National Assembly for Wales

Welcome, everyone, to this meeting of the Equality, Local Government and Communities Committee.

I would like to begin today by paying tribute to Carl Sargeant, who was the Cabinet Secretary that this committee dealt with most often. In fact, much of the work of this committee covered Carl's responsibilities, and we enjoyed a positive and constructive working relationship with Carl, for example on issues such as Communities First, refugees and asylum seekers, and the post-legislative scrutiny of the landmark Violence against Women, Domestic Abuse and Sexual Violence (Wales) Act 2015. We also scrutinised the abolition of the Abolition of the Right to Buy and Associated Rights (Wales) Bill, which Carl introduced earlier this year—one of the many Bills, of course, that Carl Sargeant steered through this Welsh Assembly.

So, I would now like to invite committee members and Alun Davies as the Cabinet Secretary and his officials to stand for one minute's silence in memory of Carl.

Thank you very much.

The first item on our agenda today is apologies and declarations of interest. We've received two apologies today, from Rhianon Passmore and Bethan Jenkins. There are no substitutes for either. Are there any declarations of interest? No. Okay. Thank you very much.

We will move then on to item 2 on our agenda today, which is scrutiny of the Welsh Government's draft budget 2018 to 2019 and our second evidence session. I'm pleased to welcome Alun Davies, Assembly Member, Cabinet Secretary for Local Government and Public Services. Cabinet Secretary, would you like to introduce your officials for the record, please?

I'm accompanied this morning by Rob Hay and by Reg Mitchell-Kilpatrick.

Thank you very much. Okay. Perhaps I might begin then in terms of an overview of local government allocations and the local government main expenditure group. I wonder if, at the outset, Cabinet Secretary, you might say little bit about how the draft budget allocations reflect your priorities as far as the local government MEG is concerned.

Can I start by associating myself very much with the opening remarks that you made? I was a colleague of Carl's in both Government, of course, and I also, as a backbencher of course, worked alongside him in predecessor committees on a number of pieces of legislation and overall scrutiny as well. Carl was, of course, a very good and successful local government Minister, and he was able to both pursue an agenda and make friends. That's not something that is often said about local government Ministers, so I think we should recognise that as well. 

In terms of the budget that we have in front of us today, the budget represents, of course, the priorities of the Welsh Government, and Welsh Government has been very clear, both in this budget and previous budgets, that we want to protect local services to the extent that we can, and we recognise the vital importance of local government, both in the delivery of essential services to communities across Wales but also, of course, as employers as well. For me, it's very important that Wales is a fair work country, that we have policies that sustain and support our workforce, and that we support and sustain local government to enable local government to take real decisions about transforming and serving the communities they represent.

Okay, thanks for that. In terms of the net increase of £30.5 million within the total budget for the local government main expenditure group, could you say a little bit about the context for that, Cabinet Secretary, and how we've arrived at that position?

I think the context is one that is well known to all members of this committee. We are in a difficult financial situation; we know that austerity has taken a real toll on the delivery of services across the whole range of Welsh Government and local government. We are aware of the impact of austerity policies that have both failed, on a macroeconomic level, to deliver any of the objectives that the UK Government have set for themselves over successive years, and have failed to ensure that we have the sort of economic growth that's been enjoyed on the European mainland and in the eurozone. So, we've got significant policy failure from the United Kingdom Government, and we, as a Welsh Government, are seeking to ameliorate the worst impacts of that policy on services in Wales.

Now, clearly, the budget was agreed before my appointment, so I will rely on officials in a way that I wouldn't normally do, Chair, and I'd be grateful for the committee's patience with me on those matters. But I would like to invite Reg to explain some of the background to you.

Certainly.

Thank you. Good morning. It's fair to say that the £30.5 million is the result of a complex set of transactions. As always in local government, the end figure covers up a multitude of calculations underneath it. It's probably fair to say that, again, in response to local government, this settlement does reflect the rolling back into the revenue support grant of a number of grants, and the £30 million is a net figure that includes £90 million that we have put back into the RSG. And that would be about £30 million-worth of social care grants, £27 million of independent living grant and £35 million of environmental single revenue grant. So, while it looks like a small figure, there is actually quite a lot of resource being fed back into the RSG to provide local government with greater flexibility as to how it uses the funds that we allocate to it. 

I should say as well, Chair, that the policy direction that I would seek to pursue would be to continue to respond to local government and to create a real partnership with local government, and that includes the continued de-hypothecation of specific grants. I think the Welsh Local Government Association has provided evidence to you that indicates that it could save up to 10 per cent, I think, in administration, where hypothecation and ring fences are removed, and that's certainly a policy direction that I would seek to continue to pursue.

Okay, thanks for that. In terms of working with local government, Cabinet Secretary, we heard from the WLGA in our first evidence session that the reduction of 0.5 per cent in the overall local government budget isn't the full story, and that, in fact, they will need to make savings of nearly 4.5 per cent in 2018-19 in real terms, because of the pressures they face in other areas, such as social care and, indeed, on pay. Their concern is that the financial position of local government in Wales is becoming unsustainable. What would be your view on that evidence?

I don't challenge that evidence. I recognise what the WLGA are saying, and I recognise that they are facing the pressures that they have outlined in their correspondence to the committee, in the evidence that they provided, and the conversations that they've had with my immediate predecessor. I recognise those pressures. I think the most difficult job in politics in Wales today is that of a councillor who has to wrestle with these very, very difficult decisions. We have sought to protect local government in Wales in a way that hasn't happened across the other side of Offa's Dyke. We've ensured that local government hasn't seen the attack on services that you've seen in England. We've seen protections of budgets in a way that you haven't seen across the border, and we've sought to work alongside local government at all times to ensure that we are able, wherever possible, to protect services. But I will say this as well. I don't think it's enough simply to say that there are problems and difficulties facing us. Where we make those assertions, we must also find solutions, and it isn't sufficient and it isn't adequate to simply describe the problems we face. We can all do that. What I'm interested in is finding solutions to those problems as well, and certainly my focus will be—if we accept the WLGA's analysis, which I do, that we are seeing local government moving towards difficulties with sustainable service provision in different parts of the country—well, that gives a certain responsibility to find answers to that and to ensure that local services are sustainable, and that those providing those services are protected, and that the work and the employment that is delivered through the investment in local economies is protected as well. So, I think, yes, I agree with the analysis, but agreeing with the analysis isn't sufficient; it leads us to another debate and that debate we can't avoid. 

Okay, thanks for that. Janet, you wanted to come in at this point. 

Just a quick question. I know in recent years local authorities across Wales have been carrying significant—some have—reserves; I think it was £1.5 billion at one point. Could you tell us the level of reserves currently across all the local authorities? How do you intend to tackle where some actually do hold on to their reserves, rather than putting them back into services? There is a huge inconsistency about the levels of reserves held. I just wonder what your plans are, you know, as we move forward. 

There was a time, Janet, when I asked exactly that question of the Minister, and Leighton gave a very robust response as you might imagine. It is not my intention to be as robust this morning. In terms of the actual numbers, I'll ask Reg if he could provide that level of detail. 

I think Rob might give us the actual figure, but I think our approach to reserves is based on the fact that we have 22 local authorities with their own democratic accountability and their own scrutiny. Some of them have generated and do hold quite considerable reserves. Government policy has been very clear over the years that we would encourage local government to use those for transformation and service change. We certainly have never said that the reserves ought to be used for revenue purposes or filling in funding gaps; it is about creating a different set of authorities and a different set of services that are sustainable for the future. 

In terms of the variability across Wales, our authorities are pretty varied in all respects, but the decisions as to the level of reserves and how those reserves are used are ultimately down to local authorities and their own scrutiny processes.

Do you have a ballpark figure? Thank you, Chairman. If you could tell us the amount, and then do you have a ballpark figure that you believe—like a percentage—that a local authority should be looking to hold back, or is it literally down to each authority? Because I know when that transcends down to the public, when they're facing council tax increases, the issue of reserves does come up, and if local authorities are hanging on to their reserves and at the same time pulling back on services and increasing council tax, it doesn't go down well at all. 

I'll ask Rob to come in to answer the direct question, and I'll come back to you on those wider issues. 

