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Y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol

External Affairs and Additional Legislation Committee

08/01/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

David Melding AM Yn dirprwyo
Substitute
David Rees AM Cadeirydd y Pwyllgor
Committee Chair
Dawn Bowden AM
Jane Hutt AM
Jenny Rathbone AM
Michelle Brown AM

Y rhai eraill a oedd yn bresennol

Others in Attendance

Des Clifford Llywodraeth Cymru
Welsh Government
Mark Drakeford AM Ysgrifennydd y Cabinet dros Gyllid
Cabinet Secretary for Finance
Piers Bisson Llywodraeth Cymru
Welsh Government
Simon Brindle Llywodraeth Cymru
Welsh Government

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

Alun Davidson Clerc
Clerk
Gemma Gifford Dirprwy Glerc
Deputy Clerk
Jennifer Cottle Cynghorydd Cyfreithiol
Legal Adviser
Jonathan Baxter Ymchwilydd
Researcher
Rhys Morgan Ail Glerc
Second Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle y mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Dechreuodd y cyfarfod am 13:30.

The meeting began at 13:30.

1. Cyflwyniad, Ymddiheuriadau, Dirprwyon a Datgan Buddiannau
1. Introductions, Apologies, Substitutions and Declarations of Interest

Good afternoon. Can I welcome Members to this afternoon's session of the External Affairs and Additional Legislation Committee, where we have various items on our agenda? Before we commence our business today, can I remind Members to please make sure their mobile phones are switched off or are on silent for the duration of the session? There are no scheduled fire alarms today, so, if one takes place, please follow the directions of the ushers. And if you require simultaneous translation from Welsh to English, that's available on channel 1, or if you require amplification, that's available on the headphones on channel 0. 

We have received apologies from Suzy Davies and Mark Isherwood, and I welcome David Melding to this afternoon's meeting as one of the substitutes. Can I offer the congratulations of the committee on your recent CBE in the new year's honours list?   

We've also received apologies from Steffan Lewis, and, on behalf of the committee, can I also wish him all the best in his recovery as he faces difficult times ahead of him? 

2. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o'r cyfarfod heddiw ar gyfer eitemau 3 a 6, ac o'r cyfarfod ar 15 Ionawr
2. Motion under standing order 17.42 to resolve to exclude the public from items 3 and 6 of today's meeting, and from its meeting on 15 January

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o eitemau 3 a 6 a'r cyfarfod ar 15 Ionawr yn unol â Rheol Sefydlog 17.42(vi).

Motion:

that the committee resolves to exclude the public from items 3 and 6 and the meeting on 15 January in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

Can we move on now to the items of business for today? The first item we have is actually to move into private sessions for items 3 to 6—sorry, for items 3 and 6—and also for the meeting on 15 January. Are Members content to move into private session for those items on today's agenda and the meeting on 15 January? 

Thank you. Then we go into private session. We'll resume at 2 o'clock. 

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 13:31.

Motion agreed.

The public part of the meeting ended at 13:31.

13:55

Ailymgynullodd y pwyllgor yn gyhoeddus am 13:59.

The committee reconvened in public at 13:59.

4. Bil yr Undeb Ewropeaidd (Ymadael) a'i oblygiadau i Gymru--sesiwn dystiolaeth
4. The European Union (Withdrawal) Bill and its implications for Wales--evidence session

Can I welcome the public back to this afternoon's session of the External Affairs and Additional Legislation Committee? We continue our agenda, and the next item on the agenda is our scrutiny of the Cabinet Secretary for Finance in relation to the European Union (Withdrawal) Bill, the implications for Wales, and the recent meetings of the Joint Ministerial Committee (EU Negotiations), and any other Brexit issues we can think of at the time. I'm sure there'll be a few popping up today.

Can I welcome the Cabinet Secretary, Mark Drakeford? Cabinet Secretary, would you like to introduce your officials today?

14:00

Thank you, Chair. So, at the table with me I have Des Clifford, from the First Minister's office, but who chairs groups of senior officials across the Welsh Government in relation to Brexit; Piers Bisson, who's the director of the new team we have working in this area; and Simon Brindle, who has been focusing for us on some of the discussions in relation to frameworks, which I know the committee has said that it's interested in as well.

Yes, thank you for that. We will have some questions on the frameworks coming up. But before we start, perhaps I can ask the opening question. Since we last met, clearly there has been a JMC (EN). We've also seen changes in European negotiations in the sense that we seem to have, not completed, but gone to a stage where we can move into phase 2 of the process. I'm wondering, prior to all those events, what consultation took place with the Welsh Government from the UK Government in relation to the decision and the stage they were at to actually move forward. Because the last we heard, when we last met, there was still quite some way to go on some of the negotiations. So, what notification did you have? Did you have any notification prior to them agreeing with the EU?

Well, Chair, in the sense that the timetable was well advertised in advance, you'll remember that the original ambition of the EU negotiators was that the decision on whether sufficient progress had been made to move to phase 2 of the negotiations would have been taken at the October Council of Ministers, and it became clear early in the autumn that the negotiations were unlikely to meet that timetable. So, the next opportunity after October was always going to be the December Council of Ministers. So, in that sense, the timetable was one that had been well advertised. In the immediate run-up to the December council, the then First Secretary of State, Damian Green, came to Cardiff on 30 November. He held a meeting with the First Minister. I was there. The Secretary of State for Wales was there as well. It was a wide-ranging meeting covering a number of the topics you set out in your letter to me in advance of today's meeting. But one of the things that was discussed at the 30 November meeting was the forthcoming Council of Ministers and the prospects for securing an agreement that sufficient progress had been made to move to stage 2. So, that was a general discussion.

The First Minister received a further telephone call from the First Secretary of State on 4 December [correction: 5 December]—in other words, in the week in which the negotiations came to a climax. It was a briefing telephone call, making sure the First Minister was aware of the state of play. It was not the case, and I don't suppose we would have expected it to be the case, that we were shown in advance the documents that were being negotiated and finally agreed, but I think it would be fair to say that efforts were made to make sure that we were kept in touch with the developing negotiations and had an opportunity to make some contribution to them.

On the basis of that, on 4 December there was a possibility of a differentiated agreement being put forward, with Northern Ireland being treated differently. Was that consulted with the devolved institutions?

Well, I don't want to say that it was consulted with us in the sense of, 'Were we directly involved in those discussions?'. But has the possibility of special arrangements or special status for different parts of the United Kingdom been part of the ongoing discussion of the negotiations? Well, Scotland, in 'Scotland's Place in Europe'—the document they published a year ago—made a very plain bid for Scotland to be allowed a special status, because they argued that Scotland had voted to stay in the European Union, and that that ought to be respected within the negotiations. The idea of a special status for Northern Ireland has been in wide circulation for a considerable period of time, and I've been in a number of meetings where it's been discussed; promoted by some interests in Northern Ireland, fiercely opposed by others and so on. So, while we were not involved in the direct discussions that went on in that week, you couldn't possibly say that anybody could be taken by surprise that that discussion was happening because it's been in the air around the negotiations for 12 months and more.

14:05

So, you were not surprised that a differentiated solution was put on the table that you weren't consulted on or informed of prior to it being made public?

Nor was I surprised to hear that there were strong voices opposed to that sort of solution as well.

Okay. Did you see any debrief following the negotiation coming to that phase 1 point where they said, 'We're now in a position to recommend moving forward'? Did you have a debrief following that?

Maybe more by chance than design, I don't know, but the last meeting of the JMC on European negotiations happened on 12 December, in the week immediately after the negotiations had taken place, and so after the agreement between President Juncker and the Prime Minister, prior to that being formally agreed by the Council of Ministers. But at that meeting, the Secretary of State for Exiting the European Union, David Davis, attended for the first part of that meeting, and he did provide, as, to be fair, he has regularly at these meetings, a very considered account of what had been at stake in the negotiations, what the debate had been about and how these matters had been resolved.

