Steelworkers vote to accept Tata deal – what are the next steps for the industry?

17 February 2017

Article by Gareth Thomas,  National Assembly for Wales Research Service

View this post in Welsh | Darllenwch yr erthygl yma yn Gymraeg

Picture showing Port Talbot Steelworks

Image from Flickr by Ben Salter. Licensed under Creative Commons.

On 15 February 2017, trade union members from Community, UNITE and GMB all voted to accept the deal offered by Tata Steel relating to pensions, future investment and job security.  The three trade unions had recommended that workers accept the deal, while recognising the difficult decision workers would have to make on their pensions.  Tata have said that work continues with the unions and others to build a secure future for the industry.

What is in the deal?

The UNITE trade union has set out details of the proposal that union members were balloted on, which included:

  • Closing the British Steel Pension Scheme to future accrual on 31 March 2017 and introducing a Defined Contributions Pension Scheme. Additional one-off payments to pension scheme employee members aged 50+ who retire between 60 and 64 will also be available in some circumstances.
  • Commitment to run 2 blast furnaces at Port Talbot until at least 2021, and proposed investment in Blast Furnace 5 to extend its lifespan beyond 2021.
  • Commitment to an investment plan which proposes £1 billion of investment over 10 years, conditional on Tata Steel UK making at least £200 million in earnings before tax, interest, debt and amortisation (EBITDA) per year.
  • Protection against compulsory redundancies until 2021, equivalent to the commitment given to the workforce at Tata’s IJmuiden plant in the Netherlands.

Tata will also seek to restructure its UK Profit Bonus, and introduce new rates and conditions for new employees. It also aims to make £13 million of employment cost savings across the UK.

How have the Welsh and UK Governments invested in the steel industry and steelmaking communities?

The previous Welsh Government offered Tata a package of over £60 million, with conditions attached, prior to the announcement on the sale of its UK assets in March 2016, including investment in environmental improvements and developing the galvanising line at Port Talbot. Following the vote, the Cabinet Secretary for Economy and Infrastructure said that he hopes to be able to bring forward announcements shortly on these projects.

The Welsh Government also established the Port Talbot Waterfront Enterprise Zone in response to the job losses announced in January 2016. The UK Government also agreed to fund Enhanced Capital Allowances for three sites within the Enterprise Zone, which enable businesses to claim a 100% first year allowance for the capital cost of new investment in plant and equipment.

In December 2016, the Welsh Government agreed to contribute £8 million towards a total investment of £18 million in improvements to the Port Talbot power plant and setting up a R&D base in Swansea. In February 2017, it contributed funding of £1.6 million towards environmental improvements at Celsa Steel in Cardiff, and £1.2 million for investment in three other companies in the industry.

In December 2016 the Welsh Government agreed to provide £4 million to Tata to match its investment in training staff and managers across Wales. The Welsh Government’s ReAct redundancy support scheme has assisted workers from Tata and supply-chain companies.

The UK Government has provided assistance to mitigate high electricity prices and the impact of climate change policy. Over the two compensation schemes that have been introduced, the UK Government has provided over £100 million in compensation to the steel industry.

Has this support addressed the key challenges the industry faces, and what further action is needed?

In October 2015, the steel industry identified five areas where action could be taken to address the challenges it faces in the longer term. UK Steel says that of these, one has been actioned fully, three partially and one not at all. In contrast, the UK Government considers it has addressed four of these actions.

On energy prices, while the steel industry welcomed the UK Government’s package of support, electricity prices for UK producers remain considerably higher than those for European competitors. UK Steel highlight a differential of £17 per Mega Watt Hour between UK and German producers, impacting on investment decisions between steelworks in different countries.

Action around the ‘dumping’ of steel will be a key area where the UK Government will need to make decisions after the UK leaves the EU, as it will need to establish trade defence measures. There has been concern that previous EU anti-dumping tariffs have not been high enough, and that the UK Government has not supported the lifting of the ‘lesser duty’ rule by the EU. The sector is concerned about the potential for tariffs being imposed after the UK leaves the EU.  While WTO tariffs on steel products are 2%, tariffs such as the 10% on the automotive industry are of greater concern.