I haven't got the overall amount of reserves figure here, but we can certainly send that to you because we do publish the figures on reserves on the Welsh Government's website. What I can say is that, as Reg has explained, the overall position does cover a range of positions across the authorities and, in some respects, just looking at the overall figure perhaps doesn't tell you the full story. Certainly, there is a range of positions across the authorities where the reserves that they had earmarked for a particular purposes ranged from 4 per cent of their annual expenditure to 22 per cent of their annual expenditure, and their general reserves—the reserve that's not allocated for specific purposes—range from 1.8 per cent of their annual revenue expenditure to 5.7 per cent. So, there is a range of positions.

Overall, local authorities drew upon about £34 million of reserves in setting their budgets for last year. So, there has been a slight drop in terms of the holdings of reserves over the last year or so, following a number of years where overall reserves have increased. 

Okay. And then, my final point: is it around about £1.5 billion that's held? It seemed to be around that for more than—that I know of—two or three years. And I just wondered if there's—.

To be honest, I just don't have the exact figures, but certainly, I could send—

I think we've asked for that figure before actually. 

Can I say, Chair, I will write to the committee with the breakdown of those numbers? I think it's a perfectly reasonable request and we will provide that analysis. But, can I also answer the wider questions, if I could, Janet? Your question goes to the heart of the relationship between national government and local government. And I believe in local government. And I believe in the reality of local government, and not simply the local administration of national policy. And that means that you have to enable, allow and provide for decisions that you might disagree with. You cannot, on the one hand, argue for local democracy, and on the other hand, argue for national government telling local democracy what it can and cannot do in these ways. So, my view would be, and my approach would be, that I believe in local democracy, I believe in local government, and the consequence of those principles is that local government will sometimes do things that I disagree with. So be it. You cannot, on the one hand, make speeches supporting the importance of democracy in the delivery and design of public services, and then not support the same democracy if it does things that you disagree with. So, I would always hesitate before I would seek to impose upon local government, because there are people elected in your constituency and my constituency to take those decisions, and it is right and proper that they have the freedom to take those decisions. And, so, the balance should always be in favour of local democracy.

If I could come back with a little one—

Well, I think Jenny wants to come in on these matters.

Okay. All right.

First of all, we've obviously had an analysis from the WLGA. Councillor Shotton, who's the finance spokesperson, sent it to us. Actually, this was back in 2014, but you can see how, in the past, it's very clear that local authorities are operating very different policies. My own local authority comes top or bottom, depending on which way you want to see it. Cardiff holds very little reserves compared with, say, Carmarthenshire and the Vale of Glamorgan, which have very, very sizeable reserves. And I just wondered what analysis Government does of the reason for the holding of reserves, because, obviously, there is a difference between holding money for capital schemes that haven't quite yet come on stream as opposed to 'other specific service needs and requirements', which covers all manner of things, no doubt. And I think that it's important in relation to the discourse with residents about whether or not it is necessary to shrink services if you're still holding very large reserves. So, I just wondered about the relationship between local authorities and what discussions you've had on whether it is really essential to take an axe to services if that local authority is carrying quite substantial reserves.

That would be a matter for that local authority, of course. There is guidance in this area from Welsh Government, which provides for the overall context within which those decisions would be taken. But I don't disagree at all with your analysis, Jenny, and that was precisely the nature of the conversation I had at that time with Leighton Andrews, who was the then Minister, about the overall level of reserves being maintained by local authorities in Wales, and then the nature of those reserves, whether they were allocated or unallocated reserves. I think the point that he was making at the time was that he wanted to see a significant reduction in unallocated reserves. And he made that very, very clear at the time. That then is a matter for local authorities to take those decisions about the balance of reserves that they believe is adequate and appropriate for their authority, and the impact that that would then have on service delivery. 

Would you say that the bar chart is very similar, currently, to what it was in 2014?

I think we've just heard that there's been a narrowing, if you like, a decline, in the overall level of reserves. But we will provide committee with that information. We can provide, perhaps, a historical analysis over the last few years, for committee to see if there are any trends in that, and to make comment upon it. But, you know, the balance between the financial strategies being followed by any individual authority would be a matter for that authority.

Okay. Thank you.

I'm keen to return briefly to the overview of local government allocations, and the indicative budget for 2019-20, again, in terms of context. Because we know that there will be a further reduction of £61 million, 1.5 per cent, in the local government aggregate external finance, and that's obviously on top of the £19.1 million reduction for 2018-19. So, the committee would be keen to understand the context for that, why that is set to happen.

Can you take that?

Yes, sure. I think, when the budget was set, the Finance Minister was quite clear that there is a degree of uncertainty around the second year of the budget. That is largely down to the actions of the UK Government and its approach to delivering the £3.5 billion-worth of savings that still need to flow through the system. And, therefore, the budget for 2019-20 was set in a fairly prudent way. The Finance Minister has said, of course, and we'll find out next week, when the budget—the UK Government's budget—is published, what the longer term financial implications are. And, if there is a relaxation, or more money was to flow to Wales, then he would look very carefully at providing that to local government. In that sense, the second year is uncertain, and we just have to proceed on that basis.

Okay. That's fine. Okay, if we move on then to priorities, and Siân Gwenllian.

Siân, we have very limited time, I'm afraid. Do you want to move on to local government?

Okay. If we move on, then, we have some further questions from Joyce Watson on the funding formula.

Good morning, Cabinet Secretary. I want to look at the funding formula, and I particularly want, if you or your officials are able, an explanation and an expansion on the significant change that's been made to the funding formula for this year coming, because of the phasing in of changes to the personal social service element of that formula.

I hear everybody complaining about the funding formula, but I've never seen an alternative to it. I'd be very happy to consider significant changes to the funding formula if there is agreement on that. I'm not wedded to this particular formula and I'm not wedded to the structure that currently exists. What I am wedded to is the concept of partnership—that we do that together with local government—and that we work together to arrive at a formula that is fair and fair to everybody. Now, Jenny mentioned earlier that Cardiff's quite often the top or the bottom of many financial matters; my local authority tends to be on the bottom of most of it when it comes to these matters, and I understand the frustrations from people who have to deal with this. So, there are changes taking place, as you've outlined, at the moment.

I know that people have argued for more significant and fundamental changes. I'd be interested to have that conversation. If there is agreement across the country and within local government and within the Welsh Government, then I'd be quite happy to pursue those matters, but, to date, what I hear are people rehearsing the arguments about the problems without providing solutions, and I think simply rehearsing the problems without solutions is not entirely a sterile activity, and a proper view and analysis of where we want to go requires more than that. I'm happy to join that debate, but you asked a direct question on the nature of those changes and I'll ask my officials to provide that level of detail.

Thank you, Minister. There was a change to the formula. It's important to say, I think, as the Minister has made very clear, that the formula is a shared endeavour and that we make changes after quite considerable discussion and consultation with local government, both at a technical level through the finance officers, but also at a political level through our finance sub-group, which is part of the partnership council.

The significant change this year was in relation to a change to the sparsity factor, which, again, had been an idea generated through the officials—the official part of the consultative mechanism—and was to try and reflect a better distribution of resources across the country in respect of unproductive travel time. The different set of weightings that inform the formula were agreed, and they, as you might expect from the sparsity formula, moved money out of the urban areas—so, Cardiff was a significant loser—into the more rural areas like Powys, Ceredigion and Gwynedd.

I think that this was a significant change to the formula, and what it does is prove how robust, collegiate and collaborative our mechanisms for managing the formula, together with local government, can be, because some authorities did lose quite a lot of money. But nevertheless, the changes were based on evidence, they were based on consultation and they were successfully implemented.

Thank you for that. I think there's another issue that we'd like to understand. In the statement that we had—. We all know that there's a funding floor in place, and all local governments welcome that. There's £1.8 million, I believe, allocated to ensure that that stays in place. Within the statement that we received, we understand it to mean that it's fully funded by Welsh Government and not top-sliced from the local government grant, and, what we're seeking here, for the record, is assurances, really, that that is the case.

I think that is the case, but my understanding is that it came from central Government reserves.

Okay. Thanks for that. We will move on, then, to Siân Gwenllian and some questions on funding for essential services. Siân.

