National Assembly for Wales

Croeso, bawb. I'd like to welcome Members to committee this morning. We have no apologies this morning. If there are any declarations of interest, please do say so now.

In that case, we'll move to item 2, and there are two papers to note. We have a letter from Sir Derek Jones from Keolis UK, and also a letter back to him from me. He was asking to meet with me as the Chair of the committee, and I've agreed to meet with him. Are Members happy to note those two letters? 

Yes.

Thank you.

I move to item 3, and this is our annual scrutiny of the Traffic Commissioner for Wales. I'd very much like to welcome back to committee Nick Jones. Good morning. Thank you for being with us again. Members will have a number of questions this morning, but perhaps I could just start with a few very general questions this morning and ask for some general reflections, really, of your time since being in the post since 2007. Perhaps you could outline what you feel, in that time, that you've achieved and that you're proud of.

I'm proud of the fact that Welsh language requirements are being addressed after many years of totally inadequate resourcing by the Driver and Vehicle Standards Agency; that is now being properly addressed. There's better road safety in Wales now compared with before. I'm particularly proud of the fact that from having virtually non-existent facilities, there will be excellent ones for the new traffic commissioner, for my successor. But I'm particularly proud of the fact that because of the work that I've done with others, including Business Wales and the Welsh Government, and some of the seminars, there are family businesses that are trading and flourishing where it wouldn't have otherwise been the case. I was speaking, earlier this week, to someone from Business Wales who told me that, as far as the financial assistance and the financial advice that they give—he could identify eight separate public service vehicle operators who may not be trading now, if it had not been for intervention, and some of that has arisen as a result of these seminars and the support. Now, perhaps credit to the Welsh Government as well, because, clearly, you've provided that support. So, I'm really pleased that there is some support for the industry that attended. Not all of them did attend the various events.

I'm also pleased that there's some impact on diversity and equality within the PSV industry, which is important with a shrinking workforce. So, addressing diversity is clearly an opportunity. But I'm particularly pleased with the fact that, for the future, we can say that the traffic commissioner in Wales will be able to be on an equal footing with the other traffic commissioners, because, in the past, he or she has been at a significant disadvantage. There are a number of positives there.

And the opposite to that, perhaps: are there any areas where you feel that you would have liked to have done something, but you haven't been able to?

I would like to have achieved all of the other things sooner, clearly. But I've recognised that I've wanted to bring about change and bring about a structure for my successor, but I want to avoid politics, and it's a matter of persuading people from different governments and different departments and different organisations. So, it has necessarily taken some time, and I've done it with no resources.

There's one group, which is just getting going, and I wish I'd got that going earlier—that's the Wales road transport advisory group, involving the PSV and the haulage industry and the police and a number of public bodies, where it can look at matters on a pan-Wales basis, to look at matters strategically. And it's doing some good work, but it's at the very, very early stages, and I wish I could have got that going earlier.

Okay, thank you. And you've been doing the job for 12 years, is that right? 

I'm in my thirteenth year, although a large part of that—almost 10 years—were covering west midlands as well.

Absolutely, yes. So, in that time, I expect you've seen quite a bit of change.

Yes.

What has driven that change? And has that change that you've seen always been for the better, do you think?

I certainly feel that my role in Wales has certainly been supported—exponentially better supported—in Wales. Across Great Britain, over the last almost 13 years, there's been the introduction of a senior traffic commissioner, which is very useful, because it means there's the equivalent of a president of the tribunal, and he's ensured that not only are we focused, but we work on a more collegiate basis. So, that really has helped.

The value of the traffic commissioners I feel is now appreciated by the Department for Transport. Traffic commissioners used to complain about the appalling relationships that they had with the DfT. That isn't the case now; it's a healthy relationship.

Why is that? Why do you think that is?

I think it's because of having the senior traffic commissioner, and the individual who's in the senior traffic commissioner post has given a lot of good constructive advice to DfT and has done things, which sometimes could be for the DfT. We've been subject to at least two triannual reviews, and they may be looking at us again, but if all the recommendations of the last ones were implemented, we could move further forward. But I believe that they are listening, and I believe that there's better accountability of the TC resource. But the big problem, which has been consistent across the period, is the relationship with the organisation that provides administrative support, namely the Driver and Vehicle Standards Agency, the DVSA. There's a need to review who provides that support because there's some clear conflicts and there's some very real tensions, and that's been ongoing for the entirety of my time as the traffic commissioner. 

So, that's not been a change; that's been a constant negative. 

Yes. And got worse in some ways. 

Really?

Yes. 

Okay. And why has it got worse?

There have been—. I believe it's got worse because the morale of staff is low. The traffic commissioners in the past would have given some credit to the organisation, the DVSA, and given them an opportunity to provide support. But there's been a consistent lack of accountability. We've been asking for explanations relating to lack of transparency on accounts and so on, and on the fees. But we've been fobbed off with nonsense, to be honest.

Really? Okay.

It needs a review. There's a need for a review of the administrative support. But the relationship with DfT is very good. 

Okay. Thank you. And you're going to remain in post as deputy traffic commissioner. That's right, isn't it? 

Technically. 

Yes. So—

I'm smiling while I say this, but, technically, acting traffic commissioner because there's a need for someone to be acting traffic commissioner—a traffic commissioner in each area so that they can be a signatory on the licences.

Sure. Okay. And there's already been one recruiting round that hasn't been successful. Has the criteria for the post been appropriate—the criteria that's been advertised for the post? Is that appropriate or does that need to change, do you think?

Yes, there is a second recruitment round, and clearly I've not been involved in the minutiae of it, and quite properly so. The Welsh Government's involved, I should add, along with the DfT. The profile of the post has been raised and the latest recruitment round makes it clear that lawyers applying will have an opportunity to upgrade their Welsh language skills and there'll be specific training to upgrade if they're not already fluent, and I think that's—. Well, I know that that has brought a lot more interest. So—

Is that the change to the first advertising round? 

Yes. It's not for me to word the advertisements, but the way the advertisements were worded might have put off people, and the way the advertisements were worded the second time around has encouraged people to apply, and I think that—. I understand that there's a healthy number of candidates. I clearly haven't seen the details because I'm not the person who deals with that. 

Understood. Bethan Sayed. 

There is a memorandum of understanding, which works, but there is a problem with the legal framework. The legal framework is a document that sets out the law and it's signed up to by the Secretary of State and by the DVSA and by the senior traffic commissioner on behalf of the traffic commissioners. If I'd look for a change, I think it would be very helpful if there was an annual assurance process whereby the Welsh Government and the Scottish Government and the Secretary of State were all assured that the DVSA had complied with the requirements of the framework agreement, and I think that's where some of the root problems occur, because of a lack of adherence with that legal framework, which is really very important.

I don't line manage staff. I think traffic commissioners have pointed out that there are—

It's a good question and I believe that they should be held to account. There is a legal framework, which is not being properly adhered to. There have been two triennial reviews. I understand that there's going to be another review of working arrangements and there might be an opportunity for Welsh Government input into that, and I'll gladly give my views to officers within the Welsh Government to assist, if necessary.

It's why I say that if the—. My personal view is that if it wasn't the DVSA that provided the administrative support and it was another organisation, they would overcome a lot of the problems, because there are occasions when there are conflicts with the DVSA. The reason I'm being reticent in being too specific is that I don't want to get involved in politics, but I also am conscious that I don't line manage individuals and so I just want to be careful, because of the judicial role that the traffic commissioner has. I should say I have made some references in my previous annual reports, both to the Secretary of State and my reports to the Welsh Government, where I've not been very specific, but I've alluded to particular problems, and I could separately go through the detail of why I made those comments at that time. But they all come round to the same point: that for a sustained period of time, there have been issues relating to that relationship. I should add—I should emphasise—that I'm not talking about the examiners on the road. The traffic examiners and the vehicle examiners in Wales do an excellent job and are very much valued.

Well, new staff have been appointed, but they're yet to take up their positions, so there will be staff—

When were they appointed?

