sector to get through this challenging period.
In terms of some of the specific policy areas that we would wish to be considered urgently that would help in the long term, I've highlighted previously the need to support our call for more public service obligation routes. We've been asking for two years for that to happen, and, in that time, the answer has been 'no'. But we've seen certainly at least one—I think it was Newquay to London—PSO route be created, so it's clear that the UK Government is not refusing to create any PSO routes. So, we would wish to see PSO routes to and from Cardiff Airport created.
The second concerns—and, again, this is something that, my goodness, we've spoken about on numerous occasions—air passenger duty. And then the third concerns the competitiveness of smaller airports, and, in particular, the disproportionate cost of security at smaller airports. It can account for as much as—possibly sometimes even more than—30 per cent of operating costs. That's a huge fixed overhead that many small regional airports in the UK are going to struggle to meet as we emerge from coronavirus.
Whereas Cardiff Airport went into the crisis in a strong position compared to many other small regional airports, it has nonetheless faced an incredibly difficult task in ensuring that it can emerge in a strong position, and, quite frankly, it will require support from UK Government—not just direct support in terms of the costs, those overhead costs, that I've referred to, and a potential package of support for the aviation sector as a whole to ensure that we get carriers based out of Cardiff, that we get carriers flying in and out of Cardiff, but also that those regulatory changes are made to guarantee the long-term viability of the airport. There are huge, huge challenges for—I'm completely aware of the challenges that UK Government face in regard to aviation, but the success of the UK Government, for our part, will be judged by how beneficial the impact of any interventions are for Cardiff Airport.
In the meantime, in the short term, we've reprofiled the loan that's offered to Cardiff Airport to help in the short term. I don't know whether Simon Jones would like to talk a little more about that particular assistance that we've been able to offer the airport. But I have to stress again that the long-term viability of the airport now is dependent on the interventions by UK Government, and it's absolutely vital that those policy changes that I've highlighted are considered with speed, because they will determine the long-term success of the airport.
Thank you very much, Minister. But, in fact, my question was regarding this COVID-19 period, and my concern—. I'm very glad you've given me a briefing in your statement, but the problem is that the aviation industry is threatened by—. One thousand four hundred jobs in Nantyglo, in my region. These are good-quality, high-skilled jobs. What is Welsh Government doing to expand the programme to support such businesses? How can we boost the training to make sure we have the key, skilled workers in the high-tech sector of the economy we will need in future? We should not lose them, Minister.
You're absolutely right; I couldn't agree more. Whether it's GE or Airbus, these businesses within the aero sector are incredibly important, not just in terms of employing large numbers of people, but also in supporting the gross value added of the economy. If you tore out the aviation sector, the aero sector, from the Welsh economy, you would leave the GVA of our nation much diminished, so it's vitally important this support is continued and maintained.
Now, if you look at the history of support from Welsh Government for the likes of GE and Airbus, I think you'll find that there's a very proud story that can be told in terms of support for facilities directly, but also for the people that are employed there, particularly in regard to skills development. A huge amount of money has been invested in the people that are employed at these sites, and I want to make sure that we continue doing that. We're only going to be able to continue doing that if they still exist in Wales, and they're only going to continue to exist in Wales if we get a really serious, prolonged period of support from UK Government in the form of the job retention scheme, in the form of sector-specific support packages.
Thank you very much, Minister.
Shall I just bring Simon Jones in? I think there was a point on the Cardiff Airport—on the reorganisation of a loan, I think, that the Minister referred to.
Yes, the Minister described the reprofiling of the loan that was made—[Inaudible.]—and I think the committee has taken evidence on that loan previously. That loan was due to be drawn down over a period of 18 months, with a chunk of it later in this financial year. What we've allowed the airport to do is draw down that allowance for this year earlier than originally intended, which gives the airport the breathing space to get over the summer months. But we shouldn't underestimate that the challenge that the airport has. The press have reported a lot of this in other sectors. The airport, in common with many regional airports, makes its money over the summer months in order to be able to get funding for the winter months. It will, effectively, have lost a year's worth of revenue, so it's really, really challenging. Cardiff Airport is not alone in this. All other airports are going to be feeling the same pinch, particularly regional airports.
The Minister identified three interventions that he's been pushing the UK Government on. In addition to that, of course, there's a fourth that we're looking at as well, and asking them to help with, and that's a general state-aid clearance to provide additional support—a kind of generic state-aid clearance to provide support—on top of the PSO and the safety and security burden and the APD.
What's PSO again?
