‘End of furlough scheme would hit Wales hardest’
AN ENDING of the UK Government’s Coronavirus Job Retention Scheme next month would have hit the Welsh economy harder than any other nation of the UK, Economy Minister Ken Skates said.
Mr Skates said Wales had the highest percentage of its firms in receipt of the flagship scheme at 74%, while proportionally Welsh firms also have the biggest backing from other UK Government support measures.
On Tuesday Chancellor Rishi Sunak announced the scheme, which is paying 80% of the wages of more than seven million staff across the UK, was being extended from the end of June to the end October, although employers will have to make contributions from August.
Mr Skates said that the devolved governments didn’t have the fiscal firepower to provide the intensity of support provided by the scheme, at a cost of around £12bn month.
The minister said: “Firms across Wales, both large and small, have seen at best both income and activity severely hit, if not stopped altogether, and that is why the UK Government did the right thing in introducing the jobs retention scheme. It has been essential to enable large parts of our economy to hibernate through the crisis and the platform that has enabled us to secure the public health lockdown of people and businesses needing the security in knowing that in complying with rules their livelihoods and their overheads would be supported in a meaningful way.”
He added: “Wales has the highest proportion of businesses applying to the job retention scheme, which stands at 74%, compared to 67% in England, 72% in Scotland and 65% in Northern Ireland.
“Wales also has the highest proportion of businesses applying generally for UK Government schemes, so I welcome the fact that the Chancellor has heard our message and has now taken steps to extend the scheme until October, but there is much work to do now with the UK Government to work through the detail of the next phase of the scheme and to prepare businesses for life after it. That conversation has to be meaningful. So, our message to the UK Government is to involve Wales, Scotland and Northern Ireland in the discussion right now so we can all plan and move forward together with confidence into our plans for recovery.”
He said a focus of continued support should also be for businesses that cannot legally open. He said sectors like tourism and hospitality, which were first into the shutdown, were likely to be among the last to come out, so would need support for longer. He also called for support for firms that can open to be able to adjust to the new norms on a fournation basis.
Mr Skates said the next phase of the Welsh Government’s £500m Economic Resilience Fund (ERF) would look to support firms that have to date fallen through the support gaps, like non-VAT-registered firms. The ERF also includes a £100m Covid-19 emergency loan scheme run through the Development Bank of Wales.
With the various UK Government loans support schemes, administered by the British Business Bank with finance provided by more than 60 accredited lenders, having approved close to £15bn of funding to more than 300,000 firms across the UK, including Wales, Mr Skates was asked if there was now any point in providing additional finance for the development bank.
He said: “We are taking our time to assess the beneficial impact of CBILS (Coronavirus Business Interruption Scheme) and the Bounce Back Loan scheme, but we are not going to rule out a future role for the Development Bank of Wales, particularly for certain sectors like tourism.”
Figures from the ONS showed that in Q1 of this year the UK economy contracted as its fastest rate since the financial crisis in 2008, at 2%. In March, when the lockdown was introduced, it contracted at the fastest rate on record at 5.8%. Figures for Q2 will be far worse.
Mr Skates said: “It is our determination to avoid job losses as much as we can and that is why the job retention scheme is so important. However, we are seeing jobs lost from the Welsh economy. That is why we are considering now the suite of interventions that we have at our disposal regarding employability, such as Jobs Growth Wales and ReAct to minimum unemployment, but also to minimise the period that people may be unemployed.”