4. Statement by the Minister for Economy, Transport and North Wales: Economic Resilience and Reconstruction Mission

– in the Senedd at 3:36 pm on 23 February 2021.

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Photo of Elin Jones Elin Jones Plaid Cymru 3:36, 23 February 2021

(Translated)

The next item is a statement by the Minister for Economy, Transport and North Wales on the economic resilience and reconstruction mission. I will now pass the Chair to the Deputy Llywydd, Ann Jones. I call on Ken Skates to make the statement.

(Translated)

The Deputy Presiding Officer (Ann Jones) took the Chair.

Photo of Ken Skates Ken Skates Labour 3:36, 23 February 2021

This last year has been incredibly difficult for everyone—for the business having to close to prevent the spread of the virus, for the young person unable to find their first job, or the family struggling to get by because of a drop in household income. It has been one of the most challenging any of us have ever experienced. Whilst the work to combat the virus obviously goes on, it is important to consider how Wales can emerge from the direct impact of the virus and tackle with renewed vigour the deep-seated challenges that Wales faces, and to help our people, businesses and communities to prevail and to prosper. Over the last few months, I've been discussing these important issues with partners, and today we publish our economic resilience and recovery mission. It sets out what many people told me directly—that in Wales we have the talent, the energy and the ideas to rebuild our economy in a better and fairer way. Our mission offers grounded optimism against a backdrop of the most challenging circumstances.

We've responded at pace to minimise the pandemic's impacts on business and workers. Our support package of more than £2 billion is the most generous business support package anywhere in the United Kingdom. For small, medium and large businesses in the hospitality, leisure and tourism sector, and related supply chain, we are now adding a further £30 million of emergency financial support for operating cost grants. Our targeted rates relief scheme has already allowed us to provide more support to thousands of smaller businesses, whilst ensuring that major essential retailers, such as large supermarkets, continue to pay rates. The UK Government has yet to confirm whether it will extend non-domestic rates support in England. I urge them to do so, and to do this as quickly as possible, so that we can have absolute certainty on the funding available for Wales as a result. We are making all of the preparations necessary to support a rapid response for Welsh businesses as soon as the Chancellor provides us with certainty on the funding that is required.

As we look to move forward, we recognise that there are businesses that are integral to the visitor economy, such as events and the late-night economy, that are likely to be hard hit in the longer term, and we’ll actively review our options for providing further support here. Despite our unequalled support, over the next 12 months, unemployment in Wales and across the UK will grow. Too many of our citizens will see their jobs go or the hours they work reduce, and be faced with few job vacancies on offer. This will be worse for young workers, women, people from minority ethnic communities, older workers, disabled people, those with health conditions, and those in low-skill occupations. So, our reconstruction work must support these hardest-hit individuals. The impact of the pandemic, coupled with exiting the European Union, threatens to reverse the progress that we've made in reducing unemployment and economic inactivity in Wales over the last decade. There will be profound implications for the future of work, our communities and our well-being, as well as the physical fabric of our town centres and our transport system. 

Photo of Ken Skates Ken Skates Labour 3:40, 23 February 2021

Our mission sets out our vision for a well-being economy that drives prosperity, is environmentally sound, and helps everybody realise their potential. It should be seen alongside the other important work that we are doing right across Government to build a stronger, fairer and greener future, including obviously our new Wales transport strategy, the manufacturing action plan, which will be published later this week, and our determination to meet our new stretching climate change targets. A prosperous Wales is one in which Wales has a steady focus on resilience with a capacity for transformation, and we'll take action to support a diverse base of outward-looking firms with positive innovation programmes, good productivity levels and an engaged workforce equipped with the skills in a changing world.

A green economy demands high levels of circularity, where resources are kept in use, adding economic value and where waste is avoided. A truly green economy is integral to a low-carbon society, so we will invest in low-carbon and climate resilience infrastructure, renewable energy projects and sustainable homes, in turn, using these as opportunities for business innovation and the chance to create good-quality, grounded jobs of the future here in Wales. An equal society and an equal economy means investing in the productive potential of all people, making sure that nobody is left behind. We'll build ambition, encourage learning for life and support people to make the most of their potential. Our regional approach will support a fair distribution of opportunities and we'll continue to demand, to advocate for and to champion fair work.

