National Assembly for Wales

Y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol

External Affairs and Additional Legislation Committee

02/07/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

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

Y rhai eraill a oedd yn bresennol

Others in Attendance

Ed Sherriff Llywodraeth Cymru
Welsh Government
Mark Drakeford AM Ysgrifennydd y Cabinet dros Gyllid
Cabinet Secretary for Finance
Piers Bisson Llywodraeth Cymru
Welsh Government
Rebecca Evans AM Y Gweinidog Tai ac Adfywio
Minister for Housing and Regeneration

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

Alun Davidson Clerc
Clerk
Elisabeth Jones Cynghorydd Cyfreithiol
Legal Adviser
Gerallt Roberts Dirprwy Glerc
Deputy Clerk
Nia Moss Ymchwilydd
Researcher

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 14:00.

The meeting began at 14:00.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Good afternoon. Can I welcome members of the public and members of the committee to this afternoon's evidence session of the External Affairs and Additional Legislation Committee? This afternoon, we'll be taking evidence from the Cabinet Secretary for Finance and the Minister for Housing and Regeneration in relation to the issues of Brexit and the implications for Wales. Before I do that, can I just remind people of some of the housekeeping? There is no scheduled fire alarm today, so if one does take place, please follow the directions of the ushers to a safe place. The meeting is bilingual. If you require simultaneous translation from Welsh to English, that's available on the headphones via channel 1. If you require amplification, that's available on the headphones via channel 0. Could I also remind Members to turn your mobile phones and other electronic devices off so that they do not interfere with the session this afternoon? We have received apologies this afternoon from Jack Sargeant, and there's no substitute for Jack.

2. Sesiwn graffu gydag Ysgrifennydd y Cabinet dros Gyllid a'r Gweinidog Tai ac Adfywio
2. Scrutiny session with the Cabinet Secretary for Finance and the Minister for Housing and Regeneration

If we move on to our next item, can I welcome the Cabinet Secretary for Finance and the Minister for Housing and Regeneration? Perhaps you could introduce yourselves and your officials for the record.

Diolch yn fawr, Cadeirydd. So, Mark Drakeford ydw i, Ysgrifennydd y Cabinet dros Gyllid, ac rwy'n gweithio ar Brexit hefyd. Gyda ni y prynhawn yma y mae Piers Bisson ac Ed Sherriff, sy'n gweithio yn y maes yma yn Llywodraeth Cymru. A hefyd—

Thank you very much, Chair. I'm Mark Drakeford, the Cabinet Secretary for Finance, and I'm also working on Brexit. With us this afternoon are Piers Bisson and Ed Sherriff, who work in this field for the Welsh Government. And also—

Rebecca Evans, Minister for Housing and Regeneration, and Welsh Government representative on the ministerial forum.

Thank you for that. Can I welcome Rebecca to the meeting? It's the first time you’ve been before us, but, of course, you're now, as you say, a representative on the ministerial forum. We have some questions for you in that respect. Perhaps I could ask the first questions to the Cabinet Secretary because, clearly, you’ve led on the European Union (Withdrawal) Bill issues. It is now an Act. Perhaps I would like to seek some clarification as to—having seen it go through Parliament, having seen the process, and having seen that Scotland still did withhold its consent, are you confident that the Act will now basically be operational, with the agreement, because there's still a question as to how it will work with Scotland’s position at this moment in time?

Well, I’m not able to speak for Scotland, of course. As far as the Welsh Government is concerned, we have the Act amended in the way that we had negotiated in the Joint Ministerial Committee, we have the inter-governmental agreement that goes alongside it, and as I have said before in the Chamber, of course I understand that the proof of all of that will be in the practical ways in which it now makes a difference to the negotiations that will follow, but I would not have entered into the agreement with the UK Government unless I expected that it would be delivered.

On the basis of the agreement, there were 24, possibly 26, areas of competencies that would be required to go back to a discussion on common frameworks. We understand, obviously, from what you've said, that each of those will have to be given consent by the Assembly. Have you yet discussed a schedule as to when that may be happening, when each of those will come before the Assembly for consideration?

No, we're some way from being in that position, Chair. We're inevitably some way from it because the time frame within which the frameworks will need to be agreed will depend pivotally on whether there is a transition period when we leave the European Union. Because if there is to be a transition period, then none of these frameworks will become operable until the year 2021. Because if there is a transition period, then we all remain working within the current EU rulebook that we are all currently bound by. So, the time period during which frameworks need to be negotiated will depend crucially on the UK Government delivering what it has always said it intends to deliver—an agreement with the European Union that gives us that extended transition period, and the time frame for negotiating frameworks from the European Union (Withdrawal) Act 2018 is contingent on that.

Work, nevertheless, has begun. You'll remember that the process for identifying the 24 or 26 areas was mostly—not exclusively, but mostly—single meetings between officials of the devolved administrations and officials at Whitehall to derive that list. They were lengthy meetings sometimes, but single meetings in which the headlines were put together. The second phase of negotiations will be different to that. The first thing to do is to narrow down within those headlines those areas that will actually require a legislative underpinning, because as we and the UK Government and Scotland have said all along, under the broad headline, there will be many areas and aspects that can be agreed through memorandums of understanding and other forms of less formal ways of operating. We expect that, within each heading, there may be some areas that will need a legislative underpinning. The first thing to do: narrow it down so we know what those things are. There will then be an extended period in which there are discussions about the nature of that legislative underpinning.

So, that work has started. There have been meetings already dealing with issues such as health, agricultural support, animal health, emissions trading. There is a further meeting on Wednesday of this week, which will take place here in Cardiff, involving officials from Scotland and the UK Government as well as our own and officials from Northern Ireland, because they are also involved in these discussions. And those discussions will undoubtedly continue through July and August and into the autumn.

14:05

At this point in time, is there an expectation that there will be 24 consents sought or will there be a reduced number because some will be merged into a motion?

I think it is very difficult to give you a sensible anticipation of that because, as you say, some areas may be combinable. Some areas may need more than one piece of legislative underpinning. So, I think what members of the committee know is that every time we need to propose that an area should be agreed in the future on the basis of an intra-UK framework, the National Assembly will see that proposal before it is agreed upon and will have to give its consent to it.

And are you concerned—because you've just identified that there's a time factor and there's a lot of work to be done in all this—because the messages coming from both sides are that the timescale that is left now before the UK and the EU can come to an agreement is getting tighter and tighter as we move on? Are you concerned that we might hit the point where there will be no agreement and, therefore, there'll be no transition period?

Well, we have this backstop, don't we, in the agreement, which is that, if we get to a point where there are no frameworks yet in place and we have left the European Union, the current EU rulebook will continue to apply until frameworks can be agreed? Now, the best way to do that is obviously through a transition agreement because that is the most secure and legally binding way that we are all in together. But as far as these issues are concerned, the backstop is there in the agreement. If we leave the European Union without a transition and we haven't been able to negotiate the frameworks by then, then the current rulebook will continue to apply. We will carry on as we have been for many years already until those frameworks can be agreed, and everybody is bound. Ministers operating on behalf of England as well as us and Scotland will be in exactly that position.

Okay. I suppose I'm just trying to clarify the position in relation to the possibility of a 'no deal', which, as we get closer, gets more likely.

As you know, from the Welsh Government's point of view, we've always said that a 'no deal' outcome is catastrophic as far as Wales is concerned—catastrophic for our economy, catastrophic for jobs, catastrophic for all those people whose livelihoods depend upon the arrangements we have today. We consistently advise the UK Government of that, and the reply we always get is that UK Ministers are in the same position. They are determined to get a deal. But on the narrow issue that you are asking me about, the frameworks issue—on that narrow issue at least, we have this fallback position where the current EU rulebook will continue to apply until we are able to bring about frameworks, whether there is a transition agreement or not.

