National Assembly for Wales

Y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol

External Affairs and Additional Legislation Committee

05/03/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

David Rees AM Cadeirydd y Pwyllgor
Committee Chair
Jack Sargeant AM
Jane Hutt AM
Jenny Rathbone AM
Mark Isherwood AM
Michelle Brown AM
Suzy Davies AM

Y rhai eraill a oedd yn bresennol

Others in Attendance

Des Clifford Llywodraeth Cymru
Welsh Government
Dr Hugh Rawlings CB Llywodraeth Cymru
Welsh Government
Dr Robert Parry Llywodraeth Cymru
Welsh Government
Mark Drakeford AM Ysgrifennydd y Cabinet dros Gyllid
Cabinet Secretary for Finance
Piers Bisson Llywodraeth Cymru
Welsh Government
Rhys Davies 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

Elisabeth Jones Cynghorydd Cyfreithiol
Legal Adviser
Nia Moss Ymchwilydd
Researcher
Rhys Morgan Clerc
Clerk
Robert Lloyd-Williams Dirprwy Glerc
Deputy 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 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 14:02. 

The meeting began at 14:02. 

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 meeting of the External Affairs and Additional Legislation Committee? Can I first of all put some housekeeping rules in order? Can I remind Members to please turn off your mobile phones and other electronic equipment, which may interfere with the broadcast equipment, or at least put them on silent? Amplification, if you require it via the headphones, is on channel 0, and the simultaneous translation from Welsh to English is on channel 1, using the headphones. There are no scheduled fire alarms this afternoon, so, if one occurs, please follow the directions of the ushers to a safe place. We've received apologies from Steffan Lewis, but no substitutes have been identified, and I'm aware that Jenny Rathbone will be late this afternoon. 

2. Papurau i’w nodi
2. Papers to note

Can we move on to our next item on the agenda, which is papers to note? We've had one paper to note, which is correspondence from the Cabinet Secretary for Economy and Transport to the Chair in relation to his evidence relating to the Trade Bill and trade policy. Are Members happy to note that correspondence? Thank you.  

3. Cynnig i gytuno ar newidiadau i drefn y broses ystyried gwelliannau yng Nghyfnod 2 o Fil Rheoleiddio Landlordiaid Cymdeithasol Cofrestredig (Cymru)
3. Motion to agree changes to order of consideration of amendments at Stage 2 of the Regulation of Registered Social Landlords (Wales) Bill

The next item on the agenda is to agree the order of consideration for Stage 2 of the Regulation of Registered Social Landlords (Wales) Bill. You have in your papers the order of consideration and I'll go through it: sections 2 to 20 followed by Schedule 1, followed by Schedule 2, followed by section 1 and, finally, the long title. The explanation has been provided. Are Members content that that order is satisfactory for consideration at Stage 2? I see Members are. Therefore, we will ensure that that is agreed and provided for Stage 2 proceedings, which I understand will take place next week. 

4. Cynnig o dan Reol Sefydlog 17.42(vi) i benderfynu gwahardd y cyhoedd o’r cyfarfod ar gyfer eitemau 5, 6, 9 a 10
4. Motion under Standing Order 17.42(vi) to resolve to exclude the public from the meeting for agenda items 5, 6, 9 and 10

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o'r cyfarfod ar gyfer eitemau 5, 6, 9 a 10 yn unol â Rheol Sefydlog 17.42(vi).

Motion:

that the committee resolves to exclude the public from the meeting for items 5, 6, 9 and 10 in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

Item 4—under Standing Order 17.42 (vi), we now propose to meet in private for the following items on the agenda: item 5, item 6, item 9 and item 10. Are Members content that we move into private session for those items? 

I see that Members are, so we'll move into private. 

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 14:04.  

Motion agreed.

The public part of the meeting ended at 14:04. 

15:00

Ailymgynullodd y pwyllgor yn gyhoeddus am 15:00.

The committee reconvened in public at 15:00.

7. Sesiwn graffu gydag Ysgrifennydd y Cabinet dros Gyllid
7. Scrutiny session with the Cabinet Secretary for Finance

Good afternoon. Can I welcome Members back to the public session of this afternoon's committee meeting? We go to item 7, which is the first of two scrutiny sessions we have with the Cabinet Secretary for Finance this afternoon. In this particular session, we're looking at JMC(EN) discussions and the proposed Law Derived from the European Union (Wales) Bill and issues relating to that. Can I welcome the Cabinet Secretary for Finance, Mark Drakeford? For the record, Cabinet Secretary, could you introduce your officials for me? 

Thank you, Chair. Rhys Davies is from legal services in the Welsh Government; Hugh Rawlings, you all know from the constitutional affairs side of things; and Rob Parry, who has been leading for us on aspects of withdrawal from the European Union. 

Thank you. Can I first of all move forward to a very simple question? Obviously, last week you gave a statement on your JMC discussions and you highlighted that a proposal was put forward at the very last minute effectively and that you didn't have time to scrutinise thoroughly that proposal, but you felt progress had been made. David Lidington then, in the speech he made in Broughton, clearly indicated that he felt a substantial move in the directions that the Government were looking for. We didn't know what the proposal was, Cabinet Secretary. Would you be able to tell us now as to what the proposal put forward by the UK Government was at that meeting? 

Well, Chair, I think what I can do is to repeat, essentially, what the Chancellor of the Duchy of Lancaster said in his speech in north Wales on 26 February. The rules of the JMC are these: that any member of the JMC is entitled to say publicly what they said at the JMC, but no member of the JMC is entitled to say publicly what any other member of the JMC said in that forum. That is necessary. That is necessary in order to give people confidence that they can express the views they want to express without thinking that they're immediately going to be reported by others for those views.

But, essentially, David Lidington captured in his speech in north Wales what he told us at the JMC, which is that the UK Government's proposal is to invert clause 11—that's the term he used in his speech. So, Members will remember that the way clause 11 is currently constructed is that all those powers that have been devolved to the National Assembly, which we have exercised through our membership of the European Union, when the European Union is no longer there, all those powers should be taken back to London and that they would then be handed back to us over time. We've never thought that that is a satisfactory outcome.

What David Lidington is now proposing is that the default position should be not that everything goes to Whitehall, but that everything comes to the National Assembly. And then there would be exceptional items that would continue to remain at the UK level while frameworks are being agreed, so that we can have a proper level playing field that allows the UK to go on operating successfully on the other side of the European Union.

So, that's the essence of the proposal. Instead of nothing being devolved unless it was specifically devolved, everything will be devolved unless it is specifically held back at the UK level. That's why we said we were willing to recognise that that was a significant step forward. There are a number of important, practical details that now need to be worked through to see how that new model would work.  

And there was no clarification as to what would be held back or how many items would be held back, but it was just a purely conceptual point of that process.

Well, reference was made in the discussion to the ongoing work on frameworks. So, you will know that the UK Government initially identified some 64 potential areas in which some sort of action—not necessarily legislative action but potentially some sort of action—would be needed to make sure that things were agreed where there were shared responsibilities at stake. The work that has gone on since then has been to try to narrow down that list, to identify those aspects on the list where legislative action, rather than non-legislative action—exchange of letters, a memorandum of understanding and things of that sort—would be sufficient. Now, that work continues and the aspects that are being talked about as being retained at the UK level are at that legislative end of the spectrum of those initial 64 areas. 

15:05

So, it's not inconceivable to think that that work that has been done to date on the deep dives, as they were called, identified that those that could be transferred down could simply be the ones that they transfer down automatically and everything else they haven't yet worked out would be held back—that's a possibility?

Well, as currently drafted, that is what clause 11 would do: it would hold everything centrally and hand a small number of things on to us with a promise of more to follow. The reason why David Lidington's speech was a move forward is that it turns that on its head: everything would come here, other than those things to be held back. What are the things that are being considered as being held back? Well, they would be those things that, in the framework discussions, emerge as needing a legislative underpinning in the future.

Yes, as you said last week, it is interesting to know how willing they are to continue discussing a way forward, because you said you wanted to be constructive and, obviously, we wait to see. You can tell us when you think you're next going to have that opportunity to engage in those negotiations. Also, what's happening in the House of Lords is obviously critically important, and you went up and briefed the peers, and I know that that was very useful and it has been reflected in many of the speeches and debates. But it's some time yet, isn't it, before they're going to consider the relevant amendments? There's a real pressure in terms of time, negotiations and the impact of the Lords, obviously, in terms of the amendments. Are you going to say anything about those points?

Well, Chair, Jane is absolutely right to point to the fact that there are two different timetables ticking here and, at a point, they will have to be brought together. So, on the House of Lords front, as Jane had said, the Scottish Government and the Welsh Government jointly held a briefing session in the House of Lords at the end of January. It's the first time we've ever done such a thing jointly together as a Government, and we had a very large attendance at that briefing session—certainly larger than we had anticipated. It was literally standing room only in the room that had been booked for it, and many of the points that we made in that discussion were indeed reflected in contributions that members of the House of Lords went on to make in the Second Reading debate.

I think we definitely have succeeded in getting minds focused on the devolution aspects of the withdrawal Bill. I think it's fair to say that many of the contributions that members of the House of Lords made on the devolution issue were focused on the idea that there would be a compromise—that the Government needed to come forward as the Government had promised it would come forward in the House of Commons, but then failed to do so. But the Government was under an obligation to come forward to demonstrate, in a further amendment, how they had taken account of the issues that we had raised and peers were raising on our behalf.