Public service obligation. So, this is where an authority would contract with a supplier to provide services. And, essentially, that's what we have in the railways—that's what the franchises are—and increasingly you see that in the bus sector as well. With the loss of Flybe, actually it's going to be quite difficult for all regional airports in the UK to attract air carriers, because there isn't an existing air carrier that fills the market that Flybe had. So, it's really important for us to be able to contract with somebody, even if it's only in the short term, to be able to provide those vital links from Cardiff to places like Glasgow, Edinburgh, Belfast and some of the other destinations that were served by Flybe, rather than waiting for the market to be able to provide that, because we could be waiting three or four years. It's a really important lifeline for businesses in the region and without that, it makes—. It's not just about the airport; this is about the recovery of the region, and the economy of the region.
Thank you, Simon. Okay, in that case, a new set of questions from Hefin David.
No, I think it's Joyce.
Sorry. I think Joyce may have—. Sorry, Hefin. I think Joyce may have addressed the question earlier on but, Joyce, have you or not?
On ports? No, I asked about oil, but I didn't ask about ports. There are two types of ports; one is air, one is sea. I want to talk about seaports and any discussions that you've had with the UK Government on support for the Holyhead to Dublin route, but also all the other ports that occupy the space that I cover.
Yes, thank you for these. I've not just held discussions with UK Government regarding support for ferry routes and ports; I've also discussed this matter with counterparts in the other devolved administrations and, indeed, with the Minister responsible for this area of Government activity in the Republic of Ireland. Now, with specific regard to the Holyhead to Dublin route, I spoke just last Friday, actually, with the Minister in the Department for Transport about this particular concern that I have. DfT are reluctant to intervene before the point of failure. Now, I accept that intervention has to come at the right time but, equally, I've made the point on numerous occasions now that we can't wait for an operator to fall over before interventions are made to support particular routes. And therefore constant monitoring and really careful attention will have to be paid to this particular route.
It's a really fragile position that the operators are in, and they're losing money on a weekly basis. The point of failure could come at any given point, and it's vitally important that UK Government is ready, before they fall over, to invest in supporting that particular route.
Thank you, Chair. Just to add to that, and I'm sure the committee will be well aware of this, but the ferry operators rely on passenger traffic for a significant part of their revenue, and obviously that has disappeared. So, that's what's causing the problem for the ferry operators—not the lack of freight movement, but the lack of passenger traffic. That's likely to be that way for some time, so they do find themselves in difficult circumstances.
The other—. One of the challenges that we've raised with the UK Government is that, particularly in Holyhead, there are multiple operators who are providing services. The competition regulations at the moment prohibit those two operators from working together to perhaps produce a more streamlined timetable that would allow them both to reduce their cost base, whilst potentially providing an adequate level of service. So, one of the things that Ministers have asked UK Government to consider is not necessarily pouring money in, but a relaxation of some of the competition regulations on a very temporary basis to allow the operators to sort some of this out between themselves.
I think it's probably—. Sorry, I was just going to say it's probably—. I know we don't want to discuss Brexit today—we've got enough on our hands with coronavirus—but the future of our seaports and airports is incredibly important in terms of delivering against UK Government's desire to see the UK become a country that exports more post Brexit. And if we start losing regional airports, if we lose seaports, then that task of increasing exports is only going to become more difficult.
Thank you. Thank you, Oscar, for the prompt and sorry to interrupt you, Hefin David. Hefin David.
Okay, no problem. I'd like just to ask the Minister about the short and long-term implications for bus, rail and community transport.
Oh, yes. Okay. Yes, sorry, Hefin.
Yes, just go ahead—if you can just tell us what you think the implications are to start with.
Potentially enormous. We're really worried about public transport, not least because behavioural change could see a reduction in patronage on bus services and rail for some time, as people fear being in close proximity to other human beings.
Secondly, during the course of the recovery, we're likely to see social distancing maintained, and that has capacity issues for the rail network and for bus services as well. We may see only 10 to 15 per cent of capacity delivered on bus and rail services as social distancing maintains a 2m barrier between individuals. That then has a major impact in terms of the subsidy that may be necessary to keep buses and to keep trains operating.
And then the third point that's causing me concern in this regard is that there's a huge social justice issue that we need to consider in that 20 per cent of people in Wales just don't own a car; they do not have the option of driving to and from work, to and from hospitals and so forth. So, there's a really, really, really important point to consider, which is: how do we prioritise capacity in the coming months to ensure that those who are most dependent on bus and rail services who are critical to the health and well-being of the nation are able to actually access those services?