Okay. Michelle, did you want to raise any questions on this section?

Okay. Can I go on, then? The debrief was obviously available to you on the twelfth. Have you had a chance to speak to colleagues in the European Union aspect, to have a debrief from that side as well?

At official level, we have continued to have discussions and to gather intelligence about the nature of the negotiations, and, of course, to consider the mandate that has been provided by the European Council in relation to the next round of negotiations—stage 2 of the negotiations. We have our office in Brussels, who have been part of that gathering of information from our current EU partners.

There have been no ministerial discussions of that sort since that middle of December meeting, but that doesn't mean to say that we haven't been, as I say, quite closely involved at official level in making sure we are learning everything we can so that we are best able to make sure that the Welsh interests that are at stake here—that we can represent those and articulate what we believe to be the best interests from a Welsh perspective—are continued to be heard in those discussions.

Based upon the Welsh Government's position that it's always been for a transitional arrangement, this stage now clearly identifies that transitional possibility, but the EU have come out with a deadline of 31 December 2020, I think, for the transitional period. Is that disappointing that you've got such a tight timescale for the transitional period, and are you having negotiations or discussions with the European Union to look at whether they now could be considering the possibility of that little bit longer, because you've always stressed that negotiations would probably take a lot longer? You even thought of two years, and here we have, perhaps, 20 months.

In general, Chair, the position that the Welsh Government has taken is that it is in nobody's interests to have these very tight, precise deadlines. You need an idea of the length of time you think something might take, and I think that is sensible, but if you have hard deadlines in things, then I think it does not aid best decision making. It means the beat of the drum becomes more important than the quality of the decision you're able to make. So, in our discussions with the UK Government, we've tried to persuade the UK Government not to be too definitive in their articulation of a two-year transition period. You know, two years, as an indication of the sort of the length of time you think it might take, that may be sensible. But you need to leave open the possibility that if there are things that you still need to be working on and you would get a better outcome and a better set of decisions if you took a bit longer, you should leave yourself the opportunity to take a bit longer. We understand why the Commission have suggested 31 December 2020: because that is the timescale that the seven-year multi-annual financial framework works to. So, the EU will be moving into a new seven-year cycle at that point and you can see, in a tidy-minded sort of way, why you might think it would be better if the transition period had concluded before the European Union moves into that next major phase. I still think our view would be that flexibility could be in everybody's interest at that point, and it is better to find language that gives you a time frame to work to without it being overdefinitive.

14:10

And in your experience of negotiating or discussing these matters with the European Union—on your officials' side of it as well—do you think the door's open on that side to, perhaps, look at this date as a possible flexibility to possibly be extended beyond that end of the financial seven years?

Well, I think you can find arguments that point you in either direction. I'll see if colleagues have other views they want to contribute here. On the one hand, I would say that in all our discussions with European Union negotiators and those who are associated with the negotiations for the Parliament and so on, I have always found people we've talked to to be people who are open to reason and open to argument and interested in thinking through things when you put points to them. So, in that way, you might think, well, they would be open to having such a discussion.

On the other hand, it does seem to me that the history of the last 12 months has been that once the negotiating mandate is agreed by the European Union, they have been remarkably disciplined in sticking to that mandate. But I don't think it's unfair to say that there were some voices at the UK level who argued 12 months ago that once you got into the negotiations it wouldn't be long before the European Union would start fracturing and there would be different voices and they would find it difficult to stick together as a negotiating unit. The opposite has turned out to be the case in the last 12 months. Once the mandate was agreed, Barnier stuck to it very closely and he's been very closely supported by other players in that. So, the wording in the European Council's letter to the Commission is pretty definitive: it says

'the Withdrawal Agreement, must be in the interest of the Union, clearly defined and precisely limited in time.'

You might think there's not a huge amount of wriggle room in that phrase, but, of course, this, in itself, is up for further discussion at the European level.

I just want to put the counter-argument, which is that the Financial Times calculates that it's costing the UK economy £350 million a week, all this uncertainty, and that that might be an argument for getting on with having some clarity for businesses and stakeholders generally. It's ironic that this is the sum of money that we were told was going to be coming to the health service. Instead, we seem to be getting poorer by the day. I just wondered if you had any views on that as you're the Cabinet Secretary for Finance.

Well, the first thing I think I would say, Chair, is that the reason why the Welsh Government argued from the very beginning that transitional arrangements would be needed—even at the point in the very first JMC where we were the only part of the United Kingdom that was making such an argument—is that we believe that a transition period does provide an additional period of certainty for UK businesses. The remainder of a paragraph that I just quoted that small sentence from in relation to time limits is very definitive about the nature of the transition period. I don't see how anybody reading the outcome of the December negotiations could be in any doubt that actually the United Kingdom is continuing to be in membership of the European Union for a further two years. The only thing we will not be part of will be any of the political decision-making arrangements. We will have no say in the decisions that are made in those two years, but we will have to implement all the decisions that are made in relation to regulatory equivalence, continued role of the ECJ, continued observation of the four fundamental freedoms of the European Union, and so on. So, in that sense, a transition arrangement where the playing field is so very clearly defined does give businesses the certainty of knowing that the rule book that they are familiar with will be there not just to March 2019, but to the end of 2020 at the earliest, and maybe even a bit longer than that. 36

The wider question of certainty beyond that is a much more difficult question, isn't it? Because we have, to my mind, a sort of remarkable situation in which the UK Cabinet has apparently only sat down within the last few weeks, and for the first time, to discuss what sort of arrangement with the European Union they want to secure as a result of stage 2 negotiations. The reason why there is so much uncertainty for businesses and others is that the UK Government has been unable to articulate, from the moment article 50 was triggered onwards, what exactly the UK Government was attempting to negotiate through this whole process.37

If they don't know themselves what they want to get out of it, then you can see why that feeds into the sort of uncertainty that you've described. The Financial Times's figure of the £350 million is a reflection, I think, of things that businesses in Wales have said very directly to us here in Wales: for them, Brexit is now. They are having to make decisions now about long-term investment and they can't wait for the UK Government to make up its mind about what that future relationship will be, and that some of those decisions, inevitably, will be decisions that will have an adverse impact on the UK economy.

14:15

Since you mentioned the UK Government's position on negotiations, it leads us on nicely to questions on the JMC(EN). Jane, do you want to lead off?

Yes. I think it's important for us as a committee to try and take stock and get your analysis of how the machinery is working—it's the intra UK Government's machinery; it's our machinery and our influence in terms of Welsh Government. Can you just sort of take stock for us—obviously, the last opportunity, we can look at your written statement following JMC—just to see what kind of influence this kind of machinery is having? It's interesting, the First Minister, when he came before us at the end of November, and as he said more than once, he is looking for a proper Council of Ministers where things can be decided, but we need to know how the current machinery is operating and what influence you feel you are having.

Thank you, Chair. So, my experience of the JMC(EN) has been that, in its most recent experience, from the autumn of last year onwards, it was significantly better than the experience of the JMC in the period between the autumn and early spring of 2016 and 2017. Those early meetings of the JMC(EN) were deeply unsatisfactory, I think, for everybody around the table. Partly, that was because the basic things of a successful meeting were absent. Leaving Cardiff without a firm agenda, with papers not having been distributed—on one occasion not even knowing where the meeting itself was going to take place. We got on the train here and we didn't know until we got to London whether a room had been booked for the meeting. So, those basic things were absent, and the calibre of material produced, and therefore the ability to have meaningful discussions, was pretty compromised as well. Far too many people attended those meetings, I believed. It's a very large number of people in the room; very hard to have a genuinely engaged discussion in those circumstances.