14:10

And in relation to the wider issues rather than the narrow one, obviously if we get an agreement there'll be a withdrawal and implementation Bill being put forward. Clearly, we've had discussions before now as to the involvement of Welsh Government in the preparation for the EU withdrawal Bill, or lack of involvement, perhaps, as has often been commented upon. Have you got any more to say to us that you are now more involved in the discussions on the withdrawal and implementation Bill?

Well, Chair, I am mildly encouraged by the fact that we have an item on the Joint Ministerial Committee (EU negotiations) agenda for Thursday this week—that's when the JMC next meets—and we have a document from the UK Government to discuss at the meeting on the withdrawal and implementation Bill, which is a substantive document. So, there will be an opportunity to discuss it on Thursday, and this time we have a document to discuss, which is, as I say, not just a high-level, one-side-of-paper document, but a substantive paper that will allow us to have, I hope, a properly engaged discussion on Thursday. The paper has arrived in time for my officials to be able to take a good look at it and make sure that I am properly briefed and prepared to represent whatever issues are at stake from a Welsh perspective in that meeting. So, I'm mildly encouraged that we are in that position.

It's pleasing to hear that, because, clearly, you have in the past expressed your frustration over the lack of substantive papers to have a discussion on. I suppose we are concerned that we have a lack of sight of discussion papers to be able to scrutinise them. Is there any indication as to when there might be some publication of some information relating to the discussions and the proposals?

Not that I have seen myself from the UK Government. The document is obviously sent to us on a confidential basis, because it is not a document that the UK Government has otherwise put into the public domain. Chair, as you know, we are always trying to navigate our way down this line. We are absolutely committed to making sure that the National Assembly has the information it needs to scrutinise and to hold to account the actions of the Executive here. But there are some points in the process where we are bound by the confidentiality that has to exist between Governments, and if we weren't able to observe that confidentiality, then I've no doubt we would not have seen the paper that we have seen in advance of Thursday's meeting.

As soon as there is a position when that information can be shared with this committee and the Assembly more widely, we give an undertaking again today to do that. But while the discussions remain confidential, we have to be able to observe that principle too.

Okay, thank you. You mentioned JMC(EN). Perhaps we can go on to the forum that's been established. The Minister is here to give us any details. Perhaps the Minister could explain in very simple terms: what's the remit of the forum, and is it a decision-making body?

The purpose of the forum is very much to inform the discussions that then take place in the JMC. It's essentially a sub-group of that JMC, so we operate to the same rules as the JMC in terms of confidentiality, which Mark has just outlined. But it is an opportunity for Welsh Government to be engaged alongside the other devolved administrations, and to seek to influence the negotiating positions within the UK Government.

We've looked specifically at areas relating to the White Paper. That's our most immediate priority—to try and influence that. And I'd certainly be happy to talk about the kind of areas that we've already looked at, and the contribution that I made on behalf of Welsh Government.

Keep going, in that case. You can tell us about the areas that you've discussed, and obviously the White Paper we are all awaiting, but it would be interesting to understand the discussions that you're having with your colleagues. But can I clarify—it's not a decision-making body as such; it is more of a discussion body, but it then feeds back to the JMC(EN)?

14:15

That's right—we don't take decisions as such in the ministerial forum. The aim is to influence the UK Government's position, ideally to agree a position with the UK Government, where we can agree, because we recognise that there are areas where UK Government and Welsh Government share aspirations and share ways forward. That's really positive. And where we are able to do that, then we're very keen to use the Welsh Government's influence overseas as well, certainly in those discussions to highlight the areas where we do have that common ground. 

But, in that sense, it's more important for us to talk about how we can influence the areas we don't have agreement on, because those are the important areas. If you agree with something, you're not going to influence it. 

It's how you influence to agree to something that you have a different view on that's important. 

Would it be helpful if I just talked a little bit about each of the meetings that took place and the content of those meetings? 

The first of the meetings took place in Edinburgh on 24 May, and the outline, or the beginning of that discussion really, was about the purpose of that forum. And we were very clear that Welsh Government does welcome the forum, but it doesn't in any way substitute our calls to be part of the more formal UK negotiating team. We were very clear that the forum has to be working on a basis of parity where all devolved administrations are treated equally, where we all have equal rights to table papers to those meetings, and so on, and we're keen to have those meetings move around the devolved nations as well. 

The main discussion item at that meeting was the White Paper on the frameworks for the UK's future relationship with the EU—so, essentially, the future economic partnership and future security partnership. I was able to then make the arguments, really, about the importance of the single market and of a customs union to Wales—underpinning, essentially, all of the other arguments that we would be seeking to make.

I also made the point again, which I know others have made, that Barnier has been clear that if the UK Government moves away from those red lines, then there's potential for a much more generous offer to be made on their part in terms of a future agreement. So, I pressed the Government again to move away from those red lines, which we think are—. There's a disconnect, essentially, between those red lines and the aspirations that the Government is setting forward in those slide packs, which I assume the committee is familiar with, which set out their aspirations for the future partnership arrangements. 

And then in the second meeting, most recently, last week, we discussed more detailed areas of the White Paper, and I was able to make contributions on areas including transport, science, research and innovation, civil judicial co-operation, and external security in relation to foreign policy, security, defence and development, and I'm happy to elaborate on any of those areas that Members might be interested in. 

I'm sure we'll take some opportunity to do so. Jane. 

It's good to hear about the context of the discussions at the forum. It would be interesting to know, as we don't know yet, what influence—as you say, it's about influencing the agenda—you may have had. It would be interesting to also know whether you've got any more news than the headlines today about when the White Paper might be published, but I suspect at the moment that's really open to question. But it's really for us to know whether you feel the Welsh Government is genuinely having an impact and influence, and also to what extent your representations are mirrored, perhaps, by the other devolved administrations. Scotland, obviously, has many policy areas where there would be a common view. That always strengthens the influence that we could have as devolved administrations.   

In terms of whether the forum has proven its worth at the moment, I think that it has got off to an unsatisfactory start in the sense that UK Government has sought to discuss issues with us but hasn't provided us with the necessary information to discuss. So, they're keen to hear our views but unable, or were unable at the last meeting, to provide us with documents to express specific views on. So, we had very high level overviews of those four areas of transport, science and research, and so on, to discuss, but no actual chapters of the White Paper were shared with us. We were very clear that that was wholly unacceptable to us. There will be areas of that White Paper that are very much areas that are Welsh Government responsibility, and the other devolved nations as well. So, within that White Paper, at the very least the UK Government needs to be clear where they're speaking for the UK and where there are devolved matters at play there. We've also—

14:20

Can I just clarify one point? You talk about the White Paper and you say you've had no chapters. So, you haven't seen the White Paper; you've only seen the headlines, effectively.

That's right. We were provided with an outline of the White Paper at the first meeting. At the last meeting, we didn't have any copies of the White Paper or chapters given to us. But, since then, we have had two of those chapters provided to us. But, as I say, that's an unsatisfactory way of working and we were very, very clear about that.

Presumably, I don't know—is the White Paper going to come up at the JMC(EN) on Thursday as well? Because if it's a sub-group, hopefully, the views of devolved administrations and Welsh Government need to be reflected, otherwise it is a pretty meaningless forum in terms of influence.

Well, Chair, I assume that the date of Thursday of this week was deliberately chosen by the UK Government so that we have a chance to come together before Friday when the Cabinet is supposed to be meeting at Chequers. Although we know no more than the committee in the sense of reading it in the newspapers, we anticipate that the White Paper will be published quickly after the Chequers meeting.