Yes. Thank you, Cabinet Secretary. So, the letter that the Cabinet Secretary sent to the committee Chair was an attempt to try and provide a bit more information about how the numbers were arrived at. There are three tables at the end of the letter, which set out that we went through a process of setting an initial budget allocation for 2018-19. Then there was some additional money put in on top of the initial budget allocation for 2018-19 in recognition of the particular priorities recognised by Welsh Ministers for schools and social services. So, table 1 in that letter identifies an additional £104 million that was put in for 2018-19, and, on the 2019-20 initial allocation, there was an additional £181 million put in to go into the particular bits of the settlement in relation to schools and social services. So, these amounts of money were additional to the initial allocations through the budget-setting process.

Table 2 in that letter then shows the breakdown between schools and social care. In respect of 2018-19, the £62 million being added into the schools element of the settlement, and the £42 million going into the social care element. The letter does make clear that the settlement is unhypothecated. However, the way the settlement is put together, there are a series of building blocks for these different services. So, it is possible for us to add money into those particular service blocks within the settlement, although the overall settlement allocation is unhypothecated.

The final table in that letter makes reference to the £35 million, which the WLGA made reference to in their evidence to this committee, and that just makes clear that the £35 million is the standard spending assessment figure, and not an actual amount of money. It is a notional figure, which is part of the building up of the settlement. So, it is a relevant figure, and it is a figure that we published, hence the WLGA made reference to in their evidence to the committee. But it is not the same as the actual amounts of money that are shown in tables 1 and 2.

Okay. Can I bring Jenny in at this point?

One of the things that the WLGA told us in their evidence is that their prediction is that the social care budget, currently around £1.4 billion or £1.5 billion, is likely to double in the next 10 to 15 years, and that obviously poses huge questions around where the money’s coming from to pay for that social care, as well as the way in which we organise social care. So, I just wondered—I appreciate it’s very early days—what thought you’d given to, particularly—. Obviously, the innovative funding model is probably more with the Minister, the Cabinet Secretary for finance, but the way we organise social care seems to me a really important point, because at the moment, it’s nearly all being provided by the private sector. There’s been quite a lot of discussion about the social sector providing social care in a much more localised way, because at the moment, this unproductive travel time is partly generated by people passing each other as they’re going to provide care in different communities. So, I just wondered what your initial thinking was on this.

I absolutely agree with you on the scale of the challenge. I think this is going to be one of the key political issues we’re going to be debating and discussing over the coming years. You’ll be aware that the Cabinet Secretary for Finance and the previous Minister for social care and public health met with Professor Holtham to explore Professor Holtham’s proposals for a social care insurance scheme using some of our new tax-raising powers. We look forward to seeing how those conversations develop.

But in terms of where we are today, clearly transformation is going to be a key issue, about how we deliver services, but also understanding the scale of that challenge and then, I think, taking decisions from a principled point of view about the sort of social care we want to see, its relationship with the national health service, and how we deliver that care into the future. For myself, as a socialist and a member of the Co-operative Party, I want to see decisions taken that are rooted in the accountability of services and a focus on the quality of services and the integration of services that will be delivered in the future.

The one thing we do know about the future is there are going to be a lot more of us living in it, and with more complex needs. Are the structures currently in place to enable us to deal with that? I think it’s clear that they’re not. Are the financial structures in place to pay for it? It’s clear they’re not. And I think we need to take some absolutely fundamental decisions about the sort of social care, and the relationship between other service providers and service areas, that we will need to create a holistic system for the future. The conversations have started. We’ve got more powers in this area now to explore how we can deliver that. But I don’t think I would disagree with you at all in your analysis of the scale of the challenge facing us.

Okay. Joyce Watson.

Part of that thinking, I hope, will include housing, because many, many times, the problem that people face is that the housing no longer fits their needs, whether that's wider doorways or whatever it is. So, whilst you're having those conversations, Cabinet Secretary, will you also have them with the housing sector so that we're not building in problems but trying to avoid them at the very earliest stage? Because it is far easier not to have the problem in the first place than to retrofit afterwards.

Absolutely. I completely agree with you. I use the term 'holistic' to include all those different service areas and structures that we need to put in place to change for an evolving society. This is about not just the sort of country that Wales will be in the decades to come but the sort of society that will live in Wales in years to come, and we will have a very different looking society from that which exists today and existed, certainly, when I was growing up in this country. And that means that the way in which we deliver services needs to change, the way in which we structure our communities needs to change, and we need to put in place all the different means that enable us to do this. 

Rebecca, of course, as the new housing Minister, has a background in social care, as you are aware, and I'm absolutely confident that this will be one of the areas that she will want to address as a priority, but my approach would be to look at this in a holistic way to ensure—. I remember, and the Chair will remember, the conversations we had, John, some time ago about Sir Jeremy Beecham's work and citizen-centred services. You'll be familiar with that. Whatever we think about those debates and discussions at that time, the political and philosophical position that we put citizens at the centre of services, I think, is unchanged. It's certainly a commitment that I think we shared at that time, and I think it's a commitment we share today and into the future.

Thanks for that. Could I ask a question in terms of homelessness allocation and seek clarity around the inclusion of an additional £6 million within the settlement for homelessness prevention and also how that relates to the £4 million in specific grants included in the communities and children MEG?

Could I ask—?

Thank you, Cabinet Secretary. These are two separate amounts. Obviously, the £6 million in the revenue support grant is unhypothecated. And, as such, it is up to local government how they wish to use that money. However, I know my colleague officials from the the housing directorate are working quite closely with their opposite numbers in local government in order to work out the best use of this funding in what is a really difficult and challenging problem area.

The £4 million in specific grants is, as the title says, a set of specific grants for specific purposes. I'm afraid I don't have the detail of what that grant involves, but it is particularly focused on specific projects around rough sleeping and ending homelessness.

Okay. Jenny, very briefly.

That's what I wanted to clarify—that it is targeted on areas that are experiencing the most amount of homelessness rather than all local authorities getting a sum of money.

I'm sorry, I don't have the detail of that for you this morning, but we will write with the specific—or the terms of that grant—

Because two thirds of the people we're dealing with in Cardiff don't come from Cardiff, and if other local authorities are getting money for homelessness then, clearly, they need to be stepping up to their responsibilities.

Certainly. We'll provide a letter on it.

Okay, thanks for that. Moving on, then, Gareth Bennett has some questions on preventative spending.

Yes. Thanks, Chair. Cabinet Secretary, to what extent have you given consideration to sustainable development impacts in your department's planning of the draft budget proposals?

If you don't mind, I'll take that one. The issue, again, around the RSG and funding local government is that it's very difficult for us to undertake a detailed, sustainable development impact on £3 billion or £4 billion of unhypothecated money. We rely on local government and local authorities—who are the organisations that receive the money, that allocate it and that spend it—to undertake those functions under a series of statutory duties. Some of our authorities are really very good at consulting with the public, with setting out their ideas, with setting out what it is they want to spend their money, or how they need to prioritise. And in doing that, each one of those organisations will need to consider the long-term sustainability of its spending plans, and consult with the public to make sure that those spending plans align properly with priorities and local needs. 

Thanks. The other issue that we need to look at is local government reform, an ongoing subject, and £5 million has been allocated for 2018-19 and £6 million for the following year for activities associated with that. Is there any expansion on that that you can give at this point? 

None whatsoever. I've sat through many committees discussing local government reform. I've actually sat on legislation committees on local government reform some years ago. Let me say this. The WLGA has been very clear in its evidence to you that the current structures that we have in place are not sustainable, and I accept that and I think the committee accepts that. The question is: where do we go from there? And that is the question that we need to answer, and the question that we've been trying to answer for too many years. What I would say to everybody involved in this on all sides of the political spectrum, whether they sit in here or in town halls and civic centres across Wales, is: let us put aside some of the debates that we've had in the past and have an honest conversation about where we want to be in the future, and conversations based on protecting our workforces, protecting our services, delivering excellence in services and enhancing and strengthening local democracy. I want to see local government stronger, not weaker, in the future. I want to see local government able to do more, not less. I want to see local government taking decisions that fundamentally change and transform the communities they serve, and that means stronger, not weaker, local government. And I hope that we can all work together on that basis. 

[Inaudible.]

I can see—

Well, Janet, it will have to be very brief because we're talking about the budget allocation here, not the general debate. 

It's very brief. 

Thank you for saving me, Chair. 

Do you honestly believe that 22 local authorities and the infrastructure therein currently are sustainable going forward? 

