– in the Senedd at 2:43 pm on 22 March 2022.
Item 3 this afternoon is a statement by the Minister for Economy: progressing with the economic resilience and reconstruction mission. I call on the Minister, Vaughan Gething.
Thank you, Deputy Presiding Officer. Last year, my predecessor published our cross-Government economic mission. It was clear then that a return to business as usual was not an option. The response to the pandemic has accelerated many of the existing trends across decarbonisation, digitisation and the impact of an ageing population. For businesses, the pandemic also brought very real trauma. The resilience shown by so many is remarkable and serves as a testament to the creativity and passion that drives businesses across Wales.
The Welsh Government has since committed to progressing the mission in a new programme for government, and Members will recall the statement I provided on this last October. In that statement, I set out my ambition to create the conditions where more people feel confident about planning their futures in Wales. In the face of a volatile recovery, I also made clear our commitment to provide as much certainty as we can to help businesses plan ahead.
As we know, in the weeks that followed, omicron turned economies back into emergency mode as we responded to the latest wave of COVID with actions delivered in partnership, based on evidence. This included a further round of business support with packages only available in Wales, such as the economic resilience fund. Similar funds, of course, were not available in England. Despite this setback, we have continued to move ahead with our mission to help create a stronger, greener and fairer Welsh economy. Earlier this month, I published a new plan for employability and skills backed by major investment in a more inclusive labour market, and Members will be familiar with that given the oral statement I made at the time. Against a difficult financial backdrop, I've had to make tough decisions to prioritise the job of narrowing the skills divide, helping more people to find work and boosting the career prospects of those already in work. We are investing £1.7 billion in the young person's guarantee. This package includes £366 million to help deliver 125,000 all-age apprenticeships within this Senedd term.
As you know, Deputy Presiding Officer, accessible childcare is crucial to a stronger, fairer economy. The Deputy Minister for Social Services has confirmed that we will expand our childcare offer to support more families. This means that more families, and women in particular, will benefit from improved employment prospects. We've also provided an additional £5 million for personal learning accounts, to help workers on low pay upskill in sectors experiencing labour market shortages, with examples ranging from HGV drivers to health and social care. I'm also working closely with my colleague the Minister for Education and Welsh Language on the progress of the establishment of the commission for tertiary education and research. This should put us in a better position to prioritise investments that improve educational attainment, develop the skills needed for good jobs, and inspire more ambitious career plans for people of all ages. Wales continues to have the most progressive student finance scheme in the UK, and we're keen to maintain this whilst considering how best to support an improved lifelong learning offer.
As I said in October, we want to ensure that our whole-Government approach allows more people to feel positive and ambitious about planning their future here in Wales. Graduate retention can help us in this mission, and we're working with partners to more effectively link students with the right opportunities at Welsh businesses. The new work route initiative offers international students the ability to stay in the UK and work for two years after they graduate. My ambition is that we can find ways for these workers to move on to full skilled worker visas so that we can go on benefiting from their contribution in a more dynamic Welsh economy.
As I have noted, this progress has been made in spite of the urgent response that omicron demanded of us. As CBI Wales have recognised, the Welsh Government’s approach to the pandemic has treated public health and economic growth as two sides of the same coin. Since the start of the pandemic, we have pulled every lever possible to back Welsh businesses. We reprioritised our budgets and repurposed funding to make sure financial support was available where it was needed most. As we move ahead, the new transition plan sets out how we will approach the task of living with coronavirus. We will continue to work on the basis of evidence, and that means working intensively this week to understand what the latest increase in cases means for the balance of harms that we currently face.
In recent months, we've also delivered schemes designed to support individuals and businesses to look ahead, including: the backing local firms fund, progressing our commitment to the foundational economy; a £1 million business start-up fund, focused on those not in employment, education or training; an extra £0.5 million to support and promote the social enterprise sector; and a £116 million package of non-domestic rates relief for retail, leisure and hospitality ratepayers in Wales. This is in addition to the publication of new regional economic frameworks to strengthen Wales’s distinctive economic regions and the refreshed economic contract.
