Y Pwyllgor Cyfrifon Cyhoeddus - Y Bumed Senedd

Public Accounts Committee - Fifth Senedd

20/01/2020

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Darren Millar yn dirprwyo ar ran Nick Ramsay
substitute for Nick Ramsay
Gareth Bennett
Jenny Rathbone
Mohammad Asghar
Rhianon Passmore
Vikki Howells

Y rhai eraill a oedd yn bresennol

Others in Attendance

Adrian Crompton Archwilydd Cyffredinol Cymru, Swyddfa Archwilio Cymru
Auditor General for Wales, Wales Audit Office
Clare Pillman Prif Weithredwr a Swyddog Cyfrifyddu, Cyfoeth Naturiol Cymru
Chief Executive and Accounting Officer, Natural Resources Wales
David Rees Swyddfa Archwilio Cymru
Wales Audit Office
Julie Rees Swyddfa Archwilio Cymru
Wales Audit Office
Sir David Henshaw Cadeirydd, Cyfoeth Naturiol Cymru
Chair, Natural Resources Wales

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Fay Bowen Clerc
Clerk
Lowri Barrance 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 13:15.

The meeting began at 13:15.

Penodi Cadeirydd Dros Dro
Appointment of Temporary Chair

Good afternoon. The first item on today's agenda is the election of a temporary Chair. Therefore, in accordance with Standing Order 17.22, I call for nominations for a temporary Chair for the duration of today's meeting.

I therefore declare that Darren Millar has been duly appointed temporary Chair for today's meeting.

Penodwyd Darren Millar yn Gadeirydd dros dro.

Darren Millar was appointed temporary Chair.

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

If I can welcome everybody to today's meeting of the Public Accounts Committee and just remind everybody that there are headsets available for the purposes of translation and sound amplification—. If I could encourage everybody to switch off their electronic devices or make sure that they are on silent because, of course, these can interfere with the broadcasting equipment, and remind everybody that, in the event of an emergency, the alarm will sound and we're to follow the direction of the ushers. We have received one apology, I think, for today's meeting, and that's from Adam Price. Are there any Members who want to declare any interests today before we go into our meeting proper? No. There aren't. 

2. Cyfoeth Naturiol Cymru
2. Natural Resources Wales

So, we'll move on to item 2 on our agenda, Natural Resources Wales—very pleased to be able to welcome to the meeting today Clare Pillman, the chief executive and accounting officer at Natural Resources Wales, and Sir David Henshaw, the chair of the board at Natural Resources Wales. Welcome to you both. We're obviously following up on previous work that this committee has done in the wake of a number of reports from the auditor general and his predecessors, but I understand, Clare Pillman, that you wanted to make an opening statement before we go into some questions today. So, can I invite you to do so?

If I may, Chair. Thank you very much, and I thank all of you for the opportunity to say a few words of introduction today. This time last year, we came before you at a time when our Grant Thornton report had uncovered the full extent of the problems within our timber sales operation. We gave our commitment then to sorting those problems out. So, I'm pleased to return today and report that we have made real strides over the last year.

Our recovery project has put in place new policies and procedures. We have trained our staff, improved contract management and overall governance, introduced new structures and more effective communications and engagement with the timber trade. The board has, critically, provided leadership, guidance, scrutiny and challenge to the project, and has been supported by an oversight group headed up by our chair.

In the summer, we asked Grant Thornton to come in and review the project, and they concluded that we had made some good progress, but also recognised that it would take time to embed fully the changes that we had made. We were pleased that the Wales Audit Office, in its own review of the project last autumn, came to a similar conclusion—that we have made good progress but that it will take time to embed all these changes fully.

There's absolutely no question that the work of this committee and that of the Wales Audit Office has been immensely helpful to us in addressing these issues. We know that fully embedding these improvements will take time, and that we must continue our focus until the end of the project in March and way beyond that. We're absolutely not complacent about this, and I and the board will continue to scrutinise and monitor progress as we move forward. We look forward to this session and discussing the detail with you.

Thank you very much for those opening remarks. You've already alluded to the fact that this committee has shone a light on some of the poor practice—I think we'd all acknowledge—previously at NRW. Of course, we have before us some signs of improvement, but, of course, we're still going to have a set of accounts that are qualified yet again for the financial period. Do you want to tell us and describe to us the sort of improvements that you've put in place and what's different? Because, obviously, whenever anybody receives a set of qualified accounts, it immediately rings alarm bells. How can we have assurances that this may or may not be the last set of qualified accounts? Is it the last set of qualified accounts that we should be expecting to see? 

Lots of questions there, and I will work my way through them. So, the qualification of the accounts for the last financial year was on the basis of decisions that had been taken within NRW in the financial year 2016-17 that had been uncovered by Grant Thornton, who had come in on the back of the qualification of the previous year's accounts, because I felt that, as a new accounting officer, I absolutely—we—needed to leave no stone unturned; we needed to get to the bottom of the issues. And Grant Thornton came in and did that. And, in looking at these contracts, called Standing Sales Plus contracts, they identified some major issues with them, which the audit office then followed up.

They gave us a whole raft of other recommendations, which we discussed in detail with this committee when we came before you last February. There are various documents that you've received that have articulated the progress against those recommendations since. But, really, just to summarise, I suppose, what we've done, over the last year we've put in place new teams and new structures, not just for the timber sales area, but for the whole of NRW. So, over the last year, we have completely restructured and reshaped the organisation. 

We've got, as part of that, much better integrated working across central and operational functions, which was one of the things that the Grant Thornton report, building on the work that the WAO had done, identified. We've implemented new policies and procedures for the handling of all aspects of timber sales, and that's not just a document that's cast in stone—it is regularly reviewed and updated, and staff have been trained on it. 

We've refreshed our governance frameworks, again, not just for timber sales, but for the whole organisation, and we've looked in particular at our financial and non-financial schemes of delegation. We've implemented new terms and conditions for all our timber sales contracts and we brought in a new standard contract from last September. We've introduced training for staff, including in contract management, public law, state aid, and we have, as a result of the big organisational change, a programme of training running that is called 'Working for NRW', which is, basically, refreshing everybody in good governance practice. 

We've made significant improvements in our IT system that supports the timber sales area. So, we've had four successive stages of new functionality in the IT system. We've really worked hard on our relationship with the timber trade, and that is a work in progress, but I think the communication is much better and I've been out and I have met many of our major customers and talked about their concerns and issues.

We've increased staff capacity in our forestry operations by 20 per cent, and we are now starting work on a new timber marketing plan, which will be implemented from April 2021 and take us through the next five years. So, lots and lots of work done, lots more to do, but I believe—and I think it's been borne out by both Grant Thornton and WAO—that we are making good progress. 

13:20

And Sir David Henshaw, obviously a lot of work going on there, as far as the operational side of the business, as it were, is concerned. What's been happening at the board level?  

