Pwyllgor yr Economi, Seilwaith a Sgiliau - Y Bumed Senedd
Economy, Infrastructure and Skills Committee - Fifth Senedd07/10/2020
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Hefin David AS|
|Helen Mary Jones AS|
|Joyce Watson AS|
|Russell George AS||Cadeirydd y Pwyllgor|
|Suzy Davies AS|
|Vikki Howells AS|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Andrew Campbell||Cadeirydd, Cynghrair Twristiaeth Cymru|
|Chair, Wales Tourism Alliance|
|David Chapman||Cyfarwyddwr Gweithredol Cymru, Lletygarwch y DU|
|Executive Director Wales, UK Hospitality|
|John Whalley||Prif Weithredwr, Fforwm Awyrofod Cymru Ltd|
|Chief Executive, Aerospace Wales Forum Ltd|
|Richard Warren||Pennaeth Polisi a Materion Allanol, UK Steel|
|Head of Policy and External Affairs, UK Steel|
|Sara Jones||Pennaeth Consortiwm Manwerthu Cymru|
|Head of Wales Retail Consortium|
|Victoria Brownlie||Cyfarwyddwr Polisi a Materion Cyhoeddus, Y Ffederasiwn Cenedlaethol ar gyfer Gwallt a Harddwch|
|Director of Policy and Public Affairs, National Hair and Beauty Federation|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Gareth David Thomas||Ymchwilydd|
|Lara Date||Ail Glerc|
|Robert Lloyd-Williams||Dirprwy Glerc|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Cyfarfu'r pwyllgor drwy gynhadledd fideo.
Dechreuodd y cyfarfod am 09:45.
The committee met by video-conference.
The meeting began at 09:45.
Croeso, bawb, i'r Pwyllgor Economi, Seilwaith a Sgiliau.
Welcome, everyone, to the Economy, Infrastructure and Skills Committee.
I'd like to welcome Members to our committee this morning, and I move to item 1. Under Standing Order 34.19, I have determined that the public are excluded from this meeting for public health reasons, although the meeting will be broadcast on Senedd.tv. If there are any technical issues with my connection, then we've agreed previously that Joyce Watson will stand in as the temporary Chair. I'm not aware of any apologies or substitutions this morning. All Members are here, but Hefin David may not be always on screen because there are some connectivity issues, but Hefin is here and will appear at the appropriate times. If Members have any interests to declare, say now.
In that case, I move to item 2, and I'd like to welcome our witnesses this morning. This is the seventh session of the committee's inquiry into COVID-19 recovery for the economy, infrastructure and skills in Wales, and we've grouped this session as long-term affected sectors. But I will ask each witness to introduce themselves for the public record. If I come to David Chapman first.
Good morning, all. Bore da. I'm David Chapman, the executive director for UKHospitality in Wales, UKHospitality Cymru.
Bore da. Andrew Campbell, chair of the Wales Tourism Alliance.
Good morning. I'm Victoria Brownlie, director of policy and public affairs at the National Hair and Beauty Federation.
That's lovely. And we have got Sara Jones, head of the Welsh Retail Consortium, with us as well, but I'm aware that there are some connectivity issues. But hopefully Sara will be able to join us at some point during the meeting as well.
Perhaps if I could ask you all, to start with, to set out, very briefly, what you think are the biggest challenges that are affecting your particular sector, and the consequences in terms of the economic impact in regard to the pandemic on your particular sector. Who would like to attempt to go first?
I'm very happy to go first, if you want, Russell.
Andrew, thank you very much.
Well, it's been a very bleak year for tourism, as we all know, and the forecasts during September, after a very late opening on 11 July, were quite dire. That was before all the latest restrictions. So, the Office for National Statistics survey research indicated that 25 per cent of food and accommodation businesses were at serious risk of insolvency. Our own WTA survey—51 per cent of businesses said that they were worried about surviving. Welsh Government's Visit Wales research carried out indicated a 50 per cent revenue figure, that businesses were 50 per cent down on revenue, which equates to about over £3 billion for the tourism sector. So, very significant.
So, yes, only five weeks of real strong trading out of a normal 20 weeks that businesses would expect. So, we were hoping for better. These recent restrictions, they came very suddenly. The Indian summer—the expectations of bookings way into November were curtailed very quickly.
Okay. Thank you, Andrew, for setting that out. It does seem, sadly, a bleak picture, but thank you for setting that out. Victoria Brownlie, do you want to perhaps go next?
Thank you, Russell. In terms of our industry, sadly, it's also a relatively bleak picture that may, unfortunately, be the theme of what we're going to be discussing today. But in terms of our sector, one of the last ones to reopen and reopened with quite significant restrictions on the trade that people can undertake, restrictions to the services and treatments that they can offer, and the number of people they can have in their premises or if operating on a mobile basis. So, this has meant that even if they're working fully at capacity, with their books completely full with appointments, businesses can only expect to make about 50 per cent of what they could make pre-COVID, because of those restrictions.
Sadly, what we're seeing, though, is people aren't coming through the door, because events are cancelled, holidays aren't taking place, people don't know if further restrictions are going to be coming in in the near future. And so businesses are down—for three in four businesses, business is down, in comparison to this time last year. A further 66 per cent see the next three months as even quieter, and over a third aren't sure if they will be able to survive until Christmas. And that paints a real bleak picture for what was a very viable sector pre-COVID. We were within five of the top eight most buoyant businesses within the sectors pre-COVID, and it's something that we find very sad. Because, as we see it, if restrictions can be relaxed, or we can show that we can operate in a more COVID-secure way, to allow more treatments to take place, we could be a very viable industry, providing the level of income to the Welsh economy that we were pre-COVID—£275 million a year, employing significant people in the 2,000 hair and beauty salons and barber shops that we have running throughout Wales. So, really, for us it's about showing that we are credible businesses that can provide something once we can get through this blip, but we have to be supported to get through it.
Okay, thanks, Victoria. David Chapman.
Thank you. To echo all the comments that Andrew made, hospitality is, of course, probably the most concentrated employment area within tourism. What we are seeing, as Andrew said, is a shortened season—five weeks, probably, shorter than the English counterparts had; five weeks, probably, of active trading. Since March, we've lost—we came out of a long winter break, in which many businesses had borrowed to invest for this season. They then had to borrow again on top of that to keep themselves going through the 2020 season. They're now leveraged to the hilt and can't really borrow any more. They've had a fantastic package of support from both Governments, from March onward, but that is now looking like it's drying up one way or another, in terms of the quantity that we need, and I'll come on to it.
The economic resilience fund is a fantastic help, but we've got six months more to get through, so the three winters are accurate. And I think, at this early stage, I'd like to say that—I've worked with this industry for 20 years and I haven't seen people who are dedicated, enthusiastic, vibrant, who live—. They're tremendous characters and I haven't seen them in such an anxious and dangerous position because of the intensity of the crisis the industry is facing.
Okay, thank you, David. Right, we'll go straight into—there are a number of questions that come from what you say. And I should say, Members will ask various questions of different members of the panel, but if you do want to come in, if you just raise your hand, and I'll raise mine to say I've seen you, and I'll bring you in appropriately as well. Suzy Davies.
Thank you, Chair. And perhaps I should put on the record, bearing in mind the witnesses we've got today, that my family does run a tourism business. I'd like to ask you all, as you all represent small businesses, pretty much, what structural changes have you've seen within your individual sectors because of the pandemic and what do you think is likely to happen next—what structural changes may be needed as a result of this? And in responding, I wonder if you wouldn't mind just referring to apprenticeships, because I notice from recent statistics that both the hair and beauty and the hospitality sectors are those areas where we're likely to lose most of our apprentices. But please don't confine your answer to apprentices.
Probably best I come in first on this, because I've done a lot of work on the skills side as well. The first thing I'd like to say is that this industry has a considerable number of larger small and medium-sized enterprises as well, and we need that to be recognised—I know you do. And Andrew would probably speak on a better platform for the microbusinesses and the smaller businesses that contribute here. But what I wanted to indicate is that each country house hotel, for instance, is equivalent to a reasonably sized manufacturing factory. They employ between 50 and 130 people in most of those are big premises. And if we were faced with the prospect of 200 to 250, maybe, manufacturing factories in every community of Wales threatening either serious redundancies or closure, you can imagine the headlines that that would create. Our industry, for a long time, has been taken for granted in terms of being a permanent presence and a regular contributor into the economic value of communities, and this time, we really do have to take a series of measures to try to ensure that that is the case and not to take a complacent position in the hope that they'll always be there.
On the skills side—and I've worked with Andrew and people right the way through, from the providers to the higher education and further education contributors, and Welsh Government outfits and Careers Wales and everybody else for the last two years—we now have a hospitality industry and tourism industry skills board, which brings all those different people together. It's the first time that's happened as an industry. I'm very proud of the work that's been done by all of us to make that happen, and that we do have now a coherent unit to be able to help the industry to move forward with the skills that will be required post COVID.
Looking at the interim, one of the problems—
Excuse me to butt in—sorry to butt in, David—but can you give us a sense of what the industry has done in this short period of time to respond to the pressures? I was only worried about the apprentices because they might go as a result of that short-term look.
I think it's realistic. What we're anticipating is that, of about 130,000 people in the hospitality industry, we might be faced with 40,000 redundancies.
Oh, right. Okay.
Now, what we're trying to do is to make sure that all those highly trained and really well respected staff that we have are kept on board and most of the businesses—their borrowings are in order to protect the integrity of that business and most of the integrity of a business, because we're a people business, are the people who work for us.
We've got buildings to look after and people to look after and that makes a fantastic hospitality offer. And so, up until now, those key members of staff certainly have been protected and the skills element has fallen by the wayside to some extent, obviously, as we've gone into survival mode. But I am concerned that we will lose a pool of talented and capable people to other industries, wherever they can find work, should we have to shed these staff. We are at the moment hugely restricted in terms of the people we will be taking on, and I know that there is concern within Government about the 16 to 25-year-olds and that's our traditional strong point, if you like: giving youngsters a start and great social skills. I can see that, at the current time, it's fairly obvious that we won't be able to lead on that for the Welsh economy.
Victoria, you wanted to come in, I think.