Our economy has emerged from an unprecedented downturn due to the pandemic, and our unemployment rate continues to track lower than the rest of the UK. However, I remain deeply concerned by the ongoing cost-of-living crisis, and we are already seeing GDP forecasts for the UK being halved. Tomorrow, the Chancellor will make his spring statement, and I urge him to do more before the crisis spins completely out of control. The Welsh Government has stretched its budget to provide a further package of support worth more than £330 million, but the UK Government holds the key levers through the tax and benefit system.
Rising energy and fuel costs must now spur action to accelerate the transition to net zero. Tackling the climate and nature emergency as part of a just transition to net zero is also the overarching ambition of our new £8.1 billion infrastructure investment strategy. Our progress also risks being further held back by the UK Government's determination to deny Wales our promised share of EU replacement funds in full. At least £375 million per year should have been provided to the Welsh Government, but UK levelling-up plans will leave the Welsh budget £1 billion worse off by 2024.
Deputy Presiding Officer, in the coming days and months, we'll also be publishing a new remote working strategy followed by a strategic vision for retail, among wider actions. Our social partnership approach has a crucial role in everything we have achieved, and I look forward to working in partnership to support a team Wales recovery, built by all of us. Thank you.
Conservative spokesperson, Paul Davies.
Diolch, Dirprwy Llywydd. Can I thank the Minister for his statement today? As we start to adjust to life post pandemic, it's important that the right foundations are created in order to nurture and support Welsh businesses for the future, and it's not just a question of responding to the pandemic, but also tackling the long-standing issues that businesses across Wales have been facing, such as the climate emergency, inherent labour market inequalities, and competing in a more digitally connected world. Today's statement sets out some of the progress made on the Welsh Government's economic resilience and reconstruction mission, and whilst that progress is welcomed, there's always more that can be done.
Today's statement refers to some of the actions taken to support the foundational economy, such as the introduction of the backing local firms fund and the package of support for retail, leisure and hospitality ratepayers in Wales. In the wake of the pandemic, it's more important than ever that the Welsh Government invests in the foundational economy, as this investment has clear benefits in other policy areas and can help address our carbon footprint and reach the Welsh Government's net-zero target. However, it's important that good practice is shared and rolled out across Wales, so perhaps the Minister can tell us a bit more about how he's making sure that is happening, whether it's in relation to food procurement, the retail sector, or even social care.
Today's statement refers to the new transition plan, which will set out how the Welsh Government will approach the task of living with coronavirus. The Minister has said that the Government will continue to work on the basis of evidence, so perhaps I can tease out a bit more information from the Minister about the transition plan and the impact that it will have on businesses across Wales, and how their voices are being heard in the development of this plan. That's not the only plan that today's statement refers to, and I very much welcome the publication of the remote working strategy and a strategic vision for retail. However, it's vital that these strategies are forthcoming sooner rather than later. So, perhaps the Minister can tell us when these particular strategies are likely to be published.
The Welsh Government's economic resilience and reconstruction mission highlights our town centres, and rightly acknowledges that many of Wales's town centres demand urgent action. Our town centres are not just areas of business—they are the heart of our local communities, and it's crucial that action is taken to support them as they struggle against a backdrop of huge societal change. The Minister will be aware of the work done by Audit Wales last September on regenerating town centres, and more recently by the Federation of Small Businesses, which is right to call on the Welsh Government to walk the walk when it comes to acting creatively to tackle the scourge of empty units and tilting the balance in favour of our town centres. Therefore, I'd be grateful if the Minister could update us on the work being done to reverse the hollowing out of town centres and restore their vibrancy once again.
Today's statement refers to skills and employment, and I appreciate that there are a lot of reforms to the post-compulsory education and training sector with the Tertiary Education and Research (Wales) Bill. Today's statement also refers to graduate retention and how the Welsh Government is working with partners to more effectively link students with the right opportunities with Welsh businesses. The Minister will have seen that a recent pamphlet that boasts of relatively low rates of pay has recently been published by the Cardiff capital region, which describes Cardiff as having lower graduate salaries than Birmingham, London, Edinburgh and Glasgow, which will do nothing to increase graduate retention. Therefore, can he tell us what discussions are being had with the Cardiff capital region and all other stakeholders about graduate retention and how Wales is marketed?