Well, the board have, if you like, refreshed its governance completely. One of the big lessons of what happened was a lack of proper board scrutiny, probably some issues around the strategic direction of the organisation and the rest. So, we've strengthened the governance very, very—in a significant way. Most importantly, the board has been driving, through its oversight group, which I established, the recovery in this area, and also refreshed and revisited the audit functions through the audit committee, and most importantly, I think, recognised this wasn't just about forestry. This was about the whole organisation. A lot of this goes back some years to the original establishment of NRW, and some of the issues that came out, both through the audit work and Grant Thornton as well, were about some of the central functions and their lack of connectivity to the timber business and forestry business. So, making sure that we had a broader sight of all associated issues, which we've dealt with and are still dealing with. We're in the midst of a journey here, a long way down the path, but some way to go yet.

13:25

Has there been sufficient change at board level? I notice that some of the individuals around the table are still the same individuals that were around the table when, as you described it, the governance was failing in the organisation.

Well, we've had five new non-executives arrive at the end of last year—I'm including myself—and we are recruiting two executive director posts at the moment. So, I think, whilst we have had that refreshing, most important is the board facing up to—. The first step in recovery is to face the crude reality of where you are, and I think the board of the executive, that's what we did. As there had been some failed starts before on the back of the audit office work, it was clear that we had to approach this in a radically different way, and that meant changing the approach fundamentally, changing the way we did things. Actually, some of this was about some very basic things about how you do business in the twenty-first century, and strengthening procurement, strengthening the transparency of operations and the rest of it. Not very complicated stuff, but actually, when you've had an organisation so used to operating like that, cultures get deeply embedded. We've still got some of that challenge in hand, as the work presented to you shows.

So, if some of this stuff was basic, doesn't that tell you something about how serious the failures were in terms of those individual board members who were around the table at the time that allowed these things to go on on their watch?

Well, I—

If we're talking failures in basic governance, then surely, individuals ought to carry the can for that, shouldn't they?

I've always had a view that, when you go into these sorts of situations, the thing to do is focus on where we are—we are where we are—and focus on the solutions, rather than looking back and spending the energy trying to work out, actually, the exact issue of what happened. I don't think it was about one group of people or individuals; I think it was a whole set of circumstances. A cocktail of things happened here. Some of it is deeply rooted in the original establishment of NRW, and the failure, probably, to bring the three silos of organisations together with a strong connectivity to the centre, through legal, corporate and the rest of it. So, there's an awful lot of moving bits here, and so, in my judgment, we've done the right thing: we've focused on what we need to do to improve this and rescue it, and most importantly provided the platform for the future that will provide a strong, robust NRW.

Yes, I wouldn't disagree with some of what you say, but, of course, we've got many millions of pounds of taxpayers' money that has been lost, effectively, or potentially lost, as a result of the poor governance at the organisation. So, surely, accountability is as important as reflecting on where you are and trying to make changes going forward, isn't it? So, holding those individuals to account in some way is as vital as getting things off on the right foot going forward.

Yes, indeed, and there have been major changes in staffing. We've had a number of reorganisations as part of the overall—

Well, five members of the original board have stood down on their retirement rota, so we had five new members.

But they stood down. They weren't required to stand down. They weren't forced to stand down. Their resignations weren't demanded.

Forgive me, that's not a matter for me; that was a matter before I arrived.

Perhaps I can put this direct question to you then: if you were on the board at that time, would you have resigned? Would you have felt it appropriate to resign yourself?

If I were on the board at that time, I don't think we'd have got into the position we did.

But if you had, hypothetically, gotten into such a position, would you have resigned? Would you have carried the can?

I could not have served on a board that actually had got itself into that position. No, I couldn't have.

Okay. Okay. And yet you still have board members around your table that did.

Yes, but I go back to my original point: I don't see this as an individual responsibility. There's a corporate responsibility of a board. Mistakes were made, there were errors of judgment made in relation to the accountability framework, the strength of the audit committee's powers, et cetera—there's a whole raft of issues here. I believe we've approached it the right way and, indeed, the way we've strengthened governance and the way the whole board is fully behind that has impressed me hugely. So, I'm feeling, we aren't there yet, as the auditor general's report makes clear. We've made huge headway, but we've some way to go, and particularly in making sure it's embedded in the organisation. And we will over the next few months and year be clear that we're not just expecting this to be embedded and walking away from it. We're going to have a clear oversight of that through both the board, through the audit committee, and in other arrangements we'll put in place to make sure we're on it. 

13:30

Okay. Before I come to Gareth Bennett, Rhianon Passmore, you wanted to come in.

Thank you, Chair. We started off briefly talking about the legacy issues of qualified accounts and then the qualification the last time around. So, just a little bit around that—I believe we'll be coming to it later on. But in regard to the auditor general's view on the Standing Sales Plus contracts being an integral reason for that qualification, could you just outline a little bit—not very long, because I'll get told off by the Chair—as to why that legacy is still there and ongoing in terms of those contract residues?

Yes. It is quite complex, but I will keep it as short as I possibly can. So, the root of the problem with Standing Sales Plus, as identified by Grant Thornton a year ago, was the mixing of a sales element of a contract with procurement for goods and services, such as civil engineering and restocking. As soon as Grant Thornton identified that as a problem, we stopped awarding any new Standing Sales Plus contracts—

But if I can interject quickly, so that we can move on, the reasoning for the qualification of the accounts is that you still have a residue of those contracts going forward, is it?

Exactly, yes.

No, that's right. Well, that left us at the time—. So, when we stopped that, that left us with a number of live Standing Sales Plus contracts. We looked at all of those and allowed those that didn't have a restocking element, so didn't have the replanting of trees over a period that could be anything up to five years, we let those complete. However, those contracts that did have a restock element, we looked at those and decided to enter into negotiations with the eight different companies who held them. Six of those customers who held 30 out of 34 contracts have worked with us now to terminate those contracts in a way that allows me as accounting officer to assure you that we received value for money on that.

So, my question is: could you have expedited that any more swiftly than you have done?

I think we worked as fast as we could in what was a complex contract negotiation and we worked our way through and out of those as quickly as we could. We have four ongoing. I think it was very important that, actually, we didn't—. This wasn't a, 'We have to get out of these at any cost.' It has to be appropriate and value for money. So, those four remaining contracts, we will see through to completion. They were—

And from the board's perspective, I think we handled it as fast as we could and in the right way, making sure the public purse was protected.

So, to a certain extent, do you feel that it's unfair that that has meant that there's been a qualification of the accounts, or do you not put it down to that?

No. So, the qualification for last year was on the basis of what had happened in 2016-17. It is possible—and, clearly, the auditor general will need to think about this—that because the contracts continued into this year that there could be a qualification of this year's accounts, but that will be something that the audit office will have to consider in due course.