Within the last few weeks, I understand, if not days. It's certainly very recently. So, they're civil servants who will take up posts in Caernarfon and they're fully bilingual. And I expect that it will take time to train them and I will assist in that training programme. My successor, clearly, will have an input into that. But your question relates to why has it taken time. I've alluded to it in my answer to my previous question. We're talking about different cultures. The Welsh Government is different to the DfT, and the DVSA is another organisation again, and it's the DVSA that has the legal responsibility. I've referred in my report to costs and recharges, and there would accommodation issues as well as staffing issues—issues relating to gradings and relating to costs of accommodation and so on—

There are staff in Birmingham—excellent staff; I'm not criticising them—who provide the support. There are three members of staff who provide the support for the public inquiries and the driver conduct hearings. To have those staff in Wales has actually taken this time, but don't forget that it's taken time to have an agreement to have a separate traffic commissioner for Wales. If you look at Hansard and the Westminster Parliament, there have been discussions—. I can point to questions in Parliament going back to 1932—a long time—about having a separate traffic commissioner for Wales. So, it's taken 80 or so years to have a separate traffic commissioner. It's almost exactly three years ago that it finally came about that there was a separate traffic commissioner for Wales. Now, we're about to have offices and staff within Wales. In terms of the future, that's very positive. If you're saying to me that it's taken far too long to come about, the answer is, 'Yes, I agree'. 

Currently, in south Wales, we use Cardiff Crown Court. Staff have been very helpful there. We've not been able to use the magistrates’ court or the civil justice centre. It's a problem elsewhere, in as much as the traffic commissioners currently have their own tribunal facilities, but the DVSA want to move them out into the HM Courts and Tribunals Service estate, which will be a problem. The problems that occurred in Wales will be a major problem. I used to be a chief officer in the courts, and I'm aware that there have been a lot of court closures and a lot of rationalisations, so it's naive to think that the courts can accommodate. In theory, if necessary, hotel rooms or private village halls or whatever would be hired to hold a tribunal. But, thus far, we can use the Crown Court, which is helpful, and the facilities in Pontypridd will be fantastic. I say 'fantastic'; they really are very good facilities, and they can also be used by others when we're not using them—or when my successor's not using them. It won't be me.

Diolch.

Vikki Howells.

Thank you, Chair. I have got some questions on the haulage and PSV industries. In your opening remarks, you made reference to the training seminars that you've been conducting in conjunction with Business Wales. I'd just like to ask you to begin with a bit more about that. You say in your report that these kinds of seminars have ceased elsewhere in Great Britain, but are being delivered in Wales with considerable Welsh Government and logistical support. So, what kinds of benefits do these seminars bring, and would you be able to give us some specific examples of how they've benefited both operators and, ultimately, passengers as well?  

I'd comment that attendance at seminars used to be mandatory when traffic commissioners ran them. When I was first appointed, we had our own seminars, and they were cut as a—they ceased as an economy measure. But, I believe that it is better to educate upfront when people first get their licences, and periodically for certain industry sectors. So, some sectors may need specialist training. It's better to do that rather than wait until they get into trouble and there's an accident and the police or other regulatory bodies investigate.

I made reference earlier to businesses existing now that may not have existed without intervention from Business Wales, and that has stemmed from the seminars. Only a quarter of the PSV businesses have availed themselves of the seminars because I don't have the staff to do the trawling—because we are talking about a large database. So, some operators haven't attended, but of those who have accessed the seminars, it's clear that there have been significant improvements.

There has been training on compliance to improve safety standards with the DVSA input, but there's also been bespoke training on bidding for contracts, for example. So, as part of a listening exercise that we carried out with local authorities and industry, it came about that there was a lack of expertise as to how to bid for local authority contracts. So, some bespoke training has been provided. Similarly, there has been other training provided in relation to a lot of HR policies and contracts generally.   

There have been improvements in retention of staff because there's been quite a bit of bespoke training provided by external people, with my assistance, in a range of areas. There's even an initiative taking place from a private source to have some specialist training for operators, particularly transport managers, on safeguarding for transport managers and for operators, because that's something where there's clearly a gap.

So, there's a range of areas where there's been some bespoke training for the PSV industry, although I should add that it's fine training the industry, but a lot of the issues that arise identify potential training for some of the local authorities as well, because there's a problem in that many local authorities—I don't want to exaggerate; some local authorities—have problems relating to their resources because their experienced staff may have left.

So, would you like to see these seminars being extended to local authorities?

The Association of Transport Co-ordinating Officers Wales does excellent work, and if they wanted me to assist, then I would gladly assist. There's some external support. I'll give you the example of the training that was provided in relation to bidding for contracts. The person who delivered this training, he could equally provide that sort of training to a local authority because there were legal obligations and the local authority might be in difficulty if it didn't comply with best practice, as it were, in relation to contracts. So, there's an opportunity, but I don't think it's my role to push a local authority. I regulate the goods industry. If I can assist, I will—. If I'm asked, I will assist, or my successor would assist, I'm sure.

Okay. Thank you. And thinking about HGV operators, there are many more of those in Wales than there are PSV operators, but you note in your evidence that seminars for HGV operators will need to await the provision of resources. What sort of resources are needed for that and what kind of benefits do you think that those seminars could bring to the HGV industry?

Well, first of all, I'd make a plea—I'm acting traffic commissioner, and there's a recruitment process for my successor—so my plea is to let the new traffic commissioner get his or her feet under the table, because they will have a structured induction programme, and they need to do that before they're running seminars. But my view is, in answering your question, yes, there's a need, in my view, to deal with the HGV industry. For every one PSV operator or vehicle, there are probably nine operators or nine HGV vehicles. There are particular sectors, individual sectors, that may merit specific training, bespoke training, because they are the ones that come before traffic commissioners. So, there may be efficiencies in having, say, scaffolders together or operators dealing with skip hire and waste disposal. It might involve Natural Resources Wales in such an event, if necessary. There are a number of bespoke HGV industries where training would assist in terms of assisting in their being efficient and viable, because it certainly works in the case of the PSV industry. In the case of the HGV industry, the difference is they tend to work on a GB basis, whilst the PSV industry is very much local within Wales.

So, what sort of resources are needed to make these seminars available, and when do you think it could be feasible to achieve that?

Well, at previous events, and having spoken to individual members of this committee, and spoken to officers from the Welsh Government, it's clear that there are indications of some financial support to run some seminars—just the cost hiring rooms and the food or whatever. I believe once the new TC's got his or her feet under the table, that if there were some resources within the office of the traffic commissioner, then they could be run. I think I've referred in my report to the fact that if you did have staff to deal with some other functions, then clearly there would be synergies. Currently, there are only three staff in the Birmingham office dealing with the public inquiries, and I've made reference to potential staff for dealing with such matters as PSV operator licensing and also bus registrations as well. But if they were all in one place, there really would be synergies. I don't have a secretary at the moment. I used to have one—I've been using one from Bristol—but she retired at the end of March, so I've not had a secretary. And there clearly are real synergies if you have staff based in one place.

My view is that if you needed X number of staff to deal with PSVs and Y number of staff to deal with bus registrations, if they were added to the existing staff, you should expect—. Well, surely there are synergies by having people—. It's about critical mass; the office is quite small at the moment, but with more staff, there should be efficiencies, and from within those efficiencies, you ought to be able to undertake the work for seminars, I would hope, and secretarial work and whatever. But I accept that all of that would be subject to review, and the Welsh Government, naturally, would want to come up with an analysis, because you don't want to waste public money if you're going to provide the resources.

Oscar Asghar.

Thank you, Chair. I think you've already given an answer to my question on the bus service registration. You've already advised the Welsh Government that you need two extra staff for the registration. What is the basis to—is it really sufficient to have two staff for Wales's traffic registration?

At the moment, all registrations across England and Wales outside of London are dealt with by approximately three and a half full-time equivalent staff in Leeds, paid on an admin grade, which is £18,000 to £20,000 or so. The staff numbers are small. I've referred in my report to the fact that there could be 400 applications a day in peak periods, and many of the applications will involve 30 or 40 pages, which, merely, when they're asked—and they'll merely say that there's a change to the route or a change to the timetable without being specific as to what the problem is. And many of the problems are brought to the attention of the staff by a local authority. So, there is no real scrutiny, in my view. And I'm not criticising the staff, who do an excellent job with difficulty. And I've commented that the current function is little more than a postbox, so I'm saying it needs more. I'm very conscious of the fact that when I've spoken in the past, a few years ago, to Traveline Cymru, they've said that they end up having to try and extrapolate from the poor information that's received—that's my word, 'poor' information—to ensure that the information that they impart to the general public is in a more legible format. 