I have written, with the Scottish Minister Michael Russell, to the UK Government saying that a substantive discussion on Thursday has to depend on us having seen the text of the White Paper that is going to be discussed on Friday. So far, while some documents have been shared—a small number of documents have been shared with us—it is not enough and it's certainly not enough for us to have the sort of discussion we would need to have on the economic partnership that the Prime Minister has talked about.

It's meeting around monthly at the moment. So, the intention was that there should be four meetings before October. So, we had one in May, one in June, there's one being planned for the end of July, and it will meet throughout the recess as well.

So, four meetings before agreement is meant to be reached with the European Union. No papers provided. Don't you think that this is just an empty talking shop to keep devolved Governments quiet, happy, contented, whilst the UK Government gets on with the big boys' job of negotiating our future away with the European Union?

We were very clear in the meeting that the way that the UK Government was approaching the ministerial forum was by no means satisfactory and that we would fully expect to see the White Paper before the meeting on Thursday. I think that Mark made it clear in his letter to the UK Government that we would make clear very publicly that we weren't engaged as we should have been on a document that relates to Welsh Government and Welsh Government devolved responsibilities. 

So, what are your aims and objectives, then, on this? Do you have tangible Welsh Government aims and objectives for this forum to try and make it work in that respect? Personally, I don't think that you're going to get a great dramatic change in attitude from the UK Government in just four meetings. I think that's quite clear—they've made their feelings known about how they treat devolved administrations over the last two years. So, what are your cast-iron aims and objectives, the areas that you want to influence in the very few meetings you have left before October, before that crucial deadline? Is it as big as shifting the Government's position on membership of the single market or is it far smaller than that and you think that it's unrealistic and therefore you're looking for smaller concessions, just so that we can get a sense of, when you're going up to these meetings, what exactly do you hope to get out of them?

You can see from the White Paper that our parties jointly published where we would like to move the UK Government to. So, we take the opportunities within these forums to make those arguments. For example, we had the opportunity to discuss transport at the last ministerial forum, but there was no way that we could discuss transport if we weren't also discussing the single market and customs union and movement of people and so on—

And you were the ones who put transport on the agenda, was it, or was that the UK Government?

The agenda is agreed by all parties. It's a joint secretariat.

I'll ask Ed to let you know about the discussions ahead of the meetings.

We've been focusing mainly around the White Paper, because that's been the big issue, obviously, coming up—

14:25

Can we clarify—obviously, there are a couple of White Papers here now—?

Yes, sorry, the future frameworks and partnerships White Paper. So, we've been basing that around the information the UK Government have been able to make available. So, they've published various slide decks out on their website and, because that is information that is out there that is available, which does go into some detail of the UK's position on these matters, it makes sense to base the ministerial forum around where we do have some detail on the UK position, because they have been based around the information where the UK Government have been able to put some information out there on their negotiating position. So, that's why those subjects have been covered. But, in the first meeting, we also discussed the broad areas around the White Paper and the general principles around the economic partnership and the security partnership as well.

Right. So, nothing specific in terms of Welsh Government wanting something on the agenda to try and get a win early on on this specific matter. It's very much a response to the UK Government agenda. Would that be fair?

No, I don't think that's fair at all. I think these meetings are genuinely there for the devolved nations to make their points very clearly and very strongly in terms of the context of the debate we're having. So, as I say, talking about transport—you can't talk about transport without discussing the wider issues. So, at every opportunity, we're pushing UK Government to move closer to where we are, because we believe that where we are is where we're able to secure the best possible deal for the UK and, hence, for the people of Wales.

Can I just—sorry, Steffan—come in? It's just clarifying—have you got a different arrangement? You mentioned a secretariat. So, the other JMC—the JMC(Europe), I think—worked on the basis of an inter-ministerial officials group that met before, whereas the JMC(EN) is all UK Government, really, led. But, just to clarify—this joint secretariat does mean that you have a chance to put things on the agenda and meet before the forum and, actually, prepare for it on the basis of Welsh Government and, presumably, Scottish Government, actually being able to input into the agenda of those fora.

Yes, work is ongoing amongst officials. So, as well as the JMC(EN), we also have the ministerial forum and then the official level group, and work is going on there all the time in between the meetings, obviously, to inform our positions, to gather evidence, and so on.

One of the areas that was withdrawn from the withdrawal Act was the principles around the environment that we've enjoyed through our membership of Europe up until now—the precautionary principles, the polluter-pays principles, and a whole suite of them. Now, this has now become one of the great unknowns, because, whilst withdrawing the relevant amendments, the UK Government committed to introducing an environmental Act of some sort within the first six months. But, clearly, whilst it only applies to England, it's clear that clean air, clean water, people spraying fertilizers all over the shop will impact on Wales, even if we have completely different approaches. So, I just wondered whether this was going to be something you were going to endeavour to influence, in either one of the bodies where you're trying to improve the position.

Well, Chair, those discussions go on already. They are part of the discussions that our colleague Lesley Griffiths has in the forums that she has with DEFRA. As ever, our experience in dealing with the UK Government is that some parts of Whitehall are more closely engaged in dealing with devolved administrations and understand the devolved landscape better. DEFRA is certainly at the better end of that spectrum and it's a place where the ability to explore the ways in which the separate responsibilities we have as the four Governments of the United Kingdom have implications for one another, because we have separate responsibilities, as you've said, and we exercise them ourselves and will want to exercise them in a way that gives full regard to those environmental principles here in Wales. But where the exercise of those parallel powers across our border has an impact on us, then the discussions that Lesley is having in her work is where we take those things up, and she will certainly be wanting to do that in relation to the precautionary principle and environmental matters. And they have, to be fair, a more sustained set of meetings, probably a more embedded way of transacting business between the different participants, so that does move around between the four nations, it does have a different level of input from the devolved administrations, and there will be a proper opportunity there for those matters to be taken up.

14:30

Yes, I just wondered if I could ask Rebecca a question about the ministerial forum, following up from something Steffan asked about how much influence you've got in directing what's discussed at the meetings. We've heard as a committee about the 30 deep dives into various sectors of Welsh life and the economy, and I imagine that, as a result of those, some will have come up as more vulnerable, perhaps, to the effects of different types of Brexit. Have you been able to bring up, shall we say, the most vulnerable—if I can put it like that—as priority topics on your forum, in order to feed the results of those discussions into the JMC(EN) itself?

Whenever we discuss different topics within the ministerial forum, we're really keen to tie it back to real-life examples as to what the impact might be on various sectors in Wales. So, when we were talking about future arrangements for transport, for example, and we had a discussion about aviation, ports, haulage, we were able to bring that back to a discussion on the agri-food sector, just-in-time manufacturing and so on, what the impact would be, and why it is so important that we have a deal that enables that frictionless movement of goods and people. So, we're always able to use the evidence that we have to provide us with points from which to argue as to why we need movement to come in our direction, and we've also been clear that Welsh Government has been amassing huge amounts of evidence, and our White Paper comes from a point of evidence, and all of our arguments are based on evidence, the trade paper is based on evidence and so on. So, we were clear as well, with the UK Government, that should their White Paper take a different approach to the one that we've set out, then they need to provide their evidence as to why they believe their approach is the appropriate one. So, it needs to be an evidence-based approach, which we've taken, and yet we haven't necessarily seen that from the UK Government.

Okay. Can I just—? Just a quick supplementary. Accepting that there obviously is going to be some interconnectivity between these areas, are there any specific areas of vulnerability that you think haven't been or will not get the chance to be discussed in your forum?

We've had the outline of the UK Government's White Paper, so there were opportunities there to check as to whether or not there were potentially gaps in it. One area where I asked a question was about the European Investment Bank, for example. We know how important that is to Wales, so how would that be reflected in the White Paper? So, just having had the outline, we were able to ensure that the sectors and the issues—environmental protection and so on—to ensure that the kind of things that we're particularly keen on influencing and keen on ensuring work for Wales are addressed in the White Paper.