Okay. I know we'll come back to that later. Thank you, Chair.

Thanks, Chairman. Yes, thanks for what you've said so far. I appreciate that a lot of things are changing, and as Sir David said, to some extent, we have to look forward, but perhaps it would be helpful to look back at certain particular things to see what we can learn from them. Obviously, we've spoken already a lot about the timber sales. Now, it does appear that this part of NRW was either unable or unwilling to learn from its mistakes. What was the root of the problem with this team dealing with the timber sales, and what have you now done to turn matters around?

I think the issues in this area of our work have been set out in successive audit reports and in the Grant Thornton report. What was also important, as Sir David said, was that, actually, this wasn't just something that we could say, 'This was just this part of the business.' It was important that the whole of NRW learned from it. And we have improved—. I think I gave you a long list earlier, which I won't repeat, but in all those areas we have not only thought about the impact on this team and this area of work, but how it impacts across the organisation as a whole.

It's been hugely helped by the oversight that the board have given and the way in which we have worked our way through those recommendations in the Grant Thornton report. We had six work streams, they've all worked their way through. We're coming now to a stage where we are looking at how we embed all those changes, the new governance arrangements for when we effectively go into business-as-usual mode from April.

13:35

Okay. Thanks. You've talked about oversight, which I appreciate, from what you've both said, there's going to be more effective oversight of what's going on. Could either of you say any more about why—again, I appreciate it's going back, but I think sometimes we have to look at these things—there was so little corporate oversight and scrutiny at the beginning? That's one issue.

The other thing is, Clare, you were just saying about how things impact not just on one department but throughout the organisation, and I think Sir David mentioned the difficulty of people working in silos, and this appears to have been happening with the timber sales function. I think you've kind of alluded to that in your answers. How can we be sure that other NRW functions in the future aren't going to be beset by the same problem of operating within their own silos?

Yes. I think it's very difficult for me or Sir David to comment on oversight issues that preceded either of us being in place. What I think we can talk about are the changes that we've made, both to the way in which the board operates, which David might want to touch on, also the audit and risk committee and the way in which the oversight group for this project worked.

But, actually, there's also an important strengthening of executive team governance over these issues. We've been looking at this. We've had reports due at every single meeting of our exec team since a year last July. So, those improvements in corporate governance have been absolutely key.

I suppose two other things have happened during this period, one I alluded to earlier, which is, we have been through a total organisational restructure. So, the organisation is a different shape and has different focus from when these issues arose. So, what we have done is, we have focused our staff into six teams, area-based teams, and a marine team, supported by a strong corporate and policy centre. With that has come a refresh of the way in which governance works across the organisation. So, we now have business boards in place for different areas, such as flood or natural resource management, and that brings together, in one place, the policy, the operational and the corporate services. So, it means that these issues around people being able to work in silos or perhaps without the level of oversight or governance should not be able to occur again. But I think, David, you might want to add to—

Not much to add, really. I think the fundamental reorganisation of the business into an area-based approach, breaking down those silos at an area basis, is going to be one of the great strengths of NRW going forward. And also, if you like, the relationship between the centre of the organisation at corporate level, legal, finance, et cetera, will mean that we've got a far healthier state of oversight, working right at the start of any business that that particular part of the organisation gets into. So, I'm feeling a lot more encouraged about the way staff are responding to that, because they're seeing, if you like, a more sophisticated framework that they can sit within and know what they have to do. Part of the issue—and we can't look back; we haven't got that sort of perspective. But some of this may be not being sure where to go and what advice to get and when and how. That's one of my reflections—that, if a stronger centre had been there, that might have been more complete in giving advice and support to colleagues going forward. But that's hindsight, so it's very difficult; we weren't around when that happened.

13:40

Can I just ask a question? You talked about a stronger centre there. Just before I bring Jenny Rathbone in, we've seen other boards that have been publicly appointed in Wales also struggling with some of their governance issues, I think it's fair to say. We look at health boards, for example—there've been some significant failures at at least two health boards in Wales. What sort of support do you get from the Welsh Government as the organisation, the Ministers, that appoint members to boards to make sure that board members are properly equipped to be able to support the sort of change that you, Clare, are obviously trying to drive in the organisation, and that you, David, are obviously trying to push at board level? To what extent has the Welsh Government been involved in driving forward any of these changes, or are you left very much at arm's length to get on with these things and just report when they're done?

At the non-executive end of the business, the appointments are matters for the Welsh Government, to make the appointment. But there is a very strong dialogue between myself and the Minister about—. At the moment, we're looking at some vacancies occurring later in the year, and the dialogue has started about what sort of people I'd be looking for and the sort of strengths we'd need around the board table. The board is not a representative group of people representing different factions within Wales or different industries; it's a group of non-executive directors utilising quite significant experience and making good judgments. So, we've been talking about that and we've started that conversation, and I will have a hand in articulating that requirement—directly articulating that to the Minister.

When it comes to the interviews, these are public appointments. I will sit on the panel, but it will be chaired by an independent person. Then, a list will go to the Minister from which she will make the judgment about who to appoint. So there's a dialogue going on there that very much reflects what Clare and I see—because I obviously talk to Clare about that—as the need for the board table strength.

And the competency is tested purely at interview, is it, and on the strength of an application, rather than in any other way, in terms of—? I mean, how is the competency of board members tested?

There is an interview process.

Yes. It's just the interview, though, is it? I'm just interested to know what the process is, and how it compares to other parts of the public sector in terms of appointments.

It does vary. My experience is it varies from just an interview, with a lot of public appointments like that, to sometimes, for particular ones, there's an assessment centre process. That might be something worth considering. But the sort of people you're talking about come with a significant experience. The question is the fit or the mixture you're looking for to complement others who are already there.

And then just explain to us—you have some sort of induction process to the board then, do you? And someone training or upskilling?

Indeed. Also, with ongoing development, we have an away day that is just non-execs tomorrow, all day, to work out how we operate together as a team. Clare's doing the same thing with the executives, then we're bringing those two bits together to build that unitary board.

Going back to the failures of the centre to ensure that contracts were being let appropriately and in line with the law, obviously there must have been senior executives in place with responsibility for the timber sales function. Have any of these executives been held to account for their consistent failure to manage this function? If not, why not?

So, the contracts that we're talking about today—the framework that was found to be irregular was set up in 2016-17. There is nobody left in the organisation at senior level who was involved in that.

Before they left, were they held to account for their failures, or did they leave with large pay-offs?

No, they didn't leave with large pay-offs. I think we've discussed some of this before, and I wrote to the committee after, I think, the first hearing with some additional details.

13:45

Okay. Because obviously, the public would expect that people who'd failed to do their job properly wouldn't then be compensated, as occasionally happens, for failure. But that didn't happen.

As I say, the people who were involved in the setting up of these frameworks in 2016-17 are no longer with Natural Resources Wales.