First of all, we must strengthen the foundational economy. The crisis has reinforced the vital importance of key workers, and the critical role they play in our well-being and in every sector of our economy. We need to radically rethink the places we live in and the way our homes and our communities work, putting into practice the 'town centre first' principle and developing regional co-working hubs, as part of our transforming towns programme of work. We must realise the potential and the opportunity of putting new footfall back onto our high streets so that they can again become the vibrant hubs for the people who live there. Secondly, we will pursue our COVID commitment so that the impact of the pandemic levels across Wales leaves nobody behind, creating opportunities to retain and upskill. We need to harness an invigorated entrepreneurial culture, renewed enthusiasm for volunteering and an appetite for lifelong and online learning. New technology can, of course, reduce the isolation of some communities, creating opportunities to live, work and learn from all corners of Wales. 

Thirdly, we should accelerate adaptation by business for the future. We'll provide support to innovate and diversify, which meets the dual challenges of COVID-19 and EU exit, and make businesses fit and sustainable for the future. The Development Bank of Wales will, therefore, receive an additional £270 million for the expansion of the Wales flexible investment fund to continue investing in general business loans and equity through what we expect to be an extended period of economic reconstruction and adjustment. We'll also speed up business decarbonisation and boost circularity of resource use. Driving digital innovation and tackling digital exclusion are central to our commitment to promote equality and help people realise their potential.

Fourthly, we'll maximise the impact of future major investments as magnet projects to embrace and exploit new and disruptive technologies such as artificial intelligence, pulling in employment, skills, expertise and development to Wales. This will include a strong emphasis on research and development, innovation, regional stimulus plans, clustering of SMEs and development of new skills. Finally, we will fortify our pursuit for social value in our relationships with business. We'll refresh and strengthen the economic contract so that businesses properly embrace and incorporate its values, embedding fair work, low carbon and climate resilience. Valuing deeply the well-being of all Welsh citizens frames our response to this pandemic. The fundamentals of our economy—the people, the communities and the businesses within it—are strong, and together I know that we can succeed.

Photo of Russell George Russell George Conservative 3:45, 23 February 2021

Can I thank the Minister for his statement today and the advanced copy, as always? I think, from my perspective, Minister, any additional support for Welsh businesses has to be welcomed, so, certainly, from my perspective, I and colleagues welcome the additional support for the Development Bank of Wales. There are large elements of what you said that I can agree with. Clearly, I'm going to focus on some areas that I think that you've missed in your plan and statement today.

What the statement doesn't set out today is clarity for businesses in terms of coming out of the lockdown. That's not just my view, that is the view of the Federation of Small Businesses, business groups. I had an example this morning of a retail business operating a number of outlets in my constituency: 'Can we order stock or not?' They order seasonal stock. So, they believe that their comparison companies in other parts of the UK have got more of a plan of where they're going than they do here in Wales. And they accept that dates change and priorities change, but to have that indicative plan in place.

Minister, you say that the new funding for the Development Bank of Wales will improve the supply for the long term of accessible business finance. That is something that I think is desperately needed, so I agree with that. I think what is disappointing is that the Government's been slow on the implementation of the fourth phase of business support. Businesses are crying out for clarity, for you to provide an aspirational timetable for a route out of this crisis. I think what businesses do need is, they need to hear from you on extending the business rates holiday, providing additional support for the hospitality sector, for example, and by using the underspend from the sector-specific fund to ensure that any unused financial support is allocated quickly and where needed. So, of course, I welcome your comments on that.

You refer to health, well-being, decarbonisation, foundational economy, digital skills, regenerating town centres, green economy, all these areas are right, and I agree with all that you've said in that regard. But what your statement doesn't talk about—and there seems to be a lack of information in your plan, your mission, with regard to supporting the productivity and the competitiveness and job creation. And, if I'm honest, what I was most disappointed in, actually, is there's no mention of entrepreneurship, the support for start-ups, and there's very little detail in the 30-page document. So, how are you going to do this? When we came out of the first lockdown across the UK, there was great entrepreneurial spirit across the UK, and that needs to be enhanced. Those who are bringing forward that entrepreneurial spirit need to be encouraged. So, other parts of the UK have schemes that do that; what are you doing in Wales in terms of encouraging that entrepreneurship here in Wales?