If the current equivalent for the postbox and doing little more is a half a member of staff, as a rough ballpark figure, two members of staff should be able to do it. But if someone said to me, 'It's actually one and a half members of staff', or 'It's one member of staff', or 'It's two and a half members of staff', then fine. It's in the ballpark figure of about two members of staff, I would suggest, but that's exactly what would be analysed by Welsh Government staff before such support was provided. It depends on what the staff do as well, you see. At the moment, if the staff were able to say, 'Your registration isn't clear'—. I mean, famously, there were some registrations that ATCO pointed out to me a long time ago, saying that people in Leeds have accepted registrations from a place called 'Ysgol' to another place called 'Ysgol', and actually, it's the Welsh for 'school' and there is more than one school in Wales and where does it go between the two places. You might say that's a silly example, but it is straight to the point, apart from the language issue, that some of the registrations are pretty poor in terms of quality.

Oscar, do you mind if Bethan comes in and we'll come back to you?

I just wanted to ask on this, then—I'm not sure I'm understanding correctly. If there is a registration of a change to a route, does that mean because they only get that through and they're not scrutinising it, there may be some routes that are changing that you would like for people to be able to question, but that's not happening at the moment? For example, if you take a location off a route, or if you change it so that somebody's disenfranchised in one area. That's my understanding. 

Can I say that many people—? I'm not trying to be rude; I've got to be careful how I say this. Years ago, traffic commissioners decided what bus route should run, but that stopped with deregulation in the 1985 Act.

I understand that.

But what I believe we are entitled to know is what is the route and are you giving the notice. There is a requirement for 56 days' notice, and it's important that local authorities are consulted and it's important that Traveline Cymru is notified so it can communicate that information. So, it's not a matter of querying whether there's a justification, but actually asking, 'What is it that you're doing?', and if there's a change, 'What is the nature of the change?'

Okay, I understand. Sorry to—.

Thank you. Are bus registrations best handled by the traffic commissioner's office, given that the committee previously heard evidence suggesting that they should be handled by Traveline Cymru?

I've said in the past that there is no reason why bus registrations are dealt with by the traffic commissioner. My suggestion is that, in the short term, you consider, if you're going to have it dealt with in Wales, having it via the traffic commissioner, because the Deregulation and Contracting Out Act 1994 kicks in, in that some matters will need to be referred to the individual traffic commissioner if there is an exemption, because you need an appeal, effectively, and you can only delegate to someone who's a civil servant, and I think Traveline Cymru are not civil servants. There are ways round that, because the legislation relating to support for traffic commissioners—. And I've referred to the DVSA already. The DVSA staff are civil servants, but, in theory, the Secretary of State could say that staff supporting the traffic commissioner for bus registrations are Traveline Cymru or other people. But there are a range of organisations within Wales who could perhaps undertake this task. Traveline Cymru are one of them, I fully accept that. My comment is: why don't we just get on with having the bus registrations dealt with in Wales as quickly as possible? So, my suggestion is that it's quicker and easier, without some of the legal obstacles, if you actually have it in the office of the traffic commissioner. I've also ensured that the office in Caernarfon—. It's about—I'm not sure, compared with the size of this room—it's large enough, in my view, to cope, with some adjacent facilities, with staff there.

Thank you. In England, by law local authorities need to give 28 days' notice for any change of service registration before submitting the application. Is this an effective approach that the Welsh Government should consider in its proposed public transport (Wales) Bill?

The short answer is 'no'. It can extend the 56-day period to 76 days, and that results in more short-notice applications. I suggest that, because of devolution, because you don't have the bus services operators grant but you have the bus services support grant, you can have a far more sophisticated way of dealing with notices. The system in England is one in which one size fits all. There's no reason you shouldn't, if you work through the local rules effectively, say, 'Well, you won't get the same rate of BSSG if you don't liaise effectively with the local authority.' BSSG is an incredibly powerful tool. You should be setting the service standards. If you merely say, 'As long as you've given the notice, it's 56 days, 72 days or whatever,' that's one thing; why not just say you, the Welsh Government, decide what the service standard is, and if you want that BSSG, you meet that service standard, or if you want to get a higher rate of BSSG, you meet that service standard? So, I say you've got potential tools, so you could be more powerful so you can meet the needs of local people, and BSSG could, in theory, have different rates in different areas—rural areas with particular problems relating to viability could have a different rate. It's a very powerful tool, and the very clunky notice periods that apply in England—outside of London, where it's different—I wouldn't go down that route. You can, but you would just get something that is clunky.

So, what should the Welsh Government consider in their public transport (Wales) Bill in terms of what we're discussing now?

In terms of bus registrations?

In terms of the information flow, as well, to local authorities, because we've got an opportunity now to influence that Bill ahead of it coming before our committee early next year. So, what could be included in that Bill?

You could include in that Bill provision for—and I can give advice to your officers later, perhaps, in terms of the detail. But there could be provision so that, if a local authority does not receive information on that service standard, information that suits the local authority, which is meaningful and timely, and if necessary after consultation—sometimes you may say there hasn't been adequate consultation—you can put in provisions whereby the level of bus services support grant claimable would be at a different rate, depending upon the notice period. Similarly, in terms of registrations, you may decide—at the moment there's a fee for bus registrations, but it may be, in terms of administering the fees, it's actually simpler because it just flows through. Rather than doing the paperwork for the fees, you say, 'Forget the fees', and you just say you get a higher rate of BSSG if you register and are meeting a particular service standard. Does that answer your question?

It may do. I'll have to dive into that—there's a lot of detail there I don't quite understand. But what I'll do is I'll have a look at that afterwards, because it might be that we can come back to you ahead of our scrutinising the Public Transport (Wales) Bill and ask you for some further detail on what, in your view, should be included in that Bill, with regard to what we're talking about. Joyce Watson.

Good morning. I want to look around the area of devolution, and you have referred to it in relation to PSV operator licensing and certain DVSA functions, but at the moment, of course, they are reserved matters. So, I think what we would like is to understand what you mean by 'devolution'. Are you actually referring to a transfer of administrative functions only to the Traffic Commissioner for Wales, or are you actually referring to a change to the legal powers and competence of the Welsh Government?

There are different answers depending on whether I'm referring to supporting the traffic commissioner, support staff—PSV support staff or the office of the traffic commissioner—and the DVSA enforcement staff themselves. That's one of the questions that I've been asked about and I've been asked to give a view on. If you were talking about the enforcement staff at the roadside—the excellent staff at the roadside who check vehicles to ensure that the tachograph rules, the drivers' hours rules are being complied with, and that the vehicles are safe and have proper braking systems and so on—that would require legislation because that is something that isn't currently a reserved matter.

But the reason why a Minister and civil servants have asked about this is because, clearly, there would be real benefits to Wales and to those who work within Wales if there were greater synergies. Relatively recently within England, Highways England has been working with the DVSA, so they've been assisting with the stopping and they have undertaken a lot of work; if you read the trade newspapers, they've been doing a lot of joint enforcement work. Now, there isn't that provision at the moment. The equivalent of Highways England is devolved, but the DVSA enforcement staff is not devolved, which is why, in the note that I've provided, in my report, I've commented that, although there's a good case, although you need to look into the detail, to look to have devolution of the enforcement staff, the excellent enforcement staff within Wales—I don't know the exact numbers; 20, 22, 23 or thereabouts we're talking about—I suspect it's not of value to Wales to have devolution of the MOT function, and I suspect the industry wouldn't welcome it either, and there's no real benefit in that. But some of the enforcement functions if they were devolved would make it much easier for the Welsh Government to bring about changes and to enforce the road network, and there are some clear synergies that could occur. But that's something that would need to be investigated, I appreciate that. But that would require legislation, in that it's a reserved matter. The issue related to staff supporting the traffic commissioner is different.

I think you've more or less answered on the specific aspects of both the PSV operator licensing and wider DVSA functions that might move to Wales. I think you've mentioned some of that, but is there's anything else that you want to add about the specific aspects, rather than the staff, of both PSV operator licensing and the wider DVSA functions that could move?