That isn't quite my question. Ultimately, obviously, the chief executive  is responsible where the organisation is not controlling the organisation's operational procedures.

And clearly that was a previous chief executive.

I appreciate that—absolutely. Okay. I think this is probably as far as you're going to go in public session.

The auditor general's supplementary memorandum in paragraph 1.43 says that you have been renegotiating the standing sales plus, and we've already, to some extent, covered this in an earlier answer to Rhianon Passmore. You said that there were originally eight companies, and you've come to arrangements with six of the eight companies. What are the reasons for not coming to arrangements with the other two companies? Is it because they're refusing to come to the table, or that the terms of ending those contracts are so onerous commercially on NRW that it's not attractive for you?

There is a limit to what I can say within commercial confidentiality, but effectively, we approached the companies and if they wanted to discuss exiting from the contracts, then we took it forward with them.

Okay, but there are still two companies who are resistant to coming to the table.

Yes, and we can take these contracts successfully through to completion and ensure that we deliver value for money under them.

It's fair to say they're low-volume contracts, as well.

They represent about 4 per cent of the total.

Okay, so a relatively small sum of money. But you're still, presumably, putting in place additional measures to ensure that they're delivering value for money.

Okay. Paragraph 42 of the auditor general's supplementary memorandum indicates that nearly 70 per cent of the timber sold under these Standing Sales Plus contracts was sold to just two customers, and it's clear that this was likely to favour larger suppliers. Obviously, that's completely contrary to the new procurement approach and the emphasis on the foundational economy and trying to award contracts, where possible, to Welsh companies. So, what action has the board taken to satisfy itself that the use of these Standing Sales Plus contracts meets market objectives?

So, as we say, no more Standing Sales Plus contracts, so we have either exited from them or, with a small number, we're just driving them through to completion. What this means, in effect, is that all our timber is put to market through open competition via five sales events annually. It's principally sold in two different ways: standing sales—so, the trees are still on the hillside, somebody goes in, cuts them down and takes them away; or roadside sales, where we cut them down and sell them cut. The ending of the Standing Sales Plus contracts and the existing long-term contracts have vastly simplified our timber sales business, and effectively, all our timber now is sold openly through those five sales events. We package it in different sized groupings so that actually, it's attractive to people, organisations and businesses of all different sizes and geographic locations. So, I think that, yes, these contracts did favour larger companies and a small number of companies, but now how we are selling timber should be much more favourable to a wider number of customers coming into the market. But we'll continue to keep an eye on that, because as you say, it's very important.

I mentioned in answer to an earlier question that we would be starting work on a new timber marketing plan, and that's something that I very much want to be part of, because I think it is really important that we have a healthy and diverse timber business in Wales that supports both smaller organisations as well as some of the larger ones.

13:50

Okay. I just want to probe the accuracy of the methodology that's used when you're specifying in the contract. In 2.8 of the auditor general's report he points out that the majority, nearly 60 per cent, of the contracts completed by the end of March last year

'had outturn volumes in excess of 110 per cent of that contracted',

and nearly 20 per cent of the contracts had outturn volumes of over 150 per cent, which would, to my lay mind, say you're just not getting value for money, because you're just underestimating the amount of timber that is on plot A.

Yes. I think when I started I thought, 'Oh', but actually, you estimate the amount of timber on the basis of standing timber, and that is clearly quite complex.

You've got aerial things and all the rest of it. But it does mean that you can have different volumes. It doesn't mean that people don't pay according to the volume. So, it's not sold on the basis of, 'That's it, and if you get a bit more—'. So, you pay for the volume you take. Our new terms and conditions have been changed so that actually, we are in a better position to manage those variations between the estimate and the actual.

Okay. So, in the contracts that were completed by the end of March last year, is it right to surmise that, actually, the purchaser was getting a much better deal than they might have done if you'd been more accurate in your estimation? Or were you still getting additional money for additional—

You were getting additional money. So, they paid for the stuff by—

On weight.

On weight. Fine. So, even if you got it wrong initially, you're still going to get the money.

So, you estimate what you think is going to come off that coupe. So, when it comes off, it's weighed.

And we're putting in place various measures to improve the way that we estimate mensuration within forestry, but it is quite complex.

Okay. So, there isn't an industry-wide approach that everybody recognises is the most accurate. Okay, thank you.

On a coupe-by-coupe basis it can be hugely different—the quality of timber within different coupes can be hugely different.

That was my question, really: is there a globally recognised methodology for estimation of that tree production? But what you're saying is that there's not. So everybody has to bespoke-ly do their own bit of quantification, for instance.

Clearly, we can learn from others. We're in regular contact with Forestry Commission England and Scotland and all the rest of it, and as I say, we are improving the systems that we use to estimate volume within our forests.

Yes. But I think—. I can sort of hear my foresters in my ear, almost. I think it is never going to be that we're able to say, to the last tonne, that that's what that coupe will produce.

But with regard to the main point, which you've already addressed, it is by weight, by volume—

It's paid for—. Exactly.

The foresters from our side will estimate what they think might come off that area, and the customer will take a view about whether that represents the value they want to go for, but then it comes out in the wash in terms of the weight that comes off the site.

13:55

Although it would affect the price if there's a lot more timber available than would otherwise have been the case, wouldn't it? You'd get a lower price, presumably, if there's a lot more timber in the market than you've estimated. Tell me if I'm wrong.

The price is set at contract.

Okay. But you've just suggested that you're paid, then, on the basis of what's recovered from the timber that's been felled, yes?

Price is agreed for a coupe, and then the company goes in, cuts it down—

On the agreed volume.

So, you agree the volume that's going to be felled within that coupe. So, if there's more volume there, you don't fell it.

No, you do fell it. Obviously, there's a discussion, but you do fell it, because you don't want to be dealing with half-felled coupes and things. So, it is at that price, but the price is set by the open market. 

Yes. And the price fluctuates according to the availability of the timber. 

Exactly. And the timber market at the moment is very volatile, because there is a lot of timber from different sources coming into it.

Yes. I'm just trying to establish what the potential impact is of the very significant underestimation of what could be recovered from some of these areas. Ten per cent tolerance seems perfectly reasonable, but 50 per cent tolerance is obviously pretty significantly different. If you're telling me that it's very difficult to judge because you never know what sort of disease the trees have succumbed to, or the quality of the timber can be variable, depending on the land and conditions and things like that—I understand that, but in response to Jenny, you're saying, 'That's pretty typical. It's very difficult to establish. It would be typical in any market, with any timber supplier, or in terms of timber as a crop, to determine what would be there.'

We would like to get it lower, but I think there will always be an element of it being an estimate, because you're estimating the volume of something that's standing on a hillside against how much it will weigh when it leaves the forest.

But there's no impact on the taxpayer's pocket. That's the critical thing for us. 