Okay. And that would include spotting opportunities as well, looking on the bright side.

Sorry. Just one thing I'd like to add in terms of the forward look is that one thing that we're trying to align, as well as areas where we've got particularly strong devolved interest, is also lining up the forum timeline with the negotiating timeline between the UK and the EU to make sure that we are aligned there, so we do see that route of influence going into the negotiations with the EU. So, that's a bit of work that we're taking forward now as well.

And that also links to the official-level group, then.

We've got Mark first, then Jane, and I want to ask a question, basically just based on what you said, Minister, that you've focused our White Paper, in a sense—the White Paper between the Welsh Government and Plaid Cymru—to be evidence-based and other papers in the portfolio are evidence-based. You said you had two chapters from the UK Government. Is there an evidence base in those two chapters, or is it lacking in evidence?

We've only just received those documents, so we are looking at them now, so we'll provide the UK Government with the response to that.

So, it's not clear whether it's evidence-based at this point.

I'm not able to say what the chapters are on, and that's because of the confidentiality that we've agreed with the UK Government. What I will say—

You haven't got to say what the chapters are on; just if there's evidence to support it or not.

What I will say is that those two chapters that we have received are not areas where we have large amounts of devolved competencies, so these are areas that are very much beyond our responsibilities. So, yes, they do look, to some degree, in terms of providing an evidence base for their arguments. We will provide them with a detailed response to those, but it does really show the level of work that will need to go on, even if we had all of the chapters by this Thursday, in order to be able to provide robust responses. So, it's not a satisfactory way of working.

14:35

Yes. There were media reports today that the Prime Minister is expected to present a third customs arrangement proposal this week. Is it your understanding that that will be presented at Chequers on Friday, or is it something you already have some knowledge of, or is it something you are anticipating hearing more about on Thursday?

Well, we've had no advance notice of any new proposal the Prime Minister intends to make. There will be an opportunity on Thursday to discuss customs union arrangements. We will, once again, put the case we make for continued membership of a customs union the other side of Brexit. Whether the UK Government will share with us on Thursday any new thinking that is to be part of Friday's consideration I'm afraid I probably won't know until I get there.

Okay. My second question for now, slightly going off tangent, but it hasn't been mentioned yet: what discussions have either of you had in the context of the UK prosperity fund in the context of the broader discussions you've held? And do you have any better understanding now over what formulas might apply across the UK and particularly in the context of Wales?

Well, Chair, I've had discussions on the UK prosperity fund primarily with Treasury Ministers. I say there what I say every time: that the answer to the money that Wales gets from the European Union today must simply be to honour the guarantee that was offered to people in Wales that we wouldn't be a penny worse off as a result of leaving the European Union. I put a particular proposal to the Chief Secretary to the Treasury. If the UK Government wants to call what I have described as their delivering on a shared prosperity fund, I'm not going to worry about what it's called, but the proposal that we have put—as I've explained, certainly at the Finance Committee and maybe here before—is that the money that we get from the European Union today should be put in our baseline because these are responsibilities that are devolved and we exercise them here, and that that would be the most straightforward, simple way for the UK to respond to that issue. That is a position shared by the Scottish Government; they have said exactly the same thing.

The money that we have today, we get it because we qualify according to a rulebook. It's because we have needs that are recognised through European funding. Those needs are not going to go away the other side of our membership of the European Union and the funding that we get to address those needs in Wales today should be guaranteed to come to Wales in future. And we are best placed here in Wales to make the decisions about how that money can be put to best use. Our fears about a different approach to a prosperity fund—. A Barnettised share, for example, would be very bad for us here in Wales, but we're also not going to sign up—I've been clear this afternoon, as I've been with the UK Government, that we will not sign up to a shared prosperity fund that is organised, for example, on a bidding basis, in which the UK Government sets the rules, the UK Government makes the decisions, the UK Government adjudicates on disputes about the way that those decisions are made, and we are left as some sort of agency of the UK Government, being relied upon to implement the things that they have determined. That is not the way that we will be prepared to sign up to a shared prosperity fund.

May I ask what is your most recent dialogue regarding this? Are we talking about some time ago, or—?

My direct discussions with the Chief Secretary to the Treasury are some months ago. There will be further meetings in the autumn as part of the budget-making process, where I'll be able to raise these directly with her again. At official level—. Well, this is what I'm told. At official level, we are told that work continues on the shared prosperity fund, but it is possible that, when proposals are published by the UK Government, there will be a range of options as to how a shared prosperity fund could be made to work. If our option is included then we will be able to support that possibility. There may be other options that would not be acceptable to us. And if an options paper were published, well I think that would be at least a way to ensure that there is a proper debate about the fund. The last time I was given a report of discussions at official level, that possibility was at least still being discussed. What would not be satisfactory would be a single proposition that we had no hand in framing, and that could only then end up in another argument over something that we don't need to have if we do it properly.

14:40

It was very good that we had evidence about this last week at the Finance Committee in fact, which was really useful on the shared prosperity fund. 

I just want to go back to particular Welsh interests, either at the forum or the JMC, and whether, for example, the Airbus Brexit risk assessment very recently came up—. I mean, do we have opportunities or have you had an opportunity to raise this, because this is specifically impacting on Wales? Is that something that you can then table in the forum or the JMC(EN) or can you raise those concerns, which are obviously key concerns here in Wales?

Well, Chair, there was a slightly unusual meeting of the JMC—unusual even in that there was a dispute about what it should be called. It happened on 22 June. It happened alongside the British-Irish Council, and in a way it was taking advantage of the fact that many of the people who come to the JMC(EN) were there for the British-Irish Council in any case. So, the First Minister represented Wales in the meeting, which he wouldn't normally do at a JMC(EN). The Scottish First Minister was at the BIC, the Chancellor of the Duchy of Lancaster, David Lidington, who chairs the European negotiations JMC was there as well, and the First Minister raised the whole Airbus issue directly in that discussion with UK Ministers. I don't think there was a particular response that day because Airbus's views had only just been put into the public domain, but there was an opportunity for the First Minister to emphasise their seriousness and to press on UK Ministers the need for them to attend properly to the very strong advice they are getting from business about the damaging effects there will be if they don't do a proper deal in relation to frictionless trade. It has been very disappointing to see some of the comments from some UK Cabinet Ministers subsequently who, instead of engaging seriously with the points that were made by very senior people in a major European Union firm, sought instead to somehow marginalise them and to attack the messenger rather than to deal with the message. But I think the discussion at the JMC(EN) was of a different sort of seriousness to that.

Can I clarify, Cabinet Secretary—? You've got a JMC(EN) this Thursday, you've just said that there was a like-type meeting, but I'm assuming it wasn't scheduled as such—

Well, it was scheduled in advance but fairly close to the day as it became clearer that all the players or most of the players who you would normally need to get together for a JMC(EN) were going to be together in Guernsey for a different purpose. In the week leading up to it, a meeting was scheduled, so it was in everybody's diaries. It was a proper meeting with people knowing in advance that it was going to happen and so on, but it didn't have the normal set of players around the table, and there was some discussion with the Scottish Government particularly as to whether or not it was to be regarded as a JMC(EN) in the normal sense.

Because you weren't there, and neither was Mike Russell, who's now Cabinet Secretary in the Scottish Government—

I believe that Mike Russell might have been in Guernsey. I'm not absolutely—

So, you were the only one, basically, from the JMC(EN) who normally goes who wasn't there.

Of the political players. I don't know whether—. There are normally junior Ministers from the United Kingdom there as well. The territorial secretaries of state are normally there as well. I don't believe they were physically in Guernsey.

14:45

And do we have any idea as to what was discussed at that meeting?