You were quite optimistic, Minister, when I previously referred to the Organisation for Economic Co-operation and Development report and setting up an arm's length body: you said that that is something to explore and examine. So, I very much welcomed that at the time. I think we do need an arm's length body to sell Wales to the world, support our indigenous businesses, promote Wales, bring forward that inward investment. I agree with the OECD report in terms of that arm's length agency, and I do think we need cross-party support if we're going to bring back such an agency as well. So, I'd welcome your views on that.

Minister, I'd ask you how you would respond to this morning's analysis from Professor Dylan Jones-Evans, who has said that he is perplexed that the Welsh Government does not consider productivity as a key issue for the economy, given that Wales is the least productive country in the UK without a clear strategy to close the gap. You say, Minister, that you've outlined plans to work with the tourism and hospitality sectors to develop a recovery plan to provide short-term support to develop resilience and profitability over the longer term. Can you set out your thinking on what the recovery plan might include on the short-term support from Welsh Government, and in terms of the long term in providing through that plan?

And finally, your plan, or your mission, sets out plans to repurpose town centres away from the traditional high street as, as you said, we no longer rely on retail alone. How will you balance the support for repurposing town and city centres with supporting the retail sector, so that it can continue to play a key role in the Welsh economy?

Photo of Ken Skates Ken Skates Labour 3:50, 23 February 2021

Can I thank Russell George for his comments and his questions? As always, Russell has been incredibly constructive, not just today, in terms of the critique that he's offered and the questions that he poses, but also in the many weeks and months prior to the announcement of this mission today when he was able to offer, during a series of discussions, very constructive points to me and my officials. And we're very grateful to him and other Members across the entire Chamber for their contributions to the work that we have concluded today with the publication of the mission.

Dirprwy Lywydd, first of all, in terms of additional support, obviously the £270 million additional investment for the Development Bank of Wales brings the total fund for the Wales flexible investment fund to £500 million, which in turn will lever in a significant sum in private investment, taking the total fund to around about £1 billion of investment in businesses, which is a huge sum of money to be seeing invested in Welsh businesses in the years to come, and it will support and create tens of thousands of jobs. And, of course, I've already announced that there will be the further £30 million of support for hospitality and tourism, and during the course of my statement I also confirmed that we are awaiting word from the Chancellor regarding the business rates holiday in England, which would enable us, then, to progress such a scheme here in Wales with the consequentials that would follow.

I have to say that, in terms of the road map, the First Minister earlier confirmed that the control plan that was produced in December is still our guiding document, and that it was updated, obviously, last week. The First Minister has given a very clear signal for what's being considered as part of the regular three-week review period, and prior to this statement, the health Minister, I think, gave a very convincing argument as to why setting dates at this stage for all forms of activity is very dangerous indeed. We know that new variants are incredibly disruptive in terms of time frames for how we would wish to reopen the economy, and so promising dates that can't necessarily be delivered against, I think, could be very damaging for the economy and for businesses that would expect to be able to reopen, but which, at a very, very short notice, as the health Minister has already said today, perhaps would be left very disappointed indeed. 

I think productivity and entrepreneurship actually run right through the mission. I think, within the document, there are various beacons, as we have called them, that would lead to productivity and entrepreneurship improving. In terms of productivity, obviously, the focus is on skills and on magnetising investment and a design to drive up productivity. And in terms of entrepreneurship, the COVID commitment contains direct support for individuals wishing to start their own business—in particular, the barriers fund, which provides grants for people who are furthest from the employment market to start up their business, and to do so with the support, obviously, and the guidance of Business Wales.