Thank you. I echo a lot of what David said specifically with regard to the impact it will have on young people, who make up a large majority of those that we offer apprenticeships to in our sector. We employ a lot of apprentices, but unfortunately, as you said, with the number of small businesses that we have—three in four of our businesses employ fewer than five people; 94 per cent fewer than 10 people. And, largely, that is due to the size of the businesses that are operating.
So, when it comes to issues such as maintaining social distancing and 'This is the maximum number of employed people we can have in our premises, so that we can then have this number of clients', for example, the first people who will go will be those that can generate the least amount of income for that business, because it is all about survival. So, apprentices bring no income into a salon or a barber shop, and so, unfortunately, they will be the first to go.
Sixty-six per cent of those we recently polled said that they will not be hiring apprentices in the coming three months and onwards, and 21 per cent said that they were hugely unlikely to. And so it is a really dire picture, sadly, for the apprenticeship side. That raises massive concerns in terms of the future of the industry, those young people that I mentioned previously, but also in terms of the way that we're having to change as a sector to immediately respond to this.
Where we can't survive—these businesses are just retiring, shutting up shop, and we are largely the people who create that footfall for what would otherwise be dying high streets. So, we're the people from whom you can't buy things online: you have to go down to physical premises to have your treatment or service done, and while you're passing, you might pass a bookshop or a jewellers or a butcher and also pop in there on your way past, but you wouldn't necessarily have done that if you hadn't been going to have that treatment. So, it's that kind of footfall that we'll lose by losing our sector, and that's something we're really just trying to avoid where we can.
I think that's an important point: this ripple effect on the high street. Before I move on to Andrew, would I be right in saying that, because your businesses are generally so small, as you explained, the ability for them, as individual businesses, to restructure and maybe find opportunities in this are pretty negligible? It might be different in a large hotel chain, but maybe not in a high-street hair salon.
Unfortunately, that's been the problem. Where the wider business community has been encouraging those businesses to diversify and think of new ways to operate, unfortunately, you can't really do that within our sector. It's very limited to be able to encourage people to buy things from our premises, because they can easily buy those products when they're doing their supermarket shopping or online. It's not really a service that we can offer in any other format and, so, yes, we are massively restricted in that way.
Okay, thank you. I don't know how we're doing for time, Chair?
That's fine. If Andrew wants to—. I think Andrew indicated he wants to come in as well.
Yes, just very quickly, to answer your question, Suzy. I think the key word here is 'adaption'. I know, when we last met, at the beginning of July, we were very concerned in the industry about whether businesses could adapt to actually take on board all the safety protocols and deal with that. Huge credit to all tourism businesses for stepping up and doing it and delivering it and keeping people safe, keeping staff safe, keeping communities safe. So they really proved themselves and I think that has been a feature, when you talk about structural change, that businesses have been very innovative and they have adapted. So we've seen lots of home deliveries; we've seen lots of click and collect; we've seen lots of investment in extending facilities to accommodate visitors being outside particularly.
I think also we've seen a huge step forward with regard to the digital agenda—lots more use of digital technologies—that's been a clear gain, if there can be an advantage or a gain out of this awful pandemic. People have been buying local, they've been supporting local businesses and I think that's another key structural change, which has been another positive, which is good.
I suppose from a market change, we've seen many more new people, who've never been to Wales before, coming here for the first time, and that's a great opportunity.
Okay. Thank you, everyone.
Thank you, Suzy, as well. Sara Jones, from the Welsh Retail Consortium, I'm glad the connectivity issues have been resolved, so thanks for joining us. I wonder, before we move on to our next set of questions, Sara, do you want to just set out what you believe are the biggest challenges for particularly your sector—your members effectively?
Yes, thank you, Chair, and I'm very sorry to the committee for my poor connection issues.
Not at all; not at all.
Thank you for letting me join this meeting. I'm sure these messages will have been echoed by other panellists because we're all sectors that have really been hit hard by the six-month pandemic. Clearly, a period of huge change for us and an acceleration of consumer shopping behaviours. So that's been huge for us. It's on a scale not seen before, so what we're effectively seeing is five years' worth of transformation happening in the five-month period, and a real shift to online shopping has been huge for our industry.
In terms of the biggest challenges in the here and now, the biggest thing for us is consumer confidence. We've been really hit hard by that and, where we saw an uptake in consumer confidence post non-essential retailers being able to open, the last four to five weeks have been really poor, and we're starting to see people become more reticent about going out shopping. The obvious impact of that is low footfall, obviously a drop in sales: we've seen about a 20 per cent cut in sales in store for non-essential retail.
And I suppose, just to mention, because it's topical at the moment, local lockdowns. There'll be figures coming out this week showing that local areas have been particularly hard hit in Wales. So, I'll give you an example: we've got Cardiff, Glasgow, Belfast and London, and Cardiff was the only city to see a worsening position on footfall in the last month, and I think that a lot of that is down to the travel restriction issues that we have locally at the moment.
So lots of operational issues for us. Our industry is one that's been adapting and been investing heavily in safety measures. We want to try and reinforce the message that it's safe to shop. Many of our retailers have been open right throughout this pandemic and operating safely. But we really need to get the message out there around consumer confidence, particularly in the run-up to the festive period, because this is a massive concern for us. Thank you, Chair.
I can quite appreciate that. Thank you, Sara. So, we'll move on to the next set of questions, and I'll ask Vikki Howells to lead on this section.
Thank you, Chair, and good morning, everyone. Just thinking about the additional support measures that have recently been announced by both the Welsh Government and the UK Government to assist affected sectors, what are your views on those recent support measures, and what further support do you feel that your sectors will need over the coming months to ensure that you can continue to keep people in employment and start to recover? I don't know who wants to start on that.
This is a big one, so, not to be brief, but try and answer the specific question about the current position and what you would like to see, as briefly as you can. Victoria.
Okay, I'll try and keep it as brief as I can. Like you say, it's quite a question. Thank you. The Governments—both in Wales and in the UK—are dealing with a massive issue, completely unprecedented, and we have been very grateful for the support measures that have been offered to date. Unfortunately, with regard to the most recent ones, the additional money put into the Welsh economic resilience fund, whilst welcomed, the £80 million that's been put forward for businesses to come forward with projects that they feel would help to keep their businesses going, that requires a 10 per cent capital that the business puts forward. We've had 30 per cent of people in the beauty industry, one in five across hair and beauty, saying they can't even cover their current outgoings. So to say, 'Come up with £1,000 capital to put forward for this as a minimum' is just completely unviable. So, whilst we appreciate the sentiment, it will not help our sector at all.
The extension, however, to giving the three-weekly between £1,000 and £1,500 grants for businesses forced to close due to local lockdowns will be helpful, and we're really grateful that the Welsh Government have brought those in. What we really need here though is specific hardship grants for businesses that can prove themselves to have been viable pre COVID and can be viable again post COVID, and specific hardship grants to be made available within that funding that's been put forward for the resilience fund for specifically that reason, and that would really, really help us.
Looking further along the line, we need extensions to the 100 per cent business rate relief that will be ending in April. More widely, I could go into a million things around VAT reduction and more wider things, but keeping it looking more specific: the flexibility of the furlough scheme has been really helpful for our sector, which has a large majority of part-time workers due the fact that we're predominantly women and we balance our work through childcare. So, the flexible furlough was really helpful in terms of being able to help those self-employed people and keep bringing people in on a part-time basis as and when businesses started to recover. So, the fact that that's now going is of real concern to us. And the replacement of it with the job support scheme—again, I'm sure you'll probably hear it with some of the other people in this group—their job support scheme will not help our sector whatsoever, unfortunately, because I think it's aimed at helping businesses that have higher costs in terms of recruitment and redundancy. There's no real incentive for businesses that have a higher turnover of staff and low costs in those areas to be bringing in a member of staff where, essentially, you're paying them more for less work when, as I said, they don't even have enough money to be covering their current outgoings, let alone paying someone for work that they're not essentially doing.
Self-employed: 57 per cent of our sector is self-employed, and the reduction of self-employed income support to 20 per cent will just decimate that sector. Twenty per cent is nothing and, sadly, that will be the end, probably, for a lot of our sector. Or worse—and we really hope, and are encouraging them not to do this—it will be a movement into a black economy where we can't be fully in control of the work provisions that people are following in terms of being COVID secure and in terms of paying properly, as you should be, in terms of tax and that side of things. So, we have real concerns there.
Okay. Thank you. Who would like to go next? Sara Jones, would you like to come in?
Thanks, Chair. Briefly, just to say that the Governments' interventions, at both the Welsh and the UK level, have been hugely welcomed by our industry. They've worked really well. The job retention scheme, obviously of huge importance. The recent extension of the debt enforcement moratorium, again by Welsh Government, was very much welcomed by our industry. Similarly, all the different schemes, whether it be Eat Out to Help Out, whilst not directly affecting our own industry, clearly we work closely with hospitality and the other industries represented today, so anything that encourages footfall back into town centres has been welcomed.
Government support to date has been welcomed and, going forward, the key thing for us will be non-domestic rates, as Victoria said, and making sure we don't approach that cliff-edge position in April. There needs to be at the very least a phased approach to reduction in rates bills following April for our members, and that's the one thing at the top of their lists—it's around non-domestic reforms. Clearly, that was a huge issue prior to this pandemic: a totally outdated tax system that affects retail harder than any other industry.
In addition to that, what we'd like to see is that the Scottish Government's programme for government has committed to a retail strategy, a retail enabling plan, and Welsh Government committed to this in their economic action plan about two years ago, and we'd like to see that followed up. We think the sector needs a specific approach in terms of the enabling opportunities that might be out there.
And I suppose the final thing to say in terms of support: we'd like to see greater flexibility in how we can use skills funding, particularly the apprenticeship levy, which obviously is a UK Government levy, about how we'd use that to help support our workforce because clearly there's a huge shift to online. So, the sort of skills that our employees are going to need in the future are going to change dramatically, and we'd like to see some more support in that area. Thank you.
Okay. I don't know if, Andrew and David, you both want to come in on this, but if one of you wants to perhaps take the lead.
I'm very happy to—
Thank you, Andrew.
Okay. Well, first of all, grateful thanks to Welsh Government and national Government for the schemes, just echoing what Victoria and Sara said. Twenty-five million pounds went out of the ERF fund here in Wales to support 1,200 tourism businesses and for that we're very grateful.