I think the First Minister has published a written statement—hasn’t he—setting out what was discussed at the meeting. I’ve had a chance to go over it, of course, myself with him. So, yes, the First Minister published a note on the British-Irish Council—I beg your pardon—rather than the JMC, particularly. The First Minister, I know, took the opportunity at that meeting to once again go over the core arguments that we make as a Government about the need for an economic partnership with the European Union that puts jobs and the economy first. He emphasised again the urgency of involving devolved administrations in those discussions in a meaningful way. He will have touched on migration issues as well, and the prospects for a migration White Paper and for us to be involved in making sure that Welsh interests in terms of movement of people to take up important posts in businesses, in public services and universities here in Wales—that he was able to touch on that as well. As I said to Jane, he took advantage of the meeting to focus on the messages that Airbus published about the need for frictionless trade if they are to have confidence in continuing to invest in the United Kingdom.

And can you just clarify: where were the JMC(EN) previous to that?

There have been a number of weeks' gap in the JMC programme, not because—. I'm just trying to be fair: efforts were made to try to establish a date for both weeks prior to 22 June. We always face this difficulty. We sit on a Tuesday and Wednesday. That’s difficult for us ever to get away, when there are votes on the floor of the Assembly. Scotland sits on a Thursday in Plenary, so they always have votes on a Thursday to worry about. They are a Government without a majority in Scotland. So, finding a date when we can meet, even with a lot of effort, can be difficult. The second of May was the previous JMC, and part of the reason why 22 June—the opportunity—was taken was because of the diary issues that have been faced in meeting any earlier.

And you have a meeting this Thursday, which is, obviously, as you say, conveniently timed to meet prior to the Cabinet meeting on Friday to discuss this White Paper. If you see no influence of the discussions you're having at JMC(EN), or even at the ministerial forum, appearing in that White Paper, is there a question as to whether these JMC(EN)s are actually achieving anything?

Well, the position that we have taken as a Welsh Government—and it's the position, so far, that the Scottish Government has taken as well—is that however unsatisfactory the forum, and however marginal the result, it is our job to turn up wherever we have an opportunity and to make the case for Wales. I don’t think we are likely to change our view on that.

The real issue at stake in the White Paper and what it says, though, is not about whether we think the JMC is worth pursuing. It is, as we consistently say to the UK Government, that we would like them to be able to publish a document to the European Union and to be able to say that they are speaking on behalf of the United Kingdom, and that they have done the work that leads them to be able to say that this is a shared position across the administrations in this country. If they don’t, and if the White Paper sets out positions that we could not agree with, then we will have to say that, and we will have to make that clear to the European Union as well—that when the UK Government publishes a paper that hasn't secured our agreement, they're not speaking on our behalf. That’s the prize. That’s the real issue at stake. That’s why it should be important to the UK Government to do the spade work because their position will be strengthened as a result.

Okay. Thank you. I’ll move on to questions on preparedness. Jenny.

Are you able to publish a list of the EU agencies that you think are particularly important to the well-being of Wales?

We continue, Chair, to discuss with the UK Government, in advance of the autumn, the agencies that we say should be part of any future arrangement with the European Union, and we will aim to publish, hopefully in the autumn, a list of those agencies that we believe it could be in the UK's interest to have a continued relationship with. The headline list is well known and often rehearsed, isn't it? It's Horizon Europe, Erasmus+, Creative Europe, inter-territorial co-operation programmes and the European Investment Bank, as Rebecca said earlier.

But there is a much longer list of organisations than that that we say the UK has an interest in remaining in a continuing relationship with. So, the whole business about the Civil Aviation Authority and its relationship with European Union arrangements; the whole business of whether planes will be able to fly the day after we leave the European Union. We say it's in our interest to remain part of that.

In the health field, there is a long list of organisations that protect our public health and give us access to the most up-to-date medicines, that makes sure that Velindre hospital here is able to continue to import nuclear medicine to go on treating patients, and so on. That depends on having a relationship with the European Medicines Agency or, in the public health field, the European Centre for Disease Prevention and Control.

There are a whole series of agencies in the chemicals and environmental field: the European Chemicals Agency, the European Environment Agency. There are organisations in the food safety area—the European Food Safety Authority. I could take up more of the committee's time in just going through the list.

14:50

No. Thank you for that. I think, given that we're still completely unclear as to what the UK Government's position is going to be in its next round of negotiations with the European Commission, what work is the Welsh Government able to do in preparing for the worst and the best-case scenarios? Because the end date is rapidly approaching, and all our stakeholders, whether it's Airbus or whether it's Farmer X, need to know, as indeed do those who rely on food imported from Europe.

Chair, of course Jenny is absolutely right that there is a very real limitation on the work that we can do, because what we can do depends so crucially on what the final deal will look like. We cannot prepare in isolation here in Wales.

The question that Jenny asked earlier was exactly in that field. We can have environmental principles here in Wales, but without knowing what the bigger picture will be, it's impossible to be confident that you could be as effective in those areas as you would want to be. At one end of the spectrum, the best possible deal is of course easier to prepare for, because the best possible deal will see us in the closest ongoing relationship with the European Union in terms of customs arrangements, in terms of access to the single market, in terms of a sensible approach to migration, in terms of maintaining the protections that people have through workers' protections and consumer protections and so on. Preparing for that gives us a fighting chance that we will be able to limit the harm that will be done to the Welsh economy, Welsh businesses, and take whatever opportunities we can see in the post-Brexit era.

At the other end of the spectrum, I simply have to say what I've said consistently to this committee: a 'no deal', crash-out Brexit is not just one other point on the spectrum that you can prepare for. It is beyond the ability of the Welsh Government, or any other Government, simply to 'prepare' for the catastrophe that that will be for Wales. So, we do whatever we can, we prepare in every way we can, working with the UK Government, working with businesses and other partners here in Wales, working internally on the preparation of corrective legislation and all the other things that we can do that are in our own hands, but a slash-and-burn form of Brexit—. Let's not forget, while we talk of that normally as though it would be a terrible failure of the negotiations, the Prime Minister faces voices behind her, and sometimes alongside her in the Cabinet, who are advocates for that sort of Brexit. They actually want to leave the European Union on the hardest possible terms. They positively reject any form of ongoing relationship with any of those agencies that I listed and more, and that's why it's so very difficult to prepare for what is about to happen, because there is such a degree of uncertainty within the Government itself, let alone in its negotiations with the EU. 

14:55

So, with the £50 million that's been set aside as a transition fund, what are the top lines that are a 'must do'?

Well, the £50 million Brexit preparation fund, Chair, its top line is that it is there primarily to help businesses, but not only businesses—it can be for other bodies as well—to prepare themselves as best they can for the future they face the other side of the European Union. So, you'll know that we've made some announcements from the fund already. We've made an announcement of over £2 million for the red meat industry because it faces very significant challenges and there are things that we know those businesses can do now to make them more resilient the other side of Brexit.

We've put £100,000 into a scheme that is looking at import replacement, in other words, looking at two things really. There are things that, at the moment, we're getting from the European Union; what if it's much more difficult to import those in the future, where else might we be able to source those materials? We need to look for alternative markets inside the United Kingdom for some of the things that we export to Europe today, particularly in the agricultural sector, and there's £100,000 been set aside from the fund to help with that sort of preparation.

We've announced £150,000 to assist the Welsh Local Government Association in the work that they are doing. They've done some quite significant work already and published a very useful document demonstrating the impact on local government services of leaving the European Union. But there are things that they can do to prepare themselves for the future and there are a number of other announcements that are pretty close to being made. They all share that one common purpose, which is where you can see that there is a proposal that says, 'If we took action today, we would be in a better place to cope with the challenges that Brexit is posing to us.' That's how you get through the door of the European Union transition fund.