On business rates, the steel industry has called for plant and machinery to be exempt from business rates bills.  UK Steel found that UK companies pay five to ten times more business rates than producers in France and Germany. The Welsh Government has not taken this forward, as they consider it complicated to operate and have preferred to support the industry in other ways.  However, the recent business rates revaluation has seen a fall in the average rateable values of steelworks in Wales.  UK Steel have noted that under the Welsh Government’s transitional relief scheme steelworks will not have business rates bills reductions capped as will happen in England.

Both governments have also taken action on procurement.  The Welsh and UK Governments have published infrastructure pipelines of which projects will require steel. Additionally, the Welsh Government has changed its transport contracts to require that ‘dumped’ steel is not used.  The UK Government has also introduced procurement measures, including requiring central government departments to consider economic and social impacts of the steel they source. Key areas of future action for the steel industry include monitoring compliance with guidance, and developing transparent reporting mechanisms.

In May 2016, Swansea University called for backing for a new proposal for a national innovation and technology centre for steel.  The IPPR have argued that foundation industries such as steel should be better integrated into the Catapult networks, which are designed to boost innovation in key sectors across the UK.

Looking forward, while the UK Government’s proposals for an industrial strategy have been seen by some as not sufficiently considering steel, the UK Government and the steel industry are discussing the potential for a ‘sector deal’ for the industry, which is supported by the Welsh Government.  Sectors will develop plans to boost productivity.  The UK Government could then assist in a number of ways, including skills and training policy, changes to regulation, helping address barriers to trade and supporting the creation of new sectoral institutions.

A change of direction of the Welsh Government’s youth concessionary bus travel scheme?

13 February 2017

Article by Andrew Minnis, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

flikr_micolo_j

Image from Flickr by Micolo J. Licensed under Creative Commons

Media reports have suggested that the Welsh Government’s mytravelpass scheme, which offers discounts on Welsh bus travel for 18-16 year olds, is soon to be withdrawn. However, recent statements from the Cabinet Secretary for Economy and Infrastructure indicate that it may not have reached the end of the road just yet.

This blog post explains the background to the scheme and how it operates, along with an update on the most recent statements from the Cabinet Secretary.

Why was the scheme introduced?

In autumn 2014 the Welsh Government reached an agreement with the Liberal Democrats in the Assembly to support the Government’s draft budget. One aspect of the agreement was the introduction of a youth concessionary fares scheme.

Mytravelpass was subsequently launched in September 2015 on an 18 month pilot basis with funding of £15m.

The current pilot ends on 31 March 2017.

How does the scheme currently work?

Mytravelpass offers young people at least a one third discount on equivalent adult bus fares, although some operators may offer additional discounts. This includes local bus services which operate wholly in Wales or where the trip originates or terminates in Wales. The TrawsCymru long distance bus service is also included.

To be eligible for the pass, applicants must:

  • be aged 16 to 18 inclusive; and
  • have their primary residence in Wales (including those studying in Wales, provided they reside here).

The application process is handled by Traveline Cymru, the public transport information service funded by the Welsh Government. Users are issued with a photographic mytravelpass card which they must show when buying their ticket.

Details of how to apply are available on the mytravelpass website. Applications can be made online, by post or over the phone. During the pilot phase, the pass has been provided at no cost to the user, although applicants must provide a passport-sized photo to be included for ID purposes.  No proof of age or address is required with the application, but the details may be verified by third parties on behalf of the Welsh Government.

The mytravelpass website includes frequently asked questions with further information.

So what’s happening to the scheme now?

Uptake of the pass has been low. Despite a total market estimated at about 110,000 young people, by mid-January 2017 the total number of passes issued since the scheme’s launch was around 8,300.

On 18 October 2016, during questions following his Plenary statement on the future of bus services in Wales, the Cabinet Secretary acknowledged the limited uptake of the scheme.  He said “every opportunity—and I think any opportunity—that we get to flag up the existence of the pass we should take”. He also highlighted the role of the bus sector itself in marketing “concessionary travel opportunities”.

Three months later in January 2017 media reports suggested the scheme was being withdrawn at the end of the pilot period.  Welsh Government sources were quoted saying that the decision was based on analysis indicating that pass holders were not using the pass to travel outside their local area.