I can only echo—and I'm glad Rishi isn't on the call—about the job retention scheme that it hasn't been well received. The English alliance, the Scottish alliance, not one organisation has said that's going to help them and no business that I've spoken to in the Wales Tourism Alliance has said that it's going to help them. So, it's well meaning, but it's not enough. Reserves are low, cash flows are tight, and quite honestly there isn't enough money to ask employers to pay more. It's not realistic at this time.
With regard to the recent announcements, the £20 million ring-fenced for tourism is welcomed; it shows great recognition for our industry. We don't know the detail on how that's going to work through, but we believe that money is going to be there for a hardship fund, which would be good. The £60 million is going to be helpful, but again, looking at the checker this morning, it's going to be the same people who aren't able to qualify to access the grants. So, they're not limited companies; they're not VAT registered; they're not doing £50,000 a year. We're talking about the solos and the freelancers who missed out the first time around and they're going to miss out on that particular tranche. But let's not pre-judge that because, in the £20 million, there could be money for them and we just hope that's the case.
The voucher scheme was tremendously successful; 2,900 businesses signed up for the Eat Out to Help Out; 2.3 million meals were eaten, if you're interested; and £13 million of discount was claimed back. So, that was a great economic stimulus and there are great plans to try and take that idea forward to extend the autumn, but of course, with these recent announcements, things have changed.
Do you have any further questions, Vikki?
No, that was all very useful. Thank you very much.
Okay. Joyce Watson, I'll bring you in if you've got any supplementaries and then by all means come on to your area of questioning.
No, I haven't got any supplementaries, but I suppose I'm going to ask about whether you've seen any changes in things that have been done well, examples of best practice, either nationally or internationally, that will help you go forward. It was alluded to about Scotland having a plan and Wales needing to implement the plan that they talked about. But anyway, what we're interested in is how we can innovate—how Government can innovate, not us—to help you, and whether you've seen any other Government or whether you've got ideas of your own to help you survive, quite frankly.
Perhaps if I bring David Chapman in on this, if you're happy to take the lead, David.
When the others were speaking—and I endorse all that's been said there—I felt that we're entering a third phase. I think the first phase was 29 March on, and then the reopening and recovery stage of August on, and now we've hit a very much bleaker stage. I think there's also a question here of well-being, as I raised earlier, and energy. We have to support the entrepreneurs that exist within the industry in the next six months, where it's a very lonely time and it will be a very hard time. Some of them are faced with losing their homes, their businesses, and their friends who work with them. This six months is really, really bleak, as we've described.
At the moment, the job support schemes are not really applicable to our industry. The Welsh Government has a limited resource, we appreciate that; we've worked with them since June on this package. The £20 million ring fencing is a considerable achievement—and we recognise that—with the prospect of maybe a bit more, but I've been arguing for a bridging fund. Most of our businesses are heroic contributors to the economy: across the UK, we put £37 billion into the Exchequer; we pay an excessive amount of business rates; we pay, I think, something like 19 different taxes in total for most of our hotel businesses—that's what was told by one of our members.
We've got the chance to bounce back in March to a considerable contribution. Every hope is that with the way that staycations are, and the attitude that the public showed in August of this year, this industry has a fantastic opportunity, given the right conditions and COVID-related conditions, for next season to be able to put a lot of money back into the Exchequer. And so it's a very sensible investment, but we do need a sizeable investment to get it through. I'm calling it now—we did talk about hardship, and it was mentioned earlier, but it's a sort of a wrong expression. What we need is a bridging fund to get us through to the season, to get us through to March, and that investment will be repaid by billions and billions of pounds in the years to come, if that is able to be taken on.
Now, it does mean that both Governments have to work together to achieve that. That is a very important consideration, because the Welsh Government doesn't have the firepower; under the Barnett formula it doesn't get the sort of money that the industry, being such a dominant industry in Wales, needs. And so, what we need is recognition of the ability to trade where we can, and as much trade as possible, but also the support measures with this really tough time over the festive season and the new year, which are always difficult.
Thank you, David. Joyce, do you want to continue that line of questioning, or are you happy for Suzy and Helen Mary to come in on this?
I think there's one part additional to the question that I haven't asked yet, and that is whether you're satisfied that the Welsh Government moving forward is actually considering your industries in their plans. Of course, there was a paper announced yesterday, and you might not have seen that as yet, so I'm sure you'll be asked for your thoughts on the reconstruction plan that was announced yesterday. But are you content that your industries fit into the Welsh Government plans of moving forward? And again I ask if you know of any innovation nationally or internationally that might help.
Thanks, Joyce. I think there has been a tendency to—in terms of how our industry perceives the response from the Government throughout this whole pandemic—it's been that our industry is perhaps frivolous, unnecessary, and there's been a tendency to be quite flippant towards our sector, despite the significant amount we contribute to society. And it was evident, through the media response during the pandemic, how highly people viewed health and beauty as important to their mental well-being. That's not even talking about the assistance we give in terms of helping people through chemotherapy, conditions such as polycystic ovaries, alopecia et cetera. Our concern has always been that we are perceived as frivolous and unnecessary, and we're trying to change that perception.
In terms of what the Welsh Government could be doing in terms of other initiatives, the Welsh Government already has a really good scheme, the ReAct II retraining programme, and we would love if that could be extended to our sector. That was a great initiative that allowed people to reskill and rediversify into other sectors in areas where they was perhaps having problems within their own, and that would be something we would be really welcoming of in terms of something coming in to our sector.
We discussed limitations with the job support scheme. The Germans have a similar scheme—excuse my pronunciation—called the Kurzarbeit scheme, which has many similarities to the job support scheme. But in times of economic downturn, which is ultimately what we're dealing with right now, they expect employers to pay precisely zero towards the cost of the additional time that employees aren't working, and we feel that that provision should be put in place for the job support scheme here. Jersey introduced a wider high-street voucher as opposed to the Eat Out to Help Out, and that was really well received. That could be spent in a variety of ways by residents in Jersey as long as it wasn't spent on gambling and saved et cetera, and that really helped invigorate their local high streets and businesses within sectors such as mine. So, that would be another one that we really ask could be considered.
And then, more generally, it's around building that client confidence back up, whether that's following similar measures to Scotland in terms of really pushing the compliance side, giving more specific funding to employ more environmental health officers to be going and checking that premises are operating properly. And we do our own work in regards to that; we have our own #DoItRight campaign, which we push that message at every opportunity. But it's that balance between encouraging people to start going back and using facilities like ours, but also giving them the confidence that when they do, environmental health officers et cetera have given them that blue tick that they are COVID secure. So, that would be something we would really like to see as well.
Thank you, Victoria. If you're happy, Joyce, I'll bring others in. Suzy, do you want to come in with your question now? You're on mute, Suzy.
Thank you very much, Chair. I just wanted to go back to something that David Chapman was just starting to talk about at the end of his last response—and it is relevant to Joyce's question about Welsh Government planning—whether any of you would be pleased to hear from Government about what they can do for you for this Christmas period. Obviously, you're all planning towards what your Christmas offer is going to be now, and while I appreciate that the disease is unpredictable in one sense, would it really help for a statement of intent from Welsh Government about what you'll be able to do over the Christmas period?
Who would like to come in on that? It was partly directed at you, David, did you want to come in particularly on that?
Well, I'm a bit slow to come back on that, because I think this has been such a deflating few weeks. Andrew and Myself have been discussing with the Minister's taskforce group the opportunities that we would have had to build on 'eat out to help out', and to look at how we could put more confidence behind the industry with incentivisation for the period from November until certainly January, and maybe longer. That was moving really well and there was a very big upbeat feel about that. I think the series of lockdowns and the re-emergence of the disease has caused a real 'going back into the shell' feeling inside the industry. While that changes day by day, the planning at the moment really has reverted to survival; this is just about making sure that the businesses are still there day by day.
But, looking ahead to the Christmas period, it's an essential part for us and it's a very high percentage of the annual revenue per month compared to other months. We have to look at innovative ways to be able to rebuild the market that was being built in August again, and we need Government help to do that, because the efforts of the 'eat out to help out' scheme were absolutely tremendous in terms of making people aware that we'd observed protocols and guidelines to such a high level that visiting a hospitality premises was a very safe experience. And it's been recognised, I think, by Welsh Ministers that our businesses adopted that very well. So, we will need a lot of help, but it's a very, very tipping-point moment for the industry.
Sara Jones, did you want to come in on this point?
Thanks, Chair. Clearly, this is a make-or-break quarter for us in terms of the run-up to Christmas and the importance of Christmas and festive revenue for retailers. What we're going to be looking to promote over the next couple of months is a 'shop early for Christmas' campaign, partly to try and encourage people to spread out the spending so that it's not all impacting potentially at the worst time of year for them, but more so as well in terms of just purely the logistics of people and the safety measures that are going to need to be in place. People all rushing out to shop in the last two weeks before Christmas, if they're able to, is just not going to work given the social distancing measures that we have in place. So, from both the safety perspective and a spending perspective, we're keen that people look to shop early this year and encourage people to do so. So, anything around that in terms of a partnership with Welsh Government around a comms campaign would be great. Echoing the points that both David and Victoria have said about any initiatives to help consumer spending, obviously, that's always going to help in terms of revitalising the industry. And just going back to the earlier point in terms of working with Welsh Government, we've worked very closely throughout this whole period. The guidance that came out was developed in partnership with us and with USDAW, and I think that was a really fruitful approach, and I think that we need to continue that partnership approach going forward into any further lockdowns or any other regulations. So, I think we just want to maintain that approach with the key decision makers.
Okay. I think Andrew has indicated that he wants to come in. I was just quite keen on picking up Suzy's specific question about what guidance, perhaps, or heads-up you want from Government ahead of the Christmas period. I thought that was quite a relevant question. So, hopefully, Andrew, you'll address that in your remarks.
I haven't seen the statement last night, but, just on the face of it, I think we need some optimism. I think, as all the speakers have said, the situation is very bleak. So, whether this is workable—and I think there is a huge amount of doubt surrounding it—I think any positivity and positive messages that come out that we can look to more sunnier times is to be welcomed. I think there is something in the messaging generally that we need to try and find the positives in what is a very bleak situation. So, yes, Suzy, we would welcome that thinking about Christmas and that we have hope. I don't want to get too evangelical about things here, but we need to be thinking forward and optimistically. So, 'yes' is the answer to your question.
Do any other members of the panel want to come in on those recent questions before I bring Helen Mary in?