Okay. It all sounds terrifyingly close, because under all the scenarios that have been prepared by the expert panel to the Welsh Government for, for example, agriculture, they need to diversify and it takes time to turn these things round. People have got to be trained, they've got to engage, be on board, and each individual has got to have a plan, depending on where they are.

Of course, Jenny is absolutely right, and it's why a transition period is so essential. It's why we've argued for that in our paper from the very beginning, when nobody else was arguing for it at all. And we continue to say as a Welsh Government, both to the UK Government, but also to partners in Europe as well, that we need some flexibility over the end date of that transition. It was one of the grim moments, wasn't it, over recent weeks to find the Prime Minister forced into a position where she had to add an end date into a document, otherwise her Secretary of State for Exiting the European Union was threatening to leave the Government. She knew that it wasn't the right thing do, that that date actually means nothing, and if it means anything, it is just to make life more difficult rather than easier to get to a sensible outcome with the European Union, and we have tried—. We've had to try on both sides, because there are voices in the European Union as well who say, 'This can't go on indefinitely.' But our plea has been for flexibility around the end of the year 2020. If we needed another short period to be able to leave the European Union in good order, in ways that work for them and work for us, why would you say, 'Oh no, we've agreed, it's got to be 31 December 2020', when everybody could see that it would be in everybody's interests to have a bit more time to get things right? And we continue to try and make that pragmatic, sensible case for a bit of flexibility in these arrangements with both sides of that negotiation. 

15:00

Thank you, Chair. You mentioned earlier the possible implications of various separation scenarios on the health service. I feel I should declare an interest as someone currently benefiting from exceptional care and medicines from Velindre cancer centre. But on the issue of drugs and equipment being available—because it's not just the 'no deal' scenario that threatens the ability for the NHSs of the UK to obtain the drugs and equipment that they need—you may have seen on The Andrew Marr Show yesterday the head of the NHS in England saying that they are planning for no deal but other Brexit scenarios as well, but that the priority for them is to ensure that medicines and equipment become available. Now, this is complicated for us because drug control isn't devolved, but obviously health is. I wondered if you could elaborate on the extent to which the Welsh Government has been involved in preparing for alternative arrangements needing to be made for equipment or drugs in the Welsh NHS, as I say, even though it's not directly devolved—you can't run a health service without drugs and equipment.

Well, Chair, I probably can't give the finer detail because Vaughan Gething is involved in doing all that. He made a statement on the floor of the Assembly last week setting out the actions that he is taking in his department to deal with the consequences of Brexit for the health service here in Wales. It definitely and properly has a focus on how we can make sure that we go on having access to the medicines, the equipment, the advice, the clinical arrangements we have. We are part of a European Union-wide arrangement in relation to organ donation, for example. I was being told last week of patients in Wales last week who had benefited from organs that had been donated in other parts of the European Union but that, in that European Union-wide arrangement, had ended up here in Wales, just as organs donated in Wales sometimes end up in other parts of Europe helping people elsewhere. We do that because there are no barriers to it—no questions about standards. You know that if an organ is fit for donation in another part of the European Union you can accept it here because the same standards will have been applied, and it works in the opposite direction too. So, on a very wide range of health-related matters that really make a difference every day in the lives of individual people, I know that our health department and the Minister in charge of it are alert to all of those things and working hard to try and make sure that we come to a point the other side of the European Union where those things are properly protected.

Thank you. I just wonder whether we could perhaps have some written evidence or a letter from the Cabinet Secretary elaborating on who it is we should be scrutinising in terms of the availability of drugs in the Welsh NHS, for example. Would that be the Department of Health and Social Care in London? Could we have further information? Because, of course, that's something—not just with the 'no deal' scenario—with implications whatever terms we separate from the EU on.

I'm very happy to take that away and get that organised.

Thank you. Could I just take you back to the £50 million transition fund for a moment, please? Is my understanding right that the £10 million that we've got for this in this year is in addition to £5 million already, which gives us £15 million? You said earlier that £2 million and £100,000 have already been allocated and that there is a short pipeline at the moment of other applicants. You offered in response to a question that the £100,000 offer was to help with, I don't know, recalibrating the market, so it's more about the internal market. Are you looking favourably upon applications from organisations—whether that's the Welsh Local Government Association or actual commercial organisations—recalibrating in a looking-out way as well as a looking-in way, so that, as well as looking at better internal markets, they're looking for global markets as well?

15:05

I'm just trying to get to grips with what this fund can do.

There will be nothing in the terms of the fund that would prevent us from looking—and looking positively—at proposals, if we had them, that said that businesses wanted to be looking for new markets outside the United Kingdom, not in the European Union. We have already funded, separately, a strengthening of the Welsh Government’s presence abroad in key markets so that we’ve got a presence on the ground to assist businesses in that way. I think it would be fair, Chair, for me to say that the sorts of proposals that I have seen coming in so far are slightly more defensive than that. They're less people thinking, 'Oh, this is going to be a great opportunity, give me some help to get out there and do more'; it’s more businesses looking to find ways through the challenges that they think they are going to face in the immediate term with Brexit. Maybe when people get past the immediate changes that they know they’ve got to make, there will be more energy left over to go and look for things elsewhere. And if there were proposals coming into the fund, we would certainly look seriously at them, but it's not how I would characterise the bulk of the applications we have to date. 

If possible, just to mention one additional point on that, which is that prior to the announcement of the fund, the Welsh Government announced it was extending its international office presence simply to try and assist with that. So, that predated the establishment of the fund, but is an example of where we are trying to look at what can be done more generally in relation to export systems and so on.

I just want to clarify—. Clearly, the Welsh Government has initiated this £50 million fund, but following that, the Chancellor did indicate in his autumn budget that there would be, I think, a £3.5 billion Brexit fund set up. Have you had discussions with the Treasury as to whether there will be consequentials from that?

There are consequentials from that, Chair. We know the consequential for this year; it is £21 million. We are told that we will know by the end of the calendar year the consequential for next year, which we anticipate, but don’t have any guarantees, will be of the same sort of order. Without any discussion on this point, we are expecting that there will be a third year of consequentials for this purpose. So, what this has allowed me to do is to draw a sharper line between the £50 million fund being outward facing—and I hope not to need to draw on that at all now for the Welsh Government's own preparedness for Brexit. The reason we get that money is because of the money that is being spent in bolstering UK Government departments—the hundreds of people who are being employed by the Department for Environment, Food and Rural Affairs, for example. That’s where that consequential comes from. It comes from the UK Government’s own expenditure on its own Brexit preparation. So, I intend to use the £21 million for anything that we need to do inside the Welsh Government to bolster our ability to respond to Brexit, and I intend not to draw any money from the £50 million into the Welsh Government's own purposes. So, the whole of that £50 million now will be available for organisations and businesses outside the Welsh Government itself.

And does that include any discussions you'll be having with HMRC? Because if the customs arrangements are to be modified, Welsh ports will be impacted upon by customs. Are you looking at discussions between yourself and HMRC?

Well, there is a forum, Chair. It’s a UK Government-initiated forum. It involves the UK Government and HMRC, and Welsh Government officials attend that forum. It has met twice already. There is a third meeting, no doubt, in preparation. That is the forum where we learn about the work that HMRC and the UK Government are doing in relation to ports, and where we are able to make sure that the specific circumstances of Welsh ports are well known in those discussions. There are two key points we have to make. One is that these are non-devolved responsibilities. These are things that the UK Government has to attend to, and has to put right. And that the UK Government has to be willing to offer assistance to port authorities when the consequences of the decisions that the UK Government will make on customs, for example, have a direct impact upon the running of those ports. It will not be enough for the UK Government simply to say to port authorities, 'We've made the decision, now it's up to you to cope with the consequences'.