Since the autumn, the two meetings that we've had, I would say, have both been qualitatively better. They were better prepared in that basic sense that we did have proper agendas; we did have proper papers; they took place where they were meant to take place. The number of people attending had been radically slimmed down on the UK Government side, and the then First Secretary of State—I want to be as fair as I can be about this—I felt, made a real effort to make sure that those meetings had a chance of success. So, he came to Cardiff, and I know that he went to Edinburgh as well, in advance of both of them, to prepare the ground for them, so that when we got to them there was proper business to be transacted and a sense of some progress being made. So, I think you could say that the recent experience was considerably better than the previous experience, and does demonstrate that if these meetings are approached with the necessary effort and in the right spirit, then they are capable of transacting some significant business.

Now, we will have to wait to see what the next round will bring, because we will have a different chair. It will be the fifth chair of the JMC(EN) during the period that I've attended it, which is not satisfactory, to find that change happening so often. And quite a lot will depend, I imagine, on the approach that will be taken by Damian Green's successor.

14:20

The 12 December meeting does sound as though it was more constructive. Would you have said that it was? Obviously, it was following a very important development in terms of the report, and it was pre the council meeting. Would you say that that was the case? I mean, obviously, things are going to change, so that's a real challenge that we need to think of.

Yes, yes. Chair, I think what I would say is that the meetings were, as I've said, qualitatively better than the previous experience. What we are yet to learn definitively is whether that better atmosphere and that better sense of being genuinely engaged in things, whether that will lead to a demonstrable set of outcomes. So, there are outcomes that we will need to see from the JMC process in relation to the way in which the next round of negotiations are conducted: how common frameworks are to be negotiated, whether the withdrawal Bill will be amended in the way that it needs to be amended, from a Welsh and Scottish perspective. All of those things were well discussed at the December meeting, but we're yet to be at the point in the process where we will see whether those discussions actually produce real outcomes that demonstrate that the process has been a success. 

The old Joint Ministerial Committee on Europe, when we were members of the European Union without any intention at that stage of withdrawing, was thought to be quite functional. So, when it met to prepare for a Council of Ministers—. Let's just take agriculture as an example. In the last 10 years, there's been a big reform of common agricultural policy, so the JMC(E) met and it agreed what technically was called a 'speaking note'. That was Ministers agreeing, but before that a whole bevvy of work undertaken by officials. So, then there was a common negotiating position. Is that the kind of constructive working relationship you're aiming for, and what chance has it of emerging? Because, as I said, there is actually quite good precedent in this area, I would say.

Well, thank you, Chair, and just to say to David, I have, myself, directly cited the JMC on Europe as an example of how business could be conducted in the future—at least as a starting point. Jane Hutt was a long-time attender on behalf of the Welsh Government at JMC(E). JMC(E) still meets, and I represent the Welsh Government on that as well. As it happens, I'm the only person of the JMC(EN) who is also a member of JMC Europe. So, sometimes, I'm able to explain to them that, as a model, it works in the way that David Melding has just suggested. Its remit is to look ahead to the next Council of Ministers meeting to make sure that the position that will be taken by the UK Government is properly informed by the views of the devolved administrations. It meets to a regular timetable, and that's something that the JMC(EN) could learn from. You're not always negotiating the next meeting—there's a calendar, so they're predictable, they have well-prepared papers in advance. It isn't just the UK Government that is able to commission papers for JMC(E). Devolved administrations are able to say, 'We think we need a paper on this topic', and a paper is produced because devolved administrations have asked for it. The purpose of it is to have a substantive discussion about business to agree the position that the UK Government will take when it is at that next set of negotiations and also sometimes to agree that it will be a devolved Minister who will represent the United Kingdom in those discussions. So, I try to persuade the UK Government that, in a different part of the forest, there is a piece of normal business that goes on where they themselves are able to demonstrate that reaching common positions by agreement can be done successfully, and that we can build on that experience and do more of it the other side of the European Union.

14:25

And I think, following that point on, there's a lot of good work between the JMC(E) by the officials, and that was UK Government officials with Welsh Government, and they used to meet together as well—Scottish Government, Northern Ireland. So, it seems that it's a very important point you made, in fact, in your statement, that it could be a template for the future, as David has described, but also it actually demonstrated the devolved administrations having an influence. From our perspective, we see the headlines—the Scottish Government, for example, saying they want a cast-iron commitment about the amendment, that the EU withdrawal Bill needs amending to protect the devolution settlement, and I'm sure you've had discussions not only with the Scottish Government, but, presumably, hopefully, in JMC(EN) or JMC(E). Perhaps you could comment on that as well.

Thank you, Chair. Well, yes, Jane's absolutely right, Chair. The issue of the withdrawal Bill was an agenda item at the JMC(EN). It's an example of where the then chair of that body had come to Wales on 30 November to prepare the ground for that discussion, because, when he came to meet the First Minister on that day, the bulk of the discussion was about the withdrawal Bill, making sure that the Secretary of State was aware of our position. I think you have to separate out what the Scots have said. It seems to me there is a cast-iron guarantee that the UK Government will now come forward with amendments to the withdrawal Bill, because the Secretary of State for Scotland said that specifically on the floor of the House of Commons. He said that the UK Government will lay amendments to the withdrawal Bill to take account of the points that have been made during the Committee Stage on those devolution matters. So, there is a cast-iron guarantee that there will be an amendment. What we don't have a cast-iron guarantee on is the nature of that amendment. A point that I made at the JMC(EN) was that, from a Welsh Government point of view, we have always said that we would like the withdrawal Bill to succeed. We want a successful Bill. We understand the need for an orderly exit from the European Union in which the law that we have grown up with for nearly 40 years can be, in an orderly way, translated into domestic law so that many important services can continue to run in a proper fashion. So, we've never had a problem with the purpose of the withdrawal Bill. If the UK Government is to succeed in that, and if they could bring forward an amendment, there is no point in them producing an amendment like a rabbit out of a hat the day before they put it down at Report Stage, because that will have no opportunity for us to be engaged in discussing that amendment with them and making sure that it is an amendment that we could support, because we would like to be in a position where we could support that amendment. If we could support the amendment, the Bill would be in good order and we would be able to come to the Assembly with an LCM that we could recommend to the Assembly. So, the nature of our discussion with the UK Government is always trying to say to them, 'Work with us on this', because there's no great difference between ourselves and the UK Government on what they say they want to achieve here, but if they go about trying to achieve it in the way they have so far and that we cannot support them, and if they worked with us on a solution, we're confident we could reach a position where we could agree.

14:30

We'll come back to the EU withdrawal Bill later in the questions because there are some that are more specific, but can I just clarify one point you just said: at this point, you've had no discussions with the UK Government as to any possible amendments that may be laid at the Report Stage?

No, let me give you a slightly more nuanced answer than that, because we have had discussions with the UK Government about the fact that they are going to bring forward an amendment. We have not seen the text of any amendment, we've not had a chance to discuss the detail of what that amendment might be, but it wouldn't be right to say we've had no discussions with them about an amendment because we, very directly, have had a discussion with them about the fact that an amendment is necessary.

There's no idea in the Welsh Government as to what the text of that amendment is or actually what it would be addressing.

No. I have seen nothing on paper that says that this is how the UK Government intends to fulfil the commitment that the Secretary of State for Scotland very explicitly gave.

I mean, it would be helpful—. You said you haven't really got a timetable for JMC(EN). So, have you got a date for the next meeting?

There is a commitment to hold the meeting early this year. I think it would be very helpful indeed to have one in January, but with a new Secretary of State and a new chair—all those very practical things about getting dates in people's diaries and getting agendas agreed. The fact that we've had nobody in that position now since before Christmas, will, I'm sure, have some impact on the timetable.

Just to give you real-time information, we understand David Lidington is now the First Secretary.

[Inaudible.]—not First Secretary. He's got the Cabinet Office. 

Cabinet Office. So, it's likely that it'll be transferred to Lidington.