No, because they pay for the volume that they take, and that is established by the market, yes. 

Timber is a commodity like other commodities—it could be sugar et cetera. The same principles apply.

Thank you, Chair. I've got some questions around NRW's improvement action plan, and the progress that's been made against that. So, if we were looking at NRW's policy and procedural framework, it certainly seems that good work appears to have been undertaken there. But then, when we set that against the problems that were actually identified in the Grant Thornton review, and in the auditor general's reports, those problems seem to be more around members of staff not paying full heed to the policies that were in place. Now, a cultural problem like that is far more difficult to tackle. It's so much easier to set the right procedures in place, isn't it? So, how can you be confident that your improvement actions will actually result in genuine cultural change?

We completely recognise that you can put in all the new governance systems, IT improvements, new terms and conditions and not get that change in culture. Change in cultures is a long-term job, and it requires real perseverance and determination. As we've said a couple of times, I think, this isn't just about the timber sales team, this is about the organisation as a whole. I've mentioned the complete restructure and all those things, but, again, restructures in and of themselves don't change cultures. They change the way you work, they change governance systems, all the rest of it, but the don't change the culture. 

So, for me, there are three important ingredients in terms of what you need to get effective culture change. The first is effective leadership, and in terms of leadership, the tone comes from the top. I've been hugely supported by Sir David and the board in what I'd say has been an absolutely relentless focus on building a new, common culture in NRW with a very strong public service ethos. We've invested heavily in terms of training and support for our leaders at all levels within NRW, and I think we're beginning to see some really good examples of staff stepping up, taking that challenge and leading. We have an annual chair's award for leadership, and it was really brilliant to see one of our women foresters win that this year for the work that she'd done in driving through the really important UK Woodland Assurance Standard accreditations. So, the first thing for me is leadership.

Second thing: strong values and behaviours. In the autumn of 2018, following consultation with staff, we relaunched our organisational values with a very strong emphasis on public service and integrity. These values inform all new policies as we move forward, and ways of working. I think they've really struck a chord with staff. They feel that sense of ownership of them. And they are underpinned by behaviours that we expect to see.

Then the final element for me is good performance management, obviously related to that values and behaviours piece. On performance management, clearly everyone has been through this process, so everyone has moved into a new role with their new role description, so are very clear about what is expected of them. We've refreshed our performance management policy and we are working with staff to really support them in that whole area of performance management. 

So, those are the things—leadership, values, performance management—for me that are what delivers the cultural change bit of it.

14:00

Thank you. I was going to ask next how you intend to test whether the anticipated benefits of the improvement programme are realised, and what you might have identified as the key measures of success. For example, you mentioned performance management there.

Clearly, there are a whole range of things that we will be doing in order to test compliance, so whether it's through audit, whether it's through looking at deep dives on performance, in order to make sure that we have the confidence that, across NRW, we have learnt the lessons of these episodes with our timber sales. I think in terms of the cultural stuff, we will continue to be talking to our staff, listening to them, engaging with them, making sure that they feel that they can raise issues with us, that they are part of developing the solution, and I suppose that's one of the things that the project team who've been working on this have just done really, really well. They've worked really hard to take staff along with them so that it hasn't just felt that we've come up with a whole load of policies and procedures and then dropped them on people. It has been about working with those people who are delivering this work to improve it, because they know—they know how best to do it, they know what works and how it can be improved. So, it has been very much about engaging them and taking them along with it.

And the board is as keen as Clare is to measure this as best you can, through opinion surveys staff have been through, and also dip-sticking every month, because you get an awful lot of intelligence about actually how the workforce is feeling about issues, which then the executive team and the board can respond to. So, again, we're putting a big emphasis on that as part of one of the levers to deal with the culture issue. 

14:05

Okay, thanks. In terms of embedding change, then, across all parts of NRW, how close would you say the organisation is to operating as an organisation with a common organisational culture? Is there anything else you'd like to add about your strategies to achieve that?

I think we're making good progress. I think that we are developing a strong NRW culture and that's been reinforced by getting people together for team events, and things like that—that sense that, actually, we are one organisation working for the people of Wales, but, critically, at this moment of climate and environment emergency there is a real sense of common purpose and endeavour, and it's building that sense that this is the team who are going to have to deliver against a lot of that. And I think that that is really starting to bring people together.

I hear much less now people start things by saying, 'I'm so and so, and I used to work for the Environment Agency' or 'I used to work for the Forestry Commission.' I think people are much more—'I'm so and so, and I work for Natural Resources Wales', and that's what we want. 

And i I can say, I think one of the things that I see is that when I arrived a year ago, I think there was a sense of people felt the organisation was under some assault; there was a bit of a bad reputation issue. People talk to me—I'm out a lot with the staff, and I hear a lot more of, 'It's good we're getting on top of this', and holding their heads higher. So, there's a sense of confidence, and the way they're being led by the chief executive and the exec team, which is all positive about we are attacking these issues and dealing with them. You can feel that without going to an opinion survey, that people are feeling a lot more secure in an organisation that feels like it's performing better. 

Okay. One final question from me, then. How long do you anticipate it will be before you can say that the changes introduced through your improvement programmes have been successfully embedded? 

I think there are stages, so there's clearly a point at the end of March, when the project comes to an end, when we have to be confident—and I say that we as the exec have to be confident, but we have to also persuade the oversight board that they should also have that confidence—that the project should end and, effectively, we move into business as usual. And then it is that process of embedding. 

I suppose what I would say about this is that this isn't—. There are lots of things that have changed about NRW and a lot of that is moving forward. But I suppose, when I sit here a year on from when I was here last, if we had made the same leap forward I would feel that, in the next year, we would really have embedded a lot of this in a way that means that, actually, it's just part of the DNA.

Thank you very much, Chair. Thank you very much, both of you. Good afternoon to you. Very interesting. I was looking through the auditor general's supplementary memorandum on page 51. Yes, 50, 51 and 52. Eight contracts were given in 2015-16. Have you found the pages yet? Appendix 2 it is, page 50.  

Sorry, perhaps—. Have you got a paragraph number? 

Okay, 2.1 and 2.2. Lovely, thank you. 

That's helpful. 

If you look through it, when SS plus contracts were given in 2015-16, there were only eight, and then in 2016-17 there were 28 contracts. Virtually, the value was, if you take one unit as one contract, around about £100,000 each. But if you work it out in 2018-19, 43 contracts were given worth £7.7 million. You've nearly doubled the value of the contracts. So, how have you turned around this good practice? Because you just earlier said it's a very volatile business, Clare. So, I would like to see how it's been done nicely last year.

14:10

Can I just add to that, Ms Pillman? In response to that question, you've already told us that you're not giving any more of these SS plus contracts, but one thing that the auditor general's note does refer to, in paragraph 2.14, is that there were some non-SS plus contracts also that were non-compliant in the financial year ending 31 March 2019. I just checked earlier on with the auditor general and his team, and the total of those was £1.6 million, I think, and it was for two contracts, primarily just for sales of timber rather than anything else. 