I don't think we can use productivity alone as the measure of success or failure of an economy. An economy must serve the purpose of enhancing the well-being of its citizens, and the measure of productivity does not do that in isolation, and that's why we are keen to ensure that the national indicators are used as the measure of success for the economy. But, obviously, today's labour market statistics demonstrate just how valuable a devolved administration can be in keeping a cap on joblessness, and today we saw the unemployment figures published, and in Wales, during the latest period, unemployment has fallen; in the UK it has risen. There is now a gap of around 0.7 per cent between Wales and the UK average. Now, there is a long, long journey ahead of us, but that gap does demonstrate just how valuable our support for businesses has been. We've been able to secure something in the region of, according to the very latest data that I've had through today, about 145,000 jobs in Wales, which would explain, therefore, the gap in unemployment. And we will go on ensuring that support is available for businesses in Wales as we move through this pandemic. We've already completed the fourth round of the economic resilience fund and we intend to use any commitment made to date wherever possible to maximise support for businesses that offer value for money.

Of course, in regard to some of the other points that Russell George made in terms of town centres and city centres and the relationship between our transforming towns initiative and retail, well, retail is really very much at the heart of the transforming towns initiative, because unless town are transformed into more vibrant environments, then retail will continue to struggle. People must want to access their town centres, and in so doing, they will then utilise services that are contained within them. So, retail does, without a doubt, have a bright future within town centres, but that bright future will only be delivered if town centres are attractive places for people to visit, to live in and to work in. That's why the transforming towns initiative is so vitally important in delivering vibrant environments within urban areas.

Photo of Helen Mary Jones Helen Mary Jones Plaid Cymru 3:56, 23 February 2021

I'd like to give a broad welcome to the economic resilience and reconstruction mission that the Minister has published today, and be grateful to him for his statement and for the advanced copy as always. The direction of travel echoes very much what Plaid Cymru has been saying, and the Minister is right to say that I'm sure there's broad support for the general direction across much of this Chamber, and I do look forward to studying in more detail, particularly with regard to the targets, what the Minister is setting out.

I think I need to begin to say, though, Dirprwy Lywydd, that I think we need to be a bit more ambitious. Now, we obviously need to be realistic about what we can achieve, but I think it's clear that the aftermath of the COVID crisis does give us an opportunity to do things differently, and I think we should be aiming for a prosperous, not just a more prosperous Wales; a green, not just a greener economy, because greener than what, with some of the challenges that we face in terms of decarbonisation; and an equal or a fair economy, not just more equal. I was struck by what the First Minister said earlier about not talking about building back better, but building back in a fair way. So, I think that just some of that language perhaps needs to be a little bit more ambitious.

I want to begin by asking the Minister a little bit more about the process for developing these ideas. He sets out a goal for a well-being economy, which we would very strongly support, as he knows. But I wonder if the Minister can tell us how the well-being goals within the future generations and well-being Act have been built into the design of this reconstruction mission and something about the process by which that was done, because that does, of course, involve asking people to do things in really quite a different way. If he can tell us a little bit more specifically about the involvement of business in the process, because, obviously, as the Minister himself has said, businesses will be absolutely key in delivering the building of this new economy, and I'm very much hoping to hear from the Minister—they've been there on the ground. If he can also say something about the role of local government in helping to design this mission—if we've learnt anything through this crisis, it's how important that local knowledge is in terms of delivering national priorities.

I'd like to turn, Dirprwy Lywydd, if I may, to targets, and I'm very pleased to say that there are some, and I want to spend some more time looking specifically at those, but I do have some initial thoughts. I was pleased to see that there are equality targets there, and there is a specific target around levelling the playing field between women and men. But I know that the Minister is very well aware that black people and people of colour have been really disproportionately affected by the impact of COVID, which, of course, has compounded long-standing inequalities in that regard in our economy. I hope that as this process goes on, the Minister will be able to work with those communities to develop some targets to help address those inequalities, and I'd also want to say that there have been some positives, of course, perhaps from the working-from-home agenda for disabled workers, and I'd also like to see some specific targets in there about how we can make sure that the gains are not lost, but that it also doesn't lead to disabled workers ending up being more isolated. 

With regard to the poverty target, I wonder if the Minister can tell us why we're measuring ourselves against a UK median here. That seems singularly unambitious. We know the gap between the rich and poor across the UK is bad. I'm sure the Minister will probably agree with me that there's a real danger in the next couple of years that it gets worse, rather than better, given the approach in some ways of the UK Government. So, I wonder if the Minister can look at that again. 