Can I just come back, Russell, on Joyce's question? Tourism is really important. Everyone's going to say it's really important, but it really is at the heart of all communities. It's a key part of the foundational economy here in Wales. We always talk about things in economic cost, and quite rightly so, but if tourism businesses go down in destinations there is a social and cultural cost as well, and I think that should be recognised. That's one comment I would like to make.
With regard to best practice, we really need to consider the destinations that we have here in Wales, and support for destinations is critically important. In England, they had a destination management organisation financial assistance fund where £97,600 was made available to destination management organisations. I think, at this time with tensions rising, with heightened fear, I think, which has come about through the suddenness of these recent announcements about restrictions, we need to support our destinations as much as we can. So, that's good practice.
But it is, as David said, all about survival, and I think all money and resources need to be directed. As we look around the piece, internationally, particularly through Europe, most of the money has gone into substantial furlough schemes. That was the real game changer. I know it's difficult, I know it's expensive, but if we want to keep our industry intact, we really have to try and find a way to try and achieve that.
Thank you, Andrew. Helen Mary Jones.
Thank you, Chair. This might be a bit of a difficult question, because you've all been talking about being somewhat in survival mode, now, but if I can ask you, if you can, to look a little bit further ahead, perhaps beyond next March, are there longer-term policy changes and systems of financial support that you feel that the Welsh Government needs to put in place to respond? So, beyond just trying to keep you going on a day-to-day basis. I think somebody has already mentioned that the non-domestic rates regime isn't—you know, it's a pretty old-fashioned kind of a business tax, so there may be some areas there. But are there any other longer-term policy changes or approaches to financial support that would help you not only survive this crisis, but move on and develop as you'd like to as businesses? I don't know who wants to start with that.
I'll add in, because I think—. I've been very sort of realistic, I think, about the position that we're in at the moment, but I have mentioned in previous committees, looking beyond March and onwards, I think there is a fantastic opportunity for Wales, particularly post Brexit, to be able to make much more of the indigenous resource that it has—wonderful locations, fantastic landscapes and two brilliant industries that work side by side, and those industries are the tourism and hospitality industry and the food and drink industry.
We can genuinely make a difference, when people cross the border, to be able to highlight the specialist and high-premium foods that we have and the very good offer that we have within the hospitality industry in particular, to be able to marry those together and to make it a genuinely 12-months-of-the-year experience, and a special, unique experience, where you can actually see these wonderful landscapes and you can enjoy the food and drink that comes from it in great quality premises. And that would be of massive benefit to the circular economy in every community, which we are real big advocates of supporting. And if—
Sorry, David, if I can just cut across you there—that all makes a lot of sense to me. Have you got any specific ideas about what you need the Welsh Government to do to help us to build that kind of 12-months-a-year, high-quality offer?
It's a personal view. I feel that there's an opportunity to elevate both of those industries in terms of importance. I think, over the years, there have been certain industries that Wales has spotted and gone with at different times, but it has never really appreciated the industries that are on its own doorstep. And with the potential that we have with iconic brands like Welsh lamb and Welsh beef, which are worldwide brands and are celebrated in such a way—I think that the Welsh lamb brand, for instance, is the equivalent of the Scotch whisky brand, and we could actually make far more of that as an integral concept within the offer that Wales has. And in doing so, it supports key areas that I know you're interested in, in particular, with things like defending and advancing the culture, giving support to the language, giving support to communities that do that.
I only read a piece today that said how important it was for Welsh farming to be supported because something like 45 per cent of people involved in Welsh farming are Welsh speakers. And we need this difference. You can go to a hotel room anywhere in the world and you're inside four walls. We have to sell the concept of where you are, what you can do there and the enjoyment actually in the immersion of yourself in the local culture and the local experience. I think we could make much more of that. And the foundation sector is a fantastic opportunity, but let's push it right to the top of the agenda and make it a vibrant part of the offer that Wales has.
Thank you. Anybody else on what—? Victoria.
Thanks, Helen. I think, from our point of view, we think we have to be realistic that, as much as we are looking longer term, living with COVID is going to be part of the way our businesses have to operate for some time, and, in that respect, we really need to find a way that we can find workable guidance, or consistently see amendments to the guidance, as and when we can find ways to live with the virus in a more sustainable way. With the current restrictions in the guidance, which we helped with the development of, any treatments around the face have been strongly advised against. And, as I'm sure you can imagine, in the beauty industry, that is probably close to 50 to 70 per cent of their treatments that they offer—eyelashes, eyebrows, anything around the mouth area. Make-up artists are not allowed to operate currently, as far as the recommendations from Government go. So, we need to find a way that these people can start reoffering these services in a COVID-secure way and start being able to generate income again.
More widely, support for local high streets, understanding that, as I said, with a large majority of our businesses being small businesses, a lot of the time they end up being community hubs. So, they are inputting into their local areas, they're propping up other people in the high street, offering initiatives across different stores, for example, afternoon tea services previously, where you could go and be having your hair done and the neighbouring cafe would bring in prosecco and an afternoon tea for you—silly things like that, where people were helping each other out. Those kinds of initiatives we should really be celebrating, that people were trying to diversify and support each other in these high streets through these more difficult times that high streets were having pre-COVID.
I mentioned, touched on before, greater apprenticeship incentives, so that, as and when businesses do start to pick up again, we can be bringing those apprentices back into the industry and getting apprenticeships moving in Wales and also furthering the future of our sector. And, then, the wider business rates review—so, the extension of the rate relief that will run until April, and then looking at something further afield for that.
Can I put something slightly controversial to you, Victoria? Do you think that there's a bit of sexism going on in the way that the Welsh Government regards or doesn't regard your business, and do you think we should be encouraging them to take what is, on the whole, women's work and women-owned businesses, as well, of course, a little bit more seriously?
Well, that's music to my ears, Helen. Absolutely. [Laughter.]
I didn't think you were going to say 'no'.
I'm not going to disagree with you, and there have been concerns about the opening of what are considered to be largely male-related industries, or the allowing of more male treatments. For example, shaving is permitted but treatments that might be considered more feminine are not permitted. Yes, there's that argument very widely, and 95 per cent of our industry is female. As I said, we're predominantly an industry that supports working women with children, and so the restrictions that we have on the sector are directly impacting women and families. So, yes, absolutely, and the more that we can be doing to recognise that fact and be supporting entrepreneurial women who are trying to support themselves and those around them is all the better, in my opinion.
Thank you. Andrew or Sara, in terms of longer term support and what you need Welsh Government to do—one of you want to come in? Sara.
Thank you. I think, as I mentioned before, non-domestic rates, a radical review—reform, rather—of that system. And, in the short term, post April, at the very least a phased approach in terms of relief for the sector. On skills and training, that's absolutely key. And, again, picking up on Victoria's points around flexibility on apprenticeships and skills funding from Welsh Government through the consequential that's received from the apprenticeship levy—so, that's a key one for us. And also on skills, around careers—I know this is a difficult one at the moment, given the undoubted job losses that are coming for the sector—but, in terms of being able to place more value on retail as a career, we've always sung the praises of being a very meritocratic sector to work in, and I think there needs to be more value placed on the opportunity for retail to be a fulfilling job opportunity.
And then I suppose the third key thing for us is around high streets and town centres. Again, as Victoria said, we're part of the ministerial town-centre action group, and we'd be keen to see some initiatives, particularly around flexibilities on planning policy and also around local leadership.
Just a final thing: I think we also need to recognise, in terms of long-term policy and strategy, protection for shopworkers. What we've seen throughout this pandemic, sadly, has been a continued spike in terms of assault and abuse of shopworkers, and what we'd like to see is a stronger approach to dealing with those incidents, which, sadly, have been increasing over recent months.
Could you say a little bit more, Sara, about what you think that approach ought to be? I think we'd all be a bit concerned if you feel that's not being taken seriously, but I think—you know, we've all seen it in our own shopping experiences, that you see the odd person who is being pretty unpleasant. Can you say a bit more about who you think needs to do what around that support for shop staff?
Yes, and it's an issue we've raised recently with Lesley Griffiths as Minister, and she's written to police constables and to the four police forces just to reiterate the importance of responding to incidents when they happen in the retail stores. I think the problem is the impact of—. We welcome the face coverings regulations, but the fact that now we're being asked to potentially enforce, which really isn't the role of the retail worker, and the impact that that's having—. It's all coming to a bit of a head at the moment, and it's just a greater relationship between us, the police—I appreciate it's a non-devolved area, but, clearly, there are some strong partnerships that can happen here as well.
Thank you, that's helpful. I know we're short of time, Russ. Andrew, do you want to add anything quickly on long-term support?
Just very, very quickly, I think the key words there are diversification, funding for that, entrepreneurship—I note across the UK a 47 per cent increase in start-ups, compared to this time last year. So, that's the way forward, so money for that.
But, looking forward, it's going to be a very competitive market, but we've seen first-time visitors coming to Wales. They love Wales; they've discovered this wonderful place where we're so privileged to live. I think we need to put more funding into Visit Wales to help with the marketing efforts of that. We need to remain competitive, we don't want tourism tax, so we don't think that's a good move. We need to be as competitive as possible, and, of course, as WTA has said before, we're calling for statutory registration now, so that—. Particularly at this time when we've come together during this pandemic, to have all businesses registered would make communication so much better. We can get the message out better; we can make sure that quality assurance standards are what they should be. So, that would be an ask as well. Thank you.
Thank you, really helpful.
Thank you, that was a really important open question for us as a committee. Can I—? Hefin David—you might hear Hefin's voice, but you won't see him, because he's having connectivity issues, but Hefin David, do you want to come in at this point?
Yes. I'm struggling with the reality of working from home, which, I'll be frank with you, I hate. [Laughter.] Which is why it disturbs me, then, when I hear the Welsh Government talking long-term ambitions for people working remotely, and, particularly, I'm concerned about people working from home, because my feeling is that the people in my community here in Caerphilly want to be free; they don't want to be confined to their homes. That said, I think working from community hubs might be a better way of framing this, but, of course, that policy would have implications for your sectors. So, can I ask you how do you feel the Welsh Government's long-term ambition to have more people working remotely will impact your sectors? Please don't take my prejudice against it as any reason to build an argument either way.
That was a well-put question. Who wants to come in on this point, from home? Victoria.