However, responding to a question in Plenary on 24 January 2017 the Cabinet Secretary said work was underway on a “legacy scheme”:

I remain very keen that there should be a legacy scheme after the current mytravelpass ends on 31 March. My officials have had encouraging discussions with representatives of local authorities and with the confederation of bus operators. I’m optimistic that I will be able to confirm the details of the successor programme very soon.

….this was a pilot scheme, and therefore something that we can learn from. And we have learnt from it. The fact of the matter is that uptake was not as high as we would’ve wished, which is why I’m very keen for the successor programme to reach more young people across Wales. I believe it’s something in the region of 10,000 young people who took advantage of the mytravelpass scheme; I would wish to see that number grow far more with the scheme that will emerge, which I’m hoping to announce within the coming weeks.

Young people in Wales and bus operators alike will await the Cabinet Secretary’s announcement with interest.

Is the Violence against Women (Wales) Act 2015 working?

10 February 2017

Article by Hannah Johnson, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

vaw-eng

On 15 February, the Assembly will debate the Equality, Local Government and Communities Committee’s report on its post-legislative scrutiny of the Violence Against Women, Domestic Abuse and Sexual Violence (Wales) Act 2015.

The Act aims to:

  • improve the public sector response to violence against women, domestic abuse and sexual violence;
  • give public authorities (such as councils and health boards) a strategic focus on the issue, and
  • ensure the consistent provision of preventative, protective and supportive services.

The main provisions of the legislation, alongside the Committee’s findings and the Welsh Government’s response, are highlighted below.

Pace of implementation

The Committee was concerned that the pace of implementation of the Act has, in some areas, been slow. It is more than 18 months since the Act was passed, and some key parts of the Act are yet to be delivered.

The Committee was particularly concerned that the commissioning of services was taking place without statutory guidance from the Welsh Government, which could lead to inconsistencies that would be at odds with the core aims of the Act. It also highlighted concerns that the rise in demand for services as a result of the Act was not being matched with sufficient and sustainable resources.

The Committee made recommendations including:

  • The Welsh Government should set out anticipated delivery dates for the outstanding delivery plan, guidance and regulations, with the priority on commissioning guidance; and
  • The Welsh Government should have urgent discussions with the UK Government about the future funding arrangements for independent domestic violence advisers (IDVAs).

The Welsh Government response states that:

  • the multi-agency guidance “will be considered in light of the local government White Paper”;
  • “the plan for rollout of Ask and Act will be developed from July 2017”;
  • statutory commissioning guidance “will be consulted on by July 2017”;
  • “guidance will be published in relation to local strategies in July 2017”, and
  • national indicators will be published “not before” October 2017.

It also notes that discussions with the UK government have taken place, and the “national rollout of a regional funding approach for the Domestic Abuse Services Grant (DASG) from 01 April 2018. [..]2017-2018 will be a transitional year and [it will be moving] to a regional funding and commissioning model [in the future].”

National and local strategies

Sections 3-4 of the Act require the Welsh Government to prepare and publish a National Strategy to ’contribute to the aims of  the Act’ no later than 6 months after the Welsh election (i.e. By 6 November 2016). Sections 5-8 of the Act require local authorities and local health boards to prepare and publish local strategies by May 2018.

The Committee was “disappointed” that while the Act was passed more than 18 months before the Welsh Government was required to publish the National Strategy, it did not begin consulting on a draft strategy until August, leaving only one month before the deadline for amendments and improvements to be made. Many witnesses told the Committee that they were not satisfied with the draft, and in particular that the views of survivors of abuse had not been taken into account.

As a result, the Cabinet Secretary made the decision to publish a high-level strategy in November 2016, which will be followed by a ‘delivery plan’ detailing how the strategy will be achieved. The Committee was concerned that the delivery plan would not be legally enforceable (unlike the National Strategy), and that no timescales for its publication had been provided.

In addition, the Committee heard that local strategies are beginning to be developed before the delivery plan is published, which could lead to inconsistencies in strategic approaches.

The Committee recommended that the Welsh Government should:

  • clarify the legal status of the forthcoming delivery plan, which should preferably be issued as statutory guidance to ensure that it can be enforced;
  • outline when the delivery plan will be published, and how it will be consulted upon, and
  • ensure that the ten survivor recommendations contained in the report, Are you listening, am I being heard?, are fully considered during the development of the national survivor engagement framework.