Now, with regard to productivity, I absolutely heard what the Minister said to Russell George, that we can't use productivity as a measure in isolation, but I hope the Minister would agree with me that the fact that people work very hard in Wales and that productivity stays low is not good for people's well-being. And I wonder if he will consider—I take what he says about a cross-cutting theme on productivity, but that would be true of some of the other areas where he has chosen to set targets—and whether he will consider looking at some specific productivity targets, perhaps in specific sectors.

Now, this will obviously be predominantly for the next Welsh Government to deliver, and we would want to see that Government being more ambitious, and I want to ask the Minister some questions about resourcing. If we're to make some of the major investments that we need to make to create the jobs that the Minister knows are going to be lost, we will need to borrow to invest. And I know the Welsh Government will ask the UK Government for permission to do that, but we need a plan B if that doesn't happen. So, can the Minister assure us today that he will use, if he is in Government after the election, all the Welsh Government's powers in full to borrow to invest? And will he have further discussions with local authorities to see what can be done to utilise their borrowing powers and for the Welsh Government to resource that borrowing? That is certainly something that a Plaid Cymru Government would do. 

I wonder if the Minister can tell us, in driving this mission forward, whether there are things that he would be envisaging stopping doing. Because with some of the new plans, if we don't have masses of extra resources and there are elements of activity that are not delivering to these goals, will he examine what he needs to stop doing? And with regard to monitoring and evaluation, can the Minister say very specifically how the targets will be monitored? And one quite small, specific, but important point is how he would be envisaging compliance with the economic contract being monitored. We in Plaid Cymru strongly support the economic contract, but it becomes a piece of paper unless businesses are aware that there will be some form of monitoring of their compliance. 

Finally, Deputy Presiding Officer, I just want to say that I regard this mission as a valuable step in the right direction, but we on these benches believe it is time for much more ambition. Perhaps we need a leap, rather than a step.

Photo of Ken Skates Ken Skates Labour 4:03, 23 February 2021

Can I thank Helen Mary Jones for her contribution, and, like Russell George, Helen Mary Jones's really incredibly constructive critique over many months, and also incredibly constructive suggestions over many months as well? I've been very fortunate as a Minister, I think, to have been able to work with excellent opposition spokespeople who have been genuinely and sincerely determined to work together with me and my officials in pursuing the best interests of Wales. And some of the suggestions that Helen Mary Jones has made today obviously are very constructive, they are very worth while in considering them.

I think the point made about ambition, obviously we'd never wish to appear to be arrogant, but there is a huge success story that I think should be recognised in Wales over the last decade or more, in terms of how we've driven down unemployment to record lows. We've created a record number of jobs, a record number of businesses, and perhaps the most startling of all stats concerns economic inactivity, which still is at a rate that we would not wish to see and we will endeavour to bring that down continually, but the reduction in the level of economic inactivity to around the UK level was something many economists did not believe could happen, but we have succeeded in achieving that. So, we are incredibly ambitious, but, as I said, we don't wish to appear at any time arrogant about our ambition as a country or as a Government.

I can assure Members today that, in terms of reflecting on the Well-being of Future Generations (Wales) Act 2015, the future generations commissioner was part of the Ffenics group, which was led by Chris Nott. That convened employer organisations, key businesses with an interest in building back better, and they were able to provide us with ideas and they were able to critique our mission, and they were proving, in my view, to be invaluable in shaping a strong plan for reconstruction and recovery. And also in terms of some of the other fora in place, we obviously have the council for economic development that was utilised and we have regional working arrangements now in place with local authorities, so we were able to raise the mission at a regional level with our colleagues in local government. And it has to be said that the way that local governments have responded to the beacons has been incredibly positive. They share our belief in the 'town centre first' principle, and in investing wherever and whenever first and foremost within town centres, and I'm sure that they will help to deliver against that beacon in the months and years to come.

Photo of Ken Skates Ken Skates Labour 4:05, 23 February 2021

Likewise, we've been able to discuss regional stimulus plans as part of the reconstruction and recovery mission. I think that's been very valuable in drawing together local authorities at a regional level. And just in response to something that Russell George mentioned in his questions—I wasn't able in the time to respond directly—that is, the recommendation by the OECD, of course corporate joint committees are the first step in bringing together local authorities on a regional basis to drive economic development and to consolidate capabilities and expertise within bodies at a regional level.