As Members here will know, the House of Lords is now in the Committee Stage. It is going slowly. I think that the first thing that strikes you is that it is difficult to feel confident that they will be able to complete the Committee Stage within the 10 days that they have set aside for that. So far, while there has been a range of issues of interest to us—the debate on Erasmus, for example, on Euratom—they haven't yet come to the crucial amendments as far as devolution is concerned.

Now, that timetable, we think, is designed for the Committee Stage to finish before Easter and for the Report Stage to take place in mid to late April, but I think you've got to be pretty optimistic to think that that timetable can be delivered. So, against that is the second timetable that Jane referred to—the discussions that are going on between the Scottish and Welsh Governments and the UK Government about the amendments that we would like to see put to the Bill.

Chair, I just want to say again—I say it every time—that our preferred option all along has been for the withdrawal Bill to be a success. We want the Bill to succeed, therefore we are always going into the room looking to try to find a way in which an agreed amendment could be put down between all three Governments, so that I could come to the floor of the Assembly and say to you that we think a legislative consent motion could now be agreed. 

We will meet again on Thursday of this week—a follow-up meeting to the last JMC has now been agreed for Thursday. There will be a JMC plenary involving the First Minister, the Prime Minister and the First Minister of Scotland on 14 March. These are very important dates, because we shall be looking to secure an agreement through these discussions, so that by the time the House of Lords comes to debate clause 11 in our amendments, we could all be saying together that we're now in a position where we've got an agreement, and an amendment reflecting that agreement could be put down.

15:10

Just so that I can get this completely clear in my head, you're complimentary about the outcome of the JMC(EN) conversations the other day. Are we in a position now where, effectively, everything comes here but the UK Government says it, basically, wants a bit of a reserved-powers model set-up, where it decides what's to be kept at UK level? What you're looking for are amendments that say, 'Everything comes here, but it's actually the Welsh Government that decides what stays with the UK Government'—is that a fair summary of what you want the amendments to say?

No, not entirely. It's close, Chair, but it's got one crucial thing—. What we say is that the things that are to be retained at the UK level should be things that are agreed—not that we have a power of veto, and not that it's our list and other people have to live with our list, but nor must it be a UK Government's list that everybody else just gets told about. So, what we're looking for is agreement, and we think that that is the right and proper way to do this.

The fact that we've done all of this work on the frameworks already—. Chair, you'll remember there were three test-bed deep dives before Christmas, there have been 22 since Christmas, there are two more this week and there's further work to be done in March. A really significant amount of work has been invested by all three Governments through officials in that work. I think what we would say is that it demonstrates that by doing things by agreement—everybody coming to the table, everybody having responsibilities that they hold and everybody being willing to pool those responsibilities in pursuit of a sensible way through—we are demonstrating every day that we can make that work. The UK Government should have the confidence in that to agree with us that the way to do this, which we would be prepared to—. We've come through the door looking to do this constructively. If this is to be the model—everything devolved apart from the things that we agree need to continue to be negotiated at a UK level—I think they would've got to the right place.

You'd like the mechanism for that to be included on the face of the Bill, presumably, would you?

Ideally, an amendment would come forward that would put that principle into law. 

No, no, it's not. I'm just trying to say, Suzy, that in the time that's left, and with the urgency of it, we've all got to be willing to give some ground in order to be able to get a workable solution. We would have to be willing to be pragmatic enough on our side to think about the essence of what needs to be achieved in the time that is left to achieve it. But the principle of agreement, rather than the principle of imposition, is fundamental to us.

Before I bring others in who want talk about the frameworks, can I ask whether you'll be laying before the Assembly any information on the deep dives so that we can see exactly what has been going on and what is being said? It would be very helpful if you could give us an indication that that's going to happen. Also, you talked about the JMC(EN) this week. Does the fact that one occurs now within two weeks of the last one give you an indication that the UK Government has recognised the urgency, because for a long time, as you know—eight months without one and then two or three months between them, and now we've got two weeks between the next two? Does that give an indication of the fact that they may well now be moving forward in the direction that you anticipate will give you an opportunity for agreement?

15:15

Well, Chair, I said at the last meeting of the JMC(EN) that I thought that a tremendous amount of work had gone on at official level and that a lot of imaginative thought had been applied to trying to find ways in which the differences that still exist could be bridged between the three parties. But my view was that we had got to the point where the politicians involved—the people who are able, in the end, to make the decisions—had to get in the room together and be prepared to have those discussions, and so I'm pleased to see that we have another meeting this week. I think it is a sign that others have agreed that we need to accelerate consideration of these things and that it can only be done by, in the end, the decision makers, rather than those who help us to prepare the ground from which a decision can be made. 

There was an undertaking at the February JMC that there would be another conventional JMC(EN) before the end of March. So, to go to your question about when we might be able to say something publicly on the work that has been carried out on frameworks, if things work as I would hope they would, there ought to be a paper at that JMC, towards the end of this month, which summarises all the work that has gone on so far in relation to frameworks, and as I've said to you, that's been substantial; that it should take stock of the work that has been done so far; that it should identify those places where further discussions need to be carried out. And at that point, I would aim to do what I've tried to after all the JMCs: to make a report to the Assembly on what was agreed there. 

So, you're assuming there will be another JMC(EN) after the one this week, this month?

Well, that is my assumption. As you know, these things have not always worked smoothly in practice. My assumption is that this week's meeting is a single-issue meeting. That is, a meeting designed to focus entirely on the withdrawal Bill and to try and find a way of coming to an agreement on the amendments that need to be put to it. Most JMCs have a much more extensive agenda than that, and you don't always get the time that is needed to focus on really time-critical issues. So, we're meeting this week with one item on the agenda and meeting before the end of the month, which will be a more 'normal' JMC(EN), in which we will pick up the ongoing work, including, I hope, a paper on frameworks and summarising where we've got to so far, pointing to what needs to happen next, and that would allow me to make a report to you as to where progress has been possible. 

Thank you. And since we're talking about frameworks, we've got some questions. Michelle Brown.

Thank you, Chair, and thank you, Cabinet Secretary. The answers you've already given are quite comprehensive and you've actually answered quite a bit of what I was going to ask. But coming back to the proposal that has been made about clause 11, to turn it on its head—and it does sound a very positive step forward—does that change the conversation you're going to be having with the others on the JMC about the common frameworks?

I hope not. I think it—. You know, I've always got to recognise that all three—at the moment, the three parties that are there, still without the Northern Ireland Executive taking part, but the three Governments who meet there—we all have our own distinct interests. Now, we have worked very closely with the Scottish Government on this particular issue, because, in this case, there's a close identity of our interests because of the devolution principles at stake here, but my first responsibility is to represent the Welsh point of view and Welsh interests, and that's what will see me through the whole of the process. We will continue to work closely with others wherever we are able to do that. So, I don't see that it automatically leads to a breaking up of some of the ways in which we work together on things so far. But, although we work together, we've all got a primary responsibility to represent the particular institution that puts us there, and in my case that's to represent Welsh interests.

15:20

Thank you. And can you make any concrete announcements on whether any common frameworks have been agreed or are they close to agreement?

Well, no frameworks have been agreed. Lots of progress has been made in a lot of them, and what I hope at the end of March is we'll have a summary of where we've got to in all of that. We always say that the discussions on the frameworks are without prejudice to our need to get the withdrawal Bill right. So, we cannot do the one without the other; they really do dovetail into each other in that way.

There are a couple of things regarding that I could say emerging from the discussions: the first is that some of the topics have very broad headings, and, under them, some things will turn out to need a legislative solution, but there'll be quite a lot under that heading that could be dealt with otherwise. So, just because it's on the list of frameworks doesn't mean to say that everything under that heading needs a legislative solution. So, agriculture, for example, is one of the headings—well, that covers a very wide range indeed of potential areas of joint concern.

The second thing, Chair, I think, to say is that governance arrangements are emerging very powerfully across a range of these framework discussions, and what I mean by that is this: say good progress was being made and we could see how a framework agreement was possible, every signatory to such an agreement would need to have confidence that another party couldn't simply walk away from it the week after. So, what are the governance arrangements about these frameworks to be? If after six months Wales was to feel that the way that the agreement was being applied in Scotland wasn't consistent with the framework, what mechanism would there be for us to get that raised? If something that none of us have foreseen emerges after three months, how do we get back around the table and make sure that the framework can be updated to put that right? The frameworks by themselves are an important step forward, but what they are highlighting, I believe, is the need for arrangements the other side of Brexit that will allow the United Kingdom to go on talking to us. Up until now, those discussions would have happened at the European Union level. Without the European Union level there, and with devolution, we need stronger inter-governmental mechanisms than we currently have. The JMC is not, in the long run, a sufficiently strong or properly calibrated format for that to happen.

We've published a paper, as you know, designed in many ways as a discussion starter on how these arrangements could be put into place in the future. If I'm truthful, we didn't get a great deal of interest in it at the UK level, but I think that the framework discussions are making their civil servants go back to them and say, 'These issues really will have to be addressed.' So, there are lots of things emerging through the framework discussions.