I can go first—yes, that's fine. Thank you for your very funny point there. My view and from our sector is that the removal of businesses that particularly populate city centres, for example, would decimate our industry in those areas, and we've already had reports from salons of absolutely catastrophic business numbers in those areas that used to be very busy office-populated spaces, where they're just not getting the lunchtime and after-work footfall that they were previously getting. So, that will ultimately result in those businesses closing up, and, obviously, that will be very difficult.
It will also see an increase, probably, in mobile and self-employed people working more remotely. That could be the way that our sector could adapt to that, but, again, that's about making sure that's all being done in a legitimate way, with people paying the appropriate tax and going through proper provisions, ensuring that they're COVID-secure and being able to monitor those people and make sure that they're doing their business in the best way that they possibly can be.
So, we do have concerns about the working from home. I do think it is the future, that there is an element where people may do some days working from home and some days not, and that is something that we will have to adapt to as an industry, but we do have real concerns there about what is essentially going to be in its place and how Governments are going to support the businesses that are there now to either diversify, change, move or whatever. What are they going to do to be supporting those people through that transition?
Sara, do you want to come in at this point? I can see you're nodding. I'll come to you, Andrew, after.
Yes, as it currently stands, obviously footfall is hugely down, particularly in city centres and large town centres, and, obviously, the absence of office workers is a huge contributor towards that. So, any ambition to move towards cutting the number of people long term working in town and city centres will clearly have an impact on those businesses that operate from there. I think it's just about striking a balance and it's working out how we can repurpose those spaces to encourage people back into town and city centres and for footfall to be strong. It's also looking at how we address those people that do wish to return to the office—how do we help and support them with the costs of doing so? Whether it be costs of travel, costs of parking, for example—those sorts of things all need to be addressed to ensure that they feel that they can, both from a budgetary perspective but also a safety perspective, return to an office space safely, and within a financial perspective as well for themselves. So, yes, it's going to have an impact and I think we just need to work together with those that are involved in town-centre planning to see how we can try and encourage people back, if they're not all going to be coming back to office space.
Yes, just very quickly—immense sympathy with where the question came from. There's a sense of frustration here as well. But looking at the question, for customer-facing businesses, which we are, working from home doesn't apply to so many businesses. But I think the interesting thing to say is that, throughout this pandemic, we've had unintended consequences or benefits, and I think one of the unintended outcomes from working at home is that people have got more flexibility. In other words, they've got more leisure. They're not spending time commuting, so they, arguably, have more time to use those tourism facilities, which could have an economic impact to the good for our industry.
Thank you very much for that.
Thanks very much. I haven't got any follow-up questions. I was deliberately cynical at the beginning to try and be a bit of a polemic there, really. But if we are talking about community hubs rather than actually working from home, then that would benefit, wouldn't it, places like Captiva Spa, for example, Victoria, in Caerphilly? It would benefit from people using local facilities, but there is clearly, from the answers, for example, Sara gave, also a balance to be struck between city centre activities as well. So, we could see that drag out, which we want to see, to Valleys communities, which would benefit. So, it's not wholly a negative picture.
Thank you. David, do you want to come in?
Very quickly, the idea of working from home will benefit certain industries because it can help people juggle domestic commitments much better, and disabled people will probably find it much more of an equal measure to be able to do so; it will help the culture, it will help the language in keeping people in communities. What I'm concerned about is the imposition of working from home. In our industry, we're a people business. We want to see people. We need the footfall, the same as Sara said. We are social animals. I think there's an inherent danger in this, and the enforcement of working from home, whether it be as a cost-cutting measure or the enforced attempt to find a new way of earning a living following redundancy is something that we should all worry about.
And that just brings me back to my very last 10 seconds, which is to say: let's avoid those redundancies, and to do so, we need Government incentivisation, a bridging fund, we need your help to work with a similar thing to the furlough scheme, a VAT extension that goes way beyond March, we need business rates to be totally reformed, we need a business rates holiday for 12 months, and a package of genuine support right across the industry, and stop people being forced into doing work from home that they're not suited to doing, at wages that are below what they should be earning. Let's try to keep as many people, our great workers in Wales, in jobs so that we can go back in March and move on as an industry together.
Thank you, David. Do you want to come back on anything, Hefin? I can't see you, so I'm not quite sure.
No, that's fine, I think.
Okay. Well, we're drawing to the end of the session. If I can just ask the final question, and please don't feel obliged to say anything on this question at all, but I'm just conscious you're the experts in your own sectors. If there's anything you think that we should be asking that we haven't asked, here's your chance to tell us what you think is important to us in terms of us making recommendations to the Government. So, please don't repeat anything that you've already said. I'm specifically asking for any area that, perhaps, you want to cover or you don't think we've covered at all. Would anyone like to come in on any point at all?
I'll add to what I've just said. The financial side has been gone through, but I think we need help with perceptions as well. I believe the latest figures were that COVID cases related to hospitality and tourism businesses are something like 2 to 3 per cent. We need people to feel confident to be able to use our businesses, and we need the help of Government to do that. And I think one of the first things that could be done is a review of the 10 o'clock provision that's across all licensed premises at the moment. We feel it's an arbitrary deadline, but also what we're getting reports of, and it's not only anecdotal evidence but also from our discussions with Government, is that people are doing gatherings that are not under the licensing guidance and not under our professionalism, if you like, in looking after people when they're enjoying hospitality. It would make much more sense to give an extended time when they're in safe environments that are being properly looked after by professionals, rather than leaving them to their own devices to try to find other places.
Thank you, David. I'll come to Victoria now, then I'll just come to Andrew and Sara for any final comments as well. Victoria.
You said about not repeating anything, so I'll be very careful on that. Really, the last point I wanted to make was, if the Government are saying that businesses are safe to be open, so they're not a part of the local lockdown and they are open as they currently stand, all of our sectors have worked tirelessly throughout the lockdown to pull together really detailed guidance to show how we can operate in a COVID-secure way. So, we've fulfilled our end of the bargain by saying, 'While we're open, this is how we can ensure your absolute safety.' So, if the Government are allowing those businesses to be open and following that guidance, then the Government needs to be encouraging the public, as long as they're following their end of the bargain in terms of face coverings et cetera, to be using those facilities and supporting the local Welsh economy. And that's something I really want to stress, that I feel that the Welsh Government has a responsibility, where they're not closing businesses, to say, 'Please use those that are open in a COVID-secure and sensible way.'
How does Government do that, Victoria?
I think there's a messaging campaign there that has to be about supporting your local businesses, because of the very message that we don't want people to be going too far afield. They can still be supporting those businesses down their high street when they're going out and doing their daily shopping—they can be going to get their hair cut, they can be going to their local butchers, they can be going and having a meal in their local restaurant, because all of those businesses have worked very hard and spent significant amounts of money to be COVID-secure for you, and I think we should be encouraging the economies that can remain open to be used.
So, your key message, in what you're outlining now, is that the Government should have a communication strategy to support people going out to use businesses across Wales.
Yes. If funding can't be made available via the high-street vouchers that I've already mentioned, then they could be working with all of our sectors around communications campaigns to encourage people to go out safely and use the brilliant facilities they have that are still open.
Okay, thank you. Andrew, any comments from you at all?
Just very quickly, picking up on the messaging issue that Victoria mentioned, there's been a lot of consternation from businesses, particularly in the north of the country, about the restrictions and the shutdowns that have been implemented. I fully support the Welsh Government, it's not a criticism, this is a killer virus and we have to be so, so careful, but I think more information about the rationale behind the lockdowns would be helpful, and I think it would take some of the heat out of the situation. Some businesses feel a little aggrieved, and I think we all know that. So, that would be a plea.
Finally, to say that tourism is a force for good. We've proved that. We've had loads of people coming to destination areas, there have been those spikes of infection, and it's so good for health and well-being, which is a key plank in the Welsh Government's agenda. So, I just really want to say we need to do all we can to look after our sector.
Okay. I was going to say a final word to Sara, but I was going to bring Suzy in for one last question as well. But, Sara, have you got any final comments?
Yes, and I won't reiterate what Andrew, Victoria and David have just said—totally agree with everything. Just one final one from me, not so much on the strategic or recovery side, but more around, as we potentially go into further lockdowns or new regulations coming in, a plea to Welsh Government to give us as early sight as possible, but also to have an open line of communication when we've got queries on the impacts and logistical issues around this. It's been hugely difficult, especially when we find out through the media, for example, of things coming into place. We understand we can't be consulted because it's a very reactive situation at the moment, but we need to have that line of communication to be able to relay that to all our businesses in Wales, to make sure they comply when those regulations come into force.
I can see Victoria nodding as well, Sara, but do you not have—? You represent the large business sectors in retail. Do you not have a direct contact in Welsh Government where you can raise queries when new restrictions are released to ask questions and clarify issues? Do you not have that contact?
We do. Unfortunately, it was very good at the beginning of the summer. There was a bit of a void over the summer months and, yes, we just think that that could potentially be bolstered. There's one person that we do go to; they've been extremely helpful—I certainly don't want to criticise them at all—but I just think, with the numbers of queries we're getting and having to field, it's been a bit difficult getting responses timely, to be able to go back to the businesses within the time frame, then, to have to put those regulations in place, when they came into force.
Okay, that's interesting. Suzy Davies, sorry, with the last question.
Thank you, Chair. Just very quickly—yeses and noes will do on this one—have any of you sought or had advice from the regional skills partnerships during this period?
I've been invited to a meeting. So, the tourism skills partnership in my neck of the woods is alive and well.
If I can come in as well, I sit on the capital region, partly with my work and partly with the regional support we've got now a sub-sector operating on that, and we get regular contact. And I also make sure, through hospitality skills partnership that we've just created, that there's a unifying element to that.
There we are. And Sara Jones.
Thanks to David's introduction, we've had contact with the skills partnership for the capital region, and we'd like to have a greater role within the skills partnerships if possible—a voice, really, on those skills partnerships.
Lovely. Thank you.
I'm not aware that we have, if I'm completely honest. It could very well come within one of my colleagues' remits, but it's not something that I'm aware that we're part of, no.
Okay, thank you. Thank you, everyone.