Based on an audit sample. 

That's based on just the audit sample. There may well, of course, be even more. So, this wasn't just isolated to the SS plus contracts, was it—this problem?

I think the major—

But has there been any focus on these other areas as well? 

Chair, my concern is: how has it doubled the value? If you look at the total amount, it's eight contracts for £700,000, then it's 28 for £2.8 million, and then you've doubled it, virtually. 

That reflected that, in our previous timber marketing plan, standing sales plus was a very major part of our marketing exercise. That stopped completely last autumn when Grant Thornton came in and did their report, and obviously the auditor general then came in and did his report. So, that stopped and, effectively now, the way we sell timber is we sell it on the open market through these five sales events annually, and we sell it either as standing sales or roadside sales. That's just a very simple way of bringing stuff to market, which means that it's much more transparent, it's much clearer, it enables more people to come into the market. But the Standing Sales Plus contracts, as I say, we have exited from them.

So, in the past two years you're talking about, there was no transparency or accountability. It wasn't there then. 

The question that the Chair alluded to—

The other contracts. So, effectively, there were issues when I came here last year, and in the previous September. There have been significant failings in our timber area, and there have been lessons learnt across all of this. That is why we have put in place these new policies, new procedures, new IT systems, new staff, training, et cetera, et cetera, in order that we don't have these problems. 

Thank you very much. Partly, you've already given the answer to this question. In your letter, you stated that, in phase 2 of the improvement project, business and cultural changes will be embedded within business teams. What compliance arrangements are you making to ensure that business teams do not simply revert to type in time?

I think we've talked about some of this, but just to bring it together, I think there are two aspects to it. One is that these teams have changed completely, so the way in which they are grouped, and their reporting lines have changed. The second thing is that we've brought in these business boards, so the new corporate governance structure for the organisation feeding up to business boards, and those business boards having a mixture of operational policy and corporate services on them. And then, all those good compliance mechanisms, whether it's internal audit, whether it's checking, whether it's deep dives, whether it's performance management—all those things need to happen as a matter of course in these areas and across business. 

14:15

Thank you. You refer in your letter to the new place-based organisation design that has been implemented within NRW. How have members of staff responded to these changes, and what action have you taken to ensure that this new structure does not result in the deprofessionalisation of specialist staff?

So, yes, we are now based on six terrestrial places and then marine. As I say, any restructure of an organisation of this size and scale—. So, every single person is in a new role, so everybody had to go through this process. I just pay tribute to the way in which staff continued, throughout all this, to deliver really important services to the public, particularly around flood incidents and incidents of response. Such reorganisations are never easy, but staff have responded positively and are now settled, all of them, in their new roles as of 1 July last year, and the teams are settling down and working together well. We've got a bit of recruitment going on, so that's good. I think the most important thing, in a way, is for people in those teams to get on and deliver stuff. So, we've got lots of stuff going on; we've just produced our interim 'State of Natural Resources Report' at the end of last year. We're working towards the production of seven area statements for March of this year. So, the teams are forming and, I think, starting to perform really well.

Thank you. The final question. The auditor general, in his letter to PAC, says that not all NRW officers were:

'sufficiently clear on the lines of accountability within the new organisational structure'.

Clarity of accountability is fundamental if the new structure is to work effectively. So, what action are you intending to take to clarify this accountability issue?

As I said, these are new structures and new governance arrangements, so everyone is working on those and learning from them. We are putting all managers through a course called 'working for NRW', which is effectively bringing together all those governance issues in a day's course. Once they have all been through that, that will be rolled out to all staff. This is really important for us. I think that it is a clearer system of governance than the previous one. I think it supports that place-based delivery. But all new structures take time to bed in, and that's what I think the auditor  general picked up, and we very much listened to that and have taken action on the basis of it. 

Can I just ask a little bit more about the capacity to deliver the changes that you want to see in phase 2? You've mentioned, obviously, the fact that there has been some change of personnel; you've brought some additional resource in to help you try to drive that forward. How confident are you that that will be sufficient resource? One person doing some of this compliance stuff seems to be pretty tight, when you're trying to drive such significant change. Is that something that is under constant review in the organisation?  

Yes. I think the one person that WAO was referring to is—. What we've created is a new post within the timber sales and marketing team, which is a dedicated compliance post within that team. So, it's quite a small team, but it has one person who's a dedicated compliance officer in there. That, I think, feels right. They obviously work very closely—. We have a new governance role, so the timber sales team sits within the wider commercial team, and there is a dedicated governance post within that wider commercial team as well. So, I think those two roles are absolutely critical, but then you also have your governance teams at the centre, where we've also strengthened and brought in more resource, and we've also strengthened our internal audit function.

14:20

And also, we've written all the proper processes and procedures that you would expect to see in a twenty-first century business process.  

Yes. So, we're not going to see any more sorts of contracts, whether SS plus—. Well, we're not going to see any more SS plus contracts. But we're not going to see any more contracts, full stop, that the organisation enters into that are not compliant with your policies and procedures. You can give us those assurances. 

That is the plan. 

And you're confident that you're not going to be visiting us again, in another 12 months, having said, 'Actually, one got through the net.'  

Although it is always a joy to be here, it would be very nice, perhaps, not to be here talking about timber sales contracts. 

Or indeed any other contracts. 

Thank you, Chair. Obviously, there seems to be, from what you've outlined and what you've outlined previously, a plethora, a platform of restructuring and actions and initiatives. There's much positivity and reassurance that I can take from what you've said today. However, there is still work to be done, as you've stated. You've talked about how you've strengthened your processes for staff inside the organisation, and you touched upon morale a little bit earlier. What are you doing in terms of your reputational standing in the wider community? Because NRW has come in for a lot of media consideration, and rightly so, around some of these contracts. So, what are you doing in terms of building that reputation externally? 

I think there's absolutely no getting away from the fact that four years of qualified accounts has been devastating for NRW in terms of its reputation. That has a real impact on staff, who are brilliant and passionate and committed and want to do a really good job. Sir David, I'm sure, will comment on this, but the board have really supported us in the way we've thought about this.

I suppose the first thing, if you're addressing a reputational issue, is to deal with the issue that's caused it. Over the last year or so, we've made real progress in dealing with the problem. I think we've also really listened to our critics and those who've challenged us, and been humble about when we get things wrong, putting our hands up and saying, 'Yes, we've got them wrong, we need to change, we need to do this better.' That's been really important, I think, in changing the way we approach things. 

Rebuilding trust and support takes a long time. I think one of the things that happens when organisations are in trouble is that they turn in on themselves, and I think that happened at NRW. One of the things that David is very keen on, and I've been really encouraging, is we need to reach out; we need to be much more out there in the community.  

