1. Questions to the Minister for Economy – in the Senedd at 1:44 pm on 9 June 2021.
Questions now from the party spokespeople. The Conservative spokesperson, Paul Davies.
Diolch, Llywydd. Minister, can I take this opportunity to congratulate you on your new appointment, and say from the outset that I look forward to working constructively with you, where I can, to protect, support and transform our economy as we move out of this pandemic?
Now, Minister, the Welsh Government has laid claim to offering the most comprehensive package of business support in the UK throughout the COVID pandemic, and whilst many businesses have been given support to stay afloat, there have also been businesses and, indeed, individuals that missed out completely. Some have felt that they've slipped through the gaps in business support packages and others have felt that local authorities have used their discretion not to pass on financial support. Therefore, given some of the evidence, on what basis do you believe the Welsh Government has provided businesses in Wales with the most comprehensive support package in the UK? In light of the persistent impact of COVID-19 on businesses and jobs, what will be your first action in your new post to secure a strong labour market recovery?
It's a matter of fact, not opinion, that we have provided £2.3 billion of support for business and the economy here in Wales, following a consequential of £1.9 billion from the UK Government. The additional £400 million is a choice that we have made to further support businesses here in Wales. The Member will know that, for example, small business rate relief is carrying on for a full year here in Wales; it's one quarter of full relief in England, before being reduced successively after that.
The Member will also have heard in this Chamber the First Minister highlighting the example of different hospitality businesses and what they would receive over the border. For a 10-employee business since December in Wales, you could have received £52,500; the equivalent business in England would have received £26,000. It is plainly and undeniably a more generous scheme here in Wales.
I'm looking forward to building on the conversations I've already had with business organisations about how we provide greater certainty in our trading environment in the future. Not all of those are matters within the hands of the Welsh Government. I attended the partnership council today between the UK Government and the European Commission and the uncertainty is a key factor in the relationship that we have. But I'm looking forward to the next stage of business support to look at both what we need to do to support those businesses that can't trade normally, as well as investing in the future and especially the ability to invest in improving skills within the workforce and indeed within leadership and management.
Minister, I put it to you that the only way that we can judge whether you are providing the most generous support package is if we see actual figures for the businesses you've supported. The First Minister has recently confirmed to the Member for Blaenau Gwent some weeks ago that the Welsh Government intends to publish a breakdown of the level of support provided to businesses affected by COVID-19 by sector, by geography and by strand within the economic recovery programme. This data is absolutely vital in understanding where support has been given and perhaps where it has not. In the spirit of openness and transparency, that information must be made available as soon as possible. Minister, can you categorically confirm when that data will be published? Given the First Minister's recent comments about recalibrating business support going forward, can you tell us, and indeed businesses across Wales, what the Welsh Government's plans are to support businesses going forward?
There are two particular parts to that question. The first is the publication of business support already provided. We've already published some of that information on previous support we provided earlier in the pandemic. I won't give an indication now, because I need to check, but I'm happy to make sure that all Members are aware when we will, not if we will, publish that. So, there is entire openness and transparency, because there is certainly no attempt to hide the amounts that have been provided. That's part of the conditions upon which the support has been provided. Every business receiving support knows that we will publish the amounts that have been provided.
On your latter point about how we'll support businesses going forward, I expect to come back to this place to outline the next stages of business support. And in recalibrating what we're doing, that has to take account of the position we find ourselves in, both with the path of easements that are being unlocked—and we're in a good position, having announced the phased move to go fully into alert level 1 over the next few weeks. That still means there will be some restrictions in place. We then need to think about the next stage of support for businesses, as I indicated in my first answer, because we're still in an emergency situation—we're not back to the old normal. Social distancing, hand-washing, mask-wearing and those base measures are still with us, as well as restrictions on the numbers of people that can attend a variety of businesses. Alongside that, I want to look at investing in the future—to invest in the further recovery—and I think we'll be able to do that over the next few months, but crucially when the UK Government provide a future comprehensive spending review and we have more certainty on our ability to invest on a multi-year basis.
Minister, whatever changes you actually make in the future in terms of business support, they must be made clearly and businesses must be engaged and understand the Welsh Government's direction of travel, so I look forward to further statements from you in due course. I think the publication of data is also crucial in actually understanding the Welsh Government's approach and to learn lessons for the future. So, I hope very much that you will listen to the First Minister. The First Minister's made it absolutely clear that he wants that information published, so I look forward to that information being published in due course.