In terms of indicators, targets and the point that was raised about equality, of course we have just announced, in terms of support for people from minority ethnic communities, the barriers fund, which was very much shaped for people who are so far from a jobs market that require additional support in developing businesses in an entrepreneurial way. We also incorporated into the COVID commitment the incentive scheme for employers to take on apprentices aged under 25, with grants of up to £3,000 available for taking on apprentices. We've appointed disability champions across Wales to work with businesses to make sure that businesses are embracing the principles of the economic contract and the need for fair work and opportunities for all.

And in terms of the measurement against the UK median, obviously welfare is something that is reserved for the UK Government and, therefore, that is why we believe that it makes sense to set our target and our ambitions against UK levels. However, I do take the point that Helen Mary Jones raises, and certainly I'll consider whether we can look at other levels that could offer a more appropriate comparison.

I think productivity—again, just to touch on productivity—the measure of productivity within an economy can't be seen in isolation, but it must be set against, obviously, other measures. I've already talked about unemployment and economic inactivity, I've talked about employment level, business growth, and so forth, but it's a fact that as we went into the pandemic, productivity was rising faster in Wales than the UK as a whole. So, again, we had a very positive story to tell about productivity and we wish to make sure that we further boost prospects in terms of productivity by placing a very sharp focus on skills and on research and development, and we wish to see Wales capture as much of the new UK Government R&D road map funding as possible. There will be a significant increase in R&D funding and we want to make sure that it is channelled through to some of those magnet projects that are going to be focused so strongly on the clustering of SMEs, on research, development and innovation. And there are a few examples that I can throw in there: the Advanced Manufacturing Research Centre, the global centre for rail excellence, the compound semiconductor cluster, the very obvious creative industries cluster. There are opportunities to lever in more research and development, and in so doing, we can use them as magnets for investment rather than having to use a cheque book in order to basically pay for an inward investor to come to Wales, often with only a short-term view of investing in our citizens and our country.

And so, when Helen Mary Jones asks, 'What are you looking at stopping?' well, first of all, we're looking at magnetising through strength, rather than through having an open cheque book. We want to make sure that we build these resilient projects, the magnet projects that will be able to attract investors not just for years to come, but for decades to come, so that we become known as a country with an excellence in certain technical fields, whether it be in artificial intelligence, in advanced manufacturing and materials, particularly in the aerospace sector, or whether it be in compound semiconductors, cyber security, rail and transport research and development. We want to make sure that we grow and cement those specialisms within Welsh communities.

In terms of some of the other work where we are adding value, well, obviously the £270 million of funds for the development bank will see more money utilised for loans and equity purposes, and this is something that economy committees for years, if not decades, have been calling on Government to do, to try to shift away from just utilising grants to more loans and equity-based support, and this is what we're doing with that additional £270 million. That of course will enable some recycling of funding that will further enable growth into the future, and particularly with a focus on microbusiness start-ups and SMEs. The success story of start-ups in recent years really needs to be celebrated, and of course we developed a start-up fund during the pandemic to ensure that we didn't lose those excellent enterprises that innovative and creative people were able to commence prior to COVID-19.

Then, finally, on the point regarding borrowing, obviously this is something that the finance Minister will consider. I know that the finance Minister is keen to consider all creative opportunities to raise funding to invest in our communities and in our businesses. I'm sure that she will have taken a very keen note of what Helen Mary Jones had to say.

Oh, sorry, one more point, Dirprwy Lywydd, and this regards the economic contract. That's a relationship between business and Government; it's a partnership, it's not a one-off agreement. It requires consistent communication and collaboration between Welsh Government officials, also local government officials, and businesses, but as we see that economic contract strengthened and deepened, I'm really keen to see the business community itself embrace the role of peer reviewing one another to ensure that those economic contracts actually mean something. Because, to be honest, it's businesses that can promote the success that they enjoy in terms of utilising the economic contact better than anybody else.

Photo of Ann Jones Ann Jones Labour 4:12, 23 February 2021

Thank you. We have less than 10 minutes and four speakers, so I'll just put that out there. People need to think about that.