So, in that regard, obviously, from what you've said today, you're addressing those root issues and those cultural issues. But, to the outward-facing public, how are you reaching out to them? What sort of programme have you got in that regard? 

We've got lots going on at the moment, which is really exciting, and I think it is that real sense of getting through organisational design and really changing the way we operate. Some good examples of that: we've completely revisited how we give grants and our whole partnership working approach. I think people felt it was very clunky, it was very difficult. We were 'difficult to work with', through those processes. We had a really good look at those, and have come up with new ways of working. I think that will be really important. The whole area statement process has been really good in the way that it has got us out, talking not just to our usual partners and stakeholders, but a whole range of different organisations, communities, individuals who are interested in and engaged with land management across Wales. 

So, I think it is a work in progress. We have a very nice event at the Senedd tomorrow, when we will be showcasing—. Is one allowed to do—[Interruption.] We're showcasing some of those partnerships and ways of working, and perhaps some of the things that people don't—. So, the work we've done with the Welsh Revenue Authority or the work we've done on metal mines remediation, all those very different partnerships that we have—with academia, with the private sector. So, yes. There's always more to do and I suppose, for me, it is the thing that David really holds our feet to the flames on. So, yes.

14:25

There's all sorts of evidence that, when organisations get into trouble, this is what happens—you retreat behind the drawbridge, pull the drawbridge up and actually disengage—and that's what happened to NRW. Out of that comes some real reputational damage. And so you have to attack that on a number of fronts. The first thing is to fix what was wrong, and that clearly is going on. Secondly, you have to re-engage and create a narrative or story about what you're doing and why you're doing it, and thirdly is actually to start shouting about it. We're strengthening massively our whole communications function and devolving it to the areas to create those stories at local level that show what NRW does every day in and out—floods; you name it, we're there. And I sense that we are moving forward on that journey. 

And also, we—Clare, myself and others—have to be out there engaging with different stakeholders in all their forms; colleagues such as yourselves, all around. We are here at NRW. My strapline for this is we have to make ourselves indispensable to Wales and the Welsh Government and the Welsh Assembly. 

You touched upon the climate change agenda in terms of the importance of NRW's role in looking forward, and the importance of there being that sound and solid reputation has never been greater, and, obviously, you have got to restock NRW, and it seems that you are doing that, but, in regard to the communications aspect and operationally, I would presume that you have new members of staff around that.  

Okay, so can you just—? We've got a very small amount of time. Could you just extrapolate for me what you've done around communications? 

So, we've got—. The place-based teams have three pillars to them: one is the land that we manage, one is the relationships—so, regulation and waste, and all that sort of side of things—and the third one is people and places. Those teams are absolutely about being responsive and out there in communities helping and supporting them to do the right things in terms of increasing biodiversity, tackling some of the climate issues that we're facing. Each of those place-based teams has a comms person, because it is about making those connections and telling those stories locally about what people can do, what is possible. We're facing, I think, a massive challenge, a challenge that could easily feel incredibly daunting, but it is through saying, 'Look, actually, you can do something to improve the chances for curlew in this area, or to restore this really important peat land'. And those stories, I think, are the ones that we need to get out there to encourage others, to support others, to build that sense of momentum. 

So, it is chicken and egg, and I'm fully understanding what you're saying. You touched upon staff surveys earlier on, and we've touched upon staff morale and, obviously, they need to work in synergy. So, in terms of your staff survey that you discussed, walking the walk as well as talking the talk on the ground, what are you doing to understand how staff are experiencing this journey? Because, as you've already highlighted, it must have been quite devastating for very hard-working staff to be amongst turmoil of such a nature. So, how are you now moving that forward and understanding it?  

There are a number of examples. All board members, for example, are out there in offices all around Wales on particular issues, talking with the staff, supporting them on all sorts of items on the agenda. I was very encouraged this morning. Literally this morning, I got a complaint letter, a complaint e-mail, from one part of Wales, one of the places, from one of our partners complaining that, in particular, biodiversity wasn't getting as high a weighting as it should do in the place-based plan. And the very fact that we'd engaged, that we were having this debate—I was really encouraged, and there is a real discussion and argument about where it should rank. That for me said that we are actually operating effectively in that space, because we've created that dialogue, we've created that controversy, if you like. 

14:30

So, systemically, how are you understanding the staff's view? 

So, we—. As I arrived in NRW in 2018, we had just had a staff opinion survey. It was pretty tough. A lot of the issues were around job evaluation and organisational design at that stage. We then had another big consultation in the course of organisational design, so in 2019, and that, again—. You know, staff were not feeling terribly happy about where they were. We are taking to the board in the next couple of months a proposal for a new staff survey. 

So, is this the old civil service people survey, or—

I don't think so. I think we'll be looking at different options. So, we used SenseMaker last time, the Dave Snowden tool. We've used the civil service survey in the past. I think we need to present to the board those as options, but also there are other tools as well, which, you know—

We'll be doing that later this year. 

And there's real-time testing of what's going on inside the organisation as well, not just waiting nine months for a survey. 

Okay. And, obviously, in terms of how then that informs your practice, I'm sure that you'll be able to—

You get that feedback loop, then. But we consult staff on individual policies in individual areas, either through the unions or directly, as a matter of course. But I think that sort of—. I'd like to get to that regular rhythm of a consistent pattern of staff engagement surveys, moving forward. 

And when do you expect, in terms of a timeline, to be able to have that regular rhythmic pattern of being able to—

We'd have one later this year and then I think it would be annually thereafter. But I think it's a matter of—. So, obviously, there was a choice to move away from the civil service one, which happened before I arrived. The SenseMaker one came in, and I suppose it's whether—. The board and we need to take that decision as to whether you stick with SenseMaker or whether you move to something different. 

There are some quite sophisticated, I call 'dipstick', ones that sample every month that give you a flavour of where you are, and you can benchmark and map the progress, or not, that you're making. So, there's a lot to go at. 

Okay. Thank you. And, finally, then, in regard—. We've touched quite a lot, actually, on the mandate, the very large mandate, of NRW and its origins right at the beginning of this session. So, in regard to operating as a regulator and then also pursuing commercial interests, do you see or feel that there is any ongoing tension there that is not able to be managed, moving forward?  

Clearly, many public sector organisations have broad remits that might include an element of commercial and an element of regulation. The key is how you manage that, and we manage our regulation very tightly and it is very much separate from our other operational and commercial functions. Clearly, we keep that under constant scrutiny and review, because it's important reputationally, and these are decisions that are scrutinised and challenged, and we need to be able to absolutely stand behind them.  

And also in that regard then, additionally, turning to the more short-term markets, sustainability balanced with the new arena in terms of—well, it's not new, but a heightened sense of renewal around that prerogative of environmental sustainability longer term, and the importance of that and being able to demonstrate that, do we feel that there is a tension there? 