I've made very clear my views. I was foolish enough to make speeches on this in the last Assembly, and you can read them and find out exactly what I think. No, I don't think that 22 local authorities on the current model is sustainable—'on the current model' I said there—and I think that we do need to have a serious conversation about that. But I will say to you as well in opposition: opposition has not engaged in this seriously either. Too often, opposition parties have sought partisan benefit from reform and not looked at what we should be doing for the benefit of services in and across the whole country. So, there needs to be a maturity from opposition, Janet, as well as from elsewhere.  

If we're invited in for those discussions, you can count us in. It's a discussion that has to take place. 

I'll put the kettle on, Chair. 

Cabinet Secretary, is it possible at this time to say, in terms of the budget allocation for activities, what sort of activities they might be? 

I'll ask Reg if he could answer that. 

The committee will know that this budget has been part of the main expenditure group for a number of years now, and was originally established with the Minister before last and their programme for local government reform. And at that time, we were very focused on spending in support of structural change around voluntary mergers particularly. Since then, our approach has changed and this money is used for a number of different purposes. Specifically, it is there to help local authorities that come forward with credible projects for transformation and change in their services. It is important that we do believe that where local government has some lack of capacity for change management or project management, for example, and it wants to reinvent or transform services, as a Government, we should be here to help, and that is what that fund is for.

Okay, thanks for that. And Janet—income generation.

Yes, thank you, Chairman. In England, there are a number of initiatives carried out by local authorities—very brave initiatives—where they do generate income, clearly. When you're starting to look at going more and starting businesses almost, there is an element of risk. But do you think we could learn from the model in England and perhaps be braver in Wales, in terms of income generation?

I'm not sure there is a councillor anywhere in this country who wants us to learn any lessons at all from the policies being pursued across the border—

Oh, behave. [Laughter.]

Well, look at the different experience of local government on both sides of the border. I believe in local government. I want local government to be stronger, not weaker. I look forward to being able to deliver a general power of competence that will enable local government to do what is appropriate in different parts of the country. There are certainly areas where I think Welsh Government can work proactively alongside local authority leaders to deliver significant change for the people we all serve together jointly, and so I would say that it is an open door, and I have an open mind, on how we work together to strengthen and empower local government. And income generation may be a part of that, but, you know, there are also local authorities that serve some very, very poor people and deprived communities, and what I will always ensure is that my priority is on eradicating poverty in this country, and providing the best possible services. I don't see local authorities as simply income generation models. I see them as the protection of public services, public servants, and the delivery of excellence in terms of what we're seeking to achieve jointly and together for our people. 

Jenny, did you want to come in on this point?

Yes. I just wanted to pick up what Councillor Hunt, I think, the leader of Torfaen, said when we had the Welsh Local Government Association session. He pointed out that it would be very difficult for Torfaen to raise money, for example, from parking charges, because it would have such a detrimental impact on the two town centres. Without going into the merits of that particular argument, I wondered if you could say a bit more about how we support local authorities to identify additional sources of income, in line with their particular circumstances, because I note in your letter to the Chair, you do say that the settlement does take account of the relative need and relative ability to raise council tax income. So, how do we square this circle, because we can't allow local authorities to simply say, 'My local authority can't do this sort of thing because it's politically difficult to tackle the motorist', or something like that?

Anthony is one of the great new local authority leaders, who I think is driving forward change through local government, and I recognise the power of his argument. We're aware that the recent audit office report pointed us in the direction of sharing knowledge and experience between authorities, but I would like to see Welsh Government as being not just a broker of information and knowledge, if you like, acting as a facilitator, although I think there is that role for national Government. I want to see us working as a partner with local government as well, to deliver on a programme that is appropriate to those communities. And that might well be different in Torfaen, as it might be in Cardiff, or elsewhere, or in Pembrokeshire. And from my perspective in Blaenau Gwent, I would want to see our local authorities working much, much closer together, in order to seek ways of delivering for the people we all represent. I want to move away from an 'us and them' approach to these conversations, and an 'us' approach, if you like, and Anthony, I think, is one of the great new generation of local government leaders who can certainly be a part of that and help transform the way that local government works in the future.

Okay, well, that's perfect timing—it's taken us to our alloted time. Thank you very much for giving evidence today, Cabinet Secretary, and to your officials also. You will be sent a transcript, in the normal way. Thank you very much indeed. The committee will now take a very short comfort break of just five minutes and resume at 11.35 a.m. Thank you.

Welcome, everyone, to the resumption of the committee this morning for item 3: continued scrutiny of the Welsh Government draft budget 2018-19. This is our third evidence session. I'd very much like to welcome Julie James, Leader of the House and Chief Whip, Alun Davies, Cabinet Secretary for Local Government and Public Services, who's remained with us from the earlier session, and Rebecca Evans, Minister for Housing and Regeneration. Would you like to introduce your officials for the record, please? 

I've got Jo-Anne Daniels, who's—I can't remember her title. I'm sorry, Chair.

Director of communities and tackling poverty.

And I have John Howells with me, who's the director of housing and regeneration.

And Reg has remained with us from our previous session.

Yes. Okay. Well, thank you very much. Welcome to you all. Perhaps I might begin, then, with the first question on the area of equality and ask why the strategic integrated impact assessment was only carried out on the headline spending decisions rather than the detailed budget proposals, and whether a more detailed equality impact assessment of the budget will follow and be published.

Well, Chair, I'm going to have to start my appearance in this committee by saying two things, if you don't mind. First, I just want to say that I'm very privileged to be walking in Carl Sargeant's footsteps into this portfolio. That is a very large position to fill indeed and I hope I can do it some justice. The second is an apology to you that I'm not going to be able to do it any justice at all today because of the extraordinary events of the last few weeks, which we're all very familiar with. I'm afraid I've had much less time than I would have liked to prepare for this committee, so I'm going to be relying very heavily on my official, who's very helpfully tried to get me up to speed, but, I fear, insufficiently to do the committee justice. So, I hope you'll excuse me in this instance for asking the official to answer many of your questions. 

I'm sure the committee fully understands what you're saying, leader of the house, and would be pleased to hear from the officials and, indeed, possibly follow up with perhaps some further questions in writing in due course.

As we have done in previous years, the Welsh Government has produced a combined strategic impact assessment. We've done that because this enables us to give consideration to a wide range of impacts and those that affect socioeconomic contexts—children's rights, Welsh language, sustainable development. And that integrated approach provides a more realistic overall assessment, we think, of the cumulative impact of the decisions and the proposals put forward in the draft budget.

Okay. And in terms of Communities First and the decision to end Communities First, the narrative to the draft budget states that,

'extensive impact assessments were carried out'

on the decision to end Communities First. I wonder if you could tell the committee what are the main equality impacts of ending the programme, with regard to both staff and service users.

So, Chair, I'm a little bit more aware of this particular issue, because in my previous portfolio I worked very closely with the then Cabinet Secretary on some of the impacts for the ending of Communities First. We've done a range of full impact assessments across the ending of Communities First, and this included a children's rights impact assessment, Welsh language impact assessment, and an equalities impact assessment. The impact of the decision on each of the protected characteristics is outlined in the published impact assessments.

What's interesting, though, is that the information suggests that the protected characteristics of age—so, young people—and those with disabilities, in respect of mental health in particular, are projected to be impacted the greatest, because a number of projects inside Communities First obviously focused on those areas. The reason I know a little bit about this is because in my previous portfolio, I was in charge of putting together the employability programme. And so, some of the extent and nature of the impact of this going forward will depend on how well we manage the employability programmes, because many of the employability areas are specifically designed to pick up the work of Communities First. Indeed, Carl and I had worked very closely together on getting some of those projects to carry on, because they were employability projects, by and large.

One of the issues with Communities First, as you know, is that it had a very different effect depending on which area it was in. Some of the best impacts Communities First had were in employability, so we had worked very hard on that. So, I do think it would be hard to say quite what the extent and nature of the impact will be until we see what the employability programme is able to pick up, and which of the programmes that Communities First initiated are able to be taken forward.

When will we see the employability plan?