And ever so quickly, I was interested in the point that Sara raised in terms of communications with Welsh Government when new restrictions come out. Just ever so briefly because we're over time, do you have contacts yourselves on behalf of your sectors and industry with Welsh Government in terms of being able to get fast responses when regulations change, if you need any clarifications at all? Do you have that contact within Welsh Government? Are you content with that or do you think there's any improvement that needs to happen?
I'm sure I speak for David, we're very fortunate, yes.
You are, good, okay. And Victoria.
We have a contact. As Sara said, there's nothing to take away from this person—they've done an absolutely fantastic job—but I know for a fact that they are dealing with our sector on top of other sectors and are massively overworked. They're one single person dealing with large parts of the problems there.
Of course, we all understand the civil service are working extremely hard during this pandemic, so we appreciate that, but, yes, it's good to have that feedback.
Okay, thanks all. We really appreciate your time this morning and your expert advice to us—ever so grateful. We'll send you a transcript of proceedings. If you think you want to add anything to what you've said, any other evidence to help our piece of work, then please feed it in. Thank you again for your time with us this morning. Diolch yn fawr. And with that, we'll take a short five-minute technical break. So, we're back in five minutes.
Gohiriwyd y cyfarfod rhwng 11:00 ac 11:08.
The meeting adjourned between 11:00 and 11:08.
Welcome back to committee this morning. This is our eighth session in regards to our committee work on our inquiry into COVID-19 recovery for the economy, infrastructure and skills sectors in Wales. This is our second session, and we have a panel this morning of two, in regards to manufacturing industries. I'd be very grateful if the witnesses would introduce themselves for the public record.
Good morning—bore da, bobl. John Whalley, Aerospace Wales Forum, the industry association for aerospace, aviation, defence and space in Wales.
Welcome, John. And Richard.
Good morning. Richard Warren, head of policy at UK Steel. UK Steel is the trade association for the steel industry in the UK. That includes the steel producers, and then a number of rerollers, and that's where the sector ends from our perspective. It doesn't include steel fabricators and further steps in the supply chain—it's very much the producers of steel.
Thank you, both, for joining us. There are a couple of other members of the committee as well; I know one has had some connectivity issues, so is in the meeting, and will ask questions, but you won't see him on the screen—so, just to be aware. Perhaps if I can come to you first, John Whalley. Perhaps you could just give us some very opening general comments in regards to the specific challenges that face your sector.
First of all, aerospace is a key sector for Wales. We've got 5 per cent of the overall UK population in Wales, approximately, but in terms of aerospace population of the workforce, it's about 10 per cent, and six to eight of the world's top 10 aerospace companies have a presence in Wales. So, it's a really important sector. On civil aerospace, of course, we've been badly hit by the collapse in air transport, which is well known to everyone. But it takes a long time to produce an aircraft, so although deliveries have dropped to next to nothing, Airbus have cut production by about 40 per cent because they have to smooth out the production; we typically had a nine-year backlog prior to COVID—it's probably somewhere between seven and eight now. So you still have to wait quite a long time to get an aeroplane. And against that, we've seen cuts in civil aerospace—depending upon the company, between 20 per cent and 50 per cent in workforce. Airbus, for example, at Broughton, if you include contractors, have reduced from 6,000 down to about 4,000—so about a third cut. But still a lot of uncertainty facing the industry at the moment. And of course, on top of that, we've also got the additional uncertainty around the completion of the transition period from leaving the European Union, which will also potentially add cost and delays.
Thank you, John. Members will dive into some of what you said, I know. Richard Warren.
Thank you. Some very similar messages to John, actually. From a Welsh perspective, steel is obviously a hugely important industry in Wales. There are around 30,000 people employed in the steel sector across the UK, but you're looking at 8,000 or 9,000 of them in Wales. So, touching on John's point, 5 per cent of the population, but almost a third of the steel employees are situated in Wales. When it comes to production of steel, the numbers are even greater. So, we produce around 7 million to 8 million tonnes of steel in the UK each year—over half of that is in Wales. And that's obviously concentrated at Port Talbot, which is 3 million to 4 million tonnes, and then at Celsa Steel in Cardiff. So it's significantly over-represented in terms of the Welsh economy.
The challenges we're facing are very similar to a lot of other sectors. What we saw, particularly in quarter 2 of this year, when the pandemic was obviously at its peak in terms of impact on the economy, is a 30 per cent reduction in supply to the UK market. So that was both imports and domestic supply. This is the overall UK market, rather than the Welsh market. But the actual steel producers were seeing a 30 per cent drop in the orders that were being placed and they were providing to consumers. And the consuming sectors, as you will well know, the key sectors for us, really, are construction, which accounts for about 50 per cent of steel consumption in the UK, and automotive, which is a big chunk. Aerospace, in terms of absolute numbers, is of lesser importance, but it's a very high-value market for steel, and on some companies, that really is having a big impact.
The challenges are ongoing, the same with any other sector in the economy, or any other manufacturing sector, certainly, in the economy. Whilst demand is starting to pick up, and we are seeing some green shoots of recovery, we are expecting demand levels to remain well below 2019 levels for the remainder of this year, and, realistically, through 2021 as well. As John said, we're not just dealing with the impacts of COVID, we are coming towards the end of the transition period for Brexit, and that is undoubtedly going to start to have some impacts. I can touch on some of the impacts in Europe later on, but we are already seeing orders drop to the EU. Regardless of COVID, Brexit really is already starting to have an impact on us.
Okay. Thank you, both. I'll come to the first set of questions, from Joyce Watson.
You've started talking about what will be the biggest structural change, because that's what I'm looking at—the ones that you've endured now, in the first instance, which you've outlined, but also, going forward, beyond now, and what you think the consequences of that will be for Wales, or for you, operating in Wales. And I don't know if any of you are able to make any comments about the manufacturing industry more widely.
A chance to perhaps expand a bit more. John.
To date, we've suffered 4,000 announced redundancies. Obviously, companies are going through the consultation process, but 4,000 redundancies have been announced out of probably a total of about 20,000 people. So, some subsectors have held up. For example, those companies in the defence subsector, for the moment, are not seeing the same cuts as commercial aerospace. I think, longer term, the expectation is that air travel will recover. People will want to travel again, both for pleasure and for business, notwithstanding the Zoom and Teams revolution. But it's going to take a long time. I think three or four years is the kind of figure just to get back to 2019, not to get back to where we were originally expecting to be.
Generally speaking, the industry in Wales is holding up well. Airbus, I think, will survive; it's one of the two big companies in the world. But some of the smaller companies may not survive. Gardner Aerospace, for example, at Hawarden, adjacent to the Broughton facility, announced that it's closing its facility there, which employs, I think, about 70 people, before Christmas. I think that's the first casualty. British Airways—because we do a lot of maintenance repair and overhaul in Wales, particularly in the south-east—British Airways has three divisions. We know that airline, which is very much at the sort of premium end of the airline market, is suffering very significantly because of business travel cuts. They're talking about cutting 40 per cent of their 900 workforce and closing two out of three south Wales sites—so consolidating on Cardiff Airport, the main maintenance centre there, and closing their interiors and avionics centres at Blackwood and Llantrisant. And I have great fears about the potential future of British Airways, and whether they'll have to cut even further. So, particularly at that end of the market, there are some difficulties.
However, I think the industry will survive, and I think we're facing different challenges now. I think we're talking about zero carbon and greening up aviation. And, if anything, I think this crisis has accelerated the progress towards developing electricity-powered, hydrogen-powered aircraft. I think there's a huge opportunity in Wales here for what I call 'future flight'—new aviation. And some of it could be used to help connectivity within Wales. So, within Wales, we have a fantastic facility on the west coast, at Llanbedr, and Aberporth, where we're able to test unmanned aerial vehicles—drones—and small disruptive technology aircraft, both manned and unmanned. I think we have the potential to use some of this technology internally within Wales for the benefit, in particular, of some of the rural communities.
So, I think if we have a sense of vision, not only can we recover with our traditional industry; I think that we have the potential to build something very new and very exciting.
Thank you, John. It was good to hear some optimism there among some of the concerns. Richard Warren.
As I touched on in my opening remarks, by far the biggest challenge to the steel sector is the ongoing issue of low demand. When we look at the figures for the first part of this year, demand has dropped in the UK market by 26 per cent. In quarter 2, it had dropped by over 30 per cent, and, actually, when we were looking at the peak in April and May, we were actually seeing drops of over 40 per cent. We are starting to see that pick up, but the long-term picture, certainly through the rest of this year to 2021, probably into 2022, is a picture of reduced demand.
Now, that is obviously an issue for any sector producing to, or having established and invested for, a certain size of the market, or a market they were expecting to see. It is particularly an issue for the steel sector, particularly, at large blast furnace sites like Port Talbot, where the economies of scale and the level of capacity utilisation you need to get to to make a profit or even just to draw even are a real issue. You're seeing the long-term demand for your products in the UK plus the impact in Europe, plus Brexit on top of that—if you're seeing overall demand 20 per cent below where it is, it makes it increasingly difficult to be a profitable and sustainable plant. So, that is probably the biggest structural issue you're seeing. And the knock-on impact of that, and of not having the necessary profit margins, is a real issue of liquidity. But also, the longer term concern is a real issue of a lack of funds to be able to invest. And we shouldn't beat around the bush, the UK's steel sector is in need of investment—it is in dire need of additional investment. It has had, obviously, problems and structural difficulties in advance of COVID, but COVID and the long-term impacts of it really make that investment picture extremely tricky indeed, and that really is the biggest structural issue that the sector will be facing.
To perhaps put a more positive spin on things, I think the steel market, or our steel demand in the UK, whilst it is reduced at the minute, the long-term projection for global requirements of steel and UK requirements of steel are still positive. We still, as a society, continue to use more steel year on year, and the UK market is between 10 million and 11 million tonnes. The long-term outlook for that, I don't believe, has fundamentally changed. So, the UK will continue to still need this volume of steel, and the question is: where is it going to be supplied from? And I think the picture, or the increased focus on decarbonisation and a low-carbon economy, is actually a positive for the steel industry in the UK and the steel industry in Wales.
And our message to Government is fundamentally: where do you want to source the steel from? If you want to take a responsible and holistic view of reducing emissions, fundamentally the right answer is to take responsibility for our emissions related to our consumption, and not just our emissions related to production. And those emissions related to our consumption of steel are still in the region of 30 million tonnes a year of carbon dioxide. Even if we don't produce it in the UK, those emissions related to consumption would continue to exist. So, our fundamental message to Government is: the responsible way is to tackle those emissions related to both production and consumption in the UK, and the way to do that is to invest and to come up with a strategy for how you decarbonise the steel industry in the UK.