One of the things the Prime Minister said in his broadcast last night was, to people, 'If you can use a car to get to work then use your car, don't use public transport.' How comfortable are you with that message for England? That wouldn't transfer over to Wales, would it?
So, I don't want to be—. I am not going to say 'avoid public transport'. I don't want people to fear using public transport, because, actually, with transport best practice in place, in terms of making sure that good hygiene is available to drivers and ensuring that people are social distancing, public transport is relatively safe. I wouldn't wish to say to the travelling public 'avoid public transport'. We're going to need more people to use public transport more of the time in order to get the modal shift that our environment requires. Equally, I don't want to put at risk the huge amounts of energy that have gone into already creating a system by which we're—. We're right on the cusp of being able to develop an integrated transport system in Wales, and I don't want to see that destroyed because people are not using it, because people are discouraged from using public transport.
In the longer term, we absolutely need more people to be going from A to B by public transport, and I'm not going to dissuade people from using buses or trains now, but what I would say is that we are going to have to plan better to ensure that that vastly reduced capacity is put to the use that meets our health and well-being priorities, but also ensures that we deal with the potential social injustice that I've highlighted, and that we prepare appropriately, that we make sure the trains, the buses, the stations are ready to accommodate the numbers of people that may require lengthy queues, and that then we prioritise in the right way, because there's going to be a huge issue to consider around demand management. Who do we allow on to trains and on to buses if we have to choose between types of passengers? And how do we go about making sure that that prioritisation is delivered in a very transparent way?
This is something that I've spoken with my colleagues across the UK about. I spoke with metro mayors Andy Burnham and Steve Rotheram last week about this issue, because, of course, it's going to be a real challenge within intensely urbanised areas, where the demand for public transport is higher. I have to say that we really do need some further detail in so far as availability of PPE is concerned and testing and whatever else may be demanded from the sector before we can implement any sort of significant increase in public transport services.
So, before we—. I'm sure we'll get the chance to look further ahead after 28 May as well. But, for now, do you feel that the operators of public transport and local authorities that support them have responded effectively?
Local authorities have responded brilliantly through this crisis and, for the most part, operators have as well. I know that there are some that we've heard stories about concerning the availability of hand sanitiser and other hygiene products. But, for the most part, operators have behaved very well indeed and have responded very well. And those that have fallen short, we've dealt with.
Okay. With regard to the money that you've provided for public transport, the UK Government promised £167 million of new funding for English bus services. You've announced £29 million in Wales. How much of that is additional funding that wouldn't have otherwise been provided?
Okay, so, that additional money that was announced by the UK Government essentially only brought the offer to English bus operators up to what we were already offering in Wales. That's because in Wales—Simon, correct me if I'm wrong—about 45 per cent of the income for bus operators comes from your purse, the public purse, whereas in England, I think the figure is around about 25 per cent—it's much lower. Therefore, our intervention was already significantly higher than in England. That additional money that was announced by the UK Government brought the subsidy up to Welsh levels.
So, the £29 million you announced is additional money because of the crisis.
It's a hardship fund that was designed just to, basically, stem the bleeding. Simon can explain the rationale behind that.
In normal circumstances, bus operators claim reimbursement for carriage of mandatory concessionary fare passengers, they claim the bus services support grant and they claim for youth concessionary travel as well, and those are on a per-journey or per-kilometre basis.
With the crisis, the volumes of people weren't going to generate any revenue for the operators as a result of those three grant provisions. So, what the Minister has done is allocated money to the operators from the budgets that we had for those three measures pro rata the same rate as the operators were receiving those sums of money before. So, for example, if, in the previous quarter, an operator had received £0.5 million for mandatory concessionary fares, BSSG and the youth card, then they would've got that same amount of money in this quarter.
Okay. With regard to rail services—I'm sorry I'm moving on, but time is so short—£40 million has been announced for Transport for Wales. How is that being allocated and what is it going to be used for?
On the basis of pain sharing, you'll be aware that revenue support systems that were incorporated into the franchise agreement allowed 20 per cent of the pain to be placed on the shoulders of the Welsh Government and 80 per cent would be with the operator and development partner. We're looking at bringing the arrangements in line with Department for Transport arrangements after June. Simon.
It's the other way around.
It was the other way around—I said 20 per cent on our shoulders, didn't I? I wish.
Yes, so, we would take a share of the gain in the good times, but in the bad times, we also take a share of the pain. So, we take 80 per cent of the revenue shortfall and the operator takes 20 per cent. Clearly, from a public funding perspective, that's useful in the short term, but it's not sustainable for very long because the operator can't sustain that level of losses. So, we are looking to quite quickly move from the current arrangement to replicate, in large part, the same mechanism that's in place in England and Scotland—the so-called emergency management agreement—where the state is taking all of the revenue risk for the operation of rail franchises.