As we rebuild post pandemic, it's also vital that the Welsh Government is attracting investment in a green recovery. We know that there are significant opportunities for the green industry and green technology. For example, hydrogen has the potential to provide delivery solutions across energy and transport sectors. It's vital that these sectors receive investment from the Welsh Government and, of course, the private sector as well. Let's not forget that Wales has established targets for 70 per cent of our electricity needs to be met by renewables by 2030. In light of the recent increase in energy prices, perhaps the Minister could tell us how the Welsh Government is prioritising work in this area and ensuring that these technologies and sectors are getting the resources that they need.
Therefore, in closing, Dirprwy Lywydd, there are several more questions that could be asked around the progress that is being made in relation to the economic resilience and reconstruction mission, but I won't try the Deputy Presiding Officer's patience. So, can I thank the Minister again for his statement outlining some of the work that is being done to create a more prosperous, greener and more equal economy? Thank you.
Thank you for the comments and the constructive tone of the response from the Conservative spokesperson. There are many things that we agree on as outline challenges that the country faces. We've talked regularly about the climate and nature emergency and the labour market inequality that the Member mentioned in his opening introduction, and our challenge is how we can address that, and the range of other priorities that he set out in his question. That's why the vision covers such a wide area, but it also points to lots of areas of opportunity and challenge for us to address.
On your specific points around the foundational economy, I'm sure the Member will be pleased to hear that, as a Government, we've had a Cabinet discussion around the foundational economy and the next stage of moving that forward—so, not just the money allocated in the budget to further support the foundational economy, but to do as the Member has suggested, in how we share good practice that exists already, but then how we reset a level of ambition. Foundational economy officials and our procurement officials are working together, and are looking to examine different parts of the Government and our activity alongside public services and the private sector. We're especially interested in what we've already done within the food sector. We're also interested in what more we can do with the food industry in its broadest sense, through the whole chain from growth, delivery and also food manufacturing as well, where we've added significant value already.
We're also looking to build on work that's already taking place within health and social care. Having been on the other side of this conversation not that long ago, I do know that work has carried on for a period of time to look at what the health service and social care can do as very large employers, as well as people who spend significant amounts of public money. There's really good practice already taking place, for example, in Hywel Dda. We're looking to learn what has worked well to further increase what we've been able to do by embedding social value as part of procurement contracts in the health service, and then to do more in both health and social care. I'll be more than happy to provide updates to the Chamber and perhaps the Member with another hat on, when he's chairing one of the scrutiny committees.
On the transition plan that we're working through about how to transition to the next stage of living with COVID, there are regular conversations with all of our stakeholders, including business groups as well, both with me directly, but also with officials. It's not just been the regularity of the 21-day review process in reviewing our regulations; it's the nature of the conversations we continue to have about how we can understand with as much predictability as possible what we're going to be able to do if we do continue to have a stable environment with COVID, and, as I said in my statement, the balance of harms—the direct harm from COVID with an increase in cases balanced against the alternative harm of the significant measures we've had to take in the past. That is very much what we're looking to do when we set out the balance of that in the rest of the forthcoming period.
That's also been part of the context in the conversation we've had, for example, about the retail strategy, and the position statement we published last week. I expect to be able to have the full retail strategy where we've been able to work with both trade unions and employers to be ready, hopefully before the end of May, for publication. We're also working together with the visitor economy, having moved from 'Let's Shape the Future', the recovery plan through COVID, to want to get back onto the longer term strategy to provide people with a welcome to Wales where we do properly take advantage of economic opportunities in a way that is sustainable for both communities and our environmental impact.
On town centres, the Deputy Minister for Climate Change is leading that work. We've maintained a 'town centre first' approach, not just in the economy, but across a range of other areas too. And you will no doubt look forward to hearing more from the Deputy Minister on the town centre delivery group, with a focus on restraining edge-of-town development and reuse, looking in particular at town-centre development in clusters and corridors and how the redevelopment of town centres and neighbourhoods can make sure that we really do have vibrant high streets and town centres.