So, the plan will go live shortly. It's no longer my responsibility; it's the responsibility of Eluned Morgan, who's the new Minister for Welsh Language and Lifelong Learning. Skills is within her portfolio now, but I believe the previous timetable from when I was in charge of it is going to hold, so that will be—. The Welsh Government part of it will be announced towards the end of this year, the very beginning of next year, and then there will be a consultation and roll-out phase with a full start in April 2019, but that's not to say that nothing's happening in between. A large number of the projects have been picked up and rolled out as continuations of existing employability programmes, and some of the employability programmes that were previously in the community portfolio, such as Parents, Childcare and Employment and Communities for Work, have also picked up some of the issues that arose.

Okay. Well, we'll be coming on shortly to some of the employability issues, but before we do, I wonder if I might ask again, in terms of equality impact assessment, whether there will be a full equality impact assessment with regard to the proposal to cut £13 million from the proposed new early intervention, prevention and support grant for the 2019-20 period.

Yes. We're going to conduct a full equality impact assessment on the proposal to move to a single grant, so we'll be working at looking at that across the piece with a full equality impact assessment.

Okay, thanks for that. Okay, we'll move on to employability, then, and Gareth Bennett.

Thanks, Chair. I think, from what the Minister, or the leader of the house, just said, Eluned Morgan is responsible for skills. Will she be responsible for Communities First legacy funding and the other employability programmes, like Communities for Work, PaCE and Lift?

I think that's you.

Sorry—it's the wrong one.

Yes, that's me, unfortunately. I'm afraid I will be dealing with all of those issues. Can I say that, in terms of taking these matters forward, I'd follow on exactly the points that Julie was making in the previous response? I think it is important that we look hard at how equalities are going to impacted by decisions that we take and that we do full equality impact assessments on all of these decisions, so that whatever decisions we take are shaped by the knowledge of its impact on different people within our community. The issues that Julie described in terms of people with disabilities, young people, for example, will certainly be guiding the decisions that I now take in terms of Communities First and the legacy programme. 

Thanks. What's the cumulative total of funding for Communities for Work, Communities for Work Plus, PaCE and Lift in 2018-19? 

The total allocation is just under £16 million. I think I'm correct in saying that we have already allocated funding for this and it will be entirely within the prevention and early intervention Bill, which is part of the wider early intervention, prevention and support action budget line. And can I say, in tackling these issues, I worked with Julie on these matters in our previous portfolios—me from a point of view of further education and Julie as the then skills and employability Minister—and also bringing into my mind is the work on the Valleys taskforce, because I'm very, very concerned? I read the Bevan Foundation's recommendations in the 'Prosperity without poverty' report last year, and I thought it was very, very striking, some of the points that were made in that report about how we, as a Government, need to be very, very mindful, not only about the equalities impacts of negative decisions we could take in terms of stopping doing things, ameliorating decisions that we take, but also how we focus our proactive work in terms of economic development, our policy on the economy, and how we then look at interventions, such as my previous portfolio in education, as well as some of the more social policy initiatives that we take. My approach, as I tried to outline in our previous session is to focus very much on the eradication of poverty, and we know that poverty doesn't affect everybody equally. We know, for example, that poverty will affect women in a way that is far more profound in many of our most deprived communities than it does men. So, therefore, how does that guide our decision making? How does that take us in a direction to deliver social policy that is actually designed to address the real needs of people in our communities? So, I think the conversations we're having at the moment on equality have to be absolutely profound in terms of where we're going and what we want to do, and I think—and this is something that Carl, actually, was very, very clear on in all of our private meetings when we were debating these issues—that they have to be rooted in equality and not simply go through a policy gateway box-ticking exercise, but philosophically rooted in a determination that equality has to be a key outcome of what we seek to achieve. 

Thanks.

Okay. Jenny, welfare reform.

Welfare reform. One specific issue I'll just pick up on first, because Alun's just mentioned the unequal impact that poverty has on women. One of the conversations I was having with Carl Sargeant was about period poverty and the fact that some women are unable to afford the menstrual products that the rest of us would take for granted. I just wondered if you could elaborate on whether the money that had been identified by Carl Sargeant is still in the budget. I think that's Julie. 

That's me, that bit, although welfare reform itself, I think, is Rebecca. Sorry, Chair, we're still getting to grips with some of the edges of these portfolios.

It takes a while, I know.

The answer is that I don't know whether it's still in the budget, but if it isn't, I will certainly put it there.

Thank you.

So, I'm very committed to that agenda, and I know that Carl was, and we certainly will be taking it forward.

Thank you very much for that reassurance.

Just going now to the broader scenario of welfare reform and the tsunami that's coming down the road in the form of universal credit being rolled out across Wales, I wondered if I could ask Rebecca about the size of the discretionary assistance fund in the context of the fact that people are going to have to wait at least six weeks before they get any payment under universal credit. There was £12 million a year originally allocated back in 2013, and then it was reduced considerably, but it has now been increased by £1 million. So, I think it's now £7.4 million with this contract with Northgate. I wonder if you could just elaborate on whether you think that is going to be sufficient in the context of universal credit.

Thank you for the question. I would also begin by echoing the comments that Julie made at the start, in terms of what a privilege it is to come into this position, following in Carl's footsteps and taking on the kind of work that he was so passionate about.

You're absolutely right to identify universal credit as a serious matter of concern for Welsh Government. One of the first things that I did after coming into post was send a letter to the Secretary of State expressing our continued concerns about aspects of universal credit, including that wait that people have before they have their first payment and so on. We will keep putting pressure on the UK Government in the hope that they will make a decision to allow people to have a payment in a much more timely fashion, because we know the impact that it is having on families.

The discretionary assistance fund is just one part of our response to it. Our response also includes things such as our work on council tax reductions, for example, and our adverse childhood experience hubs. It encompasses so many parts of our work, but it is an important area, and that's why the finance Minister agreed to increase the funding for this fund by £1 million as of next year. So, the discretionary assistance fund, the two elements of it together, will then sit at £8.7 million.

Currently, for this year, the fund hasn't been fully utilised, but we would expect it to be utilised during the course of the year. 

Could you just describe what the relationship is between the discretionary assistance fund and the option for claimants to get a loan in advance of having to wait this six-week period, which they get obviously from the Department for Work and Pensions? Obviously, a loan from the DWP has to be repaid. Do you expect the DAF money to have to be repaid under certain circumstances? Can you describe to us whether all DAF has to be repaid or whether it's only in certain circumstances?

No, they are two separate funds. The advance money that you would get from the Department for Work and Pensions, for example, would have to be paid through your next payment, whereas the discretionary assistance fund is a completely separate fund, and there are two elements to it. One is an emergency cash payment of up to £60, and another element of it is a much more flexible element, which could include things such as white goods, for example. So, it's about looking after and supporting and sustaining people's physical health and their well-being and their mental health in very difficult circumstances. There are two elements to it, and we don't expect that to be repaid.

Okay, so neither element would be expected to be repaid of the discretionary—.

No.

Okay. Thank you for that. Could you just, specifically—? We did, in our review of the refugee and asylum seeker situation, recommend that there should be small grants available to asylum seekers where they're at risk of destitution. I wondered if the Government has had time to consider whether that's something that would be appropriate.

I think this is one that Julie James is looking at.

Yes. I haven't, I'm afraid, had any chance to look at it, but I'm more than happy to have a look at it in the future.

Okay. On the sort of wider agenda about how we cope with the full roll-out of universal credit, what expectation do you have of the state, in the form  of the Department for Work and Pensions and partner organisations collaborating together? I know that there's been successful collaboration in Torfaen, which was a pilot area. Is that the sort of model that you'll be promoting for other parts of Wales?

Well, certainly, in local terms, I would be encouraging and expecting our job centres to be working closely with partners. I know that's something I've pursued on a very local basis, as a constituency Assembly Member, to ensure that our local job centres, within the context of the huge challenges coming down the line, are engaging with all of the local services and partners—for example, the violence against women organisations, ensuring that the front-line members of staff of the DWP in the job centre are aware of the services that they offer. Because we know that paying funding into just one member of the household's bank account can have a knock-on impact on the other members of the family who might be subject to financial abuse and coercion and so on as a result of that. So, it’s absolutely essential that people working on the front line are aware of, and are connected with, all of those organisations that are able to offer support.