The final point, Chair, to make is that we are saying, very clearly, that the Sewel convention should apply to the frameworks. So, if a framework is agreed and it gets to a point where we think that it could be signed off between Governments, the legislatures ought to have a say about that too. And if it's a UK Bill that we all agree should be the mechanism, then that should have the assent of the National Assembly to going ahead in that way. So, there are a lot of things emerging around the framework discussion that means we've not concluded on any of it as yet. 

Yes, just to mention, Chair—just quickly there you mentioned a lot of stuff surrounding the frameworks, and it's actually already answered one of my questions, which was surrounding when we were expecting an announcement, but I've taken your comments on board about the announcement in March and we'll look forward to hearing that, I'm sure. 

You've mentioned arrangements post Brexit there. Are you confident, as your position, that we will get the right arrangement post Brexit, going forward, and that we can move on efficiently? 

I think this is an area that is going to need a lot of energy and attention over the coming weeks and months, and I do think it's a place where the Welsh Government and the First Minister have taken a lead in trying to make the case for a constitutional convention in the past, a forum in which we can do some serious thinking about the arrangements that will be needed to allow the UK to operate effectively. I think we've made some progress in that.

I think it would be fair for me to characterise the Scottish Government's position as having changed. I think in the immediate aftermath of the referendum, the Scottish Government's position probably was that Scotland had decided to remain in the European Union, that its political mandate was to take Scotland out of the United Kingdom and all this talk about how the United Kingdom should operate after Brexit really wasn't of much interest to them because they weren't going to be part of it. I think their position has changed over the months, and I think they would still undoubtedly say to you that their political ambition is for Scotland not to be in the United Kingdom, but now I think they would also say that, while Scotland is still a member of the UK, they have a strong interest in making sure that the UK operates effectively. So, I think they are willing to put more time and energy into thinking about these things.

As I said to Michelle Brown, I think in some ways it's the fact that the UK Government's own civil servants, I believe, are saying to them, as a result of the framework discussions, 'Look, we're going to have to think about how all of this is governed from now on' that is drawing them into that discussion in a more meaningful way. But it is urgent. I know the UK Government's hands are very full. You get the impression always when you're there of them being very stretched, trying to think of all the things that they've got to think about in the Brexit context, but this is an item that we have to persuade them that they've got to, not take more seriously, but find more time to think through because, in a year or so's time—and certainly beyond the transition period—the need for proper inter-governmental machinery to be there will be urgent.

The current system, as I said, is not satisfactory. With the JMC, as far as I tell, in practicalities, only one party to it is able to call meetings of it, only one party is able to decide on the agenda, only one party decides on the location, and that can't be right, can it, when there are four Governments in the United Kingdom and we come together around the same table? In future, you have to have an arrangement that recognises a greater equality of participation in that forum and a different sort of rule book to allow that to be a genuine forum where people come together and thrash out some important issues that lie between us all.

15:25

Chair, could I just add a word about that? I think one way of seeing this is that a sort of unanticipated aspect of Brexit is that it's put the accelerator down on constitutional developments that were already inchoate but never really moving forward. As you know, and as this committee will be well aware, there have been several reports and parliamentary committees and Assembly committees about the inadequacy of the inter-governmental working arrangements, and those, frankly, have sort of fallen by the wayside in terms of actions that have been taken in consequence of them. I think that, as the Cabinet Secretary has explained, the reality now is that we have, probably for the first time, begun to identify a set of matters that can only meaningfully be governed on a shared governance basis across the United Kingdom, and once one starts to establish that sort of set of arrangements, the mechanisms, to make that work then a whole wider set of constitutional questions about the relationships between the four administrations within the UK begins to open up. I think that that is where the sort of constitutional debate over the next two or three years is going to be.

I just want to ask the question, but clearly you've replied that you hope for a transitional period because, clearly, that is important, but there are still strong voices within the Conservative Party in Westminster who are still saying that we can leave without a deal—and that's a possibility—and, as such, we may only have up until the point that is just 13 months away now to be able to come to point. Do you think the UK is in a position to actually come to that point of an agreement upon that governance structure within those 13 months so that, when we leave, it will be operational as necessary?

15:30

Well, Chair, I think the sensible voices at the UK level have recognised—and recognise since the Prime Minister's speech in Florence in September last year—that a transitional period would be necessary. So, the Ministers that we talk to, I think, are certainly in that part of the spectrum, and that would give us longer to work up these arrangements because, for that transitional period, the European rule book would, in effect, still be in place, and the need for the frameworks and so on would not be so urgent. The Welsh Government's position from the very beginning was that a transitional period would be necessary. We are pleased that the UK Government has moved in that direction. I think the Prime Minister's speech on Friday is predicated on getting an agreement on a transitional period. She says we're not there yet but we're very close to it. When I was in Brussels last week, that was also, I thought, the feeling at the Brussels end as well: that a transition period will be agreed. If we don't have a transition agreement and we are crashing out in the way that you described in March of next year, we will have even greater problems on our hands than solving the inter-governmental arrangements.

Okay. You mentioned the frameworks, and you actually use agriculture as an example in the frameworks. There's been an agricultural command paper published because of the various Bills that are coming through—agriculture being one of them relating to Brexit. Can you confirm as to whether the Welsh Government—either you or the Cabinet Secretary for rural affairs—has actually had an input into that command paper? Because what we notice is that it's very England-orientated and no longer UK-orientated.

Well, we were pleased to welcome the fact that it is, essentially, an England command paper because, for these purposes, the Secretary of State for the environment in England is the English Minister, not the UK Minister, because agriculture in Wales is not part of his responsibilities. So, we've had to work hard, as you know, to keep reminding everybody of that fact. The fact that the command paper is a better reflection of that, I think, is something that we were pleased to see.

So, what's the position with the Welsh Government producing its own paper then?

Well, of course this is the responsibility of Lesley Griffiths, my colleague. I know that she set out a series of principles underlying a Welsh approach to agriculture post Brexit when she spoke at the conference of the National Farmers Union in Wales in the last couple of weeks. I am not as close to the detail of all of this as she will be, quite certainly, but I don't think it would be an unreasonable anticipation that we would need legislation here in Wales to be able to turn those principles into the sort of practical action that we would need the other side of the European Union.

I'm sure you'll take a message back: we'll be keen to see the paper as soon as possible.

Can I move on, then, to the Law Derived from the European Union (Wales) Bill, which you announced last week? In other words, and I think for the rest of this meeting, we will probably call it the continuity Bill, as we are all used to calling it. You identified last week that you felt that there was a need, at this point in time because of the timescale factor, to lay the Bill, and we'll be discussing that now. Can you explain, perhaps, based on your experience, the process that you think will be achieved in delivering that Bill and the timescales you are now targeting particularly for that Bill? And perhaps also, based upon the fact that we may be meeting next week—the Bill's going to be laid Wednesday, we understand, and you're meeting on Thursday—will there be a Stage 1 next week?

Well, tomorrow, Chair, the Assembly will debate two motions. It will debate a motion to take the Bill through the Assembly as an emergency Bill, and it will debate a timetable motion that will set out current thinking in relation to the timetable. If the Assembly approves it, and that's a discussion to be had tomorrow—. If the Assembly agrees that it can be taken as an emergency Bill, then I anticipate a Stage 1 debate happening next week.

15:35

It will actually go ahead, even though you might get some consideration of an amendment or a proposal on Thursday.

Well, I said last week, so I'll say again here, that if we are able to get an agreed amendment to the European Union (Withdrawal) Bill, then the Government will not seek to continue to promote a continuity Bill here. Do I think that we are likely to have got everything sorted out on Thursday to a point where I could confidently come to the Assembly and say that? Well, that would require a pretty significant set of movements on Thursday. And in any case, that Thursday meeting, even if it did make good progress, is likely to have to report what it concludes to the JMC plenary on 14 March before it could be finally agreed. These are the sort of things that prime ministers and first ministers in the end have to take a view of. So, I'm not ruling anything out because I've been taken by surprise by a number of meetings that I've been to in this process. Do I currently think that we're likely to be in a position by the end of Thursday where I could come to the Assembly next Tuesday and say, 'No need to worry about that continuity Bill; forget that, because we've got everything all agreed'? I'd be surprised if we've managed to make as much progress as that.

Thank you, Chair. If we are in a position where there is no agreement on the withdrawal Bill and so the continuity Bill goes ahead—admittedly I'd be lying if I said I'd taken this to bed and read it thoroughly, so these questions aren't as informed as they might be, but if I've understood this correctly—the Welsh Government would itself decide what constitutes Welsh retained law and what it would choose to act on and what it would be happy to leave to the UK to deal with. In answer to my earlier question, you were saying that one of the difficulties with the withdrawal Bill is that, even though there's no Welsh veto, you'd expect any common frameworks, for example, to be sorted by agreement. In the continuity Bill, there's no equivalent provision. In it, you'd be saying to the UK Government, 'Well, actually, this is what we as a Welsh Government want to act on. We're going to leave the rest to you.' What if they're not happy with what you want to leave them to act upon?

I will make sure that I am corrected if my grasp of some of this detail is still in development. I think Suzy Davies got it quite right in what she said to begin with, that the way that the scope of EU-derived Welsh law will be determined will be through regulations made by the Welsh Ministers under sections 3, 4 and 5 of the continuity Bill. Any direct EU law or domestic EU-derived enactment that is not subject to regulations made by the Welsh Ministers under those sections will not form part of EU-derived Welsh law, and so anything that falls outside that will automatically fall within the scope of the European Union (Withdrawal) Bill. So, it wouldn't be a matter of asking UK Ministers whether they would be willing to do it; it would be automatic. Anything that we do not choose to bring forward through the regulations of Welsh Ministers would be, in an automatic way, swept up by the withdrawal Bill.