And on your two final points—and I'll be as brief as I can, Dirprwy Lywydd—Cardiff capital region, I have had, as indeed have my officials, a range of conversations with them about their ambitions, and I think the way it has been reported has perhaps been miscast. I think that the Cardiff capital region are serious about saying that there are tens of thousands of graduates being produced every year from universities within the capital region. At present, graduate rates of pay are lower. Our ambition is to attract graduate employers to the capital region to raise rates of pay and to raise investment within this area. Those people, wherever they've come from previously, have a real experience of having lived and studied in Wales for a period of time. And as I said in my statement, I am keen that people who graduate from university in Wales see their story continuing in Wales, not just in their first job but indeed their longer term future. And who knows, they could be future Luke Fletchers, looking forward to get married in Wales in the near future.
And finally, on renewable energy, I have always been very clear about not just the potential to decarbonise the way that we generate and use power but the significant economic opportunity that comes alongside it, and that is very definitely part of the work I am already doing with the two Ministers for climate change, and I look forward to providing further updates with my colleagues in the near future.
The Plaid Cymru spokesperson, Luke Fletcher.
Thank you, Dirprwy Lywydd, and thank you, Minister, for your statement. There is no doubt that the past two years have been challenging for the economy, and therefore it's important that we do look to the future in order to strengthen our economy and hopefully safeguard for the future as best we can. There are things to welcome, of course. As a member of the Economy, Trade, and Rural Affairs Committee, it's good to hear that there is work ongoing on HGV drivers, and I would also wish to join the Minister in calling on the Chancellor to tackle the cost-of-living crisis. It's something that is very worrying to me, and I've mentioned my concerns many times in the Chamber.
If I could start on the role of co-operatives, Wales was hit hard by the pandemic due to its relative income poverty compared to other UK countries. We know that the poorest communities have been affected most, with those in low-paid and precarious employment being most likely to be furloughed or lose their jobs. As we look to recover from the economic damage of the pandemic, we should be seriously looking at reconstructing the economy in a meaningful way to achieve long-term security, prosperity and fairness for households and workers. I believe, and I know many Members in this Chamber believe, that co-operatives must play a central role in this, at the forefront of our post-pandemic recovery. I therefore ask the Minister how he envisions the role of co-operatives in this reconstruction mission to create a more prosperous and resilient economy. Co-operatives are almost twice as likely to survive their first five years, compared to other types of businesses. They're also known to bring increases in productivity, workers' rights, job security and overall employment figures. Italy's Marcora law, which facilitates employee buy-outs, saved more than 13,000 jobs between 2007 and 2013, during the financial crash.
Looking at a case study from my own region, BIC Innovation Ltd, a consultancy firm that has offices in Bridgend, was supported by the Wales Co-operative Centre to restructure towards employee ownership. Since becoming employee owned, the firm has quadrupled its workforce over the three-year period. The founding director of BIC Innovation Ltd believes that being an employee-owned business has attracted new talent with diverse perspectives who provide different ideas, delivered improved services for clients and added value to the brand. Providing greater support for more co-operatives would clearly allow us to make gains, not just in employment figures, but in fair, meaningful work, and allow us to build community wealth as part of our recovery.
In June 2021, the Welsh Government committed to doubling the number of employee-owned businesses in Wales, and I wholeheartedly support this objective. But there is a point that I wish to raise with the Minister. In a scrutiny session of the Economy, Trade, and Rural Affairs Committee with the Development Bank of Wales, there were uncertainties as to what additional funding would be available for the bank to pursue more employee buy-outs. If that additional funding isn't available, is the Minister confident that he will reach his target, or does he believe that additional funding is needed?
On diversity and fairness, it's widely accepted now, as we look to get people back into employment following restrictions, job losses and furlough, that young people, women, disabled people and ethnic minority communities will face particular difficulties in trying to re-enter the labour market, or when now entering for the first time. Within these groups, the impact of poverty, low household income and lower levels of education, as well as other disadvantages, will create further challenges for these individuals.