Photo of Ken Skates Ken Skates Labour

Apologies. Sorry.

Photo of Jenny Rathbone Jenny Rathbone Labour

Thank you very much. In 'Our Economic Resilience & Reconstruction Mission' you highlight that nearly half of NHS Wales's food budget is spent outside of Wales, and so that's at least £10 million that we could be recirculating into the Welsh economy. I would guess that the local authorities' catering budget for school meals and for care homes would be of a similar order. So, this is a really important issue, particularly if we're going to do more around school meals. We need to be spending more of that money in Wales. So, it's a bit of a chicken-and-egg scenario here, because until we grow more, we can't buy more. So, I just wondered if you could tell us a little bit about how you're going to square that. The farmers will grow anything if they've got a market, so how are we going to ensure that they know about the contracts that we want to offer them?

Photo of Ken Skates Ken Skates Labour 4:13, 23 February 2021

Can I thank Jenny Rathbone for her question? It's a really important point to make that the foundational economy can be supported through better procurement, through local sourcing of goods and services. We recently launched the foundational economy challenge fund, which has been promoted by Lee Waters. It's been an incredible initiative, it's risen in value quite considerably from the initial intention of investing £1 million to several million pounds, and that's demonstrated through a number of examples how better procurement can lead to more employment opportunities in local communities. The next step is then to learn from some of these initiatives and to make sure that they're mainstreamed across the economy. It can happen. It can happen. We've seen it happen in places like Preston, and what we want to do is make sure that, here in Wales, we do just the same. That's why the challenge fund has been so very important, and that's why we're making the strengthening of the foundational economy one of the five beacons within our mission.

Photo of David Rowlands David Rowlands UKIP 4:14, 23 February 2021

Can I thank the Minister for his statement this afternoon? I'd also like to take this opportunity to acknowledge the generous support you've afforded businesses across Wales in the response to COVID-19, again witnessed by the extra £270 million you announced today. But as we all know, despite the Welsh Government's endeavours, there is and will be a catastrophic consequence for the Welsh economy as a result of lockdown. I'm sure, therefore, that all of us in the Senedd will support you in your cause for greater financial help from the UK Government. The devastation has been so great that only the UK Government has the financial resources to build the UK economies, and that must include Wales.

Of course, I understand that the measures laid out in the statement are designed to mitigate the effects of the pandemic, and to bring us out of the economic downturn as soon as possible, and I welcome your emphasis on high-tech industries. The strange statistic that average wages in Wales have risen during this lockdown period masks the fact that this is because the lockdown has impacted on lower-wage earners far greater than those in the higher pay brackets. This means, of course, that the worst affected have been the poorest in society. Many of these low-wage earners are from those sectors hardest hit by the lockdown—the hospitality industry, pubs, restaurants, accommodation establishments. I would therefore call upon the Government to prioritise this sector when you're building the economy, not just because of the sector itself but because this sector has the ability to bounce out of the economic downturn far quicker than others. 

Photo of Ken Skates Ken Skates Labour 4:16, 23 February 2021

Can I thank David Rowlands for his contribution and his question? I'd agree with him entirely on the points that he's raised, first of all in terms of the support that can be brought forward by the UK Government. The job retention scheme has been crucial in avoiding catastrophic levels of unemployment to date, and therefore it has to continue for as long as it is needed. Similar schemes on the continent have been utilised for over a decade, and can be reintroduced at very short notice by European Governments. I would wish to see the job retention scheme retained for the long term and introduced whenever necessary, should further events of this nature occur. 

In terms of people on lower incomes, it's a fact that people who earn more during the pandemic have been able to save more, and the UK Government, obviously, during the course of the last week, in many statements, has been indicating that it is relying on those people who have been able to save during the pandemic to release their savings to stimulate economic activity. But, of course, we have a very significant number of people who do not enjoy higher levels of income. In turn, we must therefore intervene to support those people who have been hardest hit, and we will go on doing that through direct support for those sectors that are vulnerable. We'll make sure that they are able to grow in a more sustainable way through the beacon activity that I've outlined, through business development grants, through the Development Bank of Wales offering that significant increase in the flexible investment fund, and through, of course, the prospect of collaboration through some of the magnet projects. 