Well, at least if it is David Lidington we will be dealing with someone who has long experience of chairing the JMC Europe. Therefore, at least he's very familiar with the way that these things have been done.

But can I ask one point on the JMC(EN)? What you were discussing on 12 December seems very much to be the frameworks—and we'll come on to that in a minute—but is the JMC(EN) actually more of a discussion on UK internal issues rather than EU negotiating issues? In other words, will you be able to influence the negotiating position, and particularly in phase 2, through the JMC(EN)?

Well, Chair, I think the agenda of the December meeting combined both of those things because the first half of it was the discussion with David Davis about the negotiations at phase 1 and there was a very real opportunity there to hear from him about the way those negotiations had been conducted and to make the point while he was there about Scotland and Wales: that a different level of involvement in stage 2 negotiations will be necessary, because in the stage 2 negotiations, the things that will be being decided will, at various points in the process, be things that do not lie in the hands of the UK Government. They will be discussing and negotiating things that are the responsibility of the Parliament in Scotland, here, and in Northern Ireland. Therefore, we will have to be much more directly involved in that. So, the JMC(EN) is not just about the internal workings of the United Kingdom—important as those things are—and I think in the next phase of the negotiations it will inevitably have to focus more on the way in which devolved administrations are involved in phase 2 discussions.

14:35

So, we look forward to the agenda for the next JMC(EN), then. And since you have talked about frameworks—Dawn, did you want to ask a question on frameworks?

Yes, thank you, Chair. Just a few questions, really. One you have already talked about earlier, actually, about it not being sensible to have hard deadlines. But do we have a timetable, at the very least, in terms of the agreement on the UK frameworks?

Well, I'll stand to be corrected now if I'm getting this wrong, but my own view of it, Dawn, is that if you've got a transitional period arranged where all the rules will be the rules as we know them today, then actually some of the urgency that was in negotiating frameworks—. I think we have got longer to do this work than we might have done had we been leading without a transitional arrangement at all, because the current rule book will continue up until the end of 2020.

Yes, so it takes the immediate urgency out of it, yes.

It does, yes, because the point of frameworks is how we replace the rule book that we have today with a UK rule book to make sure that we don't have things that get in the way of the UK itself being able to operate as a single market and so on. 

So, I think it is still very important to press on with the discussions, but some of that cliff-edge sense that the 31 March 2019 was bearing down on us, I think that has—

Are you satisfied that the devolved Governments have an equal role in the discussions with the UK Government around the common frameworks? Are we first among equals in those discussions? Is that the impression you have?

I don't think we are first amongst equals, but I think we are amongst equals, and I think that's a bit of a change in the atmosphere as well. I certainly think, in the first part of these discussions, the Cabinet Office did very much see itself as running the show, and the devolved administrations then being involved in the way that they were leading things. My understanding of the discussions that have happened so far, the 'deep dives' as you will have heard them called, on the topics that have been discussed so far, is that they have been a good bit more collegiate than that, with the constituent parts of the United Kingdom coming together on the basis of equal participation, equal contributions, and having an equal stake in agreeing the outcomes.

Have you been reassured in any way that the Government's agenda has changed at all, in terms of the rolling back of the powers from Welsh Government, or are you still nervous about what the UK's agenda is in that particular area?

Well, Chair, one of the things that we have had to say repeatedly—and repeated again at the last JMC(EN)—is that our participation in the discussions on the frameworks is without prejudice at all to our fundamental position that if the withdrawal Bill is not amended, we cannot support it. So, even though the discussions on frameworks have, I would say, gone reasonably well, that—. If you think of those first deep dives as being to do with proving the concept, the concept that we have always advocated, that if you come together around the table to seek agreement, then agreement is possible because we've all got an identity of interest in trying to make sure that sensible solutions are found. Now, the UK Government, to begin with, was not convinced of that. I don't think—. They did not seem to me to have a particularly mature view of the way that devolution operated. It was like we couldn't be trusted to come to the table and behave in that sensible way. Now, I think that the deep dives have demonstrated that in our view of the world, when people come together with proper intent, you can craft consensus and reach agreement. I think that concept has been proved. The challenge for the UK Government now is to translate that understanding into amendments to the withdrawal Bill that allow that way of conducting business in the future to be codified in the law. No matter how well the discussions on frameworks go, if we don't get that other side of this coin, the outcome will not be satisfactory to us. 

14:40

I appreciate that, but do you get any sense at all that the UK Government might impose their own position on common frameworks if there's no agreement, or do you get the sense they are moving towards seeking that consensus?

I'd probably make two points, Chair: I do feel that there has been a movement in favour of consensus. Alongside the discussions on frameworks, the other point that I have tried to make, as forcefully as I can at the JMC, is that, alongside the frameworks themselves, we will need a set of governance arrangements. Once the frameworks are agreed, how are they to be updated? If one of the parties to the framework agreement wants to have some of it revisited, then what will be the process that allows them to signal that to everybody else? If there's a dispute over the interpretation of the implementation of a framework, how will that dispute be resolved? There will need to be a set of machinery put in place to support the agreements in the future. That's where the discussion on the JMC Europe and the First Minister's concept of a council of Ministers comes into play. So, I think my main answer to the question is that you would not expect a situation in which if things aren't agreed the UK just comes in and sweeps things. There would need to be a proper process and you'd expect it to be agreed in that way. 

My second point is a slightly different one, and maybe slightly cuts across what I've just said, but just to say that, actually, in the end, as in the JMC(E) when you're trying to negotiate a common position in relation to the European Union, if you can't reach an agreement, in the end someone has to be able to make a move, because sometimes there are deadlines and positions have to be crafted, and we would need to think that through in these governance arrangements as well. How do you come to a point where, if agreement isn't possible by the process of consensus and discussion and so on and a decision has to be made—what's the default that you'd revert to in those circumstances?  

I was going to ask you, actually, about the governance arrangements and what you think the Welsh Government's red line is, what absolutely has to happen in that process. Maybe we haven't quite got to that point yet and it's just something that needs to be revisited—tell me if I'm wrong. But, in terms of how the Assembly is going to be kept informed as we go through this scoping exercise, how do you see that happening?  

Well, Chair, I think in two ways: I think, first of all, we would just want to make sure that we continue to build on the ways that have been established so far. So, I would say it, wouldn't I, I suppose, but I think that the Welsh Government's record in terms of keeping the Assembly informed has been a reasonable one. I've appeared—. At committee level, I've appeared here regularly. The First Minister has appeared here. I have appeared in other committees of the Assembly when they're looking at specific aspects of European policy. So, I think we've done our best to report back to the committee system. We've made oral statements. We've made written statements. There were three different written statements made in the last sitting week in December on different aspects of European Union negotiations and policy. The Welsh Government has held debates in Government time on these aspects. So, I think we would want to suggest to you that we've done our best to make sure that we report as regularly as we can on the discussions that have been going on and to be held accountable for the part that we've played in them. 

As we move forward into next phases—the phase 2 discussions and so on, maybe a more regular pattern of JMCs and so on—then I think it's important to have a dialogue, particularly with this committee about how the oversight and scrutiny role of the committee can be discharged. I would imagine—it will be for the Chair, more than me, to be in charge of this sort of thing, but I imagine that would begin with a discussion between officials to begin with, and then probably a discussion with the Chair and myself. But I think the Welsh Government will be keen to make sure that we build on the way that things have happened in the last 12 months and make sure that there is a fit-for-purpose set of arrangements for the next 12 months in which the actions that we carry out on your behalf, or on behalf of Welsh Government, can be properly reported and investigated.

14:45

That's fine. I've just got one final question, Chair, if I might. Discussions about mechanisms for replacing the EU funding streams: is that going to be part of the discussions around common frameworks, do you think, or is that likely to be discussed separately?