The disproportionate economic effect that the pandemic has had on these communities clearly shows that current policy is not enough to create an equal and fruitful economy for all in Wales. So, as we look at restructuring the economy to make it more equal, I wonder how the Minister, as part of this mission, intends to address the structural issues at the core of our economy that have allowed these groups to be more susceptible to unemployment and economic discrimination, and, moving forward, how we can ensure that our economy is more equitable.
Finally, on a green circular economy, the Minister has noted that one of the other outcomes of this mission should be a greener, more circular economy. We know that the jobs involved in these green, science, technology, engineering and mathematics industries are often dominated by non-working-class white men. What more will be done to ensure that the demographic gap in this type of employment does not worsen as we restructure our economy to make it greener? How can we ensure that women, ethnic minority communities, those from working-class backgrounds and other underprivileged groups are not left out of this green revolution in Wales?
And in keeping with my theme on fairness and improvements in employment, as we push for the green sector to grow, once again, I ask whether the Government will consider following the Scottish Government's lead in establishing a just transition commission to oversee the changes in our economy to ensure that no-one is left behind. Diolch.
Thank you for the comments and questions. Starting with your points about the co-operative economy, as you'd expect, being a Labour and Co-operative Member of the Senedd, it's something that I'm especially interested in. Of course, there are views across the Chamber. I recall Huw Irranca-Davies's debate on the potential for a Welsh Marcora law, and the work that I'm doing with him and the Wales Co-operative Centre to look at what is possible.
Some parts of the Marcora law in Italy aren't possible because we don't have all the powers within that. But, rather than saying, 'Here are all the things that I can't do', what I said in that conversation with Huw Irranca-Davies and the Wales Co-operative Centre is that I want to look at what we can do, to understand how that will help us to meet our target, not only to double the number of worker-owned businesses within this Senedd term, but what more we can do to give the co-operative economy a stronger role in our future. Because I recognise that there are a number of significant positives. And picking up from the Conservative questions earlier on, actually, if we're going to increase and improve the resilience of the foundational economy, actually, co-operatives have a large part to play, as well as being organisations that can run in medium- and large-sized businesses around the country as well. So, I'm very keen on the co-operative and mutuals sector.
I heard what you had to say about the development bank, and whether more funding would be needed. It's part of an ongoing conversation that we've had with the development bank, and the objectives that I've set for them for the rest of this term. I have to say that I've been broadly impressed with the way that the development bank have gone about being creative in meeting some of the challenges as we've come out of the crisis, and I'm looking forward to seeing them continue to invest. They have a strong reputation for providing not just finance, but advice alongside businesses as well. There are a number of specific areas where they already work. They have got a £25 million management succession fund, which is about management buy-outs. They've also got access for larger worker buy-outs for the flexible investment fund.
But, really, the main part of this will come down to the bespoke advice that people can get from, for example, the Wales Co-operative Centre. As I set out in my statement, I've recently increased a further £0.5 million to help the Wales Co-operative Centre. We've also been able, in a longer term project, to have the £11 million European regional development fund match fund a project that the Wales Co-operative Centre have run.
The challenge is that, as we move forward, post EU funding, those funds are under even more pressure than before, and, when I talked in my statement and in previous statements about the pressure that's on the budgets, that means that if I choose to carry on funding that area—and I do expect I'll have something to say about our work with the Wales Co-operative Centre for the future—there are other parts of what the economy department has been able to do in the past that we won't be able to do at the same scale and level, but I do think this is part of the answer to deal with some of the skills challenges you mentioned later on.
But the best answer, of course, is for an attack of common sense and fulfilment of very clear manifesto pledges on Wales and the rest of the UK not losing out on a penny of EU replacement funds. As it stands, the comprehensive spending review and budget sets out that every part of the UK that previously had EU funds is going to lose out to a significant degree. That said, I'm hopeful, although not certain, that the department for levelling up will reach a different position on the Welsh Government's role in discussion and decision making about those funds, while still continuing to make the case for the full amount of funds to be paid.
And that, I think, comes back to your final points. I appreciate that Scotland have a just transition commission. I don't think that a commission in itself will necessarily deal with all the issues we want; it's really about what we choose to do. And from a policy point of view, myself and the climate change Ministers are very clear that, in wanting to see a transition to a net-zero economy, there are real opportunities, but there has to be a just transition for people in work now. We don't want to throw a group of people onto one side and ignore the skills and experience they've got as we're looking to create new industries. That's particularly important given that we have a shortage of labour and skills, so we're going to need to make use of people who already have skills and certainly want an economic future as well.