Photo of John Griffiths John Griffiths Labour 4:18, 23 February 2021

Minister, we know that the pandemic has accelerated pre-existing trends that make it very difficult for our town and city centres to thrive. There are far too many empty shops, including large empty shops such as the Debenhams store in Newport at the moment, and we know that we need to continue our efforts to diversify, repurpose and reinvigorate those city-centre buildings. You will know, I'm sure, Minister, that a recent initiative has been announced by the leaders of Newport, Cardiff and Swansea councils to work with the Welsh Government to take forward that reinvigoration and repurposing. In Newport, key to that is the knowledge quarter, which would see the relocation of Coleg Gwent to the city centre, and a new leisure centre. Will you be looking very carefully at how you can support these projects, Minister, which will create jobs, both within construction but also on an ongoing basis, and could provide a very important example of that much-needed partnership between local government, Welsh Government and business?   

Photo of Ken Skates Ken Skates Labour 4:19, 23 February 2021

Can I thank John Griffiths and say that I agree with him entirely? I think there is a crucial role for local authorities to play in promoting the 'town centre first' initiative, and John Griffiths has highlighted one particularly good example of how, at a local authority and a local level, thought is being given to reintroducing activity within the city centre that could lead to increased footfall and a more vibrant community setting. We are keen to explore all options across Wales, and that's why we're driving forward the agenda concerning the remote working hubs, planting within town centres opportunities for people to commute less but work with others across the public, private and third sector in a really innovative, creative way. They've proven already, in some parts of the world where they operate, to drive productivity, to drive creativity and innovation, so we'll be leading on this effort across Wales. We're looking at the early pilot projects that will be able to demonstrate just how successful this can be, and how, through direct intervention, we're able to breathe new life into town centres and city centres across Wales.

Photo of Alun Davies Alun Davies Labour 4:20, 23 February 2021

I'm grateful to the Minister for the statement he's made this afternoon. I specifically welcome the Government's commitment that the economic impact of the crisis will not result in people and communities being left behind. But what of those communities, Minister, who already feel that they have been left behind? As people in Blaenau Gwent and across the Valleys remember all too well, in the economic crises of the 1980s and earlier, we have often been left alone to shoulder the burden and bear the brunt of these economic issues. I want to ensure that this Government understands that, and that this Government will not simply be investing in every community equally, but will be investing in those communities that have suffered disproportionately as a consequence of the COVID crisis. That means communities like Blaenau Gwent, where not only have we seen the suffering greater amongst people, but the economic impact greater as well. How will our town centres here be supported by the Welsh Government? How will we create a new economic foundation that can bring wealth into these communities, generate wealth, generate incomes and jobs for people who have already suffered enough?

Photo of Ken Skates Ken Skates Labour 4:22, 23 February 2021

Can I thank Alun Davies for his question and the points that he outlines? He's absolutely right that many communities that have felt left behind through the course of deindustrialisation have felt over the past 12 months left even further behind, as they've suffered even more acutely from the economic impact of coronavirus. But I can assure Alun Davies that at both the Welsh Government and local authority level, through embracing this mission, consideration and support for business development and inward investment will be prioritised for those communities that have felt left behind for far too long, and that includes communities like Blaenau Gwent. I am hopeful that announcements will be made very soon that will demonstrate just how serious we are taking this initiative, working with local authorities.

I think, in the past, there was a 'cities first' approach whereby success followed success, and without direct intervention in other communities, particularly satellite towns, we saw people feel despondent about economic growth, which was seen as something that was being enjoyed more by those people who lived in the most successful and most urban areas of the UK, principally in the south-east of England and in London. Other Governments were already looking at the economic action plan; they are now looking at this mission. I think there is recognition that intervention is required in placemaking in particular, in ensuring that you prioritise finite resource in developing business opportunities in communities that have suffered the scars of deindustrialisation. But we're always open for learning from others, and that is why we introduced the OECD to this work and why we're keen to learn from exemplar projects and exemplar countries across Europe as we strive to drive down levels of poverty and as we try to narrow inequality within Wales and within the communities of Wales.