Covid: 'More flexible' funding needed to help Welsh firms

Plans to make "open-ended commitments" to help businesses during the Covid pandemic will need more flexibility from the Treasury, a report has said.

Despite already giving "unprecedented" support, the Welsh Government has more than £1bn in its Covid fund to use.

But Cardiff University research said this reflects the ongoing uncertainty around UK government funding.

The UK government said it had guaranteed £4.4bn on top of funding from the spring budget.

The report found "the bulk of economic support" for Welsh businesses and workers will come from the Treasury.

The £1bn figure accounts for what has yet to be allocated by the Welsh Government but it has more than £5bn in the fund.

That includes money which has been shifted from its own budget and £4.4bn from the Treasury as a result of estimated additional spending in England.

The largest chunk of the money has been spent on supporting businesses, with about £1.6bn of allocated grants and reliefs.

A lot has also been spent on the Welsh NHS budget, including an £800m fund announced in the summer to prepare for the current spike in Covid-19 cases.

Councils have received about £490m in support.

Wales' spending watchdog said local authorities faced financial costs of £325m over the first six months of the pandemic.

But almost £1.2bn has not been allocated.

The Funding the Firebreak and Beyond report by Cardiff University's Wales Governance Centre said: "This substantial amount of unallocated funding reflects the significant uncertainties the Welsh Government faces in planning its budget this year.

"This uncertainty surrounding pressures on public services this winter and the potential need for further economic support are amplified by the inflexible budgetary arrangements currently in place [between the UK government's Treasury and the Welsh Government].

"The UK government should either be much more flexible in their funding to devolved governments this year, essentially providing funding on a demand-led basis as in England, or provide the devolved governments with the budget management tools and borrowing powers to allow them to do so themselves."

The UK government said it had provided certainty for the devolved administrations by giving up-front funding guarantees, including £4.4bn for Wales, rather than providing money ad hoc as it responded to the pandemic in England.

A spokesman added that people and businesses in Wales had full access to a range of UK-wide support schemes.

Most of the financial support received by workers has come from the UK government, with the report saying "over 400,000 employments" in Wales have taken advantage of the furlough wage subsidy scheme.

But it adds there is "no evidence that divergences in public health guidance thus far has led to relatively more spending per person by the UK government in Wales compared to spending per person in England".

A row broke out over the weekend after the Treasury announced the furlough scheme that was meant to end at the end of October would be extended until December ahead of England's lockdown.

The first minister said it was "not fair at all" that his requests for to boost wage subsidies when a national lockdown was introduced in Wales were repeatedly turned down by the UK Treasury.

On Monday Boris Johnson told MPs the furlough scheme would "continue to be available wherever it is needed".

The report estimates "around 224,000 employees in Wales work in sectors partially or entirely shut down due to the new firebreak lockdown" - about 16% of the Welsh workforce.