15:10

Thank you. Could I move on a little bit to, perhaps, trade? The trade Bill will be coming down the line to us, but my concern at the moment is perhaps our involvement in trade discussions. We've had letters from the former Minister—because obviously Greg Hands has resigned now—indicating that there have been 14 trade working groups established within the UK Government across 21 countries. I just wondered as to whether the Welsh Government has been invited to be involved in any of those working groups.

Well, as far as I am aware, Chair—. And to be honest, I think I've tried to explain before to the committee that, as the work in relation to Brexit grows and multiplies, so we are having to share out the responsibilities for responding to different strands in the work across the Welsh Government in a way that we didn't so much to begin with, when it tended to come more directly through the First Minister and myself. So, it is Ken Skates who is dealing directly, now, with UK Ministers in relation to the trade issues. I don't believe that I've seen a formal programme of work between the UK Government and the devolved administrations in relation to trade matters. There were some encouraging words in the White Paper that the UK Government published on trade about understanding that, although it is a non-devolved matter, there are devolved issues at stake in the way that trade negotiations are conducted, and some reasonably positive words about making sure that we were properly involved in all of that. Discussions do continue and there is regular contact, I know, between the Department for International Trade and the devolved administrations. Whether it has formalised into the sort of programme that you referred to, though—well, not as far as I am aware.

Okay. Clearly, I appreciate that the negotiating side is one aspect, but these are working groups, I assume, to establish what type of trade arrangements we'd want and the implications upon the UK, particularly in the devolved areas. So, I just wondered whether—.

We'd certainly expect to be involved in those things. I'm sorry I don't know specifically the answer to that question. We'd certainly expect to be. As you know, we have pressed for a ministerial council, a council of Ministers, to be set up in relation to trade, and if we can't get that far, then at least a JMC that would focus directly on trade. We continue to press for that. I saw a letter that Ken Skates sent very recently to the chair of the House of Commons select committee carrying out work in this area, again pressing our case for those inter-governmental arrangements so that the type of discussions that you point to can be guaranteed.

Before I bring Jenny in, is it possible, therefore—? You said that things are now being—I wouldn't use the words 'farmed out', but basically, allocated to different portfolios. Would it be possible for you to perhaps give the committee a list of where things will be so that we know who to contact?

We've covered some fairly gloomy prospects in our conversation so far, but I just wondered, in endeavouring to avoid crashing out of the European Union, what consideration the Welsh Government has given to the European Parliament's suggestion that we might have an association agreement with the EU.

Well, Chair, personally, I think there is good reason for wanting to take an association agreement seriously as a potential framework for the future relationship we will have with the European Union, and I wish that the UK Government would sometimes sound a bit more positive about at least exploring some of these ways. I think it's particularly worth doing, because it is the European Parliament itself—it is Guy Verhofstadt who has led the way in saying that he thought an association agreement was a way through some of the difficult areas here.

For those real anoraks amongst us, if you wanted to read it, there is a very interesting paper by an Irish academic that traces the history of association agreements and shows that the text that is in the most recent European Union treaty is identical text to the text in the Treaty of Rome from 1957, and that that text was written by a British civil servant. It was written by a British civil servant under a Macmillan Government, because association agreements were thought of as a route into full membership of the—what would it have been called then? The Common Market, I suppose, all the way back then. So, association agreements were a sort of step between being outside it and inside it fully. That text is preserved all the way through the 60 years since.

Now, since then, the European Union has used association agreements not just for countries that are accession countries, but much more widely. They provide a framework for co-operation, and they provide, very importantly, institutional arrangements to oversee them. So, this business about being a rule taker not a rule maker is solved, to an extent, in an association agreement because there are inter-governmental arrangements around it always that make sure that the country that has signed up to such an agreement has a voice in direct, face-to-face negotiations with the European Union over the way that such an agreement operates.

It provides privilege links for the country that signs up to it, and, as Guy Verhofstadt says, every one of them starts as a blank sheet of paper, so you really can, in the Prime Minister's words, have a bespoke arrangement through an association agreement because you can put into it or out of it whatever you like. The Ukraine example is the one that is most often talked about, I know—a deep and comprehensive free trade area. It gives the Ukraine very high levels of access to the single market for goods. It has the same level of access, as I understand it, for services as other European Union countries would have, and it operates on the basis of what is called—I'm trying to remember it exactly—is it 'dynamic approximation'?

So, dynamic approximation is how they solve the issue of regulatory alignment. They don't say that it has to be exact—the regulations in the Ukraine are not identical to the ones in the European Union—but there is a sufficient approximation that allows for frictionless trade, and it's dynamic because the Ukraine undertakes as part of the agreement to keep up-to-date with changing regulatory arrangements in the European Union. It allows for selective membership, or 'participation', I think, is the word it uses, in EU agencies of the sort that we were discussing earlier. Of course, there is a price to pay in it all, because the Ukraine has to demonstrate that it is serious about taking the actions that it needs to take so that goods and services can move between itself and the European Union.

Now, a Ukraine model cannot just be picked up and dropped into the UK context, because we've been a member of the European Union for 40 years, and the size of our economy is very different. But the point that Verhofstadt makes is that you can start with this blank sheet, that you can make arrangements that are right for that country and right for the European Union and—not wanting to alarm anybody by saying this—association agreements mean that you can deepen your relationship in the future, or you can distance your relationship more in the future. It allows for movement in either direction.

15:15

We aren't starting from a blank sheet, though, because we already have regulatory alignment.

And the point that the Liam Foxs of this world will sometimes make is that that's why this is all going to be so easy, isn't it, because everything is fine on day one and there's no problem. It is an asset to start from regulatory alignment, of course, but you have to have dynamic alignment. You can't say that things are fine today, but, if the European Union changes a rule in three months' time, that that's nothing to do with you because you're no longer a member of the European Union. You've got to commit, and that's what Ukraine has had to do. That's why the word 'dynamic' is in that title, and we would have to do the same.

15:20

Are you aware as to whether this is being discussed between the four nations in the UK, and whether the UK is actually thinking that this is a possibility they want to pursue?

Well, David Davis, the Secretary of State for Exiting the European Union, has said to a House of Commons select committee that he has no objection in principle to an association agreement, and that he is willing to explore that as part of the discussions with the European Union. So, in that sense, the idea is in play. I sometimes think that—. No, maybe it's not worth saying that, perhaps.

I suppose the question I'm asking is: I met with the president of the Committee of the Regions last week, and clearly they are willing to have relationships, obviously, with Wales, and the other devolved nations, but it is very much dependent on the withdrawal agreement in one sense and what is in there to allow those things to happen. Now, this associate agreement would provide that opportunity, so it's a question as to whether you're having discussions with the UK Government to say, 'Look, these are things that need to be included in the discussions and negotiations on the withdrawal agreement'.

I certainly have raised this as a possibility and put it to the UK Government that it could provide a way through some of the difficulties that are placed both against an EFTA-style agreement on the one hand, or against a Canada or even a Canada-plus agreement on the other. This might be a different way of approaching these things and providing that overarching framework for the future of our relationships. But I throw that into what I know is a very complex and demanding set of discussions, and I don't always get a clear sense of how much space there is available in terms of thinking time or capacity within the UK Government to take on a new and different idea at the same time as they are, it seems to me, struggling quite hard to deal with the demands they already face. Piers may have a point.

Just a quick question on the back of that, because I'll admit this is fairly new territory for me as well. Of the arrangements that you know exist already, are they completely different in their attitude towards things like freedom of movement, for example? Is it absolutely bespoke in each? Or maybe it doesn't even feature as a—

I think they do feature. Piers may know more than me. I think they do feature. I've always thought it is one of the myths of the whole Brexit debate that freedom of movement is somehow some sort of absolute—you know, that it's exactly the same everywhere in the European Union.

