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Written Evidence Submitted by the West of England Combined Authority (COV0171)

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Written Evidence Submitted by the West of England Combined Authority (COV0171) Written evidence submitted by the West of England Combined Authority (COV0171) Background The West of England Combined Authority (WECA) is the devolved regional government body responsible for economic growth in the West of England. It is chaired by an elected Mayor and composed of three of the region’s Unitary Authorities – Bath & North East Somerset, Bristol and South Gloucestershire. WECA also supports the Local Enterprise Partnership, which is business- led, and also includes North Somerset Council. Our aim is to deliver sustainable and inclusive economic growth for the 1.1 million people that live in the region by improving our productivity, skills, housing and transport. The coronavirus pandemic has had a significant impact on business and workers in the West of England, as it has across the country. Temporary closures and furloughing are high, in line with national conditions: 132,600 West of England employees have been furloughed, 22% of the workforce. 41,500 claims have been made from the region to the Self-Employment Income Support Scheme. Businesses in the tourism and hospitality are clearly particularly affected. Businesses are facing both immediate and medium-term cash flow crises and supply chain challenges. Unemployment benefit claims in the region doubled in April alone. This submission outlines the high-level impacts of coronavirus on businesses and workers across the West of England. We identify the challenges we have seen through the short-term response phase, through medium-term adaptation and into longer-term recovery. We outline how national recovery should be led by regional priorities, set within a national framework and how support will be needed to ensure that recovery is inclusive and low carbon, and catalyses the Government’s ‘levelling-up’ agenda. Outstanding short-term challenges We support the Government’s financial support packages; businesses have been able to access support rapidly and this has helped preserve the region’s economic base. To date, the level of business failures in the region has remained relatively restrained. We welcome the Government’s flexibility and responsiveness in refining the support package in response to representations by WECA and others (in particular, the introduction of the Top-Up Grant Scheme) to ensure they provide the support intended for different types of businesses. However, in common with our counterparts across other Combined Authorities, we recognise that there are still some areas where gaps have yet to be addressed and we believe further support could be provided. Access to, and terms, of business loans. We recognise and welcome the Treasury’s progressive moves over time to widen access to CBILS and other business loans (for example through increasing the under-writing for some loans, introducing ‘bounce back’ loans for start-ups etc). We would welcome a continued and open dialogue about access to finance as we have direct connections to firms on the ground and can highlight additional issues as they emerge, particularly as demands on businesses change as lockdown restrictions are eased (for example, we have identified case where businesses without existing banking relationships have struggled to access loans). Flexibility in the furlough scheme. The Coronavirus Job Retention Scheme (or ‘furlough’ scheme) has been integral to minimising economic damage from CV-19. And the Government’s announced extension into the Autumn was welcome, as was the confirmation that they will explore the potential for the scheme to allow part-time return-to-work. We believe that over time the furlough scheme needs to become more flexible, potentially differentiating between different sectors for example (to recognise the medium-term impact on some firms, such as those in the leisure, hospitality, and aerospace sectors). We recognise the complexity of this, for example the risk of ‘edge cases’, but believe an alternative and uniform approach poses too great an economic risk and risks a cliff-edge situation for businesses that have been without revenue for months. Support for newly self-employed people. People who started in self-employment since April 2019 do not currently qualify for the Government’s self-employed support packages. This group includes people who are more likely to be in a vulnerable financial position than others: young people starting out with their businesses who may be renting rather than owning; people who freelance in the creative industries (of which there are a great number in the West of England); and older workers who have taken an entrepreneurial leap and, in some cases, have invested many years of savings to get their businesses up and running. Apprenticeships: there is a significant concern that capacity will be lost in the apprenticeship provider market due to lack of certainty over funding and businesses furloughing or laying off apprentices. In addition, uncertainty over future employment needs may also start to undermine the market for new starters. The number of apprenticeships across all of the MCA areas was falling in the lead up to Covid-19, and this trend is expected to be exacerbated with early indications through employers and training providers, pointing to a 60% reduction for September 2020 starts. Whilst some of these might be delayed until November 2020 or January 2021, it is unlikely that without intervention or support, the full number of apprenticeships will be created. This risks a scarring effect on a cohort of young people who may never recover from this. In addition, there is a real risk that young people currently on apprenticeships will be made redundant, particularly as support from the Job Retention Scheme tapers off. How we have responded The Covid-19 pandemic has created an unprecedented challenge for the businesses, residents and public services across the West of England. WECA and the LEP have been working to support businesses and residents through this crisis period and seeking to ensuring the support and infrastructure is in place to prepare for recovery e.g. We have expanded the capacity and reach of our West of England Growth Hub with a significant spike in business enquiries since the outbreak. We are building on our core offer by developing new specialist support including financial resilience, trading better online and mental health/wellbeing support, helping businesses adapt to the new landscape. Through discussions with business of all sizes both informally and through a new Covid- 19 Business Response Panel, chaired by the Mayor and including key business leads and the banking sector, building a picture of the specific challenges for the region and identifying any gaps in Government support. WECA has led the region’s economic analysis of emerging trends, published weekly as an economic bulletin. WECA has also made changes to existing funded programmes to support the response to Covid-19. For example, the DCMS funded Creative scale-up programme has switched support from ‘scaling’ to ‘surviving and supporting’ with expertise and experience being shared across the programme cohort. The training and coaching is being delivered on-line. A £3.2m Research and Innovation Challenge Fund to support SMEs with research and innovation activity is being expanded in response to Covid-19 and will award grants to SMEs developing digital, engineering or epidemiology products and services, and building business resilience. The project launch is scheduled for July 2020. Support for SMEs through our innovative Low Carbon Challenge Fund continues with another funded round planned for a few months’ time. In addition, WECA has worked to refocus and adapt existing skills programmes to reflect the changing needs of businesses and residents, including the £8m Workforce for the Future programme which will play a fundamental role supporting SMEs respond to the current crisis, whilst also helping connect individuals with new training and employment opportunities. WECA has also expanded the career coaching and support service, Future Bright, to help those residents whose jobs and income have been affected by coronavirus. This includes those who are eligible for Universal Credit due to redundancy, reduced hours / income, furloughed employees and self-employed workers. Adapting in the medium term It is clear that the coronavirus crisis will not end with a quick return to normality. Rather, businesses face a protracted period of disruption, as well as the evolution of longer-term trends in customer and market behaviour that will shape the economy for years to come. The full impact of these is difficult to assess, but a number of issues are of particular salience in the West of England: Impact of ongoing social distancing requirements. As lockdown measures are eased, public-facing businesses in the transport, retail, leisure and hospitality sectors will continue to face significant stresses on their financial viability. Customer confidence is likely to be slow to return, and social distancing measures will limit capacity, such that many businesses will be unable to operate profitably. As a region with a highly attractive visitor economy, this will present an acute challenge. Again, we recognise that this is a complex situation and that Government should not indefinitely subsidise businesses. Nonetheless, a continuing and flexible financial support package may be necessary to ensure that the temporary but medium-term requirements of social distancing do not lead to significant permanent damage to otherwise healthy businesses. Furthermore, as much clarity as possible over the Government’s expectations for the duration of these measures would enable businesses to make informed decisions about when and how to return to partial or full operations. There is also a role for national and regional campaigns to promote confidence amongst consumers that it is safe to return to these industries. The Covid secure poster from the Health and Safety Executive is a welcome addition that should be promoted both to businesses and the wider public as a ‘trustmark’ scheme. Economic adjustments. Beyond the short-term challenges posed by the current lockdown, a range of medium- to long-term challenges are also coming.
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