Would you not—? Bearing in mind the direction of travel of the argument up until now, wouldn't you be saying, 'Oh, right, well we're Welsh Ministers, we'll have all this devolved law'? Because, at the moment, I can't see that that's quite your position; it's almost a bit of picking and choosing.

The Bill, as constructed, would allow us to take the whole lot and to act on it ourselves. But it doesn't require us to do that; it allows us to do it but it doesn't require us to do it. And that's because we continue to believe that there are many instances where operating through the UK Bill would be sensible for us all, remembering that we've said from the very beginning that we'd like that Bill to succeed. We see the sense of the Bill; we see what it wants to do and, when it can do it successfully for us, we have no sort of theological wish simply to do things for ourselves for the sake of doing them ourselves. So, where that Bill can successfully do things for Wales, we are very content that it should do so.

One of the reasons why our Bill has been constructed carefully with the UK withdrawal Bill in mind is to allow us to have those conversations, ongoing conversations, between the two Governments so that the withdrawal Bill can still do many important things for Wales by doing it on a UK basis. But where the UK Government, at the moment, is not in that space, where it wants to argue that they should take responsibilities away from this National Assembly and take them away without our consent, having said that they require our consent to do so, but they would still go ahead without that consent and take things away that have been devolved since 1999, this Bill allows us to act to make sure that that cannot happen. It would allow us to prioritise those areas where we think that risk is greatest and would allow us to bring forward regulations in those areas. We could do more than that, but we're not obliged to do more than that by the Bill.

15:40

Okay. Just two questions on the back of that, if I may. The first is—the decision lies with 12, 14, people in Welsh Government about which areas they're going to act on. What do you see is the role of the Welsh Assembly in making that decision, because, obviously, there may be occasions where the Welsh Assembly would like you to take action where, perhaps, the Welsh Government would be been less than enthusiastic about doing that? Because we can't amend secondary legislation.

I'll ask colleagues to add to my answer on this. I think you will see, I hope, Suzy, when you come to look at the procedure set out in the Bill, that we have worked hard to try to create procedures for those regulations that Welsh Ministers choose to bring forward so that they can be scrutinised at a higher level than any form of scrutiny proposed for parallel action at Westminster. We've set out a detailed procedure as to how an extended procedure could be triggered, and the triggering of it would be in the hands of the National Assembly, either through a committee or through action on the floor of the Assembly. So, where Welsh Ministers bring forward regulations, the scrutiny responsibilities of the Assembly I think have been carefully attended to in the Bill and would allow that scrutiny to be decided on a case-by-case basis: never less than the affirmative procedure; in many instances, considerably more than that.

Your question, though, was about how does the Assembly has an influence over what topics the Welsh Ministers choose to bring forward through regulations. I don't think that there is a procedure within the Bill that deals with that, but, of course, there are all the normal ways in which the Assembly can exert an influence over the Government. A committee, for example, could choose to hold its own inquiry to make a series of recommendations, to say to Ministers, 'We think you should be bringing forward regulations in the following areas'. Debates can be held on the floor of the Assembly on a proposition of that sort. So, there's nothing in the Bill, I think, that answers your question, but there are many ways in which the Assembly can make its views known to Government and Governments would be—well, this Government, certainly, I know would want to listen very attentively to those sorts of views.

If I may, following on from what the Cabinet Secretary said in terms of the scrutiny procedures under the Bill, he made reference to the enhanced procedure, which is provided for. As part of that procedure, the Assembly, both in terms of the Assembly acting in Plenary, but also the committee charged with reporting on the regulations in question, may make any representations or recommendations it chooses. So, say, for example, a set of draft regulations came before the committee and they felt that perhaps the regulations didn't go quite as far as they felt that they should or should be expanded to cover other areas or other topics, then there would be a period of 60 days within which—

15:45

Yes, so a form of enhanced procedure that goes above the affirmative, yes, which is sometimes described as superaffirmative. So, during that process, there would be the possibility of, say, the committee indicating then their view that the regulations should be amended or would be better to deal with other areas, or expand on the areas, that the Welsh Ministers have decided to cover in the first instance.

Yes. That's a very useful procedure for expanding the specific topic area that you're talking about, but it doesn't help you introducing new topics—but the Cabinet Secretary's covered that. Just finally, if I may, then: at some point, if it all goes wrong, you'll have a withdrawal Act and a continuity Act. You'll have powers that are similar but different in both of those. How are you going to manage exercising the discretion about which of those two Acts suits you as a Government at any given point? Because you'll have access to both, won't you?

And to say again that that is absolutely not our preferred outcome. Our preferred outcome remains, and we will work hard right—

—under the withdrawal Bill, but you're asking me why, if it doesn't work out in that way—. Well, that's why the Bill is constructed in the way that it is, Chair, to allow choices to be made so that we can work with the UK Government in those circumstances, to explain to them where we will want to bring regulations in front of the National Assembly, to agree with them where there are aspects of law that need to be carefully translated into the domestic setting post the European Union where we think that the withdrawal Bill remains the best vehicle for that to be carried out. It will be a matter of careful discussion with the UK Government, sometimes explaining, sometimes seeking agreement. I don't think it's beyond us to be able to do that and to do it in a way that is able to convey the outcome of that clearly to those interested in Wales who would want to know the answer to that question. For that aspect, is that going to be taken forward via the law derived from the European Union Act as it would then be in Wales, or is it something that is going to be resolved through the UK withdrawal Bill? We will be in a position to be able to answer that question and then clarity would be available to people.

Okay. I'll have more questions next time around, I think. Thank you, Chair.

Thank you. I apologise for my lateness. You've previously, and I think last week in the Chamber, confirmed your preference remains agreed amendments with the UK Government. Your second preference would be, if that failed, for amendments through the Lords. And your final, fallback position would be the continuity Bill. You also indicated in your response last week to me in the Chamber that the key issue for you was consent, and one of the options that's been modelled previously would be that consent being exhibited through an agreement that, once frameworks were agreed on the areas that you said, a few moments ago, logically could be lent to Westminster, unfreezing would automatically occur and all the powers would return to the devolved Governments and Parliaments for scrutiny. Clearly, it would appear to me, therefore, the sticking point for the UK Government is, reciprocally, consent, and their concern that that consent may not be given at that point, which may not apply here; it may lie in another place, somewhere north of here. Are you aware of any form of wording that would provide you with confidence around consent and might also be applicable to our friends in the north, that would be applicable, which could take this forward without the need for the continuity Bill?

Well, thank you, Chair. First of all, to confirm what Mark Isherwood said, that is the hierarchy of things as we see them—an agreed amendment first. If we can't get an agreed amendment, that doesn't mean to say we will give up at the House of Lords; we will press our own amendments there and hope to get support for them. And it's only if all of that fails that we are then left with our own continuity Bill as our final option. I think the best, I'm afraid, that I can do in answering a very good question about how we are going to resolve the issue of consent is to give you an assurance that very detailed work has gone on at official level. It has involved officials of the UK Government, the Scottish Government and the Welsh Government to work up potential solutions to the different views that we currently hold on the consent issue. There is more than one way in which those different positions could be bridged, and Thursday's meeting will be about, I hope, focusing on some of the practical ways in which we think that that could be done. 

I'm not in a position to go into the detail of how that could be, but I can give you an assurance that we are not without ideas, that we are not without ideas that we think could be, with sufficient give and take and a bit more thought and a bit more moulding, and all the things you've got to do if you want to reach an agreement—that those things could be done. We are confident that, with the right approach, the solutions that we could put on the table could be successful. But, as Members on this table will particularly know, in the end it is often political will that really matters, rather than the technical issues at stake. If there's enough will to reach a solution, we are confident we can reach a solution. We've got the technical means to do that. What Thursday will expose is the extent to which that political will exists. 

15:50

And are you able to indicate, therefore—? Obviously you can speak for the Welsh Government on that, and you have indicated your perceptions of UK Government—do you feel all three Governments and representation from Northern Ireland share your good intentions? 

Well, at the JMC the week before last, there was an agreement, explicit agreement. All parties said and said in terms that we all share the same ambition here, which is to get to an agreed amendment, and I thought that was an important statement. It was important to have it said explicitly by everybody. The extent to which the solutions on the table satisfy the different audiences that the different Governments around the table represent I think would be different in each case; everybody's got slightly different pressures on them and audiences to satisfy. But at least there was an explicit recognition that the end point is a shared end point. In terms of mobilising political will, then I thought that was an important thing to get on the record.   

Yes. Obviously, there are lots of timescales and deadlines, really, recognising, of course, that we have the Wales Act 2017 changes on 1 April as well to get through in terms of timetables. I'm very interested that you're, in the Law Derived from the European Union (Wales) Bill, also suggesting a change in terms of the charter of fundamental rights, which is something I'm sure we can discuss when we get into next stages. But, clearly, there is also the importance of safeguarding our equality duties within the current competencies of the Government of Wales legislation.  