Well, so far, Chair, insofar as there have been those discussions, I think they have happened separately rather than within the framework discussions themselves, although I think it's hard to imagine how, as some of those framework discussions—the ones on agriculture, for example—develop into the detail, the issue of funding in the future doesn't become part of the way that that will have to be discussed. What we have is a new joint committee at official level between the Treasury and the devolved nations, a forum that is dedicated to the Brexit consequences. There has been an opportunity in discussions at ministerial level, with the Chief Secretary to the Treasury, in the run-up to the autumn budget, where, both in a bilateral that I had with her and then in a trilateral in Scotland as well, we had a discussion about the way in which the funds that come to Wales and to Scotland today as a result of our membership of the European Union—how that funding stream is to continue to come to Wales and Scotland in the future. Because you will know that that is the clear position of the Welsh Government: Wales cannot be worse off as a result of our membership of the United Kingdom than we have been as a result of our membership of the European Union, and, when money no longer comes to us through the EU, that money must come to us instead via the UK Government.  

Could I add a—?

If I could just add a word, Chair, I think the question is a very relevant and helpful one, because one of the consequences of the transition arrangement that will be worked out is that we remain part of the European financial perspective—of the current financial perspective—for the duration of its lifetime. It ends at the end of 2020. So, as the Cabinet Secretary has already indicated, that provides a sort of neatness in our own relationship, as a Welsh Government, with the European Commission up until the end of 2020.

But I think the relevance of your question is very much underlined by what happens thereafter. For example, part of our ambition as Welsh Government—and it's currently an ambition that the UK Government also shares—is that we continue, after we have left the European Union, to be eligible for certain European funding streams. So, for example, Horizon 2020, the innovation and research funding stream—we very much want our universities and innovators to continue to access that funding stream, and the UK Government is also sympathetic to that approach. It may well be sensible that the UK-wide approach to accessing that funding stream is something that we will find helpful to tackle through the frameworks process during the next 18 months, as we consider how best to develop the post-EU membership, if I can call it that, platform for Wales and for the UK more widely.

I'll just ask a question on the same subject, if I may. How much input did you have into the UK position that was proposed—? When the UK went to agree this substantial payment that we've agreed to pay them, how much input did the Welsh Government have into that position, which must have been agreed or proposed by whichever side? How much influence did you have over that offer, or that agreement?

Well, I suppose, Chair, my answer is a bit similar to some of the others I've given—that, on the specifics, on the actual amounts and so on, we weren't part of those direct discussions. In general, however, we have been saying from the very beginning, No. 1, that, while the UK is a member of the European Union, we have to meet our obligations. The idea that you could just walk away and not pay your bills was never a plausible one to us; it would have done enormous damage to the reputation of the United Kingdom. So, the vast bulk of the money that has been agreed is simply paying the bills that we have run up while we have been members of this club. If they are bills that we have run up then the Welsh Government has always been clear that they are bills you've got to be prepared to pay.

But the other thing that we have also said from the beginning is that there are aspects of the European Union that, even after we have left the European Union, we believe will be in Wales's interests to be able to continue to be part of those common arrangements. So, we have always said that we think Welsh universities would benefit from being able to continue to be part of the successor programme to Horizon 2020, that Welsh young people will benefit from an ability to continue to be part of the Erasmus programme, that our interterritorial co-operation programme with the Republic of Ireland in particular, where we've got 20 years' worth of investment sunk in very important research programmes in the fields of marine energy and so on—we think we ought to be able to continue to be part of those interterritorial co-operation programmes beyond our membership of the European Union. We have argued that we ought to find a way of staying members of the European Investment Bank, given the enormous investment in Welsh infrastructure that there's been through the EIB.

But, if you want to remain part of programmes that go on beyond the European Union, you have to be willing to pay into the programmes that you're going to be taking out of. So, while we have not and were not involved in the specifics of the figure work that led to the stage 1 agreement, the general thrust of it, that if there are bills to pay then, as a nation, you have to be willing to pay your bills—that's been our position from the beginning. 

14:50

You said that you didn't have any input into the actual amount of the bill that the UK's prepared to pay. Did you seek to have any input into that? Did you make any representations about the level of payment that the UK should perhaps not go beyond?

I had one significant meeting with the lead negotiator in the UK team on the financial aspects of the deal. I remind you that finance was one of the three big things that had to be resolved at that stage 1 negotiation. When I was in Brussels earlier in the autumn my programme had one substantial meeting and that was with the person who was leading those negotiations. So, we did have an opportunity there to contribute to those discussions. It didn't operate at the level of the specific amounts, partly because those are very technical and discussions were, essentially, conducted by people who have the expertise necessary to do that, but the principles underlying the UK's position, certainly, we had an opportunity to discuss those. 

If I could just add a word, Chair, the representation that we did make to the UK Government immediately after the referendum in June of 2016 was that there should be continuity of funding for programmes for Wales for the expected period for which we had contracted. So, in other words, until the end of 2020. Members, Chair, may recall that the Treasury issued a guarantee quite early on in the process, partly in response to representations from people like us, providing a Treasury guarantee so that the funding for the CAP and rural development and the structural funds would continue for the expected duration of the programme till 2020, or 2022 where that's relevant with the n+2 rule. As it's transpired, the phase 1 agreement that was reached in December has the effect of the UK Government effectively remaining part of the European financial perspective for the duration of this European financial period. So, the Treasury guarantee will not be necessary, because the money is being provided to us through the European machinery rather than through the Treasury machinery. I thought it was worth clarifying that.

14:55

If I'm correct, there's no specific amount that's been agreed; it's actually the mechanism by which an amount may be identified that's been agreed, if I'm right, under phase 1. It is what programmes we'll be continuing our commitment to, and our obligations.

Before I move on to regional policy, can I ask one question? The deep dives—perhaps I should call them shallow dives to identify where people go, because it's not really being deep—but there may be others taking place. Will you be able to keep us informed as to when those will be taking place and what areas they will be covering?

Yes, Chair, we'll certainly aim to do that. You're absolutely right, there are further subject areas to follow.

It may be helpful for me just to say very briefly that I think we're quite close to agreeing with the UK Government and others a general approach to, in our case, the 64 areas that were first identified by the UK Government as potentially needing frameworks. So, work is going on—not yet completely concluded, but I think quite close to being concluded—where we're able to divide those 64 areas into three components. There will be some areas on which I think we are now heading quite close to agreement where there will be no need for frameworks of any sort. They were on the original list, but once we've gone into the detail, they turn out not to need those arrangements. There'll be a group in the middle where informal arrangements will be sufficient, where memorandums of understanding, or some other way of making sure that things work, will be enough. And then there will be a group, within the 64, where a legislative framework will be necessary in order to provide the certainty that businesses and so on will need.

So, that's the first piece of work, which is to conclude that categorisation. Then there will be a timetable against which the areas that need a legislative framework in particular can be worked through in detail. I have seen—but it is only as a discussion document—a timetable for the next phase in those discussions and the topics that would be discussed going on over a number of weeks ahead. Certainly, once those things are agreed with others, then I'm very happy to report them to you.

Thank you. We'll move on to regional policy and Jenny.

There is one issue I wanted to clarify that is relevant. Even if the transition period is longer than the end of December 2020, is it the case that the UK would no longer be eligible for ERDF and ESF funds?

Okay, that's useful. Obviously, the Government's recently published its regional investment policy for after Brexit. I wonder if you could just tell us how you envisage that interacting with the UK's shared prosperity fund, which they published back in May.