The Welsh Government response states that “the legal status of the Delivery Framework will be considered with a Task & Finish Group, set up by the Advisory Group to develop the plan, with input from the Cross-Governmental officials Group. The Advisory Group will scrutinise the framework before being published” and “the timescale for the publication of the Framework will be determined by the Task & Finish group”.

Education

Section 9 of the Act places a duty on local authorities to report on how they are addressing violence against women, domestic abuse and sexual violence within their education institutions. Section 10 gives Welsh Ministers and the Higher Education Funding Council for Wales (HEFCW) the power to issue guidance to further and higher education institutions.

Education was a contentious issue during the passage of the Act. The initial White Paper on the legislation from 2012 proposed that the Bill would ensure that education on ‘healthy relationships’ was mandatorily delivered in all schools.

This proposal was not included in the draft Bill. According to the then Minister in charge of the Bill, healthy relationships education was instead being considered as part of the curriculum review led by Professor Graham Donaldson, which would include a review of the basic curriculum including Personal and Social Education (PSE).

The duty in section 9 was introduced as a Government amendment during the passage of the Act.

Both the Cabinet Secretary for Communities and Children and the Cabinet Secretary for Education told the Committee that the regulations under section 9 would be developed in early 2017. It is not clear when local authorities will be required to start reporting.

The Committee recommended that the Welsh Government should:

  • commit to including teaching about healthy relationships in the new curriculum under the ‘Health and Well-being’ Area of Learning and Experience (AoLE);
  • expedite the preparation of regulations relating to the publication of information by local authorities on how they are exercising their functions to promote the purpose of the Act. It should also commit to requiring local authorities to begin reporting by the start of the 2017/18 academic year;
  • outline how healthy relationships and consent education will be addressed by further and higher education institutions.

The Welsh Government responded to these recommendations by saying “there may be opportunities to obtain information and data on what education settings within local authorities are currently undertaking with regards to Education provision stemming from the Act from external organisations currently enhancing the delivery of Healthy Relationships in schools”. It goes on to say:

Work on the development of the Health and Wellbeing AoLE will include consideration on approaches to the delivery of Healthy relationships and therefore there is potential that this can be considered as part of the overall work being undertaken.

The Welsh Government noted that in relation to the recommendation about further and higher education bodies, “this will be considered with Higher Education colleagues whilst drawing from projects already in place within Further & Higher Education.”

The National Adviser

Section 20 of the Act requires Welsh Ministers to appoint a National Adviser to provide advice, monitor implementation of the Act and undertake research.

The Committee found that the National Adviser’s role is part-time, meaning that her influence and capacity is limited. It also noted that the Adviser’s work plan was not aligned with the National Strategy, again potentially leading to inconsistencies.

The Committee recommended that the Welsh Government should:

  • Review of the capacity of the National Adviser role, and consider allocating additional resources to it to support the development of local strategies and undertake research;
  • Clarify what sanctions are available to Welsh Ministers if a public authority does not fulfil the requirements of the Act, and
  • Make reference to the National Adviser, her responsibilities and work plan in the forthcoming delivery plan and any future strategies.

The Welsh Government hasdiscussed and considered these recommendations with the National Adviser”, and it has agreed to keep it under review. In terms of powers, the response states that the Welsh Ministers have the power to “direct” an authority to take appropriate action, but does not detail what sanctioning powers are available.

Debate on the Final Police Settlement 2017-18

10 February 2017

Article by Sarah Hatherley and Owen Holzinger, National Assembly for Wales Research Service

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

flikr_jon_candy

Image from Flikr by Jon Candy Licensed under the Creative Commons

Policing policy is not devolved to Wales; however, the Welsh Government delivers an element of the annual funding as part of a three-way system that also involves the Home Office and council tax. Police forces also have access to special and specific grants and other income sources.

Under the Police Reform and Social Responsibility Act 2011 Police and Crime Commissioners (PCCs) replaced police authorities in each police force area (outside of London), with the first elections held in November 2012. More recently, PCC elections were held alongside the Assembly Elections in May 2016. PCCs appoint the chief constable, set local policing priorities and set the budget and council tax precept.