It's also, though, why, in the employability and skills plan that we recently published, we were very clear that we are aiming more of our support at people furthest from the labour market. So, it doesn't mean we're not going to achieve our apprenticeship target. It doesn't mean we're not going to carry on investing in training and skills and people close to the labour market where we can make a difference. But, as the Department for Work and Pensions is more active in some of that space, we are looking to make sure that our interventions support people who are furthest away, and often people with a disability, often people that look like me, and often women who want to either return to the workplace or enter the workplace for the first time, and the fact that, whilst we have made real progress on dealing with our economic inactivity rates in Wales, we're still slightly behind the UK average. So, that's where we're looking to focus our attention and our efforts, and I hope that will aid not just part of the just transition in people who are already in work, but to get people into work who aren't currently at present.
Alun Davies.
I'm grateful, Deputy Presiding Officer. I'm grateful to the Minister as well for his statement and I've been enjoying the discussion that's taking place here, but I find that the discussion is all about what Government is doing, and nobody has asked, 'Why is Government doing this?' I wonder whether Government has asked that question itself, because I've looked throughout the statements you've made through the programme for government, and I can't see any statement of intent. What is the point or purpose of policy, for example?
It's surprising that there is no mention of poverty in your policy at the moment. Now, if the reduction of poverty were a driver of policy, then you would take different decisions than if, for example—. Simply an emphasis on growth or GDP would drive very different decisions again. And unless we understand what the purpose of policy is, it's very difficult for us to hold you to account, Minister, and, at the same time, I see no objectives or targets of policy. So, you know, we've seen and there has been agreement across the Chamber that we want to see a fairer Wales, a greener Wales and the rest of it, but there is no idea anywhere about what that actually means in practice. What is the objective that you're seeking to achieve? How will you know if you've achieved a fairer Wales? How will we hold you to account for doing that? There is no timetable. There are no deadlines. There are no targets in the policy. And therefore, I find myself, both as a member of the Welsh Labour Party and as a Member of this place, at a bit of a loss as to how, over the four years, we can hold you to account for what you're saying today, what you said in October, what was published by the Government in December, and how, by the end of this five-year period, we will know, or you will know, whether you've achieved any of these ambitions or not.
I thank the Member for his contribution. He is consistent on his point that he believes there should be more targets across a range of areas. My view is that of course poverty is a significant part of what we are looking to do and the fight against poverty. And actually, if we weren't interested in that, we wouldn't be looking to have interventions, for example, in the employability and skills plan, aimed at those people furthest from the labour market. We wouldn't have the significant aspects of the young person's guarantee that are looking to get people with lower skills, who are likely to be less well off, younger people who have yet to enter the world of work, to make sure they have an experience of the world of work and positive support. And there's part of the point about what is the Government doing, why are we doing this.
Well, apart from anything else, it isn't just about the improvement for the individuals and communities, and it isn't just about how we feel as a country; actually, without Government support and intervention, a range of things wouldn't happen. So, Business Wales wouldn't have been created on its own by the private sector. A range of areas that we've talked about that support the co-operative economy, if the Government wasn't active in that space, we can be very confident that those things wouldn't happen. And actually, what we're trying to say is this is partly about moving towards our national milestones, the national milestones we set out, the way that we want to be able to do business, and also, some of the metrics that we will use and we know we'll look to. So, for example, will we have made a difference on the levels of economic activity? Where will we be on employment? Where will we be on average wages? And crucially, the difference in different parts of Wales, which is a conversation I have regularly had with the Member and colleagues from Valleys constituencies about what difference are we making. Because we could make a difference to the national impact across the country and do nothing about economic inequality, and that's not where this Government is and it's certainly not where I am. I look forward not just to a conversation with the Member, but to being able to set out in more detail, as we move through this term, the progress I think that we will make and then making a difference to people's lives, in his community and others around Wales.
Thank you, Minister.