Thank you, Chair, it's an important question. The UK Government has declared an intention to create a shared prosperity fund, but beyond that intention, any detail about it is very scarce indeed. It's an idea that seems to have gone deep underground as far as the UK Government is concerned. Just to be clear, the Welsh Government and the Scottish Government are on record as not being in favour of a UK shared prosperity fund. I don't think we are prepared to put ourselves in the position where we will be supplicants to a UK fund where the criteria set for access to that fund would not be in our hands and are likely to be adverse as far as Wales is concerned, because, as we say many times, while it is true that the UK has been a net contributor to the European Union, Wales has been a net beneficiary from it, and we're a net beneficiary for good reason, which is that we qualify, according to a set of agreed rules and criteria, for the help that we get through the ERDF and other mechanisms. A shared prosperity fund for the United Kingdom we don't think is likely to be a mechanism that would recognise Wales's needs and circumstances in that way. That's why we argue for our own approach to regional investment, and that's why we felt it was very important to set our stall out at this point. The document is not the end of the discussion in any way. It was an attempt to try and draw together the state of play in the many discussions that have happened over the last 12 months about what a regional policy for Wales in the future might look like, in order to allow our partners who are involved in it to then consider the ideas that we have drawn together here, and then to help us to develop them further over the next period.

15:00

In your regional investment policy document, you're arguing for a permanent upward adjustment to the Welsh Government's baseline, along the lines of what we've always received historically from the EU structural and investment funds. What indication have you had that the UK Government is going to go along with that?

Well, I certainly don't have a cheque, or anything like that, Chair. This was the nature of the discussion that I mentioned that I held with the Chief Secretary to the Treasury. Quite genuinely, what I said to her was: 'Brexit is an enormous enterprise. Whatever your view of it would be, it is a huge undertaking, and the hands of the UK Government are very full, trying to deal with all the different strands and consequences of it. Here is an aspect where there is a simple and practical solution at hand.' They know, and we know, how much Wales gets today as a result of our membership of the European Union; nobody argued in the referendum for people to cast their votes to make Wales worse off than we are today. 'You can guarantee to people in Wales that they can go on benefiting, simply by putting into our baseline the funds that we've enjoyed so far—easy for you, solves the problem as far as the Treasury is concerned, gives us the certainty we need to go on doing the things the funds have been provided for today.' I wouldn't go any further than saying that the idea wasn't dismissed by the Chief Secretary; she didn't say, 'Oh, we couldn't possibly do that.' She didn't agree to it either. But it's an idea that we have put to the UK Government, and we continue to say to them that here is a straightforward way in which they can solve at least one of the many conundrums they have on their hands, in trying to turn Brexit into a practical reality.

Would you regard it as a red line for the Welsh Government?

The red line from the Welsh Government's point of view is not the mechanism, it's the outcome. The outcome is that Wales must not be any worse off as a result of leaving the European Union. That is a red line, and we've said that from the very beginning. This is a practical mechanism for giving effect to that outcome. So, if a different way of securing the same outcome was devised, I'm not saying that I wouldn't be open to thinking about that too. But the red line, if that's how we're talking about it, for us is: this is the position Wales is in today as a result of our membership of the European Union, when we're no longer members of the European Union, we must be no worse off.

There are some interesting ideas in this document, including the fact that we should have an evidence-based experimental approach. That sounds like a bit of an oxymoron, but, on the other hand, it may well be something that I find very encouraging. So, do you want to say a little bit more about how one would do that? Because if you're experimenting, you normally don't have the evidence base.

Well, I think you resolve the oxymoron by—. What we're trying to say here is that sometimes you have to experiment in order to build up an evidence base, as we acknowledge in the paper. When you're operating within the European Union, you're having to operate in a rule book that is designed to try and meet the needs and circumstances of a very wide number of partners and players, and that does produce some rigidities in the way that the system operates. The other side of the European Union, we will be freer to devise a rule book that will allow us to calibrate those rules more closely with Welsh needs and circumstances. And we try in the document to show how we will be able to use those greater freedoms in the future to design a regional policy that isn't so geographically watertight. At the moment, we've got west Wales and the Valleys and east Wales, and different rules apply to them, and you can't do some things. That will disappear. We'll be able to be more flexible geographically. We'll be able to use a different range of funding strands more flexibly. We'll be able to identify purposes for regional policy that are beyond the list of purposes that the European Union has agreed. And that's where we will need some experimental capacity, some ability to experiment, in order to build up an evidence base about how we can use those flexibilities in the future. 

15:05

One of the things you highlight several times is the success of the LEADER programme in engaging with people at the grassroots. And one of the things I've been critical about is the fact that we haven't actually built on the successes of LEADER as much as we might have done. Do you envisage there would be some sort of urban version of LEADER? Because, clearly, the LEADER programme has shown that people were actively engaged and enthusiastic about the things they were hoping to shape.

Chair, without being able to be quite as specific as whether there will be a specific programme, what I think you will find throughout the paper is a theme where we say that future regional policy has to be where we go on investing in people and places, and LEADER is a programme that invests in people—doesn't it? And if people in Wales are going to be able to sustain an economy of the sort we need, and to take advantage of any new opportunities that come their way, we will need to be able to go on investing in the skills that people need, in the human capital that people represent, and in the collective benefits that you get when you persuade people that they can do more working together than they can by working alone. So, there's a firm theme of the need to go on investing in people in the paper, but as well as that, we know that the future of the economy relies on infrastructure, on building up the capacity of places, particularly those places that are less successful economically than other parts of Wales. And that twin stream, which is ERDF and ESF in current parlance—we want to make sure we go on doing both those things in the future, and the experience we've had through LEADER will be important to us in that. 

Thank you. Before I move back to some questions relating to the EU withdrawal Bill, obviously the Government's made an announcement today regarding £50 million, and Jane wants to ask some questions on that. 

I very much welcome—and I hope it will be widely welcomed—the £50 million fund. It fits very much, it seems to me, with your aspirations to prepare and use your regional investment plan as well. Perhaps you could just say a few more words about the EU transition fund. Clearly, some of it is building on the budget agreement with Plaid Cymru, in terms of the £5 million, which you are expanding to £10 million. You're talking about financial support and loan funding. Do you want to say a bit more about that? And, also, it's interesting that it's coming out of a partnership approach with businesses and the public sector, hopefully the third sector as well, who are crucial to this. But, again, the Welsh Government seems to be on the front foot in terms of paving the way, particularly to deliver on this regional policy.

Chair, the Welsh Government wants to see Wales come out of Brexit as strong as it possibly can be, and as well prepared as it possibly can be for the future.  And we understand that that means some investment now to help Welsh businesses, Welsh universities, Welsh public services, and in some cases people as well, to prepare for the world that they will inhabit once the UK has left the European Union. So, today is an early announcement of our intention to provide funds to assist businesses and others in making that preparation. The money that's on the table at the moment is the revenue side of it—£15 million coming out of our revenue budget for it. It will be my job as finance Minister to add to that over the coming weeks through some investments in capital and in financial transaction capital. That's why we are confident that we can get to a fund of £50 million.

The reason for announcing it early is because we want to make sure that we can have conversations with those organisations and interest groups who we hope will be able to use the fund to help to shape the fund. So, we didn't want to wait until all the money was already completely collected and it was a bit late to be asking people to help us to set the parameters for use of the fund. So, the First Minister was very keen to make sure that people knew that this help was going to be on its way, and that they can help us to make sure that the way we design access to the fund maximises its impact for them. And we'll be working with them on that side of it, and I will be working with officials and others to make sure that we can get to that £50 million pot that we think will be a very important part of businesses, public services, research institutions and others in Wales putting themselves in the best possible position to deal with the world that they will inhabit the other side of Brexit.   

15:10

I think it's something where transparency will be vitally important, for us to understand how you're going to shape and develop the fund. So, this is a starting point today, but it will be very important for us as a committee to be clearly engaged and, indeed, to be able to give our own advice in terms of how this is used. 

That will be very helpful in itself, and there's work this committee has already done in the reports that have been published that we will be drawing on in shaping the purposes of that fund, because you've already had things to say about the way in which a more imaginative approach to some of the solutions that will be needed in the future will be important. So, the work of the committee will already be having an influence on that fund, and any further thoughts that you may have to make sure that we extract the maximum value from it will be very helpful.   