If the PSV operator licensing was administered from Wales—but I'm assuming here that the fees would go to Leeds and they would be processed and by IT, the magic IT, they would come with in Caernarfon—I believe that it would be helpful for industry and for the people of Wales, because you'll be able to deal with matters quicker, or the TC will be able to deal with matters quicker—there'll be quicker processing and better, much more thorough, scrutiny, which is not available at the moment with the resources that they have in Leeds. So, I do believe that there would be some real benefits and I know that the Welsh PSV industry has supported that, and I believe it's something that's worth investigating, at the very least.

Okay. So, what is the benefit, then, of those changes to the public?

If there's an application for a new licence, it can be dealt with more speedily; if there is a problem with the licence, it can be dealt with more speedily. If there's an issue relating to a transport manager, again it's a matter of processing it quickly and efficiently. So, the public just see the outcome. If there's a problem with buses or a bus service, at the moment it takes a large number of months for it to be resolved, and so the problem becomes exacerbated.

So, it's efficiency and, effectively, it makes it more efficient and more accountable.

Yes. I'd also say that the law is slightly different in Wales, with the Learner Travel (Wales) Measure 2008, but you, the Welsh Government, clearly have a particular interest in the PSV industry in a way that, because of the number of regions in England, they're not able to express that interest, and so it would be easier, when it comes to seminars and so on, to bring about change and it would be easier to regulate if the PSV matters were dealt with in Wales. I'll make it clear, I'm not suggesting the same for HGVs, because it would not benefit the HGV industry and because that works on a totally different basis. They're two very different industries. I'm just talking about the PSV industry.

Okay. You stated earlier, and have repeated it, that there would be another additional member, maybe two, of staff required for the office of the Traffic Commissioner for Wales, and they might handle the Welsh PSV operator licences. But on what basis have you reached that conclusion? I think you've talked us through that, but the ultimate issue here is who will fund it, if these issues are deemed non-devolved. Who funds the post? Have you any comments on that? I don't want to put you on the spot if you haven't.

No, I understand the question. At the moment, it's approximately half a member of staff, full-time equivalent, plus there are line managers, so you factor in an element for the line management. So, approximately half a member of staff. So, if you did have two staff doing it, then the Welsh Government would need to fund one and a half staff. At the moment, the Welsh Government fund the difference in grades—there are issues relating to the grades—for the three staff in Caernarfon, because they are paid at a different grade to some of the staff elsewhere, for reasons that were explained earlier. So, the Welsh Government currently—it's in the memorandum of understanding—provide an element of funding.

What officers of the Welsh Government have said to me is that they understood my comments that it would make the industry more efficient and, if you had an efficient office of the traffic commissioner, which is answerable and transparent and it ran efficiently, properly and with proper probity and so on, then it would be very much cost-effective in terms of total public moneys. If you just think of the moneys that can be wasted—I don't want to say 'wasted', but wasted, if it takes a long time to bring a bad operator to a hearing to revoke a licence, then more damage can be done in that period, and that's why having an effective traffic commissioner with support staff is, in my view, something one should strive for. You don't want to waste public moneys, but it's been put to me by Members of Parliament, Assembly Members and civil servants, and industry at various times, that they see that there could be real benefits if Wales could administer the PSV licensing. I made the comment that I believe that, if the current resource is half the member of staff, in my view—I am human resources qualified as well; you'd want to do your own analysis—I think two staff could do it. But you'd also use those two staff with other staff to be able to run seminars for the PSV and the other industries as well, if you had that.

Thank you. 

Hefin David. 

You're chairing an expert panel with regard to nitrogen dioxide pollution in Cardiff and Caerphilly. What is the membership of that panel?

It includes a range of experts who've been appointed, who've been asked to attend, who are—many of the are professors of public health, air quality. Some of them sit on the equivalent panel that covers England. There are economists. There is a range of expertise. I can get it to you. I didn't know you were going to ask the question, but there are a range of experts because they need to—

But it's Public Health Wales and academics—

Yes, and economists and transport specialists. 

So, the remit of it goes beyond just traffic control; it's talking about air pollution related to traffic.

Yes. It's probably helpful to say that I was asked to be chair of the panel, and it's not part of the remit of a traffic commissioner. 

No, I understood that. 

And I said I'll only do it if I wouldn't be paid expenses for doing it and don't claim any fees—for as long as I'm paid full time as the traffic commissioner, I just treat it as a traffic commissioner position.  

But its remit goes beyond traffic commissioner responsibilities. 

It's nothing with the traffic commissioner, technically. It covers a wide range of areas. It's there because ClientEarth sued the UK and the Welsh Governments over nitrogen dioxide pollution, and there are—I can't remember the exact figure—26 million people [correction: 26,000] estimated that die each year as a result of poor air quality. 

But I'm assuming this is referring specifically to Hafodyrynys. Is that—?

Hafodyrynys is one of them. It's also in Cardiff as well, quite near here. There were particular problems. There are two authorities that are involved in the litigation, and it's been to the High Court on several occasions, and originally it got to the Supreme Court. In England, they have a two-tier approach to advising the Government and to the various local authorities. In Wales, there is one panel that deals with much of the similar work, but, of course, you have to take into account the Welsh legislation as well—the future generations legislation as well. So, it's a slightly different approach.

So, with that in mind, what are the recommendations going to be from the panel? 

Can I say I'm very conscious that because it's involved litigation, and there has been a lot of litigation—? It has made recommendations to a Minister. I'm reluctant to say specifically what they are because I don't want—

You don't want to pre-empt the Minister's announcement. 

Matters can be ongoing. The work of the panel is ongoing, and it's an area that's involved a lot of litigation, and I don't want to inadvertently say something that would cause a problem. What I would say is I've really enjoyed it, because I'm working with people who have expertise, and it shows to me the importance of air quality and it's helped my thinking as a traffic commissioner. I found it valuable.

So, from our point of view, from a scrutiny point of view, do you know what opportunities and when we will have the opportunity to scrutinise the outcomes of the panel and the decisions they're making—well, the recommendations they're making? 

I will ask the civil servant in the environmental team when I get back today. 

Okay. I think it might be helpful, Chair, to have a briefing on what the panel is doing and when ministerial announcements might follow from it, because I suspect there must be ministerial action as a result of what you've done.

The panel makes recommendations to the Welsh Government. The idea is that the Welsh Government needed an independent panel because of the litigation, and so it's independent and it makes recommendations, and, clearly, some can be more sensitive than others, and some can be simpler than others. 

So, whether that's the Minister for the environment, or the Minister for infrastructure, we would expect to see some ministerial announcements from that. 

Eventually. 

Okay. So, some detail on that would be helpful to follow up. And, with regard to proposals for decarbonising transport, which was in the 'Prosperity for All' document, how realistic is the proposal that bus, taxi and private hire vehicles should be zero emission by 2028?

There are huge technological challenges in meeting that target. In the case of rural bus services, if you're talking about the whole of Wales, just think about how many charging points there are in rural areas. There are some very real problems. In the case of city areas, until a few months ago, there were no provisions for any electric buses at all. I know that's been addressed, and there are now—electric buses are beginning to be rolled out in parts of south Wales. But there are some economic challenges and technical challenges.

So, it's not realistic at all. 

I'd say it's challenging. For the whole of Wales, are you all saying that—? Are you asking me the question whether the whole of Wales would be zero emission by 2028?

Well, perhaps I'll put it to you: to what extent will we see decarbonisation by 2028, and to what extent will it occur?

Well, some of it depends on what you do and the policies that you make. Certainly, you can make significant progress. There are many areas where, if you take the dirty vehicles out, you will go a long way. Can I say—? You've asked me a very simple question, and there is an elephant in the room. It is that, when people talk about decarbonisation, they talk about taxi and private hire and sometimes talk about trucks, but the work involved in the panel has brought it home to me that the overwhelming majority of the pollution and the carbon comes from old diesel cars. It's old diesel cars that are the elephant in the room. That is the cause of the problem. 

So, what you do with bus, taxi and private hire is marginal. 

No, I'm not saying it's marginal, but I'm saying it's the old diesel cars that are even more significant. 

Yes, but they wouldn't be taxis, because taxis would be required to be up-to-date vehicles.