Can I add to that, Chair? In my previous portfolio, we'd done an enormous amount of work as part of the employability programme in linking up DWP services—Jobcentre Plus, Careers Wales and a whole series of other programmes—for the sole purpose of making sure that, when people got advice, they got comprehensive, universal advice. Because, sometimes, the way that benefits are structured means they can’t access other beneficial programmes. It’s actually very important for all of the staff advising to understand all of the ramifications of the various detail of particular forms of universal credit, for example, as in the way it impacts with housing benefit. So, for example, having a young person go on to a Jobs Growth Wales scheme could impact the family's housing benefit overall and might have a poor effect unless it was handled in the right way. So, it’s actually very important for quite a lot of Government programmes to make sure that Jobcentre Plus, DWP services in general, and our services all interact properly in order to get the best possible outcome, given the really serious needs of some of the people we're talking about, so that we actually don’t inadvertently disadvantage them with one of the programmes.

Okay. And I think Siân Gwenllian on this point.

Can I just say that, obviously, we need to keep this quite brief because we're talking about the budget and budget allocations here?

But I’m asking about the fiscal framework as well. That should be negotiated as part of this.

Well, I’ll certainly explore those discussions that Carl was having prior to today’s meeting because I hadn’t been apprised of that.

Okay. Joyce.

Sorry, can I say as well, we're always content to explore these issues and to have these conversations with the United Kingdom Government on all of these different matters? However, the United Kingdom Government must always accept its responsibilities as well. They refused to participate in a vote in the House of Commons some weeks ago on this matter because they knew they couldn’t win that vote. So, they run away from the House of Commons, and they run away from their responsibilities. As a Welsh Government we will always engage with the United Kingdom Government and seek what is best for the people we represent. However, we have to be very, very clear as well that the United Kingdom Government has responsibilities of its own. It’s not a matter for this Government to take up and pay for them walking away from their responsibilities. So, 'yes' is the answer to your question, but don’t let them off the hook either.

Joyce.

One of those responsibilities that we have set out quite clearly is that we are going to give people better housing and more housing, and everything suggests that universal credit sees people ending up in significant rent arrears that will potentially impact on social housing landlords or providers who need to use that as financing for future capacity building within those markets. So, can I ask you whether, when you're looking at universal credit and its impact, you are doing some cross-referencing on the potential impact, from the information so far, on our programme to produce more housing for the people in Wales?

Yes, we are. We're using, obviously, Welsh Government data, but also the information supplied to us by organisations such as Citizens Advice. And some of the—. And it is early days, because, as you know, it's only rolled out in some areas, but the early advice really is that things such as verification of rent details and other supporting information are actually taking much longer than people would have anticipated in many cases and that this is having a knock-on impact then in terms of rent arrears. So, there are various issues that we do have to look at there.

One positive thing that we can do, however, is look at what we can do to support people in terms of financial inclusion and access to independent advice, assistance and support in order to manage those household budgets, because many people will be used to having their money paid directly to the landlord. We're very much encouraging that to continue. However, in some cases, where people don't, then obviously there is going to be a new challenge in terms of being able to manage those household budgets. I might ask John to fill us in on some of the work that's—

It would have to be quite brief, I'm afraid—we've got very limited time.

Just to say that we are very concerned about the impact on rent arrears arising from the universal credit changes. That's part of our constant engagement with the housing association sector.

Thank you.

Okay, thank you very much. Admirable brevity; thank you very much. If we move on, then, Joyce, some questions on community safety.

Yes. We all know that this is an area that we are really concerned about. I want to particularly look at how you're going to ensure, within your budgets, certain lines. One is the violence against women, domestic abuse and sexual violence line, and the £500,000 extra that has been allocated there and the need to know exactly how that is going to be spent, if you are able—if you're not, a note on it.

Well, the aim of the money was to strengthen the emerging regionalisation work. I haven't got my individual mind around it yet, Joyce, but I didn't have any problem in discussing it with the previous Cabinet Secretary with the direction it was taking and I'm sure that we'll be able to take it forward in the same way.

Basically, what we were trying to do is join up the services better. I'd had many discussions with him around joining up services. Relevant to the previous discussion, the additional money is to get that regionalisation and get those services to work better together—it's very much in line with the discussion we were just having about other services—to make sure that you get the best outcome for the individual from the range of services that are necessary. And every individual has a different set of circumstances that need a slightly different set of solutions. So, that's what that money's for. I'm looking forward to seeing what else we can do with it.

I know that the Cabinet Secretary for local government said in an earlier statement that it is his wish that local government will have autonomy where that's needed. With an increase of 23 per cent of incidents of domestic abuse within all police forces in Wales and the increases in the deaths this year in Wales as a consequence of domestic abuse, my question is this: as I understand it, some local authorities have in the past reduced, and may very shortly reduce, their budgets that support women and men facing domestic abuse. So, whilst we're looking at autonomy, could we also look at ensuring that those budgets that offer the front-line services are not reduced so that we don't see a greater increase, where it could be avoided, in the incidents?

I think that's an excellent question, Joyce. You'll remember the Bill that we enacted in the last Assembly, and the purpose of that, of course, was to do a number of different things: to bring consistency to service provision across the face of the country and also to learn from each other and to provide local authorities and other services with the support they need within an overall, national context in order to deliver for people within their areas—if you're talking about local government, within that particular local authority area. 

I hope and I expect all local authorities to continue working positively to deliver for people in their regions. You will remember when we both represented Mid and West Wales some years ago that there were a number of service areas in some rural authorities, and I remember the work that you led on that, Joyce. Now, I would anticipate and expect that, were local authorities to reduce their commitment to this field of work, the national structure would ensure that services didn't decline in the way that they did prior to this legislation being enacted. So, I hope that we now have in place not just a positive, proactive policy direction in terms of the strategic approach we take, but we've also got a framework that means that all local authorities will continue to work with other service providers in order to deliver these services and ensure that they are delivered at the point of need.

Okay. Well, thanks very much for that, and we move on, then, to Siân Gwenllian, and some questions on Supporting People.

There was a piece of work done that said that around 10 per cent was what you might expect in terms of efficiency, with combinations, and so the piece of work has been done; it assumes the 10 per cent efficiency. Also, we've worked very hard to give greater flexibility across areas, and so the working assumption is that it's possible to do it.

I'm not sure that that is the case, actually. I'd be interested, if you do have those numbers that you can give us, where you've seen that actually happen. But let me say this: the purpose here is to bring things together to deliver the sort of holistic approach that we discussed on social care in our previous session, and also to ensure that, for those people who are delivering a grant, we are reducing the administrative costs and burden of doing so. Now, we've been told—and the conversation we had over local government matters in the previous session reflected that—that, through reducing hypothecation, through reducing ring fencing, we can provide more flexibility, and therefore ensure that that grant reaches the people on the front line, where it's required, rather than actually becoming bound up in administration. So, I would be disappointed were that to be the case.

We have experience of this providing far better outcomes in the past, and, certainly, when I sat on the Finance Committee some years ago, we encouraged the Government to do that in education. And so I would hope that we wouldn't see the outcome that perhaps you're fearing.

Also, I think there is a real issue around flexibility. So, we were talking about designing services that support particular individuals with particular specific things, and the problem with hypothecated grants is, with the best will in the world, you end up not being able to spend some of the money on things you'd like to, because of the rigid line. So, much of the work of Government, for the whole of this Assembly term, has been trying to dissolve those hard boundaries around some of this funding, and it's in every area that you care to think of; there's always something that doesn't quite fit in the tramlines. So, we do expect that the flexibility will bring greater efficacy as well as efficiency because you will be able to move the money around in order to meet specific circumstances.

And I would just add that we do have the Pathfinder projects for the next financial year, which will be informing us very much in terms of the way forward. So, seven local authorities have agreed to take forward that Pathfinder work for us, and that would help us. Were the proposals to go ahead to create the grant to which you refer, that would help us explore what kind of outcome measurements we want, and so on, from those local authorities.

Well, for 2018-19, we do have the specific Supporting People funding in its own particular budget line, which does support people who have very serious and chronic housing needs in terms of the support that they need to live independently within the community: people experiencing mental ill health, for example, young people often, people with complex needs and other conditions. So, it’s very valuable work that’s done there.

But we have seen that, when flexibility has been allowed in the past, to test the importance of flexibility, actually more money has been put into the Supporting People projects on a local basis than has been taken out. So, I think that’s an important perspective there. We’ll be further trialling that importance of flexibility over the next financial year, where those 15 local authorities who aren’t within that seven Pathfinder group of local authorities will be able to have 15 per cent leeway or flexibility in terms of moving money in and out of Supporting People, but also Flying Start, Families First, the Communities First legacy fund and the employability grant, to give that level of flexibility. Again, we’ll be learning from that as we consider the way forward.

Diolch.

So, as far as 2019-20 is concerned, then, and whether there would be a specific amount identified for Supporting People, you wouldn’t be able to give that commitment at this stage, then.

Well, there’ve been no proposed cuts to Supporting People either in 2018-19 or in 2019-20. In 2018-19, you’ll see it in its own budget line, and in—

I’m just wondering, will that continue its own budget line for 2019-20?

No, for 2019-20 you’ll find it as part of the wider early intervention, prevention and support budget line.

And there wouldn’t be any specific delineation for that sum of money within that. It would be included.

I would say no decision has been taken as yet because we do want to learn from those Pathfinder projects and consider the issues more widely. For me, really, this is about getting the best outcomes possible for those vulnerable people in society, which is why we’re very much committed to fully engaging with the sector. I’ve asked my team to look at setting up a series of visits for me so that I can go out and see some of these Supporting People projects for myself, speak to the people on the front line delivering those projects, and also speak to people in receipt of those projects, to test out things such as: how have these projects been adapting in recent years to take account of the Social Services and Well-being Act, for example? How are they putting individuals and those ‘what matters to me’ conversations right at the heart of what they’re doing? We’ll also be considering things within the context of the Wales Audit Office report as well. So, there’s lots of work yet to do, lots of engagement yet to do, and, as I say, no final decision has been made.

Okay.

So, within the grant, there is a possibility that you could specify certain areas of work. That is possible, but you’re thinking about it.

Well, the proposal currently is to move those grants into that larger grant for the 2019-20 period. That is the proposal. However, no final decision has been made on it.

Okay. Thanks for that. We’ll move on, then. Janet Finch-Saunders has some questions on homelessness.

Yes. Why is it that some of the additional funding for homelessness prevention has been made available through the revenue support grant rather than entirely within a specific homelessness grant?

Well, we see tackling homelessness very much as one of the core statutory duties of local authorities, and that's why it's more appropriate for that funding to sit within the revenue support grant. And it also then gives local authorities confidence in terms of long-term funding for that.

In terms of the calculations as to how that funding was arrived at, perhaps I'll ask John to say a little bit about that.

You may recall there were some numbers published at the time of the Housing (Wales) Act 2014 on the cost of implementing the preventing homelessness duty. We've worked very hard over the last few years to make sure that sufficient funds were made available to support the cost of implementation, but we're also concerned that the pressures were growing on local authorities and that, although we made a calculation four years ago, the pressures were increasing over time. So, what we've now down in response to those pressures is to put a very significant allocation of £6 million into the revenue support grant, and that's about three times larger than the funding we were providing from within Government previously to support implementation costs. So, based on our original calculations, we've made a very significant contribution to local authority core budgets designed to support continuing implementation of the prevention duty. 

Okay. I do have some concerns about that. I know in my own local authority how that then transcends down to actually helping rough sleepers, because certainly some of our numbers are going up. I know when I've raised it with the local authority in that particular department, the response is, 'Oh no, that's got to be kept—it works towards our prevention agenda'. And I'm really concerned, especially with the approaching winter months, that we do have a number of rough sleepers who just—. You know, there's no support for them there whatsoever. 

Local authority colleagues have been really concerned about the need to maintain support for implementing the new prevention duty. We've now put far more than the original baseline into their budgets. The challenge, working with local authorities, is now to work out how do we flex that cash to respond to what, as you say, is a growing need in each local authority area. 

Okay. Jenny, some questions on housing supply. 

On 24 October, Carl Sargeant announced the outcome of the first phase of the innovative housing programme, for which, because of the quality of the applications, that capital budget of £10 million was increased to £19 million in the first phase. And i just wondered whether you think that that very successful set of projects that are now going to be built in any way requires you to look again at the target of only 1,000 of the 20,000 affordable homes that we're hoping to build in this Assembly term and whether that might then be increased as a result of the success of this first phase. 

I think this particular strand of work is extremely exciting, and it does offer us the opportunity to look at building 1,000 towards our 20,000 target. But I see this very much as a way of really allowing innovation to thrive and to test out various models. And it might be that, in due course, we'll look and evaluate these projects and these approaches and say, 'These are the things that really work; this is where we need to putting our efforts in in future'. So, at the moment, I think that 1,000 of these innovative homes target is an exciting one, but, obviously, I think that that would inform our approach in future. 

Could you just say a little bit about the property development fund that the Welsh Government runs to provide loans to SMEs to enable them to build new homes, because, obviously, the success of this innovative housing grant may attract more small businesses to think of what they might be able to do to contribute to the housing need? I just wonder if you could say a bit about that. 

I think the property development fund, which is £30 million—well, we've announced an additional £30 million for that property development fund—really does show the confidence that we have in the ability of SMEs to make a real contribution to the aspirations that we have for building homes here in Wales. It has been a very difficult period in recent years for SMEs, particularly in the construction sector. However, we do have many SMEs involved in our Help to Buy loans and building houses to meet that need. We have 152 developers who've used Help to Buy—Wales, and 137 of those in Wales are SMEs. So, that's exciting, although the vast majority of those homes are actually built by larger enterprises. So, we have lots of SMEs who are willing and able to step up, I think, at the moment, and the fact that we've invested this additional funding shows the confidence that we have in those SMEs.

Chair, I wonder if I could add to that, just to show the cross-Government working that's going on? One of the things that I've retained responsibility for is something called Better Jobs Closer to Home, and one of the things that we've been looking at through Better Jobs Closer to Home is some of the innovative housing projects. So, we've got a particular firm—I won't name them—in the Neath area that's been looking with us to advance that, alongside help from the property development fund and the innovative housing programme. So, we have some really excellent examples of several programmes coming together to assist a number of different agendas and take forward innovative programmes at the same time. And, even better, they're utilising some research done in some of our Welsh universities as well. So, we do have some very good tales to tell about how some of these small funds, when combined with other Government programmes, can really make a serious difference. 

I agree with you. Could you just say a little bit about the numbers, because, obviously, the property development fund are loans? So, how quickly do, particularly the larger house builders, repay these loans to make them available to other small businesses?

Just to be clear, the property development fund is specifically for small builders. That's not a support mechanism for the larger house builders. Help to Buy has been a very significant contribution to planning on the part of the large house builders. The property development fund is a deliberate attempt to make sure that we're also offering support for smaller builders, although those smaller builders can also access Help to Buy as another mechanism to support the sale of their homes. We need to be just a little bit careful about complete flexibility across funding streams when we're working with private sector builders. So, when it comes to the innovation fund, we need to make sure that we're not double counting any money. But, in theory, there's no reason why we can't be supporting small builders to be doing all sorts of innovative things, as long as we only pay them once.

Could I ask, in terms of Help to Buy, whether you consider it is sufficiently targeted at buyers most in need of help? Are you confident that that is the position?

Well, since its introduction in January of 2014, over 5,800 properties have already been purchased through that, and I think that we have around 850 further applications still going through the process. About three quarters of those were first-time buyers, and just over three quarters of those were households with an income of between £20,000 and £50,000. So, it's helping that market particularly. It's important to recognise that Help to Buy isn't for everybody. We know that other people do have an aspiration to own a home, but they can't raise that 5 per cent deposit, for example, and that's why we're looking at other innovative ways that we could support people to own a home should they wish to—the rent-to-own proposals, which we'll be considering and looking at developing, with a view to perhaps saying more about that in the new year, which would obviously make home ownership achievable for a whole new group of people as well, as well as other shared ownership schemes. 

Okay. Janet, you wanted to come in.

Yes. There are thousands of empty homes across Wales. In fact, the previous Minister actually did take this on and put a target of 5,000 brought back every year. The foot has well and truly gone off the pedal now, and I really want to know which Cabinet member is prepared to have a look at that again. There's some very good housing stock. There are thousands of empty homes across Wales. This is really good. One brought back can be fantastic housing stock for people who are already waiting for a home. 

Can I say again that, obviously, we're scrutinising the draft budget here? 

Yes, but it still comes—. The emphasis is on, to some degree, developing on green land and everything, but there is a market there, I believe. And I'm not alone, if you speak to any estate agents, even those developers: the empty stock in Wales is a commodity and a resource that you could be using.

Okay. We've got very little time, I'm afraid, but could you briefly answer that, Minister?

Yes, very briefly. It will be me who'll be taking responsibility for that particular strand of work as well. I think there's a huge amount that we can do to continue to bring empty houses back into homes. And I'll be looking to see what best practice already exists across Wales. I know that, in my own local authority of Swansea, they've had some great success of bringing around 500 homes in one year back into use. They've done that, for example, by offering a grant or a loan to an individual who owns a property in order to bring it up to standard, on the basis then that they will have a guaranteed tenant for the next couple of years and so on. So, there are ways that local authorities can work in partnership with those property owners in order to bring them back into use, and it's something I'll be looking at to see what best practice already exists and how we can scale that up.

Okay. And in terms of assessment of value for money for the social housing grant programme, could you tell us what assessment has been made?

Every scheme that is approved under that programme has to fit the Welsh Government criteria on value for money, and that's published in our acceptable cost guidance figures. Also, the social housing grant is paid to housing associations and they then use the Value Wales community benefits toolkit for all of their contracts, and they're able to demonstrate the benefit that those contracts give to their local communities in terms of things such as helping disadvantaged people back into employment and offering training opportunities for people in the local area and so on as well.

Okay. Also, on the impact that housing supply pacts with the social and private sectors have, particularly in terms of delivering affordable housing, what impact would you say has been evidenced so far?

I think we learned a lot about the importance of those pacts in our experience with Community Housing Cymru through the last Assembly term, and that very much helped us achieve our target of delivering 10,000 affordable homes, and now you'll be aware of our 20,000 affordable homes commitment during this Assembly term. So, we've entered into a pact with not just Community Housing Cymru but also local authorities in this Assembly term. Those have jointly agreed to build and deliver 13,500 affordable homes by 2021. So, that pact is extremely important. It also demonstrates the importance that we put on the work of local authorities in terms of the key role they have in helping us deliver affordable housing, and the fact that those local authorities who retain stock can now also build their own council houses, and those authorities have also agreed to provide another 1,000 affordable homes within this Assembly term.

But it's not just about local authorities and the social sector; it's also about working with private developers as well. So, I'm really pleased that we've entered into a pact with the Home Builders Federation and the Federation of Master Builders as well in June of this year, and that's because we recognise the important role that private housing also plays in meeting our housing needs. It really demonstrates our willingness to work together with all sectors to meet the housing challenges that we have. I also think that we need to be looking at what more we can do to use the planning obligations that we place on developers in terms of delivering affordable housing in future too.

Okay, thank you. Gareth Bennett on housing standards. 

Thanks, Chair. Is the Minister—the housing Minister—satisfied with progress being made towards meeting the Welsh housing quality standard, and is she now satisfied that landlords are accurately reporting the condition of their stock?

Yes. Officials do advise me that I should be satisfied with the progress made with regard to meeting the Welsh housing quality standard so far. It's something I'm going to be taking a particular interest in. I'll be very clear, as Carl was and others before him, that the target of 2020 is non-negotiable and we'll be working and providing whatever assistance and advice are necessary in terms of meeting that target. 

Thanks. Regarding that target, do you have any information about whether any landlords are likely to miss that target?

I know that concerns had been raised about one local authority in terms of whether or not they would be able to meet that target, but I'm also aware that Carl Sargeant did receive assurances from the leader and the chief officer of that local authority that the 2020 target would be met.

Thanks. How does the housing conditions evidence programme—how is it likely to influence policy development and future budget allocations, particularly relating to the private sector?

I think that particular programme is tremendously exciting, because it will provide us for the first time with the kind of level of detail about the quality and the standards and so on of our housing stock. It will give us a good idea of how successful some of our programmes have been thus far, for example in the fields of energy efficiency, hazards in housing and so on. It will also then enable us to look at where we need to be focusing our efforts in future. I understand that the first figures for that will be published towards the end of next year.

Thanks.

Okay. Jenny.

Within the budget for next year, what allocation has been provided for new publicly funded Gypsy and Traveller sites?

This is for Julie, I think. Julie—Gypsy and Traveller sites— 

I beg your pardon. Within next year's budget, how many publicly funded Gypsy and Traveller sites would you be aiming to deliver?

I don't know the answer to that, I'm afraid. I haven't caught up with that part of my portfolio.

You could write to us if you don't—

I think my official can probably help.

I can tell you that we've been undertaking an exercise with all local authorities to look at demand, as currently assessed, for these sites. From this week we expect something in the region of 50 to 60 new pitches in the next year, with around 150 to 200 new pitches between now and, roughly, 2021, but obviously this is something we're constantly in dialogue with local authorities about as they refine their needs assessments and update them.

And how close is it to meeting demand?

Well, these are the figures based on their assessments of need. So, in theory, it should meet demand.

Okay. As affirmed by the Traveller community.

Yes.

Okay. Thank you.

If we have any more information on that, Chair, I will be sure to write to the committee and update you.

Thank you very much. If we move on, then, to independent living. Could you tell the committee what steps are being taken to make sure that home adaptations demonstrate value for money and that the performance management and monitoring of home adaptations is strong enough to ensure that there is robust delivery on the funding available and we do get that value for money?

Well, we're currently gathering data on home adaptations, and actually, for the first time, we're gathering data on all adaptations from all providers, rather than just the disabled facilities grant, which has been the way we've gathered data previously. When the data is collected, we'll have the opportunity to assess that data, and I'd be happy to apprise the committee of our findings, if you like, in the future, when we have that information.

That would be great. Is it possible, at this stage, to say whether the Enable framework has helped deliver value for money in these terms?

It's still early. It's beginning to give us some positive indications.

Okay. If we move on again, then. In terms of tenant participation, the Welsh Government decided to fund one tenant organisation, and questions have been raised as to whether this allows for the tenant voice to be adequately heard. Has an assessment been made of the impact of that decision to only fund one tenant organisation?

That will be me again, Chair. It's important always to give the tenants an opportunity to have a voice and to have the correct mechanism for tenants to have that voice. There was a consultation back in 2014, and that consultation suggested that a single voice would be the most appropriate way forward because there had been some concerns about competitiveness between different organisations, for example, duplication of work and so on. In terms of assessing whether or not the current approach—and that's by core funding for the Tenant Participation Advisory Service—has been successful, then we'll be looking in terms of the performance monitoring against the criteria, which were outlined in the grant funding. So, when we have the opportunity to assess that against the criteria, we'll have a good idea. But certainly, I don't think concerns have been raised on this issue.

It's still early days. The key for tenant participation is finding new ways of engaging that real tenant voice. It's not straightforward.

No. Okay. Jenny.

I just wanted to ask about, obviously, the enforcement of private sector housing standards. Could you just tell us how much money is allocated for the Rent Smart Wales enforcement? You can write to us if you don't have the matter to hand, but I think it's quite an important issue, because there's no point in having all these landlords registered, if they're not then—.

Just to be clear: there's a budget line that we publish, but that's to do with communication activity, which is only one part of the Rent Smart enforcement picture, because local authorities have got the primary responsibility of driving forward enforcement in that area. So, I think a letter might be a good way of explaining the wider picture.

Okay. If Members have no further questions, may I thank you all very much for coming along to give evidence today, particularly Alun and his official, who have been with us since the beginning? Thank you very much for your attendance and your evidence. You will be sent a transcript in the normal course of events. Thank you very much indeed.

Our next time, item 4, is papers to note. We have three papers. The first is a letter from the Cabinet Secretary for Education to the Chair of the Children, Young People and Education Committee in relation to Communities First and lessons learnt. The second is a response from Let Down in Wales to the Welsh Government's consultation on fees charged to tenants in the private rented sector. The third is a letter from the chair of the UK Joint Committee on Women to the Secretary of State for Exiting the European Union. Is the committee content to note those papers? Okay, thank you very much.

The next item, item 5, is a motion under Standing Order 17.42 to resolve to exclude the public from the remainder of the meeting. Is the committee content so to do? Okay, thank you very much. We will move into private session.