14:35

My own view would be that, actually, I think we'll come to realise the benefits of an integrated organisation, such as NRW, bringing together all these issues into a more integrated whole, which you can make judgments about. I think that will happen. I think the theory is right. We'll start seeing the real benefits over the next few years, as the debate moves forward and the agenda moves forward. We are in the business, sometimes, of taking very difficult decisions and trading and balances, and that's rightly so. They should bring all the different aspects of that into the fray and actually make a measured judgment—sometimes it's popular, sometimes it's not, but actually that's our role. 

I think we hugely benefit from the framework of both the Wellbeing of Future Generations (Wales) Act 2015 and the Environment (Wales) Act 2016. So, the sustainable management of natural resources sits at the centre of what we do and that absolutely helps us to frame our commercial activity, just as much as it frames our nature conservation activity. So, there isn't a 'Oh, we're going to do commercial differently'. We are still looking for that multiple benefit from our commercial operations. 

And I think David's absolutely right that the benefits of NRW are huge, and I think that we will have robust debates within the organisation at board level. I think that's really healthy. What we can't do, which other organisations that are perhaps separate can do—. We can't go home, and go, 'Right. Well, I was right. I'm going to sit in my trench and I'm not going to move'. We have to resolve things, we have to come to a view, and I think that's really positive for Wales. 

And, finally, Chair, if I may, in regard to the transformational cultural change journey and the mandate of NRW, what do you think would make the biggest difference, in terms of being able to speed up the embedding process of that change? Or do you feel that it is optimum?

I don't think there's a magic bullet. It's graft. When you've been in this position, where we want to get to—you have to really keep working at all the things that Clare talked about: vision, values, clarity of the mission you're on, et cetera.

And we are very fortunate. I think what constantly surprises me is I keep running into complete enthusiasts and experts who are passionate about what they do. What we've got to demonstrate to them is that we're behind them and actually we support them. But, at times, they will not feel that they're getting the decision they want, because, we, as a board, or the Government or whatever, will have to make sometimes quite contentious decisions about using the framework of the Acts we talked about. But understanding that, being clear what the story's about on that, is critically important.

So, I don't think there's a magic bullet. Lots more money, of course, would always be the answer, but part of it is about clarity of mission and the story that you've got behind that, and what you're doing to stand and deliver the values you've got as an organisation.   

Delivering stuff, delivering good stuff, is what makes the difference for staff, I think. They want to be standing there with a new flood defence that really works for a local community or with a new woodland or a piece of restored landscape. It's the delivery. So, yes, getting on and doing it.

Thank you for that, Rhianon. Oscar, you had a—?  

Just a quick one, thank you, Chair. And thank you very much, both. Public confidence—what has happened in the past is past, but what measures or plans do you have, because you play a pivotal role in these environmental issues, clean water and green trees and all? If you cut 20 trees, you must plant 40. So, how can you build public confidence and turn around your department to make sure—? Because you are running a very, very important department, because the environment is the next issue for the whole world. So, what participation or measures are you taking, Sir David, to make sure that you—? I liked the answer you gave earlier, that nothing would have happened if you were there in the past. So, great. So, I hope you're taking this ship in the right direction. 

Well, it's delivery, and, again, I noticed—. This morning, we put out a press release about two or three reservoirs in north Wales that we actually made safe—fully, really safe—as part of our reservoir responsibility. So, that constant delivery and telling the story of the delivery— 

Yes, indeed. And actually making it clear to the public that's what we do every day, day in, day out.

This is a very important question, isn't it? You're measuring staff confidence in the organisation, and satisfaction. How do you measure public confidence? 

14:40

We have a number of—. We regularly measure our customer satisfaction. That's not a proxy for public confidence, but it is an indicator. And we've done a huge amount of work on our customer strategy, which, I suppose going back to that question earlier about how you deal with reputation, we listen to people and we are getting together a group of customers who will work with us to improve the way that we relate to a huge number of people who come to us, whether they come to us because of flood issues or they come to us for licensing, or information or advice, or they come through our doors at a visitor centre or come and visit a mountain bike trail. So, I think that that's one element of it.

But, yes, that confidence of the public is something that we will be, I suppose, be looking at whether we look at it in terms of NRW. But I think that one of the things that we need to be doing over the coming year is really engaging with the public about the challenges of climate change and the nature emergency, and really getting that conversation going. And I suppose the success of that will demonstrate whether we have that confidence from the public.

But we do work in contested territory. So, sometimes the answers we give might be a 'yes', which is acceptable to a part of the population; sometimes a 'no' would be. The comparison would be: people used to say the number of planning permissions approved was a good test of success. I used to say that the number of planning permissions turned down is equally a good test of success. So, we work in contested territory. And I think the key is showing to the public, when we have those contested areas, that we're doing it properly, fairly and well, and that's how you build reputation.

Just one final question from me, and then we'll bring the session to a close. You mentioned, David Henshaw, the financial pressures that are sometimes inherent, particularly over the past few years. You've obviously disinvested in order to invest in other parts of the organisation. So, you've invested; you've already made comments about your investment in the reputational side of things, your communication side things, your governance arrangements and your compliance arrangements. What have you disinvested in, and is that reducing your capacity in order to deliver in some other important areas that you want to disclose and be upfront about today?

I don't think with this committee, but certainly with the climate change committee, I've talked before about the impact of budget cuts on our core conservation capacity. With organisational design, we have been able to create greater resilience around that and put money back in. We're also in very positive discussions with Welsh Government for our budget for next year around a number of really important projects, looking at tackling some of the species lost and areas around that. That would be the area where I think our budget has been most vulnerable.

But we have to work smarter, and so, for example, we've put great emphasis on getting others to do the lifting for us through grants rather than us doing it ourselves, and building an alliance of stakeholders around the agenda in place-based approaches et cetera. So, there are ways around some of these, and austerity has been difficult, but it can drive some changes in the way you operate, which can prove to be of higher value.

Okay, thank you very much. Are there any more questions from Members? If not, we'll bring this session to a close.

Can I thank Sir David Henshaw and Clare Pullman for your evidence today? Thank you also for the written evidence that you submitted before today's meeting. You'll receive a copy of the transcript of today's proceedings, so if you could comment on its accuracy and feed that back to the clerk, we would thank you very much indeed.

At the risk of advertising, can I just remind you about the Senedd event tomorrow? [Laughter.]

3. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o'r cyfarfod
3. Motion under Standing Order 17.42 to resolve to exclude the public from 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.

We'll move on, then, to item 3 on our agenda: a motion under Standing Order 17.42 to resolve to exclude the public from the remainder of our business today and also from the meeting on 20 January. Are Members content? There are no objections, so we'll move into private session.

14:45

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 14:45.

Motion agreed.

The public part of the meeting ended at 14:45.