The Police settlement is derived in a two-stage process with a provisional settlement released in line with the Welsh Government’s draft budget and a final settlement in line with the final budget. The four Welsh police forces are consulted on the provisional police settlement, before agreeing the final settlement. The National Assembly for Wales must then approve this funding. As part of this process, the settlement will be debated in plenary on Tuesday 14 February 2017.

Final Police Settlement 2017-18

For 2017-18, the overall funding allocated to PCCs in Wales has been set at £349.9 million. This represents a 1.4% reduction from the 2016-17 settlement and is a 1.4% reduction for each of the four PCCs. The overall funding is outlined in table 1 below:

Table 1: Police Revenue Funding – Total Central Support

2014-15 2015-16 2016-17 2017-18
Dyfed-Powys 53.0 50.3 50.0 49.3
Gwent 76.8 72.9 72.5 71.5
North Wales 77.1 73.2 72.7 71.7
South Wales 169.2 160.6 159.6 157.4
Total   376.2   356.9   354.9   349.9

Within the £349.9 million allocation, the Welsh Government’s element is £138.7 million. This can be broken down further and comprises funding from the Revenue Support Grant (£85.8 million) and Non-domestic rates (£53 million). The remaining £211.2 million funding is provided through the Home Office. The sources of Police funding are outlined below:

Home Office Police Grant

In England and Wales, the main source of income for police forces is the central UK government grant made available through the annual Home Office Police Grant Report. The Home Office Police Grant is general revenue funding and is not ring-fenced. It is paid directly to PCCs. The Police Allocation Formula determines the allocation of central government funds between the 43 police force areas of England and Wales. This is based on the estimated workload of each police force area, including crime related activity, policing special events, policing sparsely-populated areas and population and socio-economic factors. The Home Office has recently reviewed its funding formula for police forces, which will continue to be a needs-based formula. As has been the case in recent years, the Home Office has again decided to overlay its needs-based formula with a floor mechanism. This ensures all police forces in England and Wales can expect to receive the same percentage reduction, this year this is 1.4%.

Funding from the main grant is subject to “damping”, which in 2017-18 will redistribute £12.2 million from South Wales and £417k from Gwent to Dyfed Powys (an additional £5.1 million) and North Wales (an additional £7.4 million). The PCCs for Dyfed-Powys (£3.6 million) and North Wales (£2.4 million) also receive top-up grant.

Welsh Government formula grant/ Police Revenue Settlement

In Wales, the equivalent funding previously provided by the UK’s Department for Communities and Local Government in England is devolved to the Welsh Government. The Welsh Government funding to PCCs still forms part of the local government finance settlement and is paid under provisions of the Local Government Finance Act 1988 and must be approved by the National Assembly for Wales.

Council tax precept

Each police force can also raise additional revenue funding through council tax precepts. The elected PCC in each police force area determines the annual level of the police precept, which is added to residential council tax bills. A greater proportion of police funding comes from council tax in Wales than in England; 37% compared with an average of 24% in England in 2015-16. There is also much less variation between the Welsh police forces than in England. PCCs are known as major precepting authorities. Whilst they set the precept, the funds are collected on their behalf by local authorities. In 2016-17 the Police element of council tax amounted to approximately 16% of the total, average, council tax bill in Wales.

The Welsh Government has the power to cap excessive council tax rises (generally considered to be anything over 5%).

Specific and special grants

There are also a smaller number of special and specific grants that are ring-fenced for national policing priorities. The Home Office provides a series of specific and special grants in addition to the Police Main Grant. This funding comes from the Home Office resource departmental expenditure limit crime and policing group. Some of the grants are funded by top-slicing the Police Main Grant, that is reducing the funding available for general revenue funding through the Police Main Grant to pay for some specific grants. The largest element of this is the Counter Terrorism Police Grant; other grants include the Police Special Grant and the Police Innovation Fund.

Other income

Police forces can also charge for some of their services. The main source of income from fees and charges is through charging for special police services. These are police services provided over and above core policing at the request of a person or organisations, such as football matches and music concerts. The basic powers to charge for services are set out in the Police Act 1996. Police forces are prevented from making a profit on special police services and for some types of event are prevented from recouping 100% of costs.

More information regarding how each element of police funding is calculated can be found in the Local Government Finance Report (No. 2) 2017-18 (Final Settlement – Police and Crime Commissioners). Welsh Government has published the financial tables and other information regarding the police settlement on their website.