Today’s Welsh Affairs Welsh Economy & Coronavirus Parliamentary Report shows urgent need for fair funding and UK intervention to support Welsh industry says Labour Welsh Affairs committee member and Swansea West MP Geraint Davies.
Geraint Davies said, “The report gathers together a huge body of evidence from across all Wales business sectors from aerospace and car manufacturing, to tourism and hospitality and farming and food production and paints a picture of Wales in lockdown in need to the sectoral support needed for a sustainable recovery
The evidence supporting the report finds that prior to Coronavirus Wales economic characteristics include it being the poorest part of the United Kingdom, with gross value added of 70% of UK GVA, rising employment levels, disproportionately higher public sector and lower private sector employment. Wales has had a higher impact on public spending austerity and have received only 1.5 % of UK rail investment for 11% of track and 5% of the population. It has particular reliance on core sectors including aerospace & aircraft, steel, manufacturing, farming, retail, tourism and hospitality.
The report found that devolution has allowed the Welsh Government to respond to the coronavirus tailored to Wales.
However, the funding provided to respond to the pandemic does not take account of Wales’
profile of Wales – being older, poorer, less healthy and sparser population compared with England.
Said Geraint Davies MP “Wales deserves the money that could fund an equivalent response to that in England based on our population. However, our evidence showed that Wales was shortchanged by half a billion pounds as the Welsh Government response cost £2.25 billion compared with UK funding of £1.75 billion.
“Wales needs for an additional coronavirus factor on top of the normal ‘Barnett formula’ to mount an equivalent response to England. Fortunately this year we still have EU funding that has been redirected to respond to the coronavirus crisis.
“The Welsh Government has very limited use reserves or borrowing and only EU money can be carried over between years.
Said Geraint Davies MP “We found Wales needs greater financial flexibility so should have borrowing based on the income tax that is now devolved and be able to draw on reserves and make choices between capital and day to day spending.
“We face the prospect of a disorderly Brexit, a coronavirus second wave and economic shocks to particular economic sectors so Wales must have the means to respond quickly as events unfold.
“We found announcements in England have sometimes been without consulting Wales leading to confusion as the media is London dominated.
“Unlike England Welsh Government has provided a five-mile advisory travel distance alongside a two-metre social distancing law so we don’t have thousands travelling many miles to huge gatherings as happened in Bournmouth. This has helped achieve a reinfection rate per person R in Wales of 0.5 – about half that of 0.9 in England.”
The Welsh Government has provided support for business not available in England. In particular, the Development Bank of Wales has been much more successful in providing finance as grants and loans at very competitive interest rates to business than private banks in England or Wales.
Geraint Davies added, “The Development Bank is a great success and should be adopted in England.
“Also the Chancellor should adopt our Welsh criteria for supporting business of growth potential, contributing to zero-carbon and supporting local jobs. He should target support at sectors for recovery out of lock down.
“We should support the FSB suggestion of a Visit Wales Later approach building visitor confidence in Wales as a safe destination as we ease lockdown and as a precursor attempts to stimulate local demand perhaps through local vouchers to support local retailers, hospitality etc (that has been focused as meal deals in England).
“The new normal is likely to continue to have more home working and social distancing than before and so an acceleration in the digital capacity of local businesses and consumers is needed to keep local economies supported. In addition, local procurement and encouragement of buying local would help.
“Learning from the experience of England re-opening before Wales may provide valuable lessons in how caution may deliver more gradual and sustainable reopening.
The aerospace sector is of strategic importance and Airbus in particular is a key industrial asset that provides unmatched R&D, skilled employment and gross value added and supply chain value in Wales. Therefore, UK support for this sector as occurs in France is vital to help the business through this exceptional one in a hundred year period so that the skills base is reatained and the wing of the future can be designed and manufactured in Wales.
“In particular flexible furlough allowing a shorter working week would allow skills retention and an aircraft scrappage scheme would allow a quicker shift to upgrading to more climate friendly aircraft in the interval of demand recovery over a two to five years time-frame.
“Wales needs our fair share of funding and tailored support for our key strategic sectors to build a sustainable economy for all our futures. The Chancellor should learn from the evidence and give us the helping hand we need to succeed”.