Well, Chair, all of those things are very important to us. We have consistently said that we think one of the key priorities for the negotiations as we leave the European Union is that Welsh citizens should be able to go on enjoying the protections that they have gained as a result of our membership, whether those are human rights, whether they are consumer rights, whether they are labour rights, whether they are environmental rights. All of those things that we have gained through our membership of the European Union must be translated into the future, and the Prime Minister said something similar to that in her speech last Friday. 

On the charter of fundamental rights, we have done our best to support those voices in the House of Lords that have been calling during the debate so far—. There's been a this stage debate on this matter. We are calling on the Government to amend the EU withdrawal Bill to ensure that the charter is fully incorporated into UK law after Brexit. That was the case made in the House of Lords. The Government has gone away saying that it is working hard on this issue and that it will return to it at the Report Stage. We hope that they will return to it in that full-hearted way that the House of Lords debate pressed on them and, if they do, then that is the best way of all, because that will cover the whole of the law that comes into the United Kingdom after Brexit, not simply devolved law. 

15:55

Cabinet Secretary, two points to conclude the first section today. What you just said is obviously dependent upon various things happening in the next month to two months, so we will not actually be clear perhaps until more likely the end of March, maybe early April—until we know exactly what perhaps has been agreed or not agreed by the House of Lords. In that sense, would you therefore agree that, even if you have a proposal on Thursday, it's important that the continuity Bill goes through? Because until we actually know exactly what has been agreed in the House of Lords, we won't actually know what the outcome of the changes or amendments to the EU withdrawal Bill will be. 

—take a positive view of the things that the UK Government has done in this field. And not to sound churlish about what has happened, but I'm going to end by just expressing my frustration at the fact that it has taken this long to get the discussions about clause 11 to this point, because if we had managed to have these things discussed earlier in the process, we wouldn't be in this position where these timetables are now running each other so close. We could end up—I think you are right—we could easily end up in a position where we take the continuity Bill all the way onto the statute book only to find that we reach an agreement on the withdrawal Bill and we needn't have done it after all. I think that is very frustrating that we find ourselves in that position, and we needn't have. The UK Government could have held the discussions that we are now having on clause 11 much earlier in the process. If they put down the amendment in the House of Commons at the Report Stage there, in the way that they said they were going to, we would have been weeks and weeks ahead of where we are now.

So, I'm not wanting to use this session to sound frustrated at the way things have been, because there have been important steps forward, but on this issue, I do think it will be frustrating. It will be frustrating for the National Assembly as an institution to find itself being asked tomorrow to take an emergency Bill and an accelerated process, and to have to find lots of time over the next few weeks to deal with the continuity Bill and so on, and we could still be in a position after all of that where we could have avoided it had we had an agreement with the UK Government some weeks ago. 

And my final point on the continuity Bill itself: there's a lot of talk about the Henry VIII powers in the EU withdrawal Bill, and there are still Henry VIII powers in this particular Bill. Clearly, we understand that, as you recognised, there was a need for some, but there were amendments in the House of Commons in paragraph 22 of Schedule 7 to the withdrawal Bill. Has your Bill considered those amendments, and are you limiting the Henry VIII powers as much as you can, to ensure that the Assembly has an ability to scrutinise the Government's actions in relation to the Henry VIII powers?

I will ask colleagues to assist me here, but we have said at every opportunity that we have had in front of UK committees and so on that we think that the UK Bill needs to be amended to rein back on the Henry VIII powers that are contained within it. But we also have to say that Welsh Ministers cannot be put in a less advantageous position than UK Ministers are in. So, what we want to see is Henry VIII powers rolled back in the withdrawal Bill, and then we will do the same as far as Welsh Ministers are concerned. But we are having to try and hold those two things in intention at the same time. The real answer is to amend the withdrawal Bill so that it doesn't hand over in an untrammelled way Henry VIII powers to UK Ministers. That's what we want to see happen. We will respond in kind when that does.

In the meantime, we have already taken action in our Bill to place constraints around the way that Henry VIII powers are constructed in the Bill. To begin with, they can only be exercised with the additional safeguards for scrutiny that we discussed with Suzy Davies earlier. And, secondly, our Bill is constructed in a way that places a duty on Welsh Ministers to seek continuity in the rights and obligations flowing from direct EU law. And that restriction, which means that the only thing that we can use Henry VIII powers for is to keep the law in the future consistent with the way the law is today, is repeated in sections 3, 4 and 5 of the Bill. So, these are not Henry VIII powers that can be used to invent new primary legislation; they are there to ensure that the law that exists the day before we leave the European Union is translated as faithfully as possible into the same law, but now in a domestic format, the day after we leave. And I think that's another way in which our Bill very carefully confines, tightly constrains, the use of Henry VIII powers, because all they can be used for is to make sure that what was happening the day before happens the day after. And I think that's another way in which we have sought to try to answer some of the understandable reservations that people have—reservations that we share in many ways.

16:00

Thank you for that answer, Cabinet Secretary, and thank you for the session. We've come to the conclusion of the first session. I would just like to say that perhaps the UK Government should look at this Bill, because there are some powers in here that you're constrained with and have worked with, but perhaps indeed amendments in the UK Bill would help, very much so. So, I will now call this first session to an end, and we'll have a short break. We'll reconvene at 16:10.

Gohiriwyd y cyfarfod rhwng 16:02 a 16:11.

The meeting adjourned between 16:02 and 16:11.

16:10
8. Perthynas y DU â'r Undeb Ewropeaidd yn y dyfodol - sesiwn dystiolaeth gydag Ysgrifennydd y Cabinet dros Gyllid
8. Wales’ future relationship with the European Union - evidence session with the Cabinet Secretary for Finance

Can I welcome Members back to this afternoon's evidence session of the external affairs committee? Can I welcome back the Cabinet Secretary for Finance, Mark Drakeford? Can you, for the record, introduce your officials? Because obviously they've changed since the last session.

Thank you, Chair. The three people who are with me for this session are all people involved in helping to shape the Welsh Government's thinking in relation to future relationships with the European Union. Simon Brindle has been leading for us in some of the discussions around the frameworks that we mentioned in the last session. Piers Bisson is the director of European Union transition. Des Clifford has been overseeing the official effort in this area, and of course works to the First Minister.

Thank you for that. I'll just remind Members that this evidence session is focusing upon the work we're doing on the future relationship with the EU following our departure from the EU. Perhaps I can ask the first question in relation to the 'Securing Wales' Future' White Paper, which was published over a year ago now. Clearly, it was published at a time when there was a different set of agendas, in one sense. We have more detail on some of the agendas now than we did then. Has the Welsh Government looked at the opportunity of revisiting that White Paper to see whether there are things it can now expand upon in more detail, develop a bit further, maybe even change? Because there are clearer decisions taken by the UK Government, which may or may not now be in contradiction with some of those positions the Welsh Government had.

Chair, I think the first thing I would say is that the fundamentals of 'Securing Wales' Future' have stood us in very good stead over the last 12 months. I don't think we would need to amend the key things that we said in that document. We continue to look for a Brexit deal that is aimed at preserving and promoting prosperity and therefore one that puts the needs of the economy first. All the things we've said in 'Securing Wales' Future' about full and unfettered access to the single market, membership of a customs union, a pragmatic approach to migration, to the maintenance of the citizenship rights that we mentioned in the last session, to securing the funding for Wales that has come to Wales as a result of our membership of the European Union, and the need for a transition period—those six priorities that we set out in 'Securing Wales' Future', I think, would be our priorities today.

So, where we have put our efforts, as you know, is not so much in updating 'Securing Wales' Future' than in publishing more detailed papers that expand on some of those key aspects. So, the trade paper that we published a few weeks ago deals very much in the first areas—and the migration paper that we published last year. We've tried to focus on those aspects that we think are absolutely essential to get our stall set out in advance of the phase 2 negotiations. Therefore, rather than just updating the paper, I think we've been focusing on augmenting it and augmenting it in those areas where we think it's most important to provide an extra level of detail. But I don't think that the principles we set out would change if we were publishing it again today.

16:15

Okay, thank you for that. You've mentioned also that you were in Brussels last week. How are the discussions in Brussels and the institutions in Brussels looking upon that paper and the augmented papers you produced to look at the relationship we will have with the EU?

Well, I don't want to overstate it, Chair, but every time I've been to Brussels I've been a bit taken aback at the extent to which the things that we have published here are known around the table when you go and meet people. So, I was asked repeatedly over the day and a half that I was there about our continuity Bill and they were politicians across the different groups in the European Parliament. They'd all heard about our continuity Bill. They all knew it was being brought forward. They all wanted to know what it was for and so on. So, actually, the things that we have published as a Welsh Government I think have made a genuine impact at the Brussels end, and that's partly the result of the Welsh Government's action, and it's partly the result of things that this committee has done when you've been over there making sure that the things that we publish are known and circulated and so on.

The focus of the discussions when we there was not so very specifically on the detail of those proposals. We happened to be there on a couple of very busy days when proposals were being published by the Commission in relation to translating into legal text the phase 1 agreement of December last year. And the sorts of questions that we were asked were very much about the way that the UK Government was likely to respond to those proposals and how that would then lead to decisions at the Council on 22 March. 

Thank you. I'll come back to some other questions later. Suzy. 

