Today’s Senedd Roundup: 455 Welsh suppliers affected by Dawnus collapse

Owen Donovan, Senedd Home

455 Welsh suppliers affected by Dawnus collapse

There were two topical questions this afternoon on the collapse of Dawnus Construction and the recent report into the Swansea Bay City Deal. As the latter was partially answered at economy questions, I’ll focus only on Dawnus (pronounced dow-niss, meaning “talented/gifted” in Welsh).

As you probably already know, the Swansea-based company went into administration last week, threatening hundreds of jobs and bringing a number of civil engineering projects in Wales and England to a halt. It’s been described in some quarters as “The Welsh Carillion“.

Devastating impact on the local economy

Joyce Watson AM (Lab, Mid & West Wales) asked for a statement from the Welsh Government, saying the impact of this news will go wider than just Dawnus.

“….when a large company like Dawnus does go into administration, it puts smaller, local businesses at risk, potentially having a devastating impact on those local economies. We know that they directly employ 700 people, and that’s a large number in and of itself, but there is a much larger potential number within the locality, as I’ve just described. These are not just numbers of people, but real families being affected by this collapse.”

– Joyce Watson AM

She listed a number of projects affected by the news, including four school projects and a new road in Fishguard.

Economy Minister, Ken Skates (Lab, Clwyd South) told AMs the Welsh government stood ready to help employees. New placements would be found for as many apprentices working for Dawnus as possible. His focus was now on ensuring projects being undertaken by Dawnus went ahead with minimal disruption, but he made “no apology” for providing the company with support in previous years.

Suzy Davies AM (Con, South Wales West) asked about a £3.5million Welsh Government loan to the company, which has £1.5million outstanding. As this is administration and not a liquidation it could be some time before the government gets this money back. She wanted an idea of how much would be available to other creditors once the government and banks had been paid. Was funding for the Kingsway regeneration in Swansea affected?

The Minister said funding relating to the Kingsway project wasn’t believed to be affected. The Welsh Government loan was matched by a further £3.5million from Dawnus’ bank under the same terms and conditions. He was confident the outstanding £1.5million balance would be repaid in due course – but his focus at this time is on the employees, not the money.

455 suppliers affected

Rhun ap Iorwerth AM (Plaid, Ynys Môn) said one company in his constituency was owed £175,000 – a lot of money for a small company.

The Economy Minister then dropped a bombshell (of sorts):

“In terms of some of those contracts and some of those businesses that could be directly affected by the demise of Dawnus, initial analysis of supply chain creditors indicates that there are in the region of 455 Welsh suppliers affected. The total value due to the Welsh supply chain is in the region of £6 million. Officials will continue to monitor and to review as fresh information is received from the administrator.”

– Economy & Transport Minister, Ken Skates

In reply to a question from Mike Hedges AM (Lab, Swansea West), the Minister reassured him that people whose jobs are affected by the Dawnus collapse would be offered the same support as that offered to workers made redundant at Swansea’s Virgin Media call centre.

Economy Minister distances government from insulting tweets

Rhun ap Iorweth AM (Plaid, Ynys Môn) brought up a recent Twitter promotion which sold the fact Welsh salaries are up to 30% lower than other parts of the UK as a positive reason for investment. He said it was was an insult to Welsh workers. Was this a key part of Welsh Government economic thinking?

The Economy Minister was in no doubt:

“Absolutely not….I can say to the Member that no Ministers approved that tweet. It was unacceptable. It does not represent Ministers’ thinking. Indeed, the economic action plan has been designed to drive salary growth and the quality of jobs across Wales….”

– Economy & Transport Minister, Ken Skates (Lab, Clwyd South)

Rhun added that the fact Wales still had low salaries was a damning indictment of Labour rule. Why was the Welsh private sector lagging behind the rest of the UK in bringing forward a living wage?

The Minister replied by saying a living wage is a core part of the new economic contract for companies seeking Welsh Government support. He disputed claims Labour has failed; employment is at record levels, while economic inactivity in Wales (disability etc.) was now lower than the UK average.

Swansea City Deal “needs new momentum” following reviews

Shadow Economy Minister, Russell George AM (Con, Montgomery), raised the recent independent reviews of the Swansea Bay City Deal.

