Government approves COVID-19 Fund of 16 billion euros for regional governments

Moncloa Palace, Madrid

The Council of Ministers approved the Royal Decree-Law to set up the COVID-19 Fund of 16 billion euros for the regional governments to finance costs stemming from the pandemic, particularly for the health system, together with an increase in items for education, to offset the fall in tax revenue and to guarantee the provision of essential public services.

The Minister for the Treasury and Government Spokesperson, María Jesús Montero, underlined that this Fund is the largest transfer of government resources to the regional governments paid out to date outside of the regional financing system, and that it is a non-refundable amount. "They will not have to return the money, increase their public debt or generate interest to be repaid to the Spanish State.

María Jesús Montero stressed that the Fund reflects the government's commitment to health and education as cornerstones of growth and social well-being, regardless of the tier of government exercising this jurisdiction. "Without strong public and universal healthcare and without an education system that responds to society's needs, we will not move forward in the recovery that Spain and Europe need".

She also claimed that this highlights the government's firm belief in a well-funded State of Autonomies.

Criteria for distribution

Pool Moncloa/Borja Puig de la BellacasaMaría Jesús Montero announced that more than half the Fund - 9 billion euros - will be allocated to health spending to strengthen the workforce and health systems with the aim of them being in a position to respond quickly in the event of the emergence of any new outbreak of the coronavirus; 2 billion euros will cover the needs of the education system and 5 billion euros will offset the fall in the collection of regional taxes and the fall in the number of public transport users.

The Fund is divided into four tranches: the first, of 6 billion euros, will be paid out in July and be distributed according to the impact of the virus on the regions - admissions to ICUs, hospitalised patients, total PCR tests performed, as well as the equivalent protected population. The figures at 30 April will be taken as the point of reference.

The second tranche covers the remaining 3 billion euros for health spending. This will be distributed on 31 October based on the same parameters but with different weightings.

The tranche of 2 billion euros allocated to education will be paid out in September, coinciding with the start of the academic year. In this case, 80% of the amount will be distributed according to the size of the population aged up to 16 in each region, and the remaining 20% according to the number of inhabitants aged between 17 and 24. In other words, 20% will be allocated to cover the needs of university education.

The fourth tranche, with a provision of 5 billion euros, will be divided into two sub-tranches - 4.2 billion euros will be distributed according to the weighting of tax collection in the years 2017, 2018 and 2019, with an adjustment for population size; while 800 million euros will be allocated to finance the additional deficit suffered in regional public transport caused by the measures adopted during the state of emergency.

The Government Spokesperson also highlighted that the Royal Decree-Law allows, on an exceptional basis, those regions with a surplus in previous years pending application to allocate this in order to cover financing needs caused by the pandemic.

Measures to support the industrial sector and its modernisation

The Council of Ministers agreed to allocate 173.5 million euros to measures to support the industrial sector to foster its digital transformation and new business models.

The Minister for Industry, Trade and Tourism, Reyes Maroto, highlighted this mobilisation of public resources to back projects that are in line with the goals of the government's industrial policy: "The reindustrialisation and competitiveness of companies, the digitalisation of processes and a technological boost to improve competitiveness through R&D+i".

A first raft of measures is allocated 75 million euros, of which 50 million will be earmarked for industrial R&D+i projects in the field of manufacturing industry and the rest - 25 million euros - will comprise loans to the financial support programme for Connected Industry 4.0. A second raft will allow equity loans to be offered for the sum of 98.5 million euros to SMEs, young entrepreneurs and technology-based companies.

Pool Moncloa/JM CuadradoReyes Maroto specified that, out of the 50-million euros provision for manufacturing industry, 30 million will be reserved for the automotive, aeronautics and aerospace sectors. The projects must revolve around sustainability, the circular economy, eco-innovation, decarbonisation, energy efficiency, advanced materials and products, and industrial quality and safety.

As regards the programme for Connected Industry 4.0, the aim is to support companies benefitting from such technologies as advanced robotics, 3D printing and Big Data.

The equity loans will be granted through the Base Technology Companies Line (Spanish acronym: EBT), with a provision of 20.5 million euros, managed by the National Innovation Company ENISA, a public entity attached to the Ministry of Industry, Trade and Tourism. The minister specified that the funding for young entrepreneurs will be allocated to support "the creativity and business talent" of those under the age of 40.

650 million euros for automotive sector

The government approved the allocation of 650 million euros to the automotive sector, of which 100 million euros will go to the MOVES II Programme to incentivise sustainable mobility, 500 million euros to an ICO line of guarantees for industrial vehicles and 15 million to productive investments in industrial automotive plants.

All of these measures form part of the Plan to Boost the Automotive Industry, with a provision of 3.75 billion euros, which was presented on Monday at Moncloa Palace, and which the minister, Reyes Maroto, quoted as an example of the unity of action needed to tackle "the challenge of the socio-economic recovery".

María Jesús Montero explained that the second edition of the Programme of Incentives for Efficient and Sustainable Mobility (MOVES) will have a provision double the size of the previous round of proposals and will include some new features. These include offering autonomous regions and cities the possibility of making direct investments charged to the programme, such as installing charging points for electric vehicles in hospitals and other regionally publicly-owned buildings, renewing their vehicle fleets and public transport. For their part, local authorities may use State support for actions to improve mobility, for example through the conversion of conventional lanes into bike lanes and pedestrianised areas.

