Support for People and Businesses in Wales: Covid-19 — [Sir Edward Leigh in the Chair]

Part of the debate – in Westminster Hall at 2:30 pm on 21st October 2020.

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Photo of Chris Evans Chris Evans Labour/Co-operative, Islwyn 2:30 pm, 21st October 2020

I beg to move,

That this House
has considered support for people and businesses in Wales affected by the covid-19 outbreak.

It is a pleasure to serve under your chairmanship, Mr Leigh. I am pleased to have secured this debate and glad to see so many hon. Members from across the House who hope to contribute. I do not need to tell anyone that we are living in extraordinary times. No one foresaw the pandemic, and the virus, by its very nature, has been difficult to predict. In the absence of a vaccine, it seems as though the virus will be with us for a long time and that we will have to learn to live with it. That means trusting science. As always, we have those commentators who are suddenly experts in microbiology and seem to know better than the scientists. However, the debate must focus on how the Welsh economy will adapt to the new world in which we live.

Ever since a national lockdown was announced in March, nearly every sector in my constituency—from the hairdresser, to the driving instructor and the estate agent—has written to me because they are worried about their future survival. Just last month, the Caerphilly county borough area, which includes Islwyn, was put into a further lockdown, which has only increased the financial pressure on businesses struggling to recover from the March lockdown. With the announcement of a firebreak—a two-week lockdown commencing at 6 pm on Friday—those fears have massively escalated.

The firebreak lockdown proposed by the Welsh Labour Government is necessary in order to regain control of the virus, save lives and alleviate the pressure on the national health service, but the news of a lockdown has been a hammer blow for so many businesses already struggling to stay afloat. During my time as a Member of Parliament, I have worked with and come to know one of the Islwyn businesses under threat. Halletts Cider got in touch in March to ask for assistance in finding financial support. Since that time, it has been able to access a bounce back loan, but it now faces the worry of how to pay that back. As this crisis goes on, I fear that many people will be in a similar situation to Hallets, a company that many hon. Members will know well, as it has taken part in past events arranged by the all-party parliamentary group on cider, and it can be seen at many festivals around Wales and other parts of the country. It is a very good business, and I ask that the Treasury makes plans to address its concerns.

I am concerned for businesses across the UK. It is vital that we do all we can to support them. As I said about Halletts, these businesses are completely viable in normal times—they are flourishing and thriving—but through no fault of their own they face huge financial uncertainty. The Welsh Government have worked hard to curtail this uncertainty, going above and beyond the work of the UK Government to offer the support that Welsh businesses needed. However, areas such as mine have not been able to function properly for a long time now, and this looks likely to continue, given the recent announcement of the two-week full lockdown.

The Welsh Government have done all they can to support businesses, but at the end of the day it comes down to one thing: finance. The Welsh Government can offer support only within the confines of Barnett consequentials. However, that will only become more difficult given the need for a firebreak lockdown. Since the lockdown was announced, I have heard from more businesses concerned about being unable to operate once again. I know that the Welsh Government will do all they can to support those businesses, as they have throughout the pandemic. However, I feel that the Chancellor of the Exchequer can and should do more.

I place on the record my thanks to the Welsh Economy Minister, Ken Skates, and I am sure that many Members will agree. Whenever I have written to his office about a business in my constituency asking for support, he has often arranged for members of his office to give the business a ring and talk through the options. I know those businesses have found that help invaluable— and I include Halletts in that, after his office rang Halletts within a couple of days of my asking them to give the business a call. The Welsh Government have provided the most comprehensive and generous package of financial support for businesses of all the UK’s nations. To date, the Welsh Government’s economic resilience fund has given almost £300 million of support to more than 13,000 businesses in Wales. That has helped to protect more than 100,000 jobs that were at risk of being lost. Welsh Government Ministers have made available a £300 million support package for businesses affected by the firebreak, including additional discretionary grants and support for smaller businesses that are struggling.

I believe that the Welsh Government are doing everything they can, but I am deeply concerned about the level of communication with the devolved Governments. It has been nothing short of disappointing. Sometimes I think that the Prime Minister needs to realise that we live in a new world. Perhaps it is beyond his ideas of the 1940s and ’50s, when the Prime Minister was all-powerful. The fact is that there are three nations with their own Governments and leaders, and he has to talk to them. The UK Government should commit to more regular and reliable engagement with those devolved Governments. Simply put, the matter is too important for us not to be singing from the same hymn sheet.

Among new measures that the Welsh Government have introduced is an increase in the flexibility of terms for firms borrowing from the flexible investment fund of the Development Bank of Wales. The limit for that fund will be doubled from £5 million to £10 million. The development bank will also have the discretion to extend loan periods up to 15 years, which will help to spread the cost of borrowing. Those are all helpful steps, but the measures that are coming in on Friday will strain them to the absolute limit.

At the end of last month the Welsh Government announced that £140 million would be spend in grants to Welsh businesses. Of that, £20 million has been earmarked for tourism and hospitality businesses, while businesses with a rateable value under £50,000 are able to apply for grants as well. Those are incredibly helpful measures for a huge number of businesses, but the next two weeks will mean that more help is needed.

In the phase of local lockdowns, the Welsh Government introduced a new local lockdown business fund. That support is invaluable for areas such as mine that have now been in local lockdown for over a month. The purpose of the fund is to support businesses with cashflow support, to help them to survive the economic consequences of the local restrictions that have been put in place in their area. Businesses can apply for the fund when their local area has been in lockdown for a minimum of 21 days. It is administered by local authorities, which are best placed to serve the needs of the community. I want to thank the chief executive and leader of Caerphilly County Borough Council for their handling and management of the lockdown, as well as the vast number of staff who have been so helpful during the pandemic.