They haven't been required to be up-to-date vehicles. That's the point. Many of the taxis that you see in cities will be very old, diesel-polluting taxis. One of the reasons why—I think it's in my report—I've said the sort of thing you could do if you've got an area where there are particular air pollution problems—and I'm not saying you'd do it in every area—. If there's a problem relating to air quality in one area, a local authority might say they will only allow taxi and private hires to use a bus lane if they meet a particular emission standard. I believe you've got the legal powers to do that. There was a test case in London. 

Okay. That's very interesting, actually, and is something that we'll probably explore later. 

You've got some flexibility, and I'd also want to point out that, as the regulator of the HGV industry, I'm conscious there's an image that it has, but a Euro 6 engine will churn out of the exhaust cleaner stuff than what's in the ambient air—that's where it's dirty; I don't mean in the countryside. But it's—. The Euro 6—. It's actually about reducing pollution, as well as eliminating pollution. 

So, do you think enough has been done with regard to decarbonisation of freight?

I think there are issues relating to decarbonisation of freight. In the long-term, you cannot—and it's just not for Wales, it's Westminster as well, I think—get around the fact that, although industries may not welcome it, there's a need to really consider modal shift. You're going to be, in the longer term—on local roads, are e-bikes and e-cargo bikes going to be used? And are they going to be—? It's about using technology, and are they going to be using connected autonomous vehicles in certain areas? I can't see many of the Welsh roads where that would be particularly suitable. But there are a range of issues that should be considered for the haulage industry. Hydrogen fuel rather than diesel is one of the options; electric is also an option. But, if you ask me the question in five years, huge progress will be made because, when I've been reading the trade press, there are always articles about the improving technology.

One thing that seems to me—and we could allow for technology to incrementally change things, and we could be on that path to that change naturally. But it does seem to me you're suggesting the Welsh Government isn't using all the powers and all the levers available to it to decarbonise public and freight transport.

Well, public transport, there are things—. In my report, I've made reference to the fact that, very often, a local authority will make a decision relating to a matter. And, if it looked at what the neighbouring authority was doing, it would make a better-informed decision. It's why I—. I gave my view on the consultation paper—the White Paper—relating to public transport and joint transport authorities. And, very often, the problems can be exacerbated by a local authority not necessarily communicating effectively with the neighbouring authority.

So, you've got frustrations about the prospect.

Yes. Looking—. If difficult decisions are to be made, it's better to make them on a wider, strategic basis, rather than having them local, where they'll be—

And the Welsh Government hasn't grasped the opportunity to do that to an extent that you would expect them to.

Can I say—? In fairness, the Welsh—. I haven't been given copies of all the documents that you've referred to, because I don't need to be as a traffic commissioner. There's no duty for people to do that, and I don't have—

But we are interested in this as an issue—

Yes, you are interested. I've indicated to civil servants in Wales that I'm happy to assist in whatever way I can.

Okay.

Bethan Sayed, quickly.

Yes. I just wanted to ask quickly, before the end, in terms of when you put down in your paper about future reforms, you mention the law relating to taxi and private hire licensing in Wales. And of course that's been extrapolated from the reforms that the Welsh Government are going to do in relation to buses and to public transport. I'm just wondering your opinions on that. I know they're waiting for outcomes in London, but I wanted to understand—. I think that's in relation to disability. I just want to understand what that will mean for Wales, because I'm getting a lot of people who are in the taxi industry frustrated at the delay, once again, of any reforms that they desperately need and want. So, if you can give us your opinion.

Taxi and private hire law is devolved—it's not reserved. And I believe that you can and should bring in changes. A number of them were recommended by the Law Commission. One or two you couldn't bring in. The Law Commission recommended nine-to-16-seat vehicles be licensed by local authorities rather than by the traffic commissioner. The traffic commissioner's got no problem with that—I had an input into the Law Commission, and I support that—but it would take primary legislation from Westminster to bring that about. But I believe that there could be far more synergy between private hire, taxi, all the app organisations—Uber and other ones—and the section 19 permit, and the section 22 permit, and the PSV operator licensing. I believe there should be common safeguarding, I think there are real issues relating to safeguarding where there are individuals who manipulate, who shouldn't be dealing with, getting in front of, children, but are able to do so because of the different standards and approaches—

So, I'm trying to understand—that's really good—

Huge—. I think there is a huge amount we can do.

—if there's a missed opportunity. Sorry? Is there a missed opportunity, therefore, that it's been extrapolated? I just want to understand if you've raised those concerns with the Welsh Government—that it should be a part and parcel of this transformation that they're doing in relation to buses and public transport.

I've been quite specific in going into more detail than what I've just talked about, but that's been in the last couple of years. What I've sought to do is not repeat them in this report. I'll gladly speak to you on a one-to-one if you want.

No, it's not about the issues—I get them, and I understand them, and I agree with what you're saying. It's just more about the pace of change now—that they're not going to be in the initial reforms that Welsh Government are making.

But I think it's for politicians to decide which are the priorities. There are lots of—. There are lots of—. There are lots of—.There's an awful lot I've talked about, and the question is which things are going to go forward first. Some of them can be academic.

That's a very politician answer, mind. [Laughter.]

I seek not to be a politician. [Laughter.]

Well, I guess.

Well, you are retiring, so, you know, you could become a politician.

To be a deputy. 

Yes, that's right. Well, can I thank you, Nick Jones? You've always been very helpful to us as a committee. You've attended our sessions, and always provided a great deal of evidence to other inquiries as well. I'm not sure if I can wish you well in your retirement or in your new post—for your future, I wish you well for your future. 

Thank you. Can I just comment that I've welcomed talking to you, but I'm very conscious of the fact that I've always known that the legislation requires a date for when I had to retire by reason of age, and I don't know who my successor is going to be. But I've probably pushed the boundary in terms of saying things, so there shouldn't be an expectation that—. I've said my successor needs to get his or her feet under the table in terms of running seminars, but my successor will need to ensure that he or she is regarded as independent. So, I'm saying that they may be reluctant to publicly say as much as I have. I've probably been—. Well, I've been conscious of the fact that I'm retiring. 

Well, we like witnesses that tell it as it is and are very open with us. So, we hope your successor is as independent as yourself in terms of being open with us and tell us what they think as well. Thank you very much. All the best for your future. Thank you. Diolch yn fawr.  

Diolch. 

Thank you. 

We'll take a 10-minute break. 

Welcome back. I move to item 4, in regard to our inquiry on public procurement in the foundational economy. This morning, we've got Ian McPherson with us. Ian, if I could just ask you to introduce yourself, a little bit about yourself, just for the public record, that would be helpful to start with?

Thank you. Thank you for inviting me. My name is Ian McPherson, I'm the managing director of MCP2. We're a very small, niche consultancy house. My background is I served in the armed forces for 30 years—I know I look too young for that, but, genuinely—as a logistician and in supply chain, and converted that into a number of jobs in local authorities, both in England and overseas, and did a lot of work in the Horn of Africa doing audits for the Government. We only deliver in the procurement space and in supply chain, and in the public sector interface with the private sector. Our current contracts include a contract with Cardiff University on their commercial improvement programme, Northern Ireland Water, Portsmouth Water, the Department for International Development, and a number of other housing associations across the country.

Have you had any experience of work in Wales at all?

Yes, indeed. We have a current contract with Cardiff University, as I was saying, and I did a lot of work with Cardiff city council.

Yes. Lovely. I wonder perhaps if you could outline some of the common challenges that public sector organisations, local authorities and housing associations face when they're trying to undertake effective public procurement.

The biggest problem they face is one of risk. Public procurement regulations, as enacted by Parliament, which flow from the European legislation, which is renewed every two years, is quite draconian if it's followed to the letter. That leads frequently to a lack of inflexibility and a lack of fear. The public sector, in its broadest possible sense, is scared of being called to account for failure to comply with legislation. That makes you less flexible and less commercial in your approach. So, what the public sector have a habit of doing is complying with legislation and ending up with the wrong result. But they won't go to court; they will comply with the rules, but they'll end up buying the wrong thing very, very smartly.

How do we overcome that? 

You need better training and you need more commercially minded individuals. The public sector is a business. There's a perception that public sector is bad and private sector is good. That's wrong. Secondly, there's a perception that you are not a commercial organisation in the public sector, and you are. The difference is the relationship with the purchaser of the goods that you sell—they pay you upfront. That's a pretty good deal. So, if I want my bins emptied in Cardiff, I can't get Newport to empty them because they do a better deal; I'm stuck with Cardiff and I pay my taxes. But it's still a commercial relationship. It is important for the public sector to be commercially astute and cute, and there are different ways of doing that whilst complying with the legislation. It is easy to comply with the legislation and tick the right boxes, but not be commercial in the approach. That's about not only training and education of the commercial officers, but it is everybody's responsibility in the public sector to act more commercially. 