We are starting to move in the right direction. We have polices coming from the UK Government, and the Welsh Government as well, that are starting to decarbonise the steel sector, but we are, to be blunt, tinkering around the edges at the minute. To fundamentally decarbonise a steel site like Port Talbot will require some serious intervention from Government of the order of magnitude that we've seen in the power sector or that we've seen in the automotive sector. And I think that, if we get that right, that is a real opportunity to create a long-term sustainable steel industry in the UK and in Wales. If we get it wrong, it is a fundamental challenge for the sector that, certainly, we couldn't deal with on our own.
Thank you, Richard, for that comprehensive answer. John, you wanted to come back in.
Yes, Chair. You asked a question about broader manufacturing. So, Aerospace Wales Forum is part of an umbrella organisation, Industry Wales, and we meet regularly to compare notes. There are two other key forums: Technology Connected, which is, really, electronics and software, and, of course, the Welsh Automotive Forum. But we also look at other sectors beyond that. Automotive, of course, has been particularly badly affected. The Ford closure had already been announced and that was completed very recently, but car demand has suffered a very dramatic reduction in numbers.
Other areas, such as food and drink, for example, in terms of the manufacturing elements of that, are holding up remarkably well, as you might expect. And there are some exciting areas in Wales, I think, again, potentially, as future areas for expansion. So, if we talk about the south Wales industrial cluster and the move towards a hydrogen economy in that area, also in north Wales, the whole energy side is very buoyant at the moment, with discussions about nuclear back on the table and also offshore wind, which is also an expanding area. So, there's a lot of doom and gloom, some sectors are having a very bad time, but other sectors have the potential for great expansion, and I think that's where we have to look at our strategy as a nation very carefully over the next few years.
Thank you, John. Vikki Howells. Oh, sorry, Joyce wanted to come back in. Joyce, just put your headset down to your mouth, please.
I forget all these things. [Laughter.] Procurement—I'm going to throw procurement in because of what you've just said and, of course, what you've just said, Richard, as well. Because interestingly, in another committee, we're actually looking at carbon emissions, but we're looking at it from the production side, rather than, as you've just said, the consumption. But procurement has to play a part here, so any conversations that you're having—. Because if we're going to expand, for example, offshore wind, what steel are we using? Where is it coming from? What skills are we using? Where are they coming from? Since it wasn't in the questions, I've decided to put it into the questions, around procurement.
If I could—.
Yes, John. If I could just say, we've got quite a lot to get through actually, so by all means give us a good answer, but just bear in mind we've got quite a bit to get through. John.
Very quickly on a general front. This is recognised. We've got a lot of exciting industries coming in to Wales, but if they're all from overseas suppliers or elsewhere in the UK and we're not getting our share—. So I think we're going to have to work very hard collectively to make sure we get our fair share.
To keep it as brief as possible, this is probably one of the most important issues for the steel industry. Obviously the Government is investing a vast amount of money in infrastructure over the years and the Prime Minister's announcement yesterday, to increase the target for offshore wind, is all hugely positive. But our message is, particularly at the current time when we're trying to recover from COVID, you have to take a more proactive approach to make sure that as much of it as possible is coming from the UK. HS2 is a really good example. If you don't do that, HS2 has realistically no economic benefit to Wales. If you did it right, there are vast amounts of steel that can be produced in Wales that can go into that project, and that's how you spread the economic benefit of these mega projects around. If you don't get it right, if you do 'business as usual'—and I must say 'business as usual' is very much the name of the game at the minute—you lose this opportunity, you lose the opportunity to support jobs and get economic growth from these projects.
Thank you, Richard. Vikki Howells—and don't forget your mouthpiece as well.
Thank you, Chair. My question is around what you think of the support offered by both the Welsh Government and the UK Government to your sectors. And if I could start by asking you, John: has there actually been anything that could support the aviation sector to date? And if you could just outline for us what you think needs to be done at both the Welsh Government and UK Government level.
A really tough question. On the short term, both Governments have helped with things like the furlough scheme, the job retention scheme and so on, and that's, no doubt, helped save a lot of jobs. At national UK level, there is a lobbying exercise going on with UK Government to try and get the kind of support we've seen in France, Germany and the US for aviation and aerospace. This isn't happening currently; we don't know whether it will or not. The Department for Business, Energy and Industrial Strategy in London is very sympathetic, but it seems to be, when you get to No. 10 and No. 11, the answer is 'no'. And I know our Minister for Economy, Transport and North Wales, Ken Skates, is lobbying very hard with his BEIS counterparts. He gets on very well with Nadhim Zahawi, but, again, the answer from the Treasury at the moment is 'no'. So we're still waiting for a decision on that. And although I think our industry could survive without that kind of financial support, if it's going into some of our competitors potentially, and also collaborators if we think about Airbus, so France and Germany, when production decisions get taken in future, it's more likely that future production could go to France or Germany, because they maybe have a more attractive cost base, having had the support from Government. So this is a big discussion item at the moment.
Thank you, John. And the same sort of question to you, Richard, with regard to the steel industry, although my understanding is that there have been more helpful interventions there. I'm sure you'll correct me if I'm wrong.
Thank you, Vikki. It is a mixed picture within the steel industry. Undoubtedly, some of the interventions that have been introduced have been hugely beneficial. All steel companies across the UK, and certainly all in Wales, have made use of the job retention scheme, and that, undoubtedly, has saved jobs and it continues to save jobs. The introduction or the planned introduction of the job support scheme in November, again, is hugely welcome and is hugely beneficial.
It should be noted, and I'm certainly not the first one to point this out, that we had been pushing for a model similar to what has been introduced in Germany: a short-time working scheme. This certainly answers some of our concerns. It's certainly more flexible than the job retention scheme, but it does not go as far, obviously, as the German scheme. When you look at the sums, in terms of if you wanted to put two people on half-time work as opposed to one person on full-time work, you do see a 30 per cent increase in cost to the employer. Now, all employers will look at that, and this is particularly important for the steel industry, and say that will be worth the additional cost for a short period of time to retain the skills. Once those skills have gone and you make people redundant, it is difficult to get those back. So, undoubtedly, steel companies will look at that and say, 'If I can, I will make use of that scheme.' However, it should be pointed out, given demand levels are low, liquidity problems are an issue. Not all companies and not all workers will have the luxury of saying, 'Yes, I have those additional funds to maintain those jobs.' At some point, there may be difficult decisions that have to be made. And this isn't Wales specific; this is any steel company across the UK that will have to say, 'Unfortunately, I cannot afford that additional cost.'
So, the message to Government—and we'll certainly put this into our response to the comprehensive spending review—is that they need to plan to perhaps make adjustments to that scheme. Certainly, at the very least, the scheme's meant to go on until April at the minute, but they may need to look at a longer term scheme. I've touched on this point before, but the long-term picture is one of reduced demand. It is not a short-term picture where things are going to switch back to life in March next year. We are dealing with a structural problem for the long term and the Government needs to have interventions that support us through that, and the German kurzarbeit scheme does that: it provides that support for the long term, certainly for up to two years of support, and that's the kind of scheme that we'd need to look for.
When we come to the loan schemes that have been available, I should say that the coronavirus large business support scheme is being used, I think, by one steel company in the entirety of the UK. It has had problems in terms of how willing banks have been to lend to companies. The 80 per cent guarantee has certainly been an issue, in that nearly all banks have said, 'I don't want to take the risk on the 20 per cent that I would be liable for.' So, despite us pushing—we did really push as a sector very hard to have changes made to that scheme—it has fundamentally not been of great deal of use to the steel sector. Equally, the loans or the bonds that have been available from the Bank of England, again, have not been suitable or usable by the steel sector because of that requirement for a certain level of credit rating.
Therefore, all large steel companies have had to turn to bespoke support, with mixed levels of success. As I think everyone on the committee will know, Celsa Steel in Cardiff has been, as far as I'm aware, the only UK company that has managed to secure bespoke support through the so-called Project Birch from the Treasury. I know other steel companies, and certainly companies in the aerospace sector and the automotive sector, have had discussions. I'm not sure that they've actually come to fruition yet. So, Celsa Steel has certainly been successful in that, and I know other steel companies continue those discussions. Those discussions remain critically important. It's not that demand has picked up and the problem has gone away; they need to come to fruition and they are of fundamental importance to the future of the steel sector in Wales.
I think those are probably the broad points from steel sector, but if there are any follow-up points, please do let me know.
That's very useful. Thank you.
I think, John, you wanted to come back in.
Yes. Thank you, Chair. Just to add one or two things in. There has been some modest support for aviation and aerospace from UK Government. So, they have funded the establishment of a zero-carbon aerospace research team, effectively, at the Aerospace Technology Institute at Cranfield. We also have something called the south Wales industrial cluster, of which Port Talbot—the steel factory there—is a key part. And again, there has been some modest support for the decarbonisation agenda, and, as you probably know, we have some very ambitious plans for production of hydrogen and possibly sustainable aviation fuel at the Port Talbot plant as, effectively, side issues within the main production process. So, there is support for that, but it is at a fairly modest level at the moment.
Thank you. I appreciate that, John. We've got approximately 15 minutes left. We've got three different subject areas to cover. So, Helen Mary's going to come in, then Suzy Davies and then Hefin David. So, it just gives us an outline just to help us understand how much time we've got. We've got about five minutes for each block of questions. Helen Mary Jones.
Thank you. You've both touched on the decarbonisation agenda—very important for both of your sectors. Can you say—is there anything additional you want to add to what you've said already? And perhaps specifically, what more could the Welsh Government do? And I know that the scale of this is so big that UK Government support is needed, but obviously where we can influence, we can influence the Welsh Government, so, what specifically could the Welsh Government do in addition to what they're doing already to support your industries around the decarbonisation agenda?
Okay. I think it really goes back to the point that was made on procurement earlier on. There's a lot of exciting technological developments in support of decarbonisation in my sector in particular, also automotive, around electric cars, hydrogen cells et cetera. What we need to do is to make sure that we get some inward investment, I think, into Wales of relevant companies in those key technologies. So, a big discussion going on with Britishvolt at the moment about a potential site next to St Athan—Bro Tathan. But this has to be a big drive. If we're going to make Wales the centre of this new economy, then we need to make sure we start dragging in those companies now rather than in 10 years' time. So, that, I think, is where Welsh Government, working with people like Aerospace Wales and other organisations, can do a really important job.