Thank you. We've heard quite a lot of evidence from a number of sources, which I'm sure have also given evidence to Welsh Government as well. You kicked off with your response by saying the needs of the economy come first. Do you have any plans to publish your sectoral analyses or impact assessments? The Cabinet Secretary for the economy said that they were being done, and I know there's a paper from Cardiff University, or, actually, nine individual pieces of paper—more than pieces of paper. Are they likely to be coming forward for us all to see? 

Chair, I think we've published a lot of sectoral analysis already. 'Securing Wales' Future' had a significant appendix, which was a sectoral analysis of the Welsh economy. As Suzy just said, we published the Cardiff University sectoral analysis against the needs of medium and larger businesses in Wales. Members here will have seen, I'm sure, the analysis of the fishing industry, which again breaks it down into the different sectors within the fishing industry and looks at six different ways in which we might leave the European Union and what each might mean for the different sectors there. We published a paper on the agriculture, food and farming sector in Wales—again, breaking it down to a sectoral level and looking, I think in that case, at five different potential ways in which we might leave the European Union and the impact that it would have. So, I think a lot of the additional sectoral information that has become available in Wales, over the last 12 months, has either been as a result of direct Welsh Government action or as a result of research efforts that we have sponsored. 

I just want to make this point, because we make it every time, really, that sectoral analysis is very important but it is not the end of the story, and in some ways unless you are able to look at common themes across sectors, and this is a point that was made I think quite substantially in the Cardiff University study—. If you don't look at the things that are common across sectors, then you may end up with a fragmented plan for what the Welsh economy will need after the European Union. So, sectoral analysis is very important. We've published a great deal already. I'm sure where there are opportunities we will publish more. But as well as individual strands, we've also got to look at the things that link those strands together and make sure that, in the end, the plan we have is more than a simple sectoral plan. 

16:20

Apart from information for ourselves, the reason I ask this question is that when we were in Brussels last time and meeting individuals from sub-state parts of the European Union, it was pretty obvious that some of them had quite a lot in common with us and others had less in common with us. So, it's a question, really, about whether this work has helped you identify where your friends are, if you like, in the European Union.

I think that's a very important point. When I was in Brussels last week, the last meeting I had was with the president of the Flanders region. Flanders has itself produced a detailed document looking at the impact of Brexit on the Flanders economy, which is highly bound up with the UK economy. They were able to supply us with copies of the work that they have done. It will be an important part of the ongoing thinking we need to do about those parts of the European Union where the Welsh economy is particularly aligned, and where the impact of Brexit will be felt on their economy as well as ours, and to try and think of ways in which we might be able to act together to mitigate some of the potentially adverse impacts if we don't do it in the right way. 

Well, and to contribute to the EU bargaining position, if you like. 

The reason I think it's important for the nine sector analyses is because the Cabinet Secretary for Economy and Transport actually did identify nine. Now, whether those nine have now merged into others because of decisions and considerations—I think it would be helpful for the committee to actually have clarification as to what happened or where those nine are, how they've merged and where we are now with that. It would be very helpful for us. Perhaps you could ask your colleagues—

I'd have to make sure I've understood that and we can get you a proper answer, but I've understood the question. Thank you. 

Thank you, Chair. There are a couple of points I want to raise with the Cabinet Secretary today, firstly focusing on a trade policy post Brexit, particularly in the steel industry in Wales. Obviously, we all heard the announcement by the Trump administration last week. We don't know the full details, but it's a clear concern for everyone involved. But there are longer term issues within the steel industry, in particular the dumping of cheap steel into the steel market. Would the Cabinet Secretary agree with me that the new UK Government's anti-dumping measures need to be on a par or above the current EU Commission measures? Secondly, looking at the industry as a whole post Brexit, is there a forum for industry leaders or a taskforce for industry leaders that we can bring together and look at what their requirements are post Brexit? And if not, is that something we should be looking at arranging? 

Thank you, Chair. Well, the Member is quite right to say that Twitter is not a medium for conveying detailed thought, so we are relying on what we know so far of the United States's position. I think the Prime Minister has said this pretty powerfully, really—that tariff barriers of that sort are inimical to trade and that they are likely to set off a series of counter-reactions that will make trade even more difficult. So, there is no sense at all, it seems to me, in what we have heard from the US administration. Let's hope that better arguments will prevail there. If they don't, then it's a pretty bleak lesson to those in the UK Government who seek to persuade us that there are free trade agreements to be struck around the globe that will compensate us for the loss of our ability to trade with our nearest and most open market. Some of us have always felt that that was a pretty weak series of arguments, but if you've got trade barriers being erected in other parts of the world, then the ability of being able to strike those deals seems even weaker. 

Through our membership of the European Union, we are better able to protect our industries because we have greater strength in that. That is not to say, Chair, that the European Union gets everything right. In the referendum that I was involved in, I was very pleased to stand on a platform of 'remain to reform', because I think there are many things in the European Union that could be done better. One of the things that the European Union could have done better already would be to look at the way that it deals with dumping and unfair trade practices in the steel sector. But if you want a club to do things better, you can only do that by being a member of the club, and that's why it was important to remain in order to reform.

If we're not part of the European Union, then we will have to look after ourselves, as far our steel industry is concerned, which I think strengthens the point that Jack just made about the need to be able to find new ways post Brexit of still being able to be part of networks across the European Union, where there are shared interests, because that way, acting with others, our ability to protect industries in the way that we need to—protect them from unfair actions and unfair competition—will be strengthened if we're able to act in concert with others.

16:25

The question on business and the forum for getting people together to discuss—.

Jack, if you were asking, 'Do we need better arrangements inside Wales to bring people together to have those discussions?', then I think there are many ways in which we already do that. We've strengthened them already in the Brexit setting. The council for economic renewal, if that is what it is still called—[Interruption.] Okay—sometimes the terms move about—the council for economic development has got a sub-group, which is a Brexit sub-group. It brings together the representative bodies of industry, but the Welsh Government is there and trade unions are there as well. I'm sure that we will be looking at ways in which we can strengthen those forums still further to make sure that they can go on advising us and be powerful ways in which they can get together themselves to represent Welsh interests post the European Union.

We obviously live in a very uncertain world, and then we've got Brexit on top of that. One of the areas that is of considerable concern, in the light of discussions we've had with stakeholders, is the future of healthcare. Seven per cent of our doctors are European citizens, and, anecdotally, we know of people who have decided to go elsewhere. I imagine that just as many nurses are also originally from the European Union. This is an area where we don't, obviously, have devolved powers over migration services, so that leaves us very vulnerable.

In addition to that, leaving the European Medicines Agency means that we will no longer be able to get early access to breakthroughs in medical innovations, because we'll no longer be part of this large European market. My understanding is that it's simply not possible for us to be part of the European Medicines Agency if we're no longer part of the European Union. So, obviously, both of those issues are of considerable concern for people who may have relatives with diseases that need medicines.

Well, Chair, to take the two points separately, it has always been an anxiety of the Welsh Government that there are businesses, public services and research bodies in Wales that rely on their ability to recruit people from other parts of the world, including the European Union. We do not want to leave the European Union in a way that creates new barriers to those people being attracted to Wales, because it's the rest of the people in Wales who will be affected.

I've probably given you this example before, but I'll just briefly do it: when I was speaking to someone who runs a large hotel in mid Wales—it's undoubtedly the largest employer in that quite remote part of Wales—he said to me that he requires 100 members of staff to make that hotel a success, which it is. Eighty of them are recruited locally, but 20 of them he has to recruit from elsewhere. What he said to me is, 'If I can't get the 20, it's the 80 jobs that are at risk. It's the jobs of people who are living in Wales already that are put at risk if I can't recruit people from elsewhere, because, without 100 people, I can't get this hotel to run.' So, it's not people taking jobs from other people. It's actually sustaining jobs for other people by being able to recruit people where there are jobs that need to be done and there isn't an indigenous population available to take them up.

So, our paper on migration says this very clearly—that we want a pragmatic approach. We think it's consistent with the principle of free movement, what we have proposed, because we say that, with people moving to live in Wales, we need a stronger definition of people coming here to work. Many other parts of the European Union have a stronger link between arrival and employment already, so we would be no different to elsewhere. And then we have to do more at the other end of the labour market, not the doctors and nurses end, but the end of the labour market where people are looking for entry-level jobs and who fear that freedom of movement has too easily become freedom to exploit, where they fear that people are brought from other parts of the European Union, unscrupulous employers require them to work at below the minimum wage, they charge them travel expenses, they charge them rent, they make them pay for their uniforms, and they do all sorts of other things that mean that, in effect, they're not being paid the national living wage, and that has an impact on the economic opportunities of other people in those communities who are also looking to compete for jobs in that part of the market. We say in our paper that we must do more to enforce the protections that ought to be there for people and to give people confidence that people coming from elsewhere aren't having an adverse impact on their abilities to get employment.

So, we're disappointed that the UK Government's migration White Paper appears to have disappeared far into the distance. When I met Brandon Lewis, who was then in charge of migration, at the Home Office before Christmas, he told me that the White Paper was weeks away and that he was frustrated that there hadn't been a conclusion at the October Council of Ministers, that his White Paper had been delayed until December, and now we're being told that we won't see it until the end of this year. So, that's frustrating when we think that there is a set of pragmatic ideas there that could protect our ability to recruit from elsewhere and provide some reassurance to people in Wales who've had anxieties about the way that the current system works.