Hefin David.

So, with regard to local procurement and EU rules, are there ways of getting around those and still maintaining local procurement?

'Getting around' is probably the wrong term, but I think there's a way of applying them in a more sensible approach. So, for example, there's a very interesting piece of evidence in here, which has come before you, which is very short and very damning of the public sector, from a building company, saying, 'When we try and work with the public sector, we have to enter into huge consortiums. You want us to be able to work across Wales. We're too small. We can't do that.' And that is because we try and be clever and make it easy for local companies to bid, and then say, 'We encourage small and medium-sized enterprises with a turnover of more than £5 million.' Well, that’s clearly bonkers.

Secondly, if you are over-rigorous with the application of the paperwork that is required, it’s fine if I’m a multinational company; I’ve got a team of lawyers and accountants who can fill all the forms in. If I’m a small company, I can’t. So, there’s a way of bundling those contracts—

Become a collaborative—

Correct, but clever collaboration. You can’t say, ‘We will only appoint a company that starts with the name Davies and lives in Cardiff’. That’s illegal. What you can say is, ‘I want anybody who delivers this contract to be able to operate within 5 miles of the delivery of the contract.’ So, there are different ways of skinning the cat to get the same solution.

I know Joyce will ask some questions about how you sustain SMEs long term over collaborative contracts. I’d be interested to hear your answer on that, so I’m not asking that question. I would be interested to hear the answer to that later.

With regard to the whole concept of local procurement, Professor Karel Williams gave us some evidence that said it was a dubious objective if it is purely about local procurement, because what you could end up doing is creating long supply chains that actually lead out of the country—Morrisons supermarket being an example.

Unfortunately, we measure what we can. People bang on about the Bolton method and other methods of measuring local procurement. So, if I go down to a local shop in Cardiff and spend £1, you can measure that. But if I’m spending it in Waitrose, the money’s not coming back into the local economy. Or is it? So, there’s a perception if you give it to a small or medium-sized enterprise who is local, but who then spends all the money somewhere else, that’s not of benefit to Wales. Whereas I might be contracting with a large company—Morrison, the building company—where they employ local people. So, you’ve got to be—. It's quite difficult—

But the only thing you're procuring there is the local wage; you're not—

Absolutely correct, and the danger is it's easy to measure the local wage. It is more complicated to measure the local economy. And we have to face up to that challenge, and there are different ways of measuring those metrics. We can put contractual ties into documentation to ensure that we measure what we want to measure, no matter how difficult that is.

Okay. So, you need to set your objectives at the outset. With that in mind, the Welsh Government are coming up with a new strategy for local procurement. How would they achieve what you’ve just said, in that approach? 

By thinking about outcomes not outputs.

Right. Okay. 

So, your outcome is to deliver a new building—that’s an easily measurable outcome. But you want people who live in that building to be satisfied with the outcomes, and you’re also trying to engage with the local economy and encourage SMEs. Well, if you don’t make that a condition of the service that’s being delivered, then it will not be delivered, and it will not be measured, and it will not be managed.

So, with that in mind, what practical steps would the Government take in their document to achieve that?

So, you can measure most things—

I'm sorry if I'm trying to ask 'why' all the time. 

I understand. So, you can measure most things in a set of tender documents, including the—. If you want to encourage the use of SMEs in Wales, then you can make that a scorable metric in the tender documentation. But you’ve got to express what you mean, and it’s got to be clear and concise. And dare I say—I know I’m in Wales, but in Anglo-Saxon—'Don’t overcomplicate it.' What the public sector tends to do is write a document that is really difficult for people to bid. The aim is to encourage people to bid, not discourage them from bidding.

Okay. So, when we are scrutinising the Welsh Government, we are looking at those outcomes and what their overarching objectives are.

So, the difference would be, if you said to the Welsh Government, ‘We’re going to measure your outputs so that 62 per cent of all contracts are awarded to companies registered in Wales', that is not the outcome you're trying to achieve. The outcome you're trying to achieve is—and I'm not telling you what your outcomes are—maybe greater contracting with SMEs in Wales, or in an area of deprivation, or whatever you're trying to do. Then say what you want, not what you think you want, and the big risk is that translation of needs and requirements.

So, my last question, then, would be: Care and Repair Cymru have said that local procurement shouldn't be target driven and an end in itself, and what I'm trying to work out is—

Correct.

That's exactly what you're saying as well. 

Absolutely. It's no good employing local SMEs and having a building that falls over. That's of no use. So, the outcome's got to be in the round, and I would agree that targeting growth in Wales on its own is not a desirable outcome, but you can join those outcomes together.

And I think that's largely consistent with a lot of what we've been told so far.

Absolutely.

Diolch, Chair. 

Joyce, you wanted to come in.

No, it's all right, Chair.

Oscar Asghar. 

Thank you very much, Chair, and thank you, Ian, for an interesting introduction when you said private sector and public sector good and bad. Basically, it's a highly professional job, procurement officers and all the rest, and they give you the best value for money. That's what I believe. Expertise on that line is very crucial to protect public funding.

Correct.

That's right, and the thing is, eventually, in Wales, sadly, we haven't got that sort of—. There's a brain drain here. People do go other ways because the private sector pays more than the public sector. That's one area that hasn't been covered. But I'll come back to you on that. My question is: how do you define procurement and how can we monitor it? 

Okay. 'Procurement' is a misused word. There is a perception in the public sector, if I can be blunt, where everybody thinks they can buy things, and procurement is not about buying stuff. Procurement is the back end of a supply chain that's taking a statement of need and taking that through to a procurement exercise, which is the tender exercise at the end. We spend far too much time down this end of the table doing the procurement itself and not enough time working out what we really need. So, this is back to measuring outcomes and not outputs. So, the procurement business is frequently referred to as the Titanic—you ask my advice when you're already holed below the water line and we're moving deckchairs about to some nice music. Actually, the commercial decision should be at the front end and commercial expertise should be brought in at the front end. Too many public sector organisations do not invest in their commercial people and their procurement people, an example of which is a recent salary survey. It puts procurement professionals above accountants and lawyers, and I apologise if there are any accountants and lawyers in the room. It can't be helped. I was going to be an accountant, but I was busy that weekend.

But it's really important, and the reason is that a commercial decision is difficult to make. So, if I'm buying something today or tomorrow, the route to market I take will be different based on the economy in place at that time. Four and four is eight yesterday, today and tomorrow. The way I procure something will change over time as the market moves. And, therefore, you need to be quite canny and astute and to understand the market. The public sector tend to hit the button and bung a tender out, and it's the private sector's responsibility to respond. Why have we not done our research on the private sector before we go out to tender? Why are we not doing that pre-market research? Why are we not thinking, 'This is public money we're spending. I own it. I'm a taxpayer. This is my money. You look after it for a short period of time'? We need to be more commercial about that approach.

So, the procurement piece is going out to tender. You've already made your decision about what you're going to buy and why you buy it. We tend to spend a very short time working out what we're going to spend and how we spend it, and then we spend a great amount of time on a technical tender expertise with lawyers and accountants and procurement people when we should be spending more time on just designing and defining what we want to buy.

Okay, thank you. What are your views on how well public sector organisations tend to collect and analyse the type of data that would be required in order to get a true picture of spending in local areas?

Badly. It's a general term. Some organisations are very good at it and some people have recognised the need. We're working with Cardiff University at the moment, who've recognised that every Welsh pound they spend is really important to the local economy and about growing jobs in Wales. And they've done some very clever spend analysis by categorising spend. So, frequently, the public sector will tell you how much they spend, but they don't categorise it. So, there's a slight difference here between—I'm going to go back on my word about private versus public sector.

If you go to a very sharp private sector organisation, the chief executive and all their directors will know where every penny is spent and who their top 10 suppliers are. If I go into a public sector organisation, I ought to be able to ask the same question, and I don't normally get the answer. So, you should know where you're spending your money, who with, for what, and are you leveraging that expenditure. Data is key because you need to know what you're spending, where you're spending it, what you're spending it on. Frequently, the data that is available doesn't give you the answers to all of those questions, so how can you make informed decisions?