What we know is that it's not. Freedom of movement is interpretable, and different states already who are inside the European Union have different approaches to how the freedom of movement principle is implemented. I think in association agreements you do have to have a view of how people as well as goods and services are able to move, but it's not as though there is only way you can do it, and I think it is negotiated individually for each of the states that are not members of the European Union who have an association.

Thank you. I understand that, with association agreements, a non-EU partner is often required to share part of relevant EU regulations throughout that agreement, so not just the point where we begin regulatory alignment. That then brings in the question about—different words have been bandied around—a body that will adjudicate where there might be dispute. This has been raised, I think, with you, with the First Minister, with UK Ministers, over many months, by this committee and elsewhere. Has there been any further discussion over what sort of model might be adopted, short of the ECJ retaining full responsibility?

Chair, there are now, I think, a number of strands in the UK Government's position on the ECJ, and it is certainly not the red-line issue that it was when the Prime Minister made her Lancaster House speech. Because, as I understand it, the discussions in relation to civil aviation would mean that, if we stay in a European Union-wide system of air control, that will be the ECJ. That will be the rule-making body for that arrangement. So, there are some aspects—I agree that they are very specific—where the UK Government appears now to understand that the ECJ will have a direct and ongoing role to play if we want to remain part of a Europe-wide arrangement.

There are other places where the UK Government—in citizenship rights, for example—is proposing a sort of hybrid model, in which it would be domestic UK courts that would have the responsibility to adjudicate, but that they would be bound by the decisions of the European Court of Justice for at least five years—I think it's either five or seven years—after we have left the European Union. Domestic courts would have to operate within the precedent-making decisions of the European Court of Justice.

So, in a way, I feel encouraged by this in that it seems that some sense of pragmatism is beginning to operate at the Whitehall end, and some of the more absurd language about the ECJ, as though it was an organisation that made terrible decisions every day of the week, no longer appears to rule the roost in the way that the UK Government is thinking of it. But I don't think they have a single approach any more; they have an approach that tries to solve the issue case by case depending on the matter that they're having to resolve. Piers knows more than me. 

15:25

Just to add one thing, which was touched on in the recent questions, we will see what we see this week in terms of JMC(EN), but the governance arrangements for the future relationship is one of the areas that we would anticipate being discussed specifically at the ministerial forum in one of the coming meetings. So, yes, the legal construct and all the associated governance arrangements is very much on our radar, and it's something that we are looking to try and make sure is supportive of the overall outcome that we seek in policy terms on different aspects. 

On that last point, where you want to see things appear in the ministerial forum, and JMC(EN), as you say, has been ad hoc, effectively, we are getting a very tight timescale. We are being told 10, 12 weeks and that's it, because those are the timescales in which the European Parliament has to make decisions and the European nations have to make decisions on the EU withdrawal agreement. Is one a month really sufficient? Do we need more than that, because it seems to me that there's still a lot to be discussed?  

I'd be more than happy to meet more regularly. We do have a proposed timeline for the ministerial forum, and, as Ed suggested earlier on, it does relate to the discussions that will be going on at EU level. So, underneath is the work that's going on at official level, and then that feeds into the ministerial forum, which then informs the work of the JMC and then, in turn, the discussions at Europe. But what we've said is important is, actually, that we see that line of sight back down to the ministerial forum and the official working groups to ensure that the arguments that we've been making in those forums have actually been taken into account and are influencing the UK Government. 

Can I ask, then, whichever forum we're talking about, clearly, if there is a withdrawal agreement, there is also discussion of a EU/UK joint ministerial committee? Have you had discussions at this point in time as to whether Wales will be represented on that oversight committee?  

I've had no direct discussions of that, Chair, other than to make the point, as we have, that we would expect to have a relationship with that committee, whether that's directly involved in it or being involved in discussions that lead to it. The First Minister may have had—I'm not certain, but I think he may have had—some opportunities to discuss that more directly. 

And are we still pursuing the agenda, along similar lines, that when it comes to Council of Ministers meetings, as the Welsh Government has represented the UK on occasions, as has the Scottish Government, that that should still be the model we follow now? 

That's exactly the model that we have advocated. So, I attended the JMC(E)—the normal business JMC—in Scotland the week before last. It remained a good example of the way that these things can be done properly—an agenda well in advance, papers available in advance, our ability to put points to the UK Government on behalf of Scotland and Wales in advance of the meeting where those issues were going to be discussed. So, it's not perfect, of course. But, as a basic working model, it still has a lot to commend it. 

15:30

If I might just come in on the point about governance, we've had some high-level official-level discussions prior to what will come on to the agenda at the ministerial forum, and that point around devolved representation, responsibility around the governance and setup for that committee, has been made at official level, and that will be made going forward into the ministerial level discussions as well. 

Thank you. We've come to the end of our time this afternoon. Can I thank you for your evidence this afternoon? You will receive a copy of the transcript for any factual inaccuracies you can identify. If you do see any, please let the clerking team know as soon as possible. I wish you well in your future meetings on the JMC(EN) and the forum because I think there's a lot to be discussed in a very short space of time. It's clear from my meetings last week that there is deep concern over the tight timescale that now remains and the ability to complete everything within that timescale, and it's important, therefore, that Welsh voices are heard at the right places to ensure our interests are ensured and guaranteed. Thank you very much for your time this afternoon. 

Well, thank you, Chair, for the chance to discuss it this afternoon. And just to say that it is helpful to me as well to have had this meeting today because it allows me to reflect those issues and the questions that have been raised with me today directly in that meeting on Thursday. 

3. Papurau i’w nodi
3. Papers to note

For Members now we move on to the next item on the agenda, which is papers to note. We have three papers to note. One is the correspondence from Simon Thomas, Chair of the Finance Committee, regarding the Welsh Government's draft budget process. Are Members happy to note that?

Can I ask a question on the back of that? Thank you. I don't know whether it's something to go back to Simon for, but in the focus of scrutiny, the new list of angles that they're taking, about half way down, we're talking about prevention—approach to preventative spending and how that's represented. I think that's really important. But, as a consumer of the budget papers rather than a preparer of them, actually trying to evaluate prevention is pretty difficult, and I'm wondering if they might be in a position, even at this stage, to give us an indication of what they would expect to see in a budget that would help us as Members evaluate whatever they put towards prevention. 

We could write to Simon to ask for clarification on that point. 

The next paper to note is correspondence from the Chair of the Constitutional and Legislative Affairs Committee to the Cabinet Secretary for Finance, who's just been here, on the intergovernmental agreement on the European Union (Withdrawal) Bill. And it highlights perhaps a slight concern in that they're still awaiting a response in relation to the environment Bill, which is England-only, which Jenny reflected in the session with the Cabinet Secretary, particularly to ensure that he has confirmation that the Bill will be an England-only Bill and not reflect upon Wales. Perhaps my fault—I should have taken the opportunity to ask him when he was here—but let's note that and keep an eye on it. 

Well, I had a briefing from Manon that said it was going to be an England-only Bill, so I went with that. 

Well, I think we'll just keep an—. I think it's what we expect, but I think it's one to keep an eye on. 

And the third paper to note is correspondence from the Cabinet Secretary for Finance relating to the new ministerial forum, but we've had the opportunity to question him on that this afternoon. Are Members happy and content to note all three papers? Thank you very much. 

4. Cynnig o dan Reol Sefydlog 17.42(vi) i benderfynu gwahardd y cyhoedd o weddill y cyfarfod
4. Motion under Standing Order 17.42(vi) to resolve to exclude the public from the remainder of the meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).

Motion:

that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

The next item is the motion under Standing Order 17.42(vi) to exclude the public for the remainder of this meeting. Are Members content to move into private session? I see they are content. Therefore, we will move into private session. 

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 15:34.

Motion agreed.

The public part of the meeting ended at 15:34.

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