Thank you, John. Richard.
I think, as you said, the Welsh Government has limited ability in this area just because the scale of the problem or the scale of the challenge with this is so huge. Fundamentally, what we're looking for is large-scale interventions that we've seen in the power sector or the automotive sector—[Inaudible.]—millions of pounds' worth of investment that is required to decarbonise the steel sector.
Where the Welsh Government can support is to continue things like its—[Inaudible.]—improvement schemes, where it has provided grants and funding support for energy efficiency and even improvements to things like the power station in Port Talbot. Those are obviously hugely helpful, and, actually, this comes perhaps on to my wider point in that examples like that from Wales—it was the first of its kind in the UK—actually strongly influenced and helped our lobbying position to get the introduction of the industrial energy transformation fund, which, fundamentally—. For years, we were saying, 'Look, this scheme exists in Wales: replicate it at a UK level.' So, activities like that that can influence UK Government are hugely important, and the point that John made on procurement is, whilst your procurement decisions and the projects that you have under the Welsh Government's sphere of influence are obviously not as big as the ones that happen in the UK, the approach that you take as the Welsh Government can be just as important and influential.
So, some of the things that we're asking the UK Government to do, which are to set non-legally-binding targets on the UK steel content of projects, making sure that your projects always record and report on the origin of steel, making sure that everything right down to the actual purchase of the steel is advertised or is done in an open and transparent way—those are things that don't really happen at the minute. If the Welsh Government can take a lead in saying, 'This is so important to us, we're going to do that', it will influence the UK Government and it will help us—. It really helps us as an industry to say—. When we get pushback from UK Government that says, 'We can't do that, it's against public procurement guidelines', when we can point to another public organisation like the Welsh Government that has done it and shown it's entirely possible, it really helps us with our discussions with the UK Government.
Very helpful, both of you. Thank you.
Thank you, Helen Mary. Suzy Davies.
Thank you, Chair. I'd just like to go back to some comments that John Whalley made earlier on about how there are opportunities ahead that still present difficulties for the industries that we have at the moment. And I'm curious to know what response you've had from the regional skills partnership, both of you, about that longer term vision, at the same time as trying to help you, or steer you, through these short-term challenges.
I have to say, at the moment, the interaction has been pretty minimal.
Okay. Oh, right—it's as simple as that.
It's as simple as that, and that's not to point the finger at the regional skills partnerships; that's me too. We need to actually—. I think, if we're going to build the future, then skills is going to be a key part of that, and we do need to plan that very carefully.
Do you know whether they've just been speaking to other sectors who seem to be perhaps in more imminent danger—I don't know, like we've just been speaking to tourism and hospitality, for example? Is it perhaps just a case of they're going to where—in your opinion, they're going to where the immediate need is?
So, if I think about the challenge facing north-east Wales, and the Airbus plant in particular, Minister Skates established the rapid employment response group, which included everybody. There are about 40 people around the table, including Aerospace Wales, but also including organisations from north-west England, and we're running a regular monthly supply-chain group, which is cross-border, and that's looking at employment issues, the number of people that will be released from companies and what the opportunities are for those people going ahead, and the colleges are also on that roundtable as well. So, it's a taskforce, if you like, and that's very focused on the very specific short-term issue, I think, coming out of the Airbus situation. But, longer term, I think there's nothing yet that I think is in place that could do the same sort of job.
Okay, that's helpful to know. So, these, in many cases, very highly skilled individuals, it's not quite clear where they might go following any challenges that we can't solve during COVID or after it. Richard, is it a similar picture with you?
I have to provide to you with an even less useful answer, in that we haven't had any engagement with the regional skills partnership. And that isn't remotely a reflection on the partnership; it's that UK Steel is a very small organisation with small resources, and it has to target them where it can. I imagine if you asked the same question of Celsa or Tata they would be able to provide you with a huge amount of information on the engagement that they have had. Unfortunately, I can't do that.
Oh, right. So, it's likely to have been at that much more localised level where we'd be looking for something responsive, I would have thought. Okay. But that's helpful for us to know. Thank you, Chair, and thank you, both of you.
Thank you, and I'll bring in Hefin David, who can't be seen on screen, but I believe is with us. Hefin David.
I think it's to everyone's benefit that I can't be seen on screen.
I'm sure that's not true, I'm sure that's not—. [Laughter.]
Just with regard—. A lot of this has been covered, but, with regard to the Welsh Government's planning for economic recovery, do witnesses feel that their sector is represented there in that planning, first of all?
The answer is 'yes', because Industry Wales, our umbrella group, and Aerospace Wales both have extremely good working relationships with the civil service at working level, so we're aware of what's going on. What's coming out at the moment is a framework; we saw some stuff published in the Western Mail this morning from the Counsel General, but I think there's still a lot of work to be done, and we'll only do that working together, so I'm not sat here waiting for Welsh Government to come up with a master plan. We've all got to work together with the Welsh Government to develop that. There are some promising signs, but still a lot of work to be done in terms of the detail.
And from a steel industry perspective, I would say, as UK Steel, our primary focus has clearly been on the levers that UK Government can pull, particularly in terms of addressing this issue of low demand, getting infrastructure spending going again and the construction industry moving again, things like introducing a new vehicle scrappage scheme for the automotive sector. That's been where our primary focus has been. In terms of what the Welsh Government is doing, exactly the same as the aerospace sector, we have very good connections with Welsh Government. Welsh Government will speak, I imagine, on a daily basis with the likes of Tata and Celsa. I have absolutely no concerns, or no doubt, that the Welsh Government is incorporating the views of the steel sector and its concerns and needs into planning on economic recovery.
My connection's been in and out in the meeting, so I haven't heard everything that's been said, but I'm aware of the Welsh Government's consultation on 'A Manufacturing Future for Wales'. If you've already mentioned this then I apologise, but are you—? Do you see that as a helpful consultation, and do you think it will help you in responding to the challenges of the future?
Yes, it's a very helpful process and consultation. Aerospace Wales ran a consultation workshop with its members—I'm trying to remember when it was; I think it was probably last week, because all the weeks seem to run into each other at the moment, but it was fairly recently. The consultation closes later this month, and all of our member companies are being encouraged to input into that. Certainly, the flavour I'm getting is that it's not the final article. It is very much back to, 'This is our idea, we want you to now, industry, to build on this and develop it into a document that we can share.' So, I think, as long as we stick to those principles, I'm very hopeful for the future that we'll get something that we can all work to.
Okay, thanks Russ.
Thank you, Hefin. Can I ask if there are any Members—?
Did Richard want to come back in then?
Sorry, yes, by all means.
Only very briefly just to say, yes, it's a useful process from our perspective. Officials from the Welsh Government have come along to meet with our committees and to speak with members, and we will, obviously, be responding to that by the end of the month.
Thank you, Richard. Do any other Members have any other final questions at all? No. If I look to our witnesses in that case: is there anything that you think is important for our work that's not been drawn out in our discussion this morning that you think is helpful to contribute?
I think, just summarising, it is a terrible time, there's no doubt about it. I haven't retired yet because I want to continue making a contribution. We face an enormous challenge, but there are some glimmers of hope and optimism, I think, in some of the stuff we've talked about this morning: the new technologies, the new economy that's emerging, future flights, space—which I haven't mentioned, which is another thing the UK Government is encouraging to be spread on a pan-UK basis, rather than being concentrated in the south-east and Harwell and Oxford. The only thing I will say is we've all got to work together, and we've got to have—. This isn't about just how do we get back to normal. We really do have to rebuild something new, and potentially very exciting. And it's about how we work together—[Inaudible.]
Oh, John, your microphone has just gone off. Sorry. Your microphone just went off, John. I think something must have happened to your connection. You might just need to repeat the last 20 seconds.
It's a pity; it's was my great speech, which just said, 'Do we have the ambition, do we have the vision, do we have the tenacity to make this happen?' I think we can do something really exciting if we all work together. Come on Wales.
Yes. Thank you. Thank you, John. Richard.
I would really only echo John's messages. This is a uniquely challenging time for the steel sector. Even before we obviously came into this year, there were a number of huge challenges for the steel sector, not just in Wales, not just in the UK, but actually globally: the longstanding issues of overcapacity in the global steel sector; falling prices were already making more difficult market conditions—add to that Brexit, add to that COVID, it is an extremely challenging time for the sector. And actually the decisions the Government makes in the next six to 12 months will be fundamental to the future of the steel industry in Wales and in the UK.
I think—. I do want to have a positive view on it in that the decarbonisation agenda perhaps provides an answer to a question that has often been posed, but I don't think has maybe been fully answered before, which was—and it's not a question I ask, but definitely it's a question that a lot of politicians, certainly in Westminster, ask—'Why do we still need a steel industry? Isn't that an industry of the past? Why don't we just import all of our steel, and we can get it cheaper from elsewhere?' I think, fundamentally, answering that question, 'Do you want to decarbonise properly, or do you wish to offshore your problems to other countries?'—that is the answer to that question, and, actually, if we get a good vision for how do we solve that, and you start to get the same sort of approach that you've had in other sectors, you do actually have a positive and sustainable future for the steel industry, and one that is actually investing and modernising.
Well, thank you to John Whalley and Richard Warren. I have to say that some of these sessions can be quite depressing, but what you've brought across to us in this sessions, as well as outlining the huge challenges and the real challenges that there are, are glimmers of hope and a positive tone as well. So, I think that's appreciated. But can I thank you both for your very comprehensive answers this morning, which will be significantly helpful to our work? We will send you a record of the transcript, and by all means review it, and if you have anything further to add then we'd welcome that of course from you as well. And if you follow the rest of our debate and work then, by all means, feel free to contribute further as issues develop. So, thank you ever so much for being with us. Thank you for your time. Diolch yn fawr iawn. Thank you.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(ix).
that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(ix).
Cynigiwyd y cynnig.
I move to item 4 and, under Standing Order 17.42, I would propose we exclude the public from the remainder of the meeting, if Members are content. Thank you. We'll do that. That draws our public meeting to an end.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 11:51.
The public part of the meeting ended at 11:51.