So, the public sector doesn't make anything; it provides services and it buys those services in. It commissions all of its work. If it commissions its work, then it's really important that you know who you're buying from. When we contract with the private sector, do we know how long that company's going to be in business, how much profit they are making, whether they are true to our ideas and thoughts about sustainable procurement, about slave trade? All of those kinds of things are important questions that we should know before we go to market, not—

Do you think there is a more red tape in the public sector?

Sorry?

Do you think there is a more red tape in public sector procurement?

I just think we lack sufficient expertise and investment in supply—. Because we've moved—. So, the public sector years ago used to deliver stuff, and we had large direct labour organisations. That is no longer the case. I'm not saying that's a good thing or a bad thing, I'm making a statement of fact. If you've moved to becoming a commissioning organisation that buys all those services, you need to be clever about it. What we've done is we've moved from a direct labour organisation to a commissioning organisation, and the commercial knowledge has not flowed with it. Well, let's invest. If you're spending money with third parties, which is what you're doing, then invest in the clever people to enable you to do that wisely.

Thank you.

Joyce Watson.

So, you've given us some food for thought, that's for sure. What are the barriers in moving from where we are now to where we might want to be?

What are the values?

Barriers.

Barriers. The barriers are inappropriate interpretation of the legislation. So, the public sector procurement legislation is thicker than this book. That is then interpreted into UK legislation and, indeed, here in Wales, and it's the wise application of that information.

So, I was asked earlier how we get round things. If I'm clever at what I do, I can make use of the legislation to my benefit. If I'm not good at what I do, I abide by the letter of the law and I'm not clever about it. So, training and education and, I think, effective planning. We frequently make decisions to buy something we don't need to buy because we've come to an end of a contract, we need to renew the contract. We cross out the date in crayon and write a new date in. That's not clever procurement. We need to be a bit smarter.

I think, commercial awareness in an organisation from the chief executive down. The first question I always ask when I go into any public sector or private sector organisation is: how much do you spend, where do you spend it, what do you spend it on? And I would expect a managing director of British—in fact, I know the managing director of British Airways knows that, and the managing director of Virgin Atlantic. Does the chief executive of a local authority or a housing association know that? Not always, and they should. And then you start thinking about what is our commercial picture. So, when I read the business plans and the plans of Governments and local authorities, frequently you have to dig to find the word 'commercial' or 'procurement', and I shouldn't have to dig because you are a commissioning organisation. You need to think about it strategically. 

The last point I'd make, if you're trying to shift, there is a balance of economy, if you think of a four-box model—top-right, top-left, bottom-left, bottom-right—there's too much concentration bottom left: the buying of stationery, paper, tables, carpets, because it's easily measured—back to metrics. Whereas, you want to be in the top-right strategic box: new buildings, outsourcing, all of those clever bits; we need more emphasis on that top-right-hand box.

What ought to be the role of the Welsh Government in this? Because, if we're going to, we will fix the legislation for others to implement.

The National Audit Office has given some very good advice on the importance of contract management and commercial skills in the public sector. I think that's a good reference document, and it says why it should be done and what the advantages of doing it are. I think you should expect to see a commercial plan from the public sector. There's a perception of, 'I don't need a commercial plan because I'm delivering; I'm all heart.' And, actually, you need to be private sector by head and public sector by heart, not—. If you just use your heart, you're going to get fleeced. The private sector are there to make a profit, there's nothing wrong with that; I want them to make a profit, I want them to stay in business. But I need to be as commercially clever as you are, and we need to balance that economy. And I think the Government of Wales should expect the spenders in Wales to have that knowledge and to be able to demonstrate that in a commercial plan.

We've talked about procurement, we are talking about procurement, we're talking, and you've given us, certainly, another way of thinking around it, because every time you do talk about procurement, you're right to say that it's about purchasing. Best price is often used and it squeezes out the small player in the field, which, equally then, squeezes out the local economy, to all intents and purposes. So, how difficult is it, therefore, for the purchaser to get a clear understanding of the supply chains in their area? I know you talked about data, but are there other means that people ought to be able to use?

Absolutely. So, market engagement. There is a perception in the public sector, although that is improving, that, 'I can't speak to potential suppliers before I go out to tender.' That is not true. It's only when you've issued a tender pack that your communication with the bidders has got to be completely open and carefully controlled. So, your knowledge of the market—research and observing what the market can deliver—. Together with Cranfield University, we've developed a tool called ROOADD—research, observe, orientate, adjust, define, decide—so you've done that research before you go to market, not after you've gone to market. And it's about understanding the marketplace.

If I was running a private sector organisation for profit, I would understand my market and where the goods and services that I need to deliver my profit come from. It should be no different in the public sector. Where are the goods and services? What's the market like? How's it moving? You know, if it's in construction, what's the price of steel? What's the price of concrete? What's the price of bricks and blocks and timber frames? I need to understand all of that. And that should be part of my strategy.

So, I think there are two answers to that. We need to categorise the spend: what are we spending in what category? Building materials being a category, social care being a category, children's care being a category. And I would say that the public sector spends an awful lot of money on the soft services, so adult social care and children's care. And people think you can't be commercial in doing that and I would completely disagree. We did some work with Cardiff council some years ago about looking after families in difficulty and challenging children, and we held a number of supplier days with local suppliers—local SMEs and third party, including a group of Somali people who had created a company to help deliver solutions for this. That's market engagement, and you should be doing that well in advance of your procurement. You need time. Planning means time, and too frequently we're up against a light coming in, and it's the train that's approaching at great speed, and therefore you rush into the procurement and you buy the wrong thing.

So if I could turn this on its head, because I want to, if we're talking about buying, we ought to be also talking about selling, and since it's not in the questions, I'm going to ask it: there will be large-scale, I suspect, in the very near future, disposal of assets by local authorities and ourselves, so should we be applying the same principles and be mindful that we do before we make any asset transfer? Because of course these assets are public assets and we're hoping, I'm sure, for public good outcomes.

Absolutely. So, back to my point about procurement being at the right end of the supply chain, it's about buying and selling, so if you own something, be that land or property, are you sweating that asset? So, frequently the public sector own huge capital in vehicles, plant, equipment, land, buildings; are we sweating those assets? If we're not, what are we doing with them? Those are commercial decisions and selling is the other side of the mirror to buying. So you need to know the market you're selling into. Are we selling at the right time? Are we selling? Are we leasing? Can we collaborate? Can we co-operate? So you absolutely need to be commercial in the use of your assets as well as what you're procuring. So, selling and buying are both commercial opportunities.

Okay. And collaboration amongst SMEs, how can we ensure that that's both encouraged and sustained?

Keep it simple. So, firstly, what's your SME market? How often—? I'm not talking about you, but if I'm a local authority in Wales, how many supplier days am I holding for SMEs about how to contract with the authority? Not just a website, not a button; speak to people. The only way to communicate in the commercial world is as we're doing now, eyeball to eyeball, so I can see what you really think. How are we encouraging SMEs? Don't send them out bits of paper. Talk to them. Explain to them. Help them train and educate their staff how to complete a tender. Make those tenders easy to complete. Don't ask stupid questions that you are legally allowed to ask that you don't need the answer to. A frequent question in pre-qualification is, 'Give me the name of your health and safety adviser.' So if I write 'Donald Duck' down, I have got a tick in the box. You've had to write 'Donald Duck', I've had to read 'Donald Duck', and we've complied. Do I really need to know, or do I need to know that you have a health and safety policy, you apply it and you have qualified people in place? I'm turning the question round. You don't have to fill in a form, I'm getting what I need, it's easy for you to comply. So base your tenders on the ability of smaller companies to bid, and encourage them to work together.

Hefin, did you want to come in on this?

Yes, I just wanted to explore that idea of understanding your supply chain, and particularly with regard to collaborative bids. Isn't the local supply chain so complex and fragmented that you may be able to understand what is out there, but you won't be able to understand capacity—capacity to deliver?

