Inquiry: The Welsh economy and Covid-19
The Welsh Affairs Committee recently launched an inquiry into the economic consequences for Wales of Covid-19, and the support needed to support businesses now and in the future. Policy and Communications Manager Catherine Evans summarises the Centre’s response.
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The Welsh Affairs Committee inquiry into the economic consequences for Wales of Covid-19, asked what support will be required to support the Welsh economy both during the pandemic and the rebuilding period that will follow. The Wales Co-operative Centre submitted a response highlighting the economic impact on social businesses and the role they can play in rebuilding Wales.
What additional flexibility is needed to support seasonal industries during the pandemic?
We emphasised that a significant number of social enterprises in Wales are ‘place based’. The most common sectors include arts / entertainment / recreation; health and care; education; and community centre / social spaces / youth club services. Taken together, these four sectors account for 65% of all social businesses and these would include those working in seasonal industries such as tourism. We asked that consideration be given to:
- Maintaining the financial support schemes currently available to reflect the fact that many seasonal businesses will not be able to generate any revenue until Easter 2021;
- Providing a gradual exit approach from the furlough scheme – seasonal businesses will have lost their entire 2020 trading season and may need to bring staff back on a part-time basis initially;
- The continued provision of specific social enterprise business support to cater to the different needs of social businesses, for example in terms of finance and structure;
- Additional support post Covid-19 for employee buyouts, mergers, or creation of co-operatives and co-operative consortia.
What additional financial support does the Welsh economy require in order to survive during the pandemic and to recover afterwards?
We reported that emergency funding from Welsh Government and UK Government has been essential in supporting social enterprises to survive the pandemic. Government in Wales and at the UK level acted promptly to protect businesses and jobs. We also welcomed the short-term flexibility of Welsh Government and the Welsh European Funding Office which have enabled programmes to switch their emphasis from growth and job creation to survival and job safeguarding. This flexibility has allowed us to respond to the urgent needs of the social business sector and should continue into the medium- and longer-term to allow support for rebuilding the sector.
When considering future funds, we noted that many social businesses are still concerned about the impact of Brexit on their businesses and the loss of EU structural funds. There is an urgent need for clarity on the proposed Shared Prosperity Fund that is set to replace EU structural funds across the UK. We also asked that medium term funding be as flexible as possible to allow social businesses to bridge the gap between emergency funding and rebuilding income streams.
What support do key sections of the population, including the elderly and the newly unemployed, need from the UK and Welsh Governments during and after the pandemic?
When thinking about support for sections of society, we stated that newly unemployed people should be encouraged to consider social business models such as social enterprises and co-operatives. Starting a new business can be daunting but setting it up with other people – using a co-operative approach – could help the newly unemployed build a healthy and effective business based on fairness and shared responsibility. We also highlighted that co-operatives and co-operation can play an important role in building resilience to help reduce feelings of loneliness and isolation. Housing and social care are sectors where this is especially true.
What work can be done to make the Welsh economy more resilient in the face of future crises and potential outbreaks of Covid-19 and other pandemics?
The Centre considers that recovery provides an opportunity to adopt a ‘ground up’ approach to rebuilding a resilient economy in Wales. We feel that consideration should be given to building a strong foundational economy embedding the principles of a greener and circular economy.
The Covid-19 crisis has clearly demonstrated the societal importance of the foundational economy to the day-to-day functioning of life. When the pandemic is over, we need to rebalance away from the tradeable and competitive economy towards the foundational economy producing daily essential goods and services which underpin quality of life and sustainability. Supporting this section of the economy will improve physical infrastructure such as utilities, operating infrastructure such as banking, food supply chains and services such as social care. Furthermore, foundational businesses are anchored in their communities; investment in them stays in the community and is recycled for wider economic and social benefits. Strengthening these businesses will make local communities more resilient and self-sufficient, better able to cope with crisis in the future.
We need to re-build our economy differently and in a fairer way. Social enterprises should be at the heart of this new economy.
Welsh Economy and Covid-19: Welsh Affairs Select Committee Inquiry
Download our full response here (106.2KB pdf)