Okay. Chair, would you mind if I just go on to PPE for taxi—?
That's fine—absolutely, Hefin, yes.
I did want to ask one question, which I've had from a number of different people who use taxis; their only means of transport is taxis, as vulnerable people. How are those being supported and what kind of advice are they being given with regard to the likes of PPE? How are private-hire taxis supported financially as well?
Okay. Those businesses, if they are eligible, are able to draw down support through the ERF and through the various UK Government schemes. There may be some that are falling through the gaps. If they are, then we'd wish to hear about them as we consider the future of the ERF. But in terms of the travelling public, guidance will be published, not just for operators, but also for passengers as well, and we hope to publish that as soon as possible.
So, have they had guidance with regard to safety and how to operate at this time?
In terms of the guidance that they've had to date, they've had the regulations, which concern the two-meter rule and they've also had indications from UK Government regarding how they should go about being carried in a taxi. The difficulty, of course, is that, if you require a carer, you can't actually comply with those sets of guidance that are in place that suggest that you should sit in the back-left seat and you should only be in that vehicle by yourself. So, there is an exception there in terms of people who require carers, and we acknowledge that that puts them in a very, very difficult position.
Okay. I think that's sufficient for now.
Joyce Watson, did you want to pick up any other further points? No.
Perhaps I could ask just a little bit more in terms of the transport network, in terms of being safe for commuters and for staff as well. Do you think there are sufficient resources available? You talked in an earlier response about ensuring that you're ready to be best placed for people who use public transport. What level of resources are needed to get to that point?
In terms of protective equipment, or in terms of financial resource?
I was thinking of financial resource, but cover them both.
Financial resource. Okay. Well, in terms of financial resource, we don't know exactly what will be required yet, but you can base an anticipated requirement on what we're currently spending. So, that anticipated spend is £250 million for a short period indeed of six months. That's a pretty sizable sum of money, but we need that certainty from UK Government that further funding will be available so that operators have the confidence to continue in operation.
And what about PPE and testing capacity as well?
Yes. We don’t know yet the full detail of what is proposed in terms of specific face masks. We've heard about face coverings, but in terms of the capacity that's going to be required and the availability to meet demand, we've raised this regularly. And I say 'we' meaning myself and my colleagues in the other devolved administrations, with UK Government. We're very, very concerned that if there's a significant increase in the number of passengers on public transport requiring face masks and gloves, that could put the provision of such items for the NHS and care home settings at risk, and we're yet to get confirmation that there will be sufficient availability and that the capacity will be there.
How does that rub against your earlier answer in terms of perhaps not being so minded to encourage people to use public transport and to use perhaps their own cars or other means of transport? How does that rub against that, because, surely you would not want to encourage people to use public transport until those measures are in place?
That's right. Absolutely. And that's why I think timing is very important as well. We wish to ensure that people can use public transport, but we wish to ensure that they can use it in the safest possible way. And we need to have answers to those outstanding questions regarding PPE and so forth before we hit 'go' on the resumption of services.
And when do you think that that might be in terms of timing?
You will, I'm sure, have seen numerous reports regarding the timing of increased rail services and bus services. My point to the Department for Transport has been: don't set a date until you absolutely know that you have the drivers available to be able to increase services; that you have PPE for staff; that you know that the traveling public will be able to acquire or make facial coverings if that's what's going to be required. Don't set a date in time and then say, 'We will work towards that and we'll commit to that regardless of whether public transport can operate safely.' It's absolutely vital that public health is put first, but equally, I would not discourage—once we've reached that safe point of commencement for more services, I would not discourage the public from using public transport.
Minister, I think it was a couple of weeks ago approximately, that you made a statement to Members in terms of long-term mechanisms to fund public transport. When do you believe that you'll be in a position to report back on that?
Okay, so, that's a policy in development. I don't know whether Simon has got an indication of when specifically we'll be able to report back to committee on that work, but I will endeavour to get back to you as soon as possible.
Yes. If Simon could add to this, it's the timing and the process as well.
We're working through that at the moment in light of the limited Assembly time or Plenary time for the buses Bill as well. So, there are some decisions to be made there, because the buses Bill was clearly a significant part of what this would look like. So, we're looking, as well as at the buses Bill, at contingencies should we not be able to get that through because of limited time. So, there's a range of different activities that we're pulling together. I think it's going to take us several months to pull this together, so, we're going to need to continue to evolve the short-term support that's being provided to buses in the same way as we're evolving support to rail in the way that the Minister has just described.