On the issue of the European Medicines Agency, although the Prime Minister did address this directly in her speech on Friday, again, we have argued for a long time that the UK ought to be willing to pay into the European Union in future, when we are no longer members of it, to allow us to continue to be part of European-wide agencies where it is in our interests to do that. So, the Prime Minister did say

'membership of the European Medicines Agency would mean investment in new innovative medicines continuing in the UK…But it would also be good for the EU because the UK regulator assesses more new medicines than any other member state.'

I think the speech was a step forward. She identified a series of different places: the European Medicines Agency, the European Chemicals Agency, the European Aviation Safety Agency—and we think there are more than that, by the way; we think there are other agencies where it would be sensible for us to pay an entry fee because we would get more out of it than we would by trying to separate ourselves off from these European-wide agencies. I don't think I've heard a UK Minister speak as explicitly as the Prime Minister did last week about their willingness to pay in in order to get out. So, we will support any efforts that are made at a UK level to allow the UK to continue to participate in those sorts of agencies where it is clearly in our interest to do so, and the European Medicines Agency, for the reasons that Jenny outlined, is high on the list of places that we would want to continue.

You've got to be creative then. If you can't be a full member, because full membership is only available to members of the European Union, you've got to invent some new category of member—you've got to be an associate member, or a country member, or a something. Again, if there's willingness to do it, it is not beyond the wit of the people involved in negotiations to create a new category, which we would belong to, that would allow us to go on benefiting and recognise that if you want to benefit you've got to be able to pay the admission price to do so. 

16:35

Yes, I'm just thinking of that in terms of associate membership or—. It was very good to hear that the Prime Minister did mention those agencies that the UK Government's prepared to pay into. Also, of course, could the Welsh Government develop its own relationships of that kind? I think it would be useful for you to comment on that.

We had a conference with a huge range of stakeholders about future relations—third sector, business, universities—and they were very concerned about the formal and informal EU networks that they're engaged in. You won't be surprised to hear me mention, for example, Eurochild and Children in Wales—actually, the Welsh Government's had a big impact in terms of supporting that kind of network. But also, obviously, there's the more formal EU networks such as Horizon 2020 and Erasmus, and I know that's been a big issue in terms of debate in the House of Lords. Another is public health, and the British Medical Association and the Royal College of Nursing are very concerned about public health issues. There's the European Centre for Disease Prevention and Control that was mentioned there, and I don't know if that was mentioned in the PM's speech. So, has the Welsh Government undertaken any work to look at the current involvement that our partners in Wales have with these networks, both formal and informal? And do you see a role for us? We're certainly looking at it in terms of recommendations for future relations. Do you see a way in which we can support this kind of engagement post Brexit?

Thank you, Chair. Well, the first thing to say is that we have done a mapping exercise; we did one for an early meeting of the European Advisory Group. It ran, at that stage—and that's probably a year ago now—to nearly 20 pages of different networks that different Welsh organisations are involved in at a European level, and if it would be helpful to the committee, I'm sure we could share a summary of that paper. I'm sure it could be updated again, and there will probably be even more things on the list, but it was a very significant list. So, we have done work on that, helped a lot by third sector organisations themselves.

After that, Chair, I think that there's probably a distinction to be drawn between an ability at a Wales level to be part of European agencies of the sort that we've just discussed or of Horizon 2020 and Erasmus and so on, where, as far as I know, those relationships are member state relationships and I don't think I've got in my mind any example of where a sub-national region is itself a member of—. You know, they're members through their member state, and so our efforts have been designed to try and persuade the member state—the UK, in other words—to do everything it can to remain in those organisations. But, I think networks are a different matter.

I was really in Brussels last week for St David's Day and to host the annual St David's Day event that goes on in Brussels. There were over 300 different people who came to it from any number of different European countries and regions, so that was fantastic, but as it happens, there were people from Wales there as well who were in Brussels for a meeting the following day of the network on healthy ageing, where Wales has played a really leading part. We've been a three-star reference site for it; the older persons commissioner has chaired a lot of the work of that network; and where I think we could genuinely say that, while we have been a huge recipient of things in other networks, we've been more than a net contributor to the healthy ageing network, and lots of parts of Europe have looked to us for a lead in some of the things that we've been doing here. So, I know that the people who are involved in those networks are desperate to be able to go on being part of those things the other side of the European Union.

One of the things that I've been really struck by—and I sometimes say that I think we're humbled by it, really—is that there are other parts of the European Union, regions of the sort that Suzy Davies was referring to earlier, where our leaving the European Union is going to do them harm. There's no doubt about it. All the analysis that they've done sectorally shows that, without the trading relationship they currently have, their economies are at risk, and yet when you go to those places, they are still incredibly willing to keep the door open to us, to go on being part of things that we have shared with them in the past. If you've had a chance at all to look at the Cardiff declaration, which is the declaration made by the Conference of Peripheral Maritime Regions—one of the big networks in Europe—it explicitly says that other parts of Europe should look for ways in which the door can be kept open to Wales in participating in these really important European networks the other side of Brexit.

So, that's where our role really comes to the fore—not so much in the big institutional relationships, which really are a member state responsibility, but at those other things where we've been, I think, very willing and positive partners but where we've gained so much in return.

16:40

Can I expand a little bit on that before I move on? I understand your argument about the member state aspect, but I suppose, in a sense: are you having discussions with the European Union or bodies in the European Union as to whether that is a possibility? Because obviously Scotland would want to join Wales, for example, in many of these aspects, so you could actually have quite a strong collective group and body that may want to see if there are opportunities available.

Yes. Well, Chair, I think that is a very good point, and certainly I have had those discussions with Scottish Ministers about ways in which we could work together on participation. Interestingly, during half-term week, I was in Belfast and Dublin. In Belfast, we had hoped that we would be talking to parties that were back in Government there, and I was there to brief them on the JMC and what had happened in the interim period. Unfortunately, the moves to reinstate the Executive hadn't matured. But with the political parties that I met—and I met Sinn Féin, I met the SDLP and I met Unionist politicians—there was a real appetite there too for ways in which we might be able to work with them post Brexit to form some alliances between Scotland, Wales and Northern Ireland to be able to continue to participate in some of these regional level arrangements that otherwise we might not be able to have access to.

Thank you, Chair. I just wanted to have a chat about the involvement of the Welsh Government in the UK's position on the transition period. How much consultation has there been? What's the relationship like? What are the difficulties you foresee, if any?

No, no, it's a good question. On one level, we have had an opportunity to discuss the transition period with the UK Government from the very beginning, because in the first meeting of the JMC where the withdrawal Bill was being discussed, I said on behalf of Wales—because we'd published 'Securing Wales' Future'—that we thought a transition arrangement was essential. At that point, we were the only voice in the room that argued that. Scotland's position was that Scotland weren't leaving the European Union; they'd voted to stay, so there was no need for a transition period for them because they weren't going. So, they didn't want to discuss it, and the Secretary of State for Exiting the European Union told me that discussion of a transition period was a distraction from his determination to conclude everything that was needed within what was then a two-year period. I put the arguments that are in our paper as to why it was very hard to see how you could conclude all the divorce arrangements and all the future relationship arrangements within such a short period of time and that a transition period would be necessary. So, we were pleased when the Prime Minister came to the same conclusion in her Florence speech.

Our view of a transition period is that if it's to be useful in providing certainty and security to businesses so that investment decisions can be made, then that transition period needs to stick as closely as possible to the arrangements we currently have. I think that is the basic proposition of the UK Government. Every now and then they appear to want to have changes around the edges. I said to David Davis at the last meeting of the JMC that I thought the UK Government ought to be willing to swallow some of those anxieties because, if we don't get a transition arrangement agreed at the March council, then another three months will disappear, making a transition period even less useful than it otherwise would be. One of the key things that I was keen to try and emphasise in Brussels last week—and I did it wherever I went with European Union colleagues—was for some flexibility in what we mean by 'a transition period'. So, they have, in some ways, taken a rather hard line on it being 21 months and it must finish before the next multi-annual financial framework comes into being. The UK Government has been a bit more flexible in saying, 'Around two years'. Our position has been that it is very important to keep some flexibility in that, and we shouldn't be thinking of transition in a way that closes off possibilities that might be in all our interests further down the line.

So, I understand why you need to have a period of time in mind, and if it's around the two years at the moment, well that seems okay, but we don't want a transition agreement that precludes, rules out, the possibility that if, in 12 months, everybody agreed that a bit longer will be sensible, that we can't all agree that that will be sensible. We were there trying to persuade everybody that not being too definitive about all of this would be in everybody's best interests.

16:45

How closely are you expecting to be involved in future negotiations? The Secretary of State for Exiting the European Union has expressed the view that there could be between 20 and 40 negotiation strands. Do you have the capacity to be that deeply involved and to make a real impact on those negotiations?