The programme will foster the acquisition of alternative vehicles through direct funding, which will range from 750 to 15,000 euros according to their type and their motorisation (plug-in hybrid, pure electric or gas, fuel reserved only for heavy transport because electric alternatives are not sufficiently developed). In the case of light electric vehicles, subsidies may amount to 5,500 euros including the scrapping of the old vehicle.

Fifth tranche of ICO line of guarantees for companies

The government has activated the fifth and final tranche of the ICO Line of Guarantees approved on 17 March to guarantee the liquidity of companies and the self-employed.

On this occasion, 15.5 billion euros have been mobilised, of which 7.5 billion will be allocated to the self-employed and SMEs, 2.5 will be reserved for the tourist sector and 500 million will go to the acquisition of vehicles for professional use, with the aim of boosting the renewal of the fleet of vehicles and fostering sustainable mobility.

The Government Spokesperson stated that this line of guarantees has amounted to "the largest mobilisation of public guarantees ever implemented to support companies", with a high rate of approval, which has made it one of the lines of guarantees "most used in the whole of Europe".

To 14 June, more than 69 billion euros of funding had been made available to Spanish companies in 565,110 operations. The main beneficiaries have been SMEs and the self-employed, who have signed up to 98% of all the loans approved to date, and the tourist sector has received the largest amount of funding, stated the minister.

500,000 devices for digital education

Pool Moncloa/JM CuadradoThe Minister for Education and Vocational Training, Isabel Celaá, reported that the Council of Ministers has approved a subscription between her ministerial department, the Ministry of Economic Affairs and Digital Transformation and Red.es to introduce the Digital Education programme.

This programme foresees the release of up to 260 million euros to digitalise education. Of this, 190 million through Red.es (184 from the ERDF) and 70 million through those regional governments that sign up to the programme to provide devices and enhance the connectivity of public education centres.

Isabel Celaá explained that education centres will provide the most vulnerable pupils with up to 500,000 electronic devices with Internet connection to facilitate their digital education, both in the classroom and at home. The distribution of these devices will commence during the first term of the 2020-2021 academic year.

The programme will also introduce support platforms for teachers, pupils and education authorities through the application of artificial intelligence.

Better digital skills

The minister announced that, in addition to the programme, the government will continue to boost teacher training in digital skills through online training courses, such as those already offered by the National Institute for Education Technologies and Teacher Training (Spanish acronym: INTEF).

The government will also support the modernisation of digital platforms at education centres and the development of proposals on education materials designed for the digital environment.

Isabel Celaá argued that Spain is aligned with the countries tackling the COVID-19 pandemic in terms of investment in education because it knows that "stronger education makes societies much more prosperous, guaranteeing higher salaries and more civic-minded and better citizens".

The Digital Education programme, added the minister, is the first step in boosting the digitalisation of education, which "is a decisive factor in eradicating gaps and committing to social cohesion, making a scenario possible in which pupils have guaranteed access to adequate education content adapted to their needs regardless of their social reality or where they live".

End of state of emergency

Pool Moncloa/JM CuadradoThe Government Spokesperson recalled that at midnight on Sunday 21 June, the state of emergency declared on 14 March to tackle the pandemic caused by COVID-19 will come to an end. There will be no restrictions on mobility as from then.

The minister argued that the state of emergency has been instrumental in saving lives, in strengthening the health system and in preparing for a future in which the risk still persists, since there is no effective treatment or vaccine against the virus. That is why she stressed that we must remain prudent and frequently wash our hands, maintain social distancing, use a face mask and clean public spaces regularly.

María Jesús Montero stated that one of the lessons learned is that "while we are individually vulnerable, we know all the good we are capable of if we work together", and praised the capacity for "adaptation, resistance and to overcome" of the whole of Spanish society over recent weeks, and remembered the victims of the disease.

Reactivation of tourism

The Government Spokesperson referred to the opening up of a tourist corridor between Germany and the Balearic Islands on Monday, and recalled that borders will open in the Schengen Area next Sunday, except with Portugal, which will open on 1 July at a special event.

The government, claimed María Jesús Montero, is very hopeful that the re-opening of internal borders within the European Union will make one of the hardest hit sectors by the lockdown and mobility restrictions - tourism - more dynamic.

The minister said that the recovery and quality go hand-in-hand, and that visitors should feel protected in Spain, in the same way as residents in the country should feel safe since the tourists have all the safety measures necessary in place.

María Jesús Montero confirmed that an ambitious plan to boost tourism will be presented on Thursday, which the Ministry of Tourism has been designing with sector representatives.

European Council meeting on Friday

María Jesús Montero trusted that the debate on the final allocation and distribution of the European Union Recovery Fund, which will take place at Friday's European Council, will be speedy, so that "these resources can be made available as soon as possible". The Council will also address a strengthened long-term European Budget.

The minister pointed out that the proposal is important to ensure growth in our country and called on all political groups to undertake "an exercise in responsibility and patriotism", to reach an agreement that responds to Spain's needs.

Non official translation