Deputy Economy Minister, Lee Waters (Lab, Llanelli), said the reports were critical of “all the actors” but it was more important to focus on delivering the deal from here on in. Russell demanded fast action:

“I did note from reading the report that the key recommendations outline the need for action over the next four months. Now, these actions are for the city deal to deliver, but I wonder how you and the Welsh Government are going to support the city deal in delivering on those recommendations.”

– Shadow Economy Minister, Russell George AM

The Deputy Minister told him the government’s priority is bringing momentum back to the city deal, with two projects – Yr Egin in Carmarthen and Swansea Waterfront Digital District – either over or close to the finishing line, but:

“….this city deal was set up in a way that has not been identical to other city deals, and I think it’s been one of the problems – dealing with it on a project-by-project basis, rather than giving the city region autonomy to take a portfolio management approach….Some of the local authorities and the region as a whole have struggled to have the skills and capacity to go through that rigorous business case model….So, in a sense, it’s been set up in a way that has made it cumbersome and difficult for them.”

– Deputy Economy Minister, Lee Waters

Supporting the car industry

Rhianon Passmore AM (Lab, Islwyn) asked what the Welsh Government were doing to support the automotive industry, underlining how important it was:

“….it’s an important industry in Wales, which comprises of around 150 companies, and employing, critically, nearly 19,000 people -13% of the Welsh manufacturing workforce – generating over £3 billion worth of revenue and manufacturing 30% of the 2.7 million engines produced in the UK.”

– Rhianon Passmore AM

Mohammad Asghar AM (Con, South Wales East) followed up by asking what the Welsh Government were doing to support electric vehicles following initial findings of an Economy Committee inquiry which suggests a lack of leadership in Wales on the issue?

The Economy Minister accepted it was a difficult time for the automotive sector, but in the last five years, the Welsh Government has invested £200million in the industry. Brexit was, naturally, a looming threat.

On electric vehicles, he believes the potential for induction charging would solve issues with, for example, terraced streets. He also pointed to Aston Martin’s development of electric vehicles at their St Athan plant as an example of forward thinking by the government.

Wales “faces £2billion shortfall by 2020” from welfare reforms

 The Motion

The Senedd:

Notes the analysis of the effect of the UK Government’s welfare reform on households in Wales (pdf).
Recognises and regrets the negative impact on the lives of the poorest and most vulnerable people in Wales.

“Disproportionate and unfair”

Leading the debate, Deputy Minister for Housing & Local Government Hannah Blythyn (Lab, Delyn) told AMs that while some recent positive changes have been announced – such as an increase in universal credit work allowances – these were small.

“We also know that many benefit cuts are only partly implemented, with the spectre of further significant cuts looming large. Relative child poverty in Wales is estimated to increase substantially, with the reforms pushing an extra 50,000 children into poverty by the time they are fully enforced. The stark reality is that the double whammy of welfare reform and the agenda of austerity is hitting those least able to bear the burden the hardest. And, it does not stop there.”
– Deputy Minister for Housing & Local Government, Hannah Blythyn

The analysis (linked to in the text of motion above) said there’s been a “disproportionate and unfair” impact on ethnic minorities and the disabled, while universal credit roll-out has lead to three specific problems: an increase in rent arrears, increase in the use of food banks and issues with online applications.

The Deputy Minister said estimates suggest the shortfall for Wales resulting from welfare reform will reach £2billion by 2020, but Welsh Government levers are limited and she said funding for advice services may only increase to around £8.5million a year – though there were a number of indirect measures like discretionary assistance funding and council tax reductions, both worth a combined ~£290million.

“Record employment”

Shadow Communities Minister, Mark Isherwood AM (Con, North Wales) praised the economic turnaround in the UK since 2010, with record employment. He rejected the “politicised nature” of the government’s motion and the absence of any meaningful Welsh Government poverty reduction targets.

“….(The) Equality and Human Rights Commission report ‘Is Wales Fairer?’ found, poverty and deprivation still remain higher in Wales than in other British nations. Wales is the least productive nation in the UK and median weekly earnings in Wales are lower than in England and Scotland. Damningly, ONS figures on employee earnings (2018) also showed that average earnings in Wales were lower and had grown slower than other UK nations in the previous year.”
– Shadow Communities Minister, Mark Isherwood AM

He told AMs universal credit was a success. It was getting people into work faster and helping them stay there longer. Under personal independence payments, a higher proportion of the neediest disabled people were receiving the highest level of support than under the old disability benefits system.