We have a report coming out on the preparedness, which I'm sure you will be interested in. But can I ask: this £50 million, over what period does it come in? You didn't mention what period it is covering. 

Well, Brexit is an event as well as a process, so Brexit is going to happen. You can't be preparing for it forever. So, it is a bit of hitting a moving target, because of some of the discussion we had earlier about transition and how long that may last, and so on. So, at the moment, we envisage the fund as being time-limited and it's there to prepare for life after the European Union when we get to that point. We can't be preparing for it then because it will have happened. 

We are keen to try and remain flexible ourselves, because the whole point of the fund is to be as helpful as we can be to those very important interests in Wales who've got to make that preparation. So, if the preparation time turns out to be a bit longer than we thought, then we will try and see what we can do to keep helping organisations over that longer period. 

And you've already mentioned that you'll be looking at some of your revenue and other forms of capital towards this. Is there any consequential of the £3 billion that has been put away included in this? 

Well, we don't have any clarity as yet on how much funding will come to Wales. We don't even have clarity on the consequential of the £250 million that has been made available in Whitehall in this financial year. But when we do get a figure of the amount of money that is coming to Wales as a result of that, then, yes, that will become part of the quantuum that we are able to use for these purposes. 

Okay, thank you. If I can go back to the European Union (Withdrawal) Bill, clearly, you answered some earlier questions relating to that, and you did say that the Secretary of State for Scotland had given a guarantee, and I quote what he said: 

'the Bill is going to be amended not at the behest of the Labour party’s incoherent approach or the Scottish National party’s nationalist approach, but because Scottish Conservatives have tabled practical amendments'.

So, it's not quite a cast-iron guarantee in one sense, and we're unclear as to what those practical amendments are. That was said in the House of Commons, in Scottish questions, on clause 11, and not necessarily clause 7, either. So, based upon the processes to date of the Committee of the Whole House in that stage, and the fact that all the amendments submitted by the Welsh Government and Scottish Government were defeated, where does the Welsh Government expect to see those changes coming through—not just practical, but delivering on the red lines you actually set out, and the First Minister set out as red lines, on those amendments?

15:15

Well, Chair, the quote you read out, I think, is consistent with what I said earlier. It doesn't give us any guarantees on the nature of the amendment, but it does give us a guarantee that there will be an amendment, and that is a significant change in the UK Government's position. Earlier in the year, the withdrawal Bill was a take-it-or-leave-it proposition. There was no suggestion by the UK Government that they were prepared to think of amending it in response to some of the concerns that had been raised in devolution matters. The Secretary of State for Scotland was responding to some very clear warnings from his own colleagues from Scotland that they would not be able to support the Bill unless it was amended. So, it's an important statement that he made. But you're right, of course—now what we need to see is the colour of the amendment. We need to see what that amendment will do.

The original indication that, I think, the Secretary of State for Scotland was making was in the context of the UK Government saying that they would not bring any amendments forward at Committee Stage. They would wait to hear what was said at committee, and if they were to bring forward amendments, they'd bring them forward at Report Stage. Well, we know the Report Stage will now be happening in the middle part of this month. My own view is that it's actually more important to get the right amendment than to be too obsessed about the point in the process where that amendment is put down. I think the Welsh Government will be prepared at least to think through the possibility that a UK Government amendment in the House of Lords, which was an amendment that we would all have had time to work on together, and was an amendment that we could agree on, would be preferable to an amendment rushed forward at Report Stage, where we'd have had no opportunity to be properly engaged in what that amendment might be.

I also have to be clear with the committee, as I was completely clear with the UK Government at the JMC(EN), that if the UK Government's amendment is not satisfactory to ourselves and Scotland, then we will pursue our own amendments in the House of Lords. We have by no means given up on that. We will organise and we will do whatever we think we can and is necessary to try and secure a majority for our own amendments in the House of Lords, even if the UK Government has come forward with amendments of its own, if those amendments do not solve the problems with the Bill as we have currently identified them. So, on the one hand we are very keen to have a continued constructive engagement with the UK Government and to get the right amendments put down by them and that we could agree to, but that is absolutely not to move a step away from our own determination to pursue our own amendments if they cannot come forward with amendments that solve the problem.

Thank you for that. I listened to the debate—for my sins, perhaps, especially late at night—and I wasn't encouraged, I'll be honest, with the Scottish Conservatives' contributions in those debates, in the fact that I felt that we may not get to see the amendments that we would like to see, particularly as they voted down both the Scottish and Welsh Governments' amendments. As you quite rightly point out, we'll wait and see the actual amendments that are placed. But is there still a red line from the Welsh Government? You said so, but what is that red line? Is it the amendments you set out, near enough to those amendments, or is it going to be something along the lines of, 'We will have a sunset clause on these changes'?

15:20

When you boil down the Welsh and Scottish Governments' objections to the withdrawal Bill, I think they come down to these two fundamental issues—. I should maybe have said earlier—it's a bit late to be saying it this afternoon, Chair—that I myself am a bit allergic to the 'red lines' sort of approach to negotiations. I think it sometimes becomes a barrier to solving a problem, rather than an asset in doing so. But, if you boil down our objections, it comes down to these two things, doesn't it: we cannot accept a position where UK Ministers can reach over the devolution settlement and make changes in matters that are the responsibility of the National Assembly for Wales and the Scottish Parliament without our consent.

So, again, I think in an entirely reasonable way, we say we don't rule out the possibility that, in a pragmatic way, there may sometimes be circumstances where it makes sense for a UK Minister to take forward a piece of action that lies within the devolved settlement. There may just be sensible occasions where that's the right thing to do. But, at the moment, the Bill allows UK Ministers to do that without any reference to the Welsh Government or to the National Assembly for Wales. They can simply reach over and make changes without our consent. That is not acceptable to us. It can happen. It must be with our agreement—only with our agreement.

The second area of fundamental difference lies in clause 11. Our position has always been that the matters that we exercise through our membership of the European Union were devolved to us in 1999. When the European Union is no longer there, those competencies and those responsibilities will lie where they've been ever since devolution began: here in Cardiff, Scotland, and in Northern Ireland. The way to create a future for the United Kingdom is by the framework process that we spent time on this afternoon, where we come around the table voluntarily, pool our different responsibilities, agree ways forward between us on a voluntary, mature basis, not a basis on which the UK scoops to itself things that have been devolved for nearly 20 years and then ekes them back out to us on a timetable that they can't declare, to an extent that they don't know, and with no guarantees that they will not have done all sorts of things with those powers while they hold them that tie the hands of the National Assembly for Wales for the future. That's not acceptable to us either, and the Bill needs to be amended to make it clear that that cannot be the default way of proceeding.

Thank you. You've laid an LCM already—a memorandum—but, clearly, the legislative consent motion has yet to be laid. Have you yet decided as to when you will lay that, because that is when, as an Assembly, we'll take a decision on supporting, or not, this Bill?

The Welsh Government continues to consider when an LCM should be laid, Chair, so, no, we haven't reached a decision on it. Given the Commons report on Third Reading will take place on 16 and 17 January, even if we move as quickly as the timetable could possibly be made to work, we don't think we could have a debate on an LCM before the very end of this month. If we were to move according to that very quick timetable, then one of its effects would be that it wouldn't allow any time for this committee, for example, or any other committee of the Assembly with an interest in parts of it to consider any of the developments that may have taken place as a result of Commons consideration. I think there's been a bit of a working hypothesis that we should come to the floor of the Assembly once the Commons stage is complete, so that we send a signal to the House of Lords, at least, as to what the view of the National Assembly would be on the Bill as it leaves the Commons. But I don't think we are completely committed to that until we see how the rest of this month and the actions that remain to be taken in it work out.

