Covid-19: Economic Recovery

Baroness Humphreys Excerpts

Tuesday 20th April 2021 Grand Committee

[Baroness Humphreys (LD) [V]]

My Lords, in my contribution to this debate, I want to talk mainly about the situation in Wales and, in the light of today’s ONS figures showing that the number of workers on UK payrolls has dropped by 813,000 since March 2020, like the Minister, I want to look at the challenges ahead.

Over the past 20 years, Wales has, of course, benefited from European funding and has seen improvements in infrastructure and advances in business development, but, as that funding comes to an end, the truth is that we are still playing catch-up. Wales remains the part of the UK with the lowest incomes and some of the worst instances of poverty. Before the Covid pandemic, a report by the Joseph Rowntree Foundation found that 700,000 people—a quarter of the population—were living in poverty. Now we are living with the aftermath of Brexit as well as Covid, both of which have caused further damage to our already fragile economy.

Over the past year, Wales, like the rest of the UK, has seen its economy supported by the introduction of the furlough scheme and by business support grants, among other UK Government measures, ensuring that families received an income and that businesses could survive to open up again as circumstances improve. As we continue our tentative release from our latest four-month lockdown in Wales, and as we approach the Senedd elections on 6 May, we need to recognise the massive challenges that the new Welsh Government will face and the decisions that they will need to make about how they use their powers and their budget to protect jobs and livelihoods and, crucially, to carve out a better future for businesses in Wales.

Our economy suffers from a structural problem that has received little recognition and has hampered plans for growth. We have a huge number of microbusinesses and a small number of branch operations from inward investors, which many jobs rely on. We need to continue to support these, of course, but we also need to promote the growth of stable, medium-sized companies by investing in infrastructure, technology, skills and training and by working with business leaders. My party in Wales wants to see the development of a long-term plan to support businesses and enable small businesses to grow, including establishing an economic recovery council grounded in real experience and the voices of small businesses from across Wales.

One feature of the pandemic has been the success of local essential retail stores in towns and high streets, many of which have operated every single day serving our communities during what has been a difficult time. To ensure that our high streets can thrive and adapt, we want to see the creation of a £500 million fund to breathe life back into our town centres.

The past two weeks have seen the reopening of non-essential stores in Wales, and next week will see the opening of outdoor hospitality. I must admit that, along with so many people, I am longing for that first decaf cappuccino outside the café on the town square. As more businesses reopen after this four-month lockdown, there will be a struggle to continue in business, particularly as any outdoor operation in Wales is invariably affected by the weather. I therefore welcome the announcement in the Chancellor’s spring Budget that the business rates holiday will be extended until the end of June, that the furlough scheme will be extended until the end of September and that restart grants will be available to help the high street reopen. In addition, the Welsh Government have confirmed a business rates holiday for the full 12 months, up to March 2022, for retail, hospitality and leisure businesses. Coming from an area which relies heavily on tourism, and having seen the impact of the pandemic on the mental health of some of our hoteliers, I know that this will bring them a modicum of relief.

The Welsh Liberal Democrats want to go further, however. By their actions, both the Chancellor and the Welsh Government have recognised the burden placed on businesses by the imposition of business rates. It is an inequitable system desperately in need of reform, placing businesses on the high street at a disadvantage to their online competitors. We would freeze business rates for the lifetime of the next Senedd and, in the long term, replace them with a fairer, more supportive system. If the high street is to survive, this system must be reformed and replaced.

I began this contribution with a reference to the number of people living in poverty in Wales, and I want briefly to return to that subject. Wales has been afflicted by a vicious cycle of low pay, inadequate childcare and rising housing costs. In half of the households in poverty, at least one person is in work. It is simplistic to suggest that employment alone is a route out of poverty. Is it enough to protect the jobs and livelihoods of those who do not and cannot lever themselves and their families out of poverty? In an age of falling real pay, longer hours and rising living costs, how can a future Welsh Government ensure that the dignity of work leads to a reduction in inequalities and gives people a hand-up out of poverty? Our ambition is to make Wales a real living wage and a living hours nation. We want to draw on evidence from around the world and work with the UK Government to pilot a nationwide universal basic income in an effort to reduce the inequalities inherent in the present system. We would seek further devolution of the benefits system to Wales to bring Wales into line with Scotland and, using the powers that the Senedd now has, we would provide free part-time childcare from the age of nine months to three years for all parents, enabling them to return to work.

For those of us committed to seeking ways to mitigate the impact of climate change, the message is loud and clear: there can be no true economic recovery from this pandemic unless it is a green economic recovery. The potential for green investment to create new, long-term jobs, stimulate sustainable long-term growth and re-energise our communities is immense. Wales, with its wealth of natural resources, can play a role in contributing to these outcomes. It is crying out for investment in new green homes and the retrofitting of existing homes, as part of a large-scale investment programme in renewable energy and environmental protection measures leading to high-quality, sustainable employment.

The additional challenges of recovery that have to be faced by a new Welsh Government are many—tackling broadband and mobile phone connectivity problems in rural Wales, ensuring that funding schemes for our farmers provide not a penny less for farming and agriculture, investment in the supply of affordable and social housing in rural communities—and a major concern is how we rebuild our NHS after the pandemic, and how we build a 24/7 mental health service to address the problems faced by so many children and adults.

The measures taken by the Chancellor and in turn by the Welsh Government have helped to preserve jobs and businesses and have provided a baseline allowing many to survive and grow. The Chancellor and the Welsh Government deserve great credit, but the challenges ahead are real, not unique to Wales and cannot be ignored.