So, the package of support that's in place for buses runs through until the end of June. We're already talking to the operators about finessing some of the detail of the monthly reimbursement that each operator receives over the course of the months between now and the end of June, and I guess if Ministers determine that there's a requirement to put additional support into buses post June, we will continue to refine those measures in parallel with developing a clear plan for what we do with support for public transport in the longer term.
I should just clarify as well, Chair, if I may, that that estimated figure that I gave of £250 million a year for public transport, if social distancing is kept for some time, reducing the fare box, would be in addition—that's annually—to what we're already putting into public transport for subsidy.
Okay, thank you. I think the final question from me: your colleague, the Deputy Minister, made a statement at the back end of last week with regard to sustainable transport measures with regard to COVID-19. There wasn't any financial assessment attached to that statement. Can you talk us through in terms of any financial element that's needed to resource what was announced at the back end of last week?
Sure. The first thing we want to do is to just get an impression from colleagues in local authorities what the appetite is for carrying out some of the work that Lee Waters gave detail to in that written statement. Once we know exactly the level of activity that could be delivered by local authorities, what that level is, we'll then be able to go to finance colleagues, to be able to indeed look within our own budgets, if we can accommodate it from within our own budgets, and the actual sum total of what that work requires, but at this stage, I think the best thing to do, as Lee Waters has done, is to actually go out to local government and ask, 'What is it in this period you could do, you would be willing to do, you would want to do and you'd have the support of communities to do in terms of being able to reallocate road space, in terms of being able to improve and increase the provision of active travel infrastructure?'.
Yes. And I understand that the UK Government responsible for England and the Scottish Government have already allocated funding resources. So, given your response that you're going to go out to local authorities first, when do you expect to be in a position to make a decision on the funding that needs to be attached to that?
I'd need to check with the Deputy Minister as to when he's expecting responses back from all local authorities, but once we've had those responses back, we'll be able to run through them and estimate how much it will cost.
[Inaudible.]—responses from local authorities by 21 May, and the aim would be to turn that around really quickly, because there's a very limited window of opportunity for policies to be able to do things. So, in terms of—. The process will be quite quick once we receive the bids in from the local authorities.
No, no. That was the basis of my question, so thank you, Simon. I appreciate that there is a timescale here. Are there any other Members that have got any other questions that need to be asked? We are over time. We're over time, so quick-fire questions. Oscar, then Joyce.
Thank you very much. Minister, I think you have a huge responsibility to get recovery on its way after COVID-19. Have you dealt, because we are an agricultural country—? So, my point is: have you had any negotiation with our farming community about how quickly you can put them on track to make sure—that's an £8 billion industry, that is—to recover our economy in that sector?
Hold fire, Minister. Joyce, do you want to come in with your question as well?
Yes, one final question on small bus operators that rely very heavily on school transport, and the implications for them and what conversations and actions you've had.
Thank you. In terms of agriculture, this is the responsibility, of course, of Lesley Griffiths, but we're working very closely because of other interdependencies between agriculture and other sectors of the economy. I've spoken with the president of one of the major farming unions regarding opportunities for the recovery period.
In terms of small bus operators working with local authorities on school transport provision, Joyce, officials have, I believe, twice-weekly calls currently with the Confederation of Passenger Transport and with bus operators. They discuss these issues on a very, very regular basis indeed, so they are alive to all of the concerns regarding the provision for learners and what might be required in order to support small and medium-sized enterprises as we resume school attendance in the months to come.
Just to add to what the Minister was saying. The Minister and the chair of the Welsh Local Government Association wrote to local authorities a couple of weeks ago or so now. Local authorities are guaranteeing 75 per cent of the revenues to those exact same kind of operators that Joyce Watson was referring to, who do school transport and section 63 services for local authorities.
Okay, thank you, Simon. That's all the questions from us, Minister. If there's anything you want to say, please add it, but from my perspective, can I thank you and all your officials? I appreciate your officials are working extremely hard under difficult circumstances at the moment, so I think we as a committee all very much appreciate your work as well. Thank you, Minister, for your time this afternoon.
Thank you, Chair. Thanks, everyone. Thank you very much.
Thank you to you, Minister.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(ix).
that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(ix).
Cynigiwyd y cynnig.
So we move to item 4, and under Standing Order 17.42, if I could exclude the members of the public for the remainder of the meeting, if Members are content. Thank you.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 14:43.
The public part of the meeting ended at 14:43.