You'll also be aware of the recent Public Health Wales report that showed that young workers aged 16 to 24 were much more likely to be employed in shut-down sectors, compared to other age groups. That same report also showed that younger workers felt more uncertain about the future, especially when Government schemes come to an end and what that might mean in terms of job prospects. Your party's Senedd manifesto promised a young person's guarantee that guarantees everyone under the age of 25 an offer of work, education, training or self-employment. Minister, what is your message to young workers in Wales today about their fears over job prospects in the future? And can you spell out exactly when the young person's guarantee is going to be brought forward so that Wales can move forward from the pandemic with an economy that works and supports young people? Because that's what it says in your manifesto.
That's exactly what we will do. I look forward to providing a statement to Members and the public on how we are taking forward the youth guarantee. I note what the Member had to say about the withdrawal of support for industry. As the furlough scheme starts to phase out, businesses will make choices in advance of that and there is a risk that, as the UK Government support is phased down, some businesses will choose not to continue with the same headcount currently available. That's a challenge and it's a particular challenge for younger workers. We know they've been particularly affected in sectors of the economy where they're more likely to be employed. I'd say to any young workers or young people looking to go into the world of work that we do understand that this is an uncertain time and that's exactly why we are going to provide a youth guarantee to make sure that there is no lost generation as a result of the pandemic. I look forward to providing a statement and answering questions here in this Chamber as we look to do that—not just the initial announcement, but how we take forward that work, including, crucially, working with businesses, our advisory services and young people themselves to understand how we'll have the most successful and practical offer available in Wales.
Plaid Cymru spokesperson, Luke Fletcher.
Diolch, Llywydd. I'd like to begin by saying congratulations to the Minister on his new post. I haven't had a chance to say it to him in person yet, but I'm sure that he's as excited as I am to have a constructive relationship going forward.
Since the establishment of devolution in 1999 and full law-making powers in 2011, no Welsh Government has undertaken legislation aimed specifically at addressing the Welsh economy and business. With the democratic institutions in Wales by now well established, we think now is the right time. Small and medium-sized enterprises need clear and long-term proposals to help them provide a strong footing for economic development in Wales. So, I'd like to ask the Minister: what legislative options will the Welsh Government consider over the next Senedd term that would help underpin the measures and the architecture needed to support economic development in Wales that can ensure that our business advice and support services have longevity and stability and are able to react in supporting businesses when crises arise, as has been the case through COVID-19?
Thank you for the kind words of introduction. I look forward to working with him across the Chamber, in the Chamber and outside it as well.
In terms of your point about legislation, I think the challenge is whether legislation will make a difference. That's the real test, surely; not just that we have the powers, but that the powers to legislate can be used in a meaningful way. If you look at the way that this place has reacted to events in the past, for example, when the previous Deputy First Minister from your own party was in post, in response to the 2007-08 crisis, at that time, the significant response of the Welsh Government led by Rhodri Morgan at the time was with the ReAct and ProAct schemes that didn't require a change in legislation. It was actually about how the powers already here and budgets were used in a creative way that involved stakeholders from the world of business—the Confederation of British Industry in particular, and also the Wales Trades Union Congress. We came together in an agreed way to protect as much work as possible. Through the COVID pandemic, we've been able to do something similar, using our powers, working with stakeholders and with our approach on social partnership. We are going to legislate the social partnership for the future. I also think it's important to recognise that social partnership and procurement legislation, because improving the amount of procurement spend that is retained in Wales will make a real difference. That's not the same as legislating to essentially try to legislate for jobs; it's how we get the greatest return on money and improve relationships.
You mentioned business support; it's one of my key concerns and why I mentioned wanting to have a more constructive relationship with the UK Government in answer to Paul Davies. Business Wales is a single brand for business support, a single door to go through at present. That has been largely funded by the former European Union funds that are coming to an end. The replacement funds, if they're administered in the way that the UK Government is currently indicating, could undermine our ability to carry on funding that service as effectively as we have been and a range of other areas. So, there is work to be done here, with the responsibilities we have, and if the Member has key proposals that would mean that legislation can be effective, I'll happily talk to him about those. But, our relationship, our powers and the existence of this place, and the responsibilities that the people of Wales have chosen to give us, are a key factor in how we work with the UK Government, I hope, rather than a more confrontational approach, which is the current path we're headed on.
I thank you for that answer, Minister, and I'm encouraged to hear about the social partnership Act. As he knows, Plaid Cymru has been very supportive of that throughout the process, and I'm looking forward to working with him on that point and, as well, to working on, potentially, looking at some legislative options going forward.