The Welsh Government have also implemented targeted support for childcare providers. At the beginning of the pandemic I was contacted by several nurseries and childcare providers in my area, who were understandably concerned that if everyone worked from home their services would no longer be required. Thanks to the Welsh Government, they can now apply for a grant of £5,000 to cover any losses from April to June, when the strictest measures were in place.

Wales is a nation with many great assets that we can be hugely proud of. One area that I am passionate about is the promotion of tourism in Wales, and I am glad to see that it is the Under-Secretary of State for Wales, David T. C. Davies who will respond to this debate, as we spoke extensively in February about the development of a Henry VII trail, to encourage American tourists with an interest in British history to come to Wales and see where Henry VII landed before eventually becoming King. I pay tribute to the Minister for the encouragement that he and officials and other Members have given to trying to bring that to fruition. Unfortunately the pandemic brought the talks to a crashing halt, but we were making progress.

Tourism has been one of the industries hardest hit by the pandemic. Gareth Bates, who owns the Cardiff-based tourism company Tours of Wales, has said that usually about 50% of his customers are Americans, and so, as he has not seen any of them, he has lost a portion of his revenue. Some tourism companies have been able to recoup part of that loss through an increase in the number of tourists from other parts of the UK. As families could not holiday abroad, more of them turned to Wales for a summer holiday. However, this increase has not been enough to meet the shortfall, with many hotel and bed-and-breakfast owners wondering where their next booking is actually going to come from.

Local lockdowns and full lockdowns, such as the upcoming two-week lockdown in Wales, and the guidance not to travel unless absolutely necessary have made fewer and farther between the number of UK travellers hoping to holiday in Wales. This means that many business owners now face the prospect of losing not only international customers but customers from elsewhere in the UK, too. I am pleased to say that the Welsh Government have once again stepped in to help secure these businesses by ring-fencing £20 million of support specifically for the tourism hospitality sector.

Some 34% of businesses in Wales have benefited from Welsh or UK Government coronavirus support, compared with only 14% in England. I believe that is a good thing. The Welsh Government are also taking additional steps to ensure that covid support reaches those who need it most. They have announced that coronavirus support will not be available to companies based in tax havens, thereby ensuring that coronavirus aid reaches the companies that need it most and that contribute to our economy fairly. That is why support needs to be provided in an ethical way, ensuring that we reward companies that do the right thing and contribute.

An example of the extra support offered by the Welsh Government is the aid given to start-up firms, which are currently left out of the UK provisions for financial aid relating to covid. The Welsh Government have not left these businesses out in the cold. This is such an important point, Mr Leigh, as the vast majority of our businesses in Wales are microbusinesses of one or two people. The fund for this aid is worth £5 million, with flexibility to increase this amount in the future, if needed. It will support start-up firms that fall outside of the UK Government’s self-employment income support scheme. Under the UK scheme, businesses that were started within the last year do not qualify for the SEISS, and it is unclear whether that will be remedied or if other provisions will be made for those affected. The Welsh Government are stepping in and providing crucial funding to recently established businesses so that they can continue to trade through the pandemic. This will aid at least 2,000 businesses that fall outside the UK Government’s help schemes.

Although every sector across the country has felt the economic hardship that covid has brought with it, I will highlight only some sectors today. There are recurring themes in the correspondence I receive from the people of Islwyn about certain areas that need help, or else face closure. They are all related to gaps in the UK Government’s schemes.

As we are well aware, pubs and restaurants have been operating under varying levels of restriction since March. Restrictions on their opening times and capacity, guidance to limit contact with others, and public anxiousness all drastically cut footfall. Footfall is significantly lower even for those businesses that are capable of being opened. As we know, all these businesses will be closed completely during the coming weeks while the firebreak is in effect.

In my own constituency of Islwyn, I have heard of many local pubs and restaurants that have struggled in the past few months. One pub was excluded from furloughing staff because of the date that the landlady took over, meaning that she had to choose between staff not being paid or paying them and going into debt herself. The cut-off date for support seems completely arbitrary to me, and it puts new business owners, such as my constituent, in a difficult position.

I take issue with the lack of clarity in the Chancellor’s statements. Many people in Wales do not follow the intricate details of what is and what is not devolved, or they are simply too busy to keep up with such matters. We do not all live in a bubble within which politics is the be-all and end-all of our lives. At the start of the crisis, Welsh Labour MPs were forced to write to the Treasury to seek clarity on what support applied to businesses in Wales, as the guidance simply was not clear enough. Businesspeople were often left confused as to whether or not the Chancellor’s announcements applied to the whole of the UK or just England. The message was not clear and it was also difficult to access, leaving may businesspeople confused as to what financial aid they qualified for.

Only the UK Government have the financial firepower to guarantee the levels of support that workers need, despite the continual work of Welsh Ministers. Welsh businesses need more generous payments to help their workers through this crisis. The Welsh Government are clearly taking proactive steps and doing all they can to support businesses, plugging gaps where UK support is not sufficient. However, through no fault of its own, Wales is struggling, despite the best efforts of the Welsh Government and of the residents to keep their businesses alive.

It is time that proper consideration is taken in Westminster as to the level of flexibility of aid that should be offered, to ensure that businesses can continue to function and jobs can be retained over the coming winter. As Wales faces a two-week lockdown, this has become even more urgent. Aid needs to be more targeted and more flexible, to take into account the complexities of British businesses. Above all, that must happen right now.