Then that is an excuse for not doing your job properly. The more complex it is, and the more fragmented it is, the more work you have to put in to understand it. I am trained, as are my colleagues in the chartered institute, on how to do that, and it's a wise application. So people frequently say, 'That's really complicated.' I love it when it's complicated because the answer and the question is more interesting. I accept and acknowledge that if there are only four players and they're all big, it's easy to understand the supply chain. Most supply chains the further down you reach become more complex and fragmented.

And more like webs.

Well, then deal with it. My answer is: then understand your market better. So if you look at social care, for example, it is an extremely complex and fragmented market. People say you can't do—sorry, my hearing aid's just gone 'battery', and I'm going to go deaf in a minute; I didn't check the supply chain. [Laughter.] It is more important that if it's complicated and fragmented that I know more.

The headphones will amplify for you. 

Yes. If you do need amplification, you can put it on a certain channel and you can hear a bit better. 

No, it's fine. It's years and years of being in a tank. It's fine. 

It is more important. So, if people say, 'It's social care, Jimmy will die, Baby P', well, then you need to be more commercial, because I can put more people in care if I do it commercially sensibly. It's not about being draconian or hard-nosed.  

The example I can think of isn't social care; it's the Welsh housing quality standard. You're aware of that. 

I am. 

So, I'm not convinced that enough of an opportunity was made to build collaborative long-term supply within that, and that was a failure, I think. 

Pre-market engagement. You've got to get out there. There is a perception that the private sector is sitting back waiting for you to come out to it—that 'I've got nothing better to do'. 

But it exists collaboratively. 

You've got to get out there. 

The other question I've got—if you wouldn't mind, Chair, is that okay?— 

Yes, fine. 

The other question I've got is: if you are to achieve that holy grail and get a large number of small firms collaborating to give an aggregate supply that would match anything a large supplier could do, sustaining that, keeping them together, is very, very difficult because you're talking about human beings who are looking jealously on at each other who may feel that one is making more money than the other in the short term. How do you sustain that long term? 

The word 'collaborate' is interesting in the dictionary. It's not always a rewarding experience. I think there's too much emphasis on collaboration being the holy grail, and it isn't. So, again, we're back to outcomes versus outputs. An output would be collaboration. An outcome would be the involvement of more SMEs. So, creating larger contracts that create a collaborative opportunity give you the challenge that I'm constantly looking over my shoulder, making sure that somebody is not gaining a greater advantage. Why not break that up into smaller packages and allow SMEs to deliver directly? There was an interesting example in the Horn of Africa where the department of international development turned a supply chain on its head. So, it's got an SME leading some major contractors, because they're the experts in their field, and the SME is at the top of the supply chain, with larger contractors working in collaboration with an SME. What's wrong with that? They're the experts in their field.

So, collaboration is one tool I have in my toolbox. But if I go out and understand the market, I might decide collaboration is not the right way forward, but I package my contract into smaller parcels. It's more difficult to contract manage. There is also a risk, and the NAO have recently published a report where they say that the public sector needs to spend, I think, 2.5 per cent on contract management. There is—or there was, certainly—a 'fire and forget' culture in the public sector: 'I've let a contract, thank God for that, it's now somebody else's problem'. You need to manage that contract, and you packet it, it gets more complicated.  

Okay. Vikki Howells. 

Thank you, Chair. What's your view on both the capacity and capability of procurement officials in the Welsh public sector? 

I think it's challenging. Wales is not unique in its lack of professionals available to the public sector. The public sector don't pay as much as the private sector—no surprise there. There is a paucity of skilled individuals, and I can only state that as we get involved in helping people to recruit the right people. There is never a great field of appropriate professionals applying in general. And it's considered to be frequently an administrative role—back to buying, rather than procurement, commercial, the clever end of it. So, it's almost economics, rather than the procurement activity on the right end of the scale.

I think we need to improve its profile. When I look at public sector plans, commercial should be shouted out loud and clear, and it is not always the case, or frequently not the case that that's shouted out loud. So, I think there are opportunities to improve that: reward people better, give them a better escalation through the organisation. If I look at most private sector organisations in the FTSE 100, they have commercial directors. If you look at the public sector, how many public sector organisations have commercial directors? And, yet, everything they spend—not everything they spend—or a large majority of their influenceable spend is spent with a third party. Why don't they have a commercial director? I find that staggering. 

Okay. Thank you. Do you agree with the suggestion that the Welsh Local Government Association gave us in their evidence that the key to success is the ability and attitude of the procurement officer?

Absolutely. So, back to my 'I'm complying with the legislation, I'm getting it out the door, we will not be challenged, there is no risk of us going to the court for not complying with the law, but have we been as smart as we can be?' And you are heavily reliant on the skill of the procurement professional. So, the fact that I have a qualification in something doesn't necessarily mean I'm any good at it. And I'm not being critical. There are people in every trade, and we all know this, who are better at it than others. We should be employing the very best people in the public sector, and the very best commercial and procurement people in the public sector, because the outputs are really, really important. The stuff we do in the public sector is crucial, and it's about people's lives, and, therefore, I think it's incumbent upon us in the public sector to be more commercially astute. 

Thank you. You may be aware that, here in Wales, we had, a few years ago, a Welsh Government scheme called Home Grown Talent, which was designed to shore up that expertise in procurement in the public sector. And the First Minister stated in September of last year that he is looking to a new programme to replace that. So, have you got any examples of best practice in terms of procurement skills, development programmes that we could be looking at in order to try and feed and initiate that? 

My answer, firstly, is 'hallelujah'. I think it should be supported. You need to grow talent, and I think there's a couple of things I would say. One is, training properly—I don't like to use the term 'apprentice' because it got a bad name and it shouldn't have—

We like the phrase 'apprentice' here. We've done a lot of work on—

Then I'll use it lots. So, I think apprenticeships should be applauded, and procurement is a proper profession. It's not buying. And the way to do that is to develop people doing a proper job. So, the chartered institute run a scheme where you learn your qualification on the job, and the contracts you're letting, the knowledge you're gaining, is in the category in which you are professional in. So, not only do you need to be a professional in procurement and commercial, it is ideal that you are an expert in a category in which you are managing so that you understand that supply chain. So, going back to Hefin's point about difficulty in understanding complex supply chains, if you're also an expert in that field, then you will get to know your supply chain better. I absolutely applaud getting people trained in-house and investing in procurement. 

Did you want to come in quickly on that?

Just a very quick question. Can I just ask about the esteem in which the Chartered Institute of Procurement and Supply is held as a gatekeeper for the profession? Is it seen as a—

That's a tough old question, as a fellow of the institute. It's a very strong institute. It has a very good training regime, and you would have to ask them. I think we are held in high esteem by our professionals. I think, by other professionals, the CIPS is not held in such esteem as being a chartered accountant or being a lawyer. 

I'm just thinking, as a gatekeeper to the profession, they can hold the control over the quality of the education people receive. 

And they do. So, there is a very firm education scheme, and they keep a very firm grip on it, and I would applaud that. And it's a very good institute. 

Okay. 

Bethan Sayed.

Just a quick question to end. You've already mentioned the Horn of Africa as somewhere where you feel that there's an example of something different happening, or looking at it in a different way. Are there any other examples across Britain, or across the world? We've heard about Preston, and we heard about Cleveland, Ohio, from academics who came to speak to us last week from Cardiff. So, in your expert opinion, what should we be looking at as exemplars that we can learn from here in Wales? 

I think there's a big danger. So, there are other exemplars, but what works in Cleveland might not work in Cardiff. And there's always a drag towards London, or Cardiff, Edinburgh—the centres. And what works in rural Wales won't work in Cardiff, and vice versa. So, it's a complex picture. I think examples of where the public sector has done it wisely is where it's invested upfront and they've got commercial people further up the food chain in organisations, and then the commercial landscape is looked upon seriously. I wouldn't want on record to point to areas of good or bad practice, because I'd never get another job. But there are people—

But, as a company, you must have worked on—. To give us broader outlines of what—. Not to name and shame per se, but to say, 'Look, this is something that shouldn't happen at all', or, 'This is something that we really need to see more of happening'.

I think an understanding of your expenditure—so, back to the point Oscar made about data. It's absolutely vital that you know what you're spending, where you're spending it, and what you're spending it on. But it's like any data—it's the wise interpretation of that data. And where people have been successful, they've got people who influence the equivalent of the board—the chief executive and chief officers in a local authority or a housing association—that influence