If I can turn to a confidence issue that we are seeing with SMEs at the moment, it was good to have the opportunity to meet with the Federation of Small Businesses Cymru last week and to discuss how the Senedd and Welsh Government can work together over the next five years to support small businesses. Their recent support, 'What We Value', outlines how SMEs can be the key to rebuilding Wales's economy and communities. Small businesses, as well as contributing to community resilience and provision of vital services, are vital employers. SMEs are 99.4 per cent of businesses in Wales, contributing 62.4 per cent of private sector employment and 37.9 per cent of turnover. As with so many other sectors, SMEs have been hit hard by the pandemic and they needed significant Government support.
Looking forward, there are significantly differing views about the outlook for business and the wider economy in Wales over the next five years. Although 63 per cent of small business owners are very or fairly optimistic about their own enterprise, optimism falls away when a wider perspective of the economy is taken into account. Optimism, in fact, falls to 57 per cent when considering the relevant sector or industry, while even fewer small business owners are optimistic about the small business sector in Wales or the Welsh economy over the next five years. How does the Minister, therefore, intend to engage with SMEs to reduce this confidence gap and provide the necessary clarity on practical long-term goals to help SMEs contribute to the economic recovery in Wales?
The Member highlights one of the conundra: that when people are asked about their business, they're confident, but when they're asked more generally, they have less confidence. It's exactly the same in a number of other areas: where people have personal experience, they feel they have more control, and less confidence when they think about a broader perspective. So, some of this is, actually, about matching up what people are seeing on the ground. When I've met a range of business organisations, including the FSB, I've had an initial conversation about what we can do and I look forward to continuing to work with them, because I think the only way to generate that confidence is in the conversations that we have, but also in the decisions that we make, and whether those businesses can, actually, provide a future for themselves that is both about maintaining businesses that exist and helping some businesses to grow. Some businesses will always be small businesses; others can grow to medium and larger sized ones. We do need to be more successful in Wales in seeing more medium and larger sized businesses developing here in Wales, together with the point about business start-up. We recognise that we do need to have a greater rate of business start-up as well, so I'm looking forward to working with them on what I think is a positive agenda, where we recognise that we're in broadly the same place in understanding the challenges that we have, and then the need to understand how we successfully work together, with the convening power of Government and the levers that are currently available to us.
Thank you, Minister. The reality is in Wales, of course, that the one institution that can give the confidence to SMEs is the Government. We know that the SMEs themselves bring the drive and entrepreneurship; they're a vital resource for their drive, their passion and their expertise in their relative fields. However, to secure this drive and investment, SMEs need certainty. Long-term business plans created prior to the pandemic have likely been scrapped, or at least need to be reviewed as a matter of urgency, and it's understandable why. Is the Welsh Government prepared to go further than their current support and be ready to invest in Welsh SMEs to provide that certainty, instil that confidence in the sector and create the conditions necessary for growth that will drive the Welsh economy forward?
There is a range of factors, as I indicated to Paul Davies, where the Welsh Government certainly has a role in creating those conditions, and others where we need to work alongside the UK Government. The continuing trading relationships with the European Union are a key factor for us. If we were talking about ports, we'd have a particular challenge about ports in Pembrokeshire and in Holyhead, and the changed relationship, with the way that trade is being diverted. We have some of those challenges to work through, where there's a mix of reserved responsibilities and responsibilities we have here.
So, that's part of the mix. It's also, then, the choices we can make here. That's why we're not just talking about the youth guarantee, but we want to about skills and about business support. Having clarity on our ability to deliver those will be hugely important, to help those smaller businesses to invest in the skills of their workforces, their leaders and their managers. It's one of the key factors in helping businesses to grow and, obviously, we have a successful base to build on, with a successful apprenticeship programme, a key commitment to do more on that, and how we work alongside small businesses to understand how we best meet their needs.
The other key factor, though, in terms of confidence for small businesses is, actually, the behaviour of customers. And you will recall the retail consortium talking about the fact that customer behaviour is still a changing matter, where we're still understanding how customers will behave. It's both about those people who want to return to an office environment and how long for, what that means for businesses where their model is that they rely on those people, as well as on the retailer on the high street, whether we're going to see numbers coming through in sufficient number, that those businesses have a more confident outlook on their own future. And part of the challenge and the honesty is that we want to provide certainty in a world that is still slightly uncertain. I say 'slightly uncertain', and I hope, over the coming weeks, we'll develop more certainty about that as we carry on with the measures that my colleague Eluned Morgan will no doubt talk about in a short period of time, on rolling out our vaccination programme and the protection that should give. So, the continuing route out of the pandemic is a key factor in providing the conditions for certainty for businesses and the wider public to make their own choices.