Well, the negotiations are undoubtedly going to be complex, and they will be multistranded, I'm sure. There was a clear recognition in the December JMC that there would need to be a higher level of involvement of devolved administrations in the phase 2 negotiations, compared to phase 1, because the negotiations will be about responsibilities that are not held by UK Ministers. Quite a lot of the time, they will be about responsibilities that are held in Edinburgh, Cardiff and Belfast, and therefore there is a transparent need for us to be more involved. What we would have to do is we would have to be able to prioritise which of those strands we have the most at stake in. So, if there are strands, as I'm sure there will be, on security, justice and all of those sorts of things that are not devolved to us, we still have an interest in them. The single biggest cluster of cyber security firms in the United Kingdom is now in south Wales. One of the things that I did when I was in Brussels was to speak at a conference on cyber security alongside Sir Julian King, the UK commissioner with responsibility for cyber security. So, we would have an interest, but we don't have devolved responsibilities at stake there. In other strands—say the strand was the environment strand—then we would have very clear and direct responsibilities at stake. So, we would have to make some decisions—and they might be quite difficult decisions, given resource constraints—as to which of those strands we put our major effort into and which of the strands we essentially just try to make sure that the UK Government is aware of the Welsh position and Welsh interests on, and essentially then leave it up to them to make sure that they carry out those negotiations on our behalf.

16:50

Thank you. The 22 February JMC you referred to many times, understandably, on European negotiations had two strands—I think you mentioned two: obviously, the withdrawal Bill that you've discussed at length today, but also the UK EU negotiating position, and you've in part addressed that in your response to my colleagues this afternoon.

You mentioned the transition period. We know that the EU itself has expressed a wish to link that to their own financial year, which would mean less than two years because of funding implications that might arise if the term goes beyond that. Clearly, the UK Government wanted a two-year period, which would take it beyond that. You've indicated a different position. So, what consideration in JMC(EN), or otherwise, has been given to the potential financial implications of a longer period than the EU's own funding round?

Chair, that is an important and complex question, and there were different views on it amongst European voices that we met when I was there. There are people at the European Union level who think that this is a very significant break point and our transition period cannot go beyond the point of the start of the next multi-annual financial framework. The 21 months is a real—. We had to work quite hard, really, I think, to persuade some of them to think maybe a bit more flexibly than that.

But there were other European voices that I met who said that they thought that this was not a real line in the sand at all and that the position was simple enough: that the UK is not going to be part of the next MAFF and, therefore, the European Union can get on and plan the basis of the resources it will have without us. If the UK ends up wanting to pay into any parts of the European Union—to be able to go on doing some of the things we've talked about already—then that would simply be a bonus from their point of view; that would be money on top of what they were planning for. People who argued that, I think, were more on the side of the argument I was trying to put, which is that you can be more flexible around that deadline than some European Union voices are suggesting. But it was a mixed picture.

The first thing I did when I got there was to speak at a group meeting of the socialist group of MEPs. So, that's just under 200 of them, and I spoke there first. The next thing I did was that I spoke at the EPP—the centre-right grouping, which is the largest political grouping in the Parliament. They have a Brexit committee and I spoke to the Brexit committee there. I spoke later to the head of the green group in the European Parliament, which is the smallest group. The heads of each of these groups form the cabinet of the Parliament that is responsible for Brexit, so it is very important to speak to them. There were nuances on that issue between each of those groups, which is why I thought it was worth being there to make that basic argument for some creative ambiguity in the text around the transition period that doesn't mean that, if we all agree it needs to be a bit longer, that avenue is closed off to us because the first agreement is too definitive. I don't think that's in the UK's interests, but I don't think it's in the interests of Europe either.

It is complex. My understanding is that the transition period from a European perspective will be all or nothing until the end of the transition period. Therefore, if it goes beyond or into a new funding round and questions arise—. But I won't labour that at this point.

You referred earlier to your meeting with the Flanders President. We also met the Flemish Government last year. They told us that not only were they economically dependent on access to the European market, but they were seeking to work with other states and regions within the EU that, similarly, saw continued trading, barrier-free, or as free as possible, relationships with the UK. Clearly, the negotiations from the EU perspective cannot enable those states or regions to have bilateral discussions with the UK, but to what extent are you aware of that group's ability to nonetheless influence that alongside the discussions you indicate they're having with you?

16:55

I'll be careful not to speak for the Flanders Government or to misrepresent what they would say. They remain very keen on the idea of a North sea grouping. Quite how far they have got in getting that group off the ground and being an effective player—I think, probably, it's a work in progress rather than, maybe, that they've got as far as they would like.

The good news from our point of view is that the things that they are keen on are very much the things that we were keen on in 'Securing Wales' Future'. They know that it is in their interest to have the most tariff-free, non-tariff-barrier trade with the United Kingdom as possible and, therefore, they're an ally to us in our arguments for the same things. They've certainly said to me what I now hear they've said to you, which is that they think that by working with other regional tiers who are in the same position—. The north of Holland, for example, where I've been asked if I can go and visit and speak to the Government there before Easter, because, again, their trade with the United Kingdom is the most significant of all of the parts of Holland, and they remain very committed to as open a trading relationship as possible, because it's in their interest as well as ours.

For the record, before Mark comes in, we didn't meet with the Flemish Government; we met with Members of the Flemish Parliament—the Speaker and some of the Members who are actually on our equivalent committee in the Flemish Parliament.

Thank you. Going back to the JMC(EN), were you consulted as a Government or able to input into or at least be informed about the Prime Minister's speech last Friday? And, as we go forward and if your hopes are borne out that the JMC(EN) can be regularised as things go forward in the second phase of negotiations, how would you propose to keep the Assembly, the Welsh Parliament, informed of developments?

I think the straightforward answer to whether we were consulted about the Prime Minister's speech would have to be 'no'. I should have said in answer to Michelle Brown's question when she asked whether we were consulted about the transition arrangements—. The distinction I was trying to make is that we have a general ability to discuss these things at the JMC(EN), but were we consulted specifically on what the UK Government said? No. 

So, I had the courtesy of a telephone call from the Secretary of State for Wales about half an hour or so before the Prime Minister stood up to make her speech, and the First Minister spoke to the Prime Minister later that afternoon, when, again, she discussed with him what she had said. But in a way, those were after the facts—the speech had been written and was about to be delivered or had been delivered. Were we engaged in discussion of its content in advance? I don't think I could say that.

How will we continue to keep the Assembly informed of all these different developments? Well, I hope that the committee would feel that we've used all the different ways in which the Assembly makes that possible—written statements, oral statements, debates, questions on the floor of the Assembly and appearing at committees here primarily but also at other committees that have an interest in this matter. I think we've done our best to be as available as possible to the legislature in providing an account of the things that we have been involved in and in allowing—that's the wrong word; I don't mean 'allowing'—making sure that we are able to take advantage of all the work that the committee does and other Members do in helping to shape the things that we then say to the UK Government on Wales's behalf.

Thank you. Cabinet Secretary, can I put on record our appreciation of your commitment to this committee, because you are regularly here to provide us with an opportunity for scrutiny at this committee, and I know that your statements are made in the Chamber, but we appreciate the commitment you have?

Just a closing point, because I appreciate the time you've given us this afternoon: we are looking at the future relationship with the EU and this afternoon you've given us some indication as to some of the discussions you've had with colleagues in the European Union and other nations. On the standards and regulations issue, whilst I appreciate that that is part of the withdrawal Bill, or the continuity Bill, whichever way you look at it, what discussions have you had, perhaps, with your European colleagues as to how we may wish to maintain the standards to ensure that our exporters are able to continue exporting, with or without tariffs, into the EU, but based upon the non-tariff barriers issues?

17:00

Well, Chair, you'll all have read the bit of argy-bargy around the Republic of Ireland and Northern Ireland border issue in the translation into legal text of the December agreement, where option C was the one that was put forward into the legal text. We've always gone one step further, and the step further is there in the December agreement, in paragraph 49. Option C is for regulatory alignment between the north of Ireland and the Republic, but the December agreement says if that isn't deliverable because of objections, primarily from the DUP, to a border in the Irish sea, then the answer is to have regulatory alignment between the United Kingdom and the European Union, and that is our preferred option. It's the least preferred option of the UK Government, but it's our preferred option. We think that, from a Welsh perspective, ongoing regulatory alignment with the European Union will be the safest way of securing non-tariff barrier trade, particularly in areas such as agriculture.

As we've said many times here, if you are a manufacturer or a grower of mussels in the north-west of Wales, an industry that has had substantial investment over the years—public investment—to help it to grow, and which is a great success story, 90 per cent of its products go to the southern Mediterranean. They leave Bangor as fresh produce, they arrive on the plate in the southern Mediterranean as fresh as well, because they have not faced a single barrier in their way from Brussels to Barcelona, or wherever they end up. If those mussels end up, when they arrive somewhere else, having to have a country-of-origin form filled in and an investigation every time to make sure that the standards, the regulatory standards, of food hygiene where they are produced are the same as those where they are being consumed and many other non-tariff barriers, by the time all that is done, those products will not be fresh at all, and the whole industry will be in peril. So, regulatory alignment is a way of making sure that those questions don't arise and that we can go on having barrier-free trade for Welsh producers in that way.

So, the continuity Bill allows us to secure regulatory alignment in the areas that it covers for the future, and that's another advantage of the Bill. But the better way would be to have UK regulatory alignment for these purposes and then trade with our nearest and most significant market could continue unimperilled.

You've answered my next question on the continuity Bill. I'm going to call it to an end now, so can I thank you for your evidence session this afternoon? You will receive a transcript of both sessions, as you will be aware, for any factual inaccuracies. If there are any, please let the clerking team know as soon as possible. Thank you for your time. I thank the officials for their time, as well, this afternoon.

We now move back into private session for the final item on the agenda.

Daeth rhan gyhoeddus y cyfarfod i ben am 17:03.

The public part of the meeting ended at 17:03.

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