UK Recovery Brief: Monday, June 29

Each day, our Public Policy team will be reporting on the latest news in the evolving situation. To view the previous day’s summary, please click here.

Prime Minister Boris Johnson is to make speech tomorrow on his plans to relaunch the UK economy

• Johnson is set to promise a huge programme of building, training and investment to stimulate the economy.
  • The Government had already earmarked £100bn for infrastructure projects in the Midlands and the north in its 2019 election manifesto, it is expected that Johnson will announce his intention to accelerate.
  • Johnson has launched an Infrastructure Delivery Taskforce, led by the Chancellor, Rishi Sunak, to cut the time it takes to develop, design and deliver vital infrastructure projects. It also aims to allow every city, town and village to benefit more quickly from the improvements that infrastructure brings.
  • It is understood that HS2, is among the schemes that could be “front-loaded”. High Speed North, an east-west rail link, is also expected to be accelerated with approval granted as early as autumn.
  • This new approach will also be applied to manifesto commitments to build 40 hospitals, 10,000 prison places, 30,000 homes a year and a £1bn school rebuilding programme.
  • Earlier this month Robert Jenrick, the communities secretary, wrote to local authorities and city regions inviting them to come forward with “shovel-ready capital projects”. Jenrick said schemes could include town centre modernisation, and improving digital connectivity.
  • Johnson’s speech is a prelude to Sunak’s July statement next week, which is expected to focus on a drive to reskill those made unemployed, with a particular focus on 18- to 24-year-olds who have been out of work for more than a year.

 Reports suggest that six companies are in “Project Birch” rescue talks with the Treasury

• Project Birch was initially authorised by Chancellor Rishi Sunak in the spring, to rescue companies deemed strategically important, but that were not eligible for other Government loan schemes.
  • It is reported that Celsa Steel UK, the Cardiff-based subsidiary of Spanish steelmaker Celsa Group, is set to become the first company to secure a loan under the programme, with an announcement expected in the coming days.
  • In return for £30m, Celsa will have to accept terms that include assurances on the workforce, reductions in emissions and strict curbs on executive pay.
  • It has been reported that only five others are currently in detailed discussions over taking similar rescue loans, they include Jaguar Land Rover and Tata Steel which has been seeking a loan of close to £500m.
  • The fact that only a handful of companies have entered detailed negotiations indicates that Sunak is determined to ensure value for money for taxpayers.
  • Only companies that have exhausted all other options and whose failure would disproportionately harm the economy, have been permitted to enter into direct talks with the government. Some companies have been unable to access the government’s new Covid-19-related loan schemes because they lack investment-grade credit ratings.
  • Aviation, aerospace, steel and carmakers are among the sectors where access to funding has been particularly difficult.
  • Some of the loans will be structured to include debt that in some circumstances can convert into equity — meaning the state could end up owning stakes in the businesses.

Business Secretary, Alok Sharma, have announced that the Sustainable Innovation Fund will help other companies recovering from the impact of Covid-19

• The Government investment will support innovations ranging from AI systems, managing city traffic flows to the latest reusable packaging materials.

• • This funding, delivered through Innovate UK, forms part of a wider £750 million package of grants and loans announced in April to support innovative firms. This sits alongside the new £500 million Future Fund, which provides match-funding to private investors.
  • Businesses can apply for support through the Sustainable Innovation Fund from today.

The Welsh First Minister Mark Drakeford has announced a £5m fund for grants to start-up firms which were ineligible for the UK Government’s Self Employment Income Support Scheme because they only began trading in 2019

• Up to 2,000 businesses in Wales will be supported with £2,500 each.
  • Eligible businesses will not have received funding from the Welsh Government’s Economic Resilience Fund or non-domestic rates grant; will have been set up between 1 April 2019 and 1 March 2020; and have less than £50,000 in turnover.
  • The new fund is part of the Welsh Government’s £1.7bn package of support for businesses in Wales affected by the coronavirus pandemic.

 Other news 

• Business Secretary Alok Sharma has announced a new financial package to protect research and development jobs and UK universities. The package includes loans to universities to plug up to 80% of any income shortfalls due to a smaller intake of international students. The second is a combination of new and redistributed money worth up to £280m.
• The Government has announced an additional £100 million in additional support to help zoos and aquariums in England to continue to care for their animals through coronavirus pandemic. This is an expansion to the £14 million initial relief fund announced in May.
• The Education Secretary, Gavin Williamson has confirmed that there will be a return of full class sizes for primary and secondary schools in September in England, five days a week. Williamson said there would be a “different approach” to social distancing within schools to the approach taken in pubs or retail settings. The Government’s full plan will be set out later this week.
• The Department for Transport have announced that over £15 million is to be invested in 3 rail stations in the North East to level up infrastructure in the country. Horden Station in Durham opens with £4.4 million of Government funding, with £8.7 million investing going to Darlington station and a further £2.45 million for Middlesbrough station.
• The Government has launched a new Covid-19 dashboard, where it will be posting the latest daily coronavirus testing, cases, hospital admissions and death figures.
• Mandatory MOTs for vehicles in Britain are being reintroduced from 1 August, the roads minister Lady Vere has announced.
• The two-metre distancing rule in Northern Ireland has been reduced to 1 metre.
• Northern Ireland is planning to release its own contact-tracing app within weeks. The app will be based on the Google/Apple model and is designed to be compatible with an app due to be released soon in the Republic of Ireland.
• Victims of domestic violence will receive £22m of emergency funding that will be distributed to organisations providing support during the pandemic. 548 organisations across the country will receive the funding which forms part of the £76m package for victims during the pandemic. A further £3m is being invested in recruiting Independent Sexual Violence Advisers to act as a link between the police, support services and criminal justice agencies.
• The Mayor of London, Sadiq Khan, has set out how the Greater London Authority Group would look to make savings of up to £500m. The London Fire Brigade and the Metropolitan Police Service face the smallest percentage reductions because of their critical public safety roles.
• Two households in Wales will be able to form one “extended household” and meet indoors from 7 July. Only one extended household can be formed, and cannot be changed once arranged. People who are shielding are included in the new rules.
• Mortgage approvals fell 90% to a record low in May.

• The Government has published its guidance this morning for how weddings and civil partnership ceremonies can take place in England from 4 July.
• Wearing face masks will be made compulsory on Northern Ireland’s public transport system later this week.