A callous system

Leanne Wood AM (Plaid, Rhondda) wanted to focus on the attitudes of administrators:

“….I don’t believe we can really create a human social security system worthy of the name unless we change the way in which staff interact with people in need on a day-to-day basis. The long list of sanctions given to people experiencing tragic circumstances – for example, the man who was sanctioned for a missed appointment due to being at hospital with his partner who had just had a stillborn child – is illustrative of this. This system is callous.”
– Leanne Wood AM

She repeated calls for the devolution of administration of welfare. The system was draconian, punished the poor and had little to do with work incentives; it’s been an attempt by “Blairites to appease the Daily Mail“.

Huw Irranca-Davies AM (Lab, Ogmore) recounted how he found himself in serious problems in his 20s when he was facing redundancy following a company take over, where he was working 12-hour shifts as a security guard in London surrounded by wealth and before the minimum wage. He paid tribute to organisations on the front line providing help and advice to individuals.

Joyce Watson AM (Lab, Mid & West Wales) pointed out that changes coming into force this May will see the housing benefit and pension credit criteria for mixed-age couples – where one is above pensionable age and the other not – change, potentially costing those households £7,000; people looking for work over the age of 65 were more likely to die than find that work.

Yesterday, the Rental Fees Bill returned to the Senedd for AMs to discuss amendments in detail. The final version of the Bill – which will outlaw several kinds of rental fees in Wales – is due to be voted on next week.

At a Glance Guide

Renting Fees Bill as introduced (summary)

Stage 1 report (summary)

The Bill:

Bans up-front letting fees for new tenancies, renewing a tenancy or continuing a tenancy.

Any landlord/letting agency found to be charging a banned fee could be fined.

Gives the Welsh Government the power to regulate security deposits, while holding deposits will be capped at one week’s rent.

Places a duty on landlords/letting agents to fully explain fees to tenants and prospective tenants.

Major Changes at Stage 2

There’s a thorough summary of the changes from the Senedd Research Service (pdf).

Stage 2 proceedings were undertaken by the Communities Committee, while the member in charge at the time is the (now) Finance Minister, Rebecca Evans (Lab, Gower).

The fixed penalty/on the spot fine for charging a banned fee has risen from £500 to £1,000.

Landlords can’t evict a tenant on “no-fault” grounds if they haven’t complied with the new law.

The Welsh Government can set a cap on security deposits.

Landlords can explicitly require tenants to make their own arrangements for council tax, TV licensing and utilities.

The Key Amendments at Stage 3

Amendment 20 – Housing & Local Government Minister, Julie James AM (Lab, Swansea West)

Makes Rent Smart Wales the enforcement authority (Communities Committee recommendation).

Vote: Agreed unanimously.

Amendment 34 – Julie James AM

Effectively sets a cap – through regulations – on tenancy default fees.

Vote: Approved – 38 for, 9 against, 1 abstention

Amendment 43 – David Melding AM (Con, South Wales Central)

Increases the fixed penalty from £1,000 to £2,000.

Vote: Rejected – 20 for, 28 against

Reason for Rejection: The Minister believes a £1,000 fine is proportionate and reasonable, while the fine has already been raised from £500 at Stage 2.

Amendment 56 – Leanne Wood AM (Plaid, Rhondda)

Gives courts the power to revoke a landlord’s licence (under the Housing Act 2014) if they’re found guilty of charging a banned rental fee.

Vote: Rejected – 11 for, 37 against

Reason for Rejection: It “inappropriately restricts” the functions of Rent Smart Wales, who should decide for themselves who keeps a licence or not. An identical amendment for letting agencies was also rejected.

Amendment 65 – Leanne Wood AM

Landlords/agents must repay a holding deposit if a prospective tenant tells the landlord/agent within 48 hours of agreeing to a contract that they’ve changed their mind.

Vote: Rejected – 9 for, 39 against

Reason for Rejection: It would create a loophole where people put down holding deposits on several properties knowing they’ll get their money back, blocking other interested parties from agreeing to a contract on a property.