Okay. I can assure you that this committee has been very closely looking at the EU withdrawal Bill and we're keeping ourselves reasonably up to date, but I appreciate your points. But, linked into that is the continuity Bill question, because the First Minister has clearly indicated to us previously that there is a continuity Bill ready to go, effectively, but there's a timescale on that as well. When do you—? Again, have you now got an idea, based upon the Committee Stage being completed and the Report Stage, which will be next week, when you may be in a position where you may have to lay a continuity Bill because the amendments were not of the standard or levels that you have just expressed?

15:25

I think you've put your finger on exactly the dilemma that we have to work our way through. The starting point for the Welsh Government is the one I've said already: we want the withdrawal Bill to be a successful Bill, and our preference is for an amendment that allows us to come to the floor of the Assembly and to recommend a legislative consent motion to Assembly Members. So, a continuity Bill has always been a fallback position; not the first choice. Our first choice is to get the withdrawal Bill into good order and in a position where it can be recommended to the National Assembly, but because we cannot be confident of that, the First Minister has commissioned the necessary work to prepare a continuity Bill. We are now confident that we have a Bill that is in a state of readiness that we could put before the National Assembly if it were needed.

The timing of that depends very much on the things we've discussed this afternoon: will there be amendments at the Report Stage that we will have had a chance to influence and could have a fighting chance of being satisfied with? Will that timetable not depend on Report Stage, but move into the House of Lords, and will that give us more time to discuss it there? There are a lot of moving parts here and I can't be definitive with you about when a continuity Bill might be laid by the Welsh Government because our position of principle remains that we would only introduce a continuity Bill if we hadn't succeeded in our first ambition, which is to get the withdrawal Bill into a position where that will do the business for Wales.

I appreciate that, but again, as you say, with the House of Lords, we don't know the timescales of the House of Lords, but we do know that the continuity Bill, if it's laid here, has to be completed prior to a process through the Houses of Parliament, so you must have some scale as to when you're going to need to make a decision on that.

The scale is exactly the one that you've just said. We know there are dates by which a continuity Bill would have to be completed, but we don't know exactly what that date is yet, because we don't have a timetable for the House of Lords consideration and we don't know the outcome of the House of Commons consideration yet. What we have done is put ourselves in the position that if a continuity Bill is necessary, we're in a position, we believe, to lay one in front of the National Assembly. The precise issue of timing is one that we're still having to make judgments on as the different parts of the picture become clearer.

Okay. I'll leave that point there at this point. Do any other Members have questions? No. If I can therefore conclude with one final question—you thought you'd got away then, didn't you?

We now know the UK Government's position—that's been made clear—and the EU's position on phase 2 has also been made clear. How does this all fit in now with the Welsh Government's original vision based upon 'Securing Wales' Future', and are you confident that you can still deliver on the vision you had in that paper?

Well, Chair, if I was to describe what I think happened during 2017, it would go a little bit like this: the Prime Minister, on becoming Prime Minister, drove the Brexit bus with all of us on board to the very edge of the precipice. She made a speech to the Conservative Party conference in October 2016 and in Lancaster House in January of last year, in which she set out a whole series of things: no to the single market, no to the customs union, no to freedom of movement, no to the ECJ, no to contributions to the EU budget. And, the history of 2017 is having to inch her back from the precipice, inch by painful inch, towards the position set out in the Welsh Government's paper, 'Securing Wales' Future'.

So, if you look at what was agreed in the end of the phase 1 negotiations, there is an ongoing role for the ECJ—a full role during the transition period, but an ongoing role beyond that; and a set of arrangements for EU citizens that are far closer to those that we set out in our original document. There is to be freedom of movement throughout the transition period, and we continue to believe that our 'Brexit and Fair Movement of People' document provides a pragmatic way in which you could continue to make sure that Welsh businesses, public services and research institutions can go on recruiting the people that they need into the future. But most importantly of all, it seems to me that if you read the section of the agreement—paragraphs 49 and 50, to be precise—if you look at what that says about the border between the north of Ireland and the Republic of Ireland, I think that those two paragraphs take us a great deal closer to the priorities that we made our very first priorities in our document, which is full and unfettered access to the single market and continued participation in a customs union.

So, I think the history of 2017 has been that we started off with Wales in one position and the Prime Minister in a very different place, and by the end of the year, the priorities that we've set out, I don't think we've moved from them at all—they continue to be our priorities; they were from the very first weekend after the referendum took place—but the UK Government is having to recognise the realities of the circumstances and the messages that they have been getting from businesses and others about continuing to trade with our closest and most important market, and they have moved considerably closer to our position. We're certainly not there; we're certainly not saying to you for a minute that we've achieved all the things that we think are necessary to achieve, but I do think we can very fairly say that the position has moved in our direction and that we've played our own modest part in bringing that about.

15:30

Thank you, Cabinet Secretary, and thank you for your evidence this afternoon. As usual, you'll receive a copy of the transcript. For any factual inaccuracies, please let the clerks know as soon as possible if you do identify any. So, once again, thank you for your session this afternoon.

5. Papurau i'w nodi
5. Papers to note

Papers to note for Members is next item on the agenda. We have several papers to note. Can we go through them one at a time? A letter from the Chair of the Equality, Local Government and Communities Committee regarding the inquiry into human rights in Wales. Are Members happy to note that? A letter from Lord Jay of Ewelme—is it Ewelme—regarding the sectoral reports, because we did write to him to ask whether he would release any to us, and he has given us a response, saying it's not within his ability to do so, but he has asked written questions relating to the devolved institutions and nations. Letter to note from the Cabinet Secretary for Finance regarding the regional investment in Wales after Brexit. That's the paper we all received. Are Members happy to note?

Can I just ask, on that—? Mark Drakeford talks about two engagement events: one on 18 January in north Wales and the twenty-fifth in south Wales. I hope we will be consulted more about the way the fund will be developed, but would it be appropriate for Members or, presumably, the clerk and officials to attend those events? Who are they targeting?

We should have asked him when he was here. We'll try and find out where that event is in south Wales as much as possible because that's the closest one.

Yes. I think it'd partly just be useful to attend to hear what people think because, obviously, we've been concerned in the past in the committee about whether we're reaching out, whether the Welsh Government is reaching out enough across sectoral—

I think we should welcome it, but we perhaps need to take more interest in it.

On 18 January, actually we're in London for a meeting with the other chairs of committees across the UK. So—

15:35

What about this inter-parliamentary forum on Brexit that I was going to ask you about that's on the eighteenth? Is that something that—

And Mick Antoniw, who is chair of the Constitutional and Legislative Affairs Committee, will go to it as well.

It's usually a private meeting, but we discuss as a committee, as a group of chairs of committees that are relevant to the issues across the UK. So, that's the Scottish equivalents, ourselves—there are no Northern Ireland equivalents at the moment, but Northern Ireland officials attend—and the chairs from the Lords committees and from the exiting the EU committee in the Commons attend, where we'll discuss any common themes across the issues raised and, as to what we feel as devolved nations, we make sure that that message is passed to the representatives from both Houses of Parliament.

But if we could hear a bit more about this Mark Drakeford event—.

Yes. We'll definitely make sure somebody's there on the twenty-fifth. 

Because it's important we don't lose all the learning from the evaluations we've invested in from all the EU programmes we've done.

Further letters to note: from the Cabinet Secretary for Economy and Transport regarding Brexit and the Welsh ports; a letter from the Cabinet Secretary for Finance regarding resilience and preparedness, and we will be discussing our report next week; and a letter from Hub Cymru Africa regarding making trading arrangements fair and transparent. Are Members happy to note all those pieces of correspondence? If that's the case, we'll move on to the next item, for which we have agreed to go into private session, so we'll now go back into private session.

Daeth rhan gyhoeddus y cyfarfod i ben am 15:36.

The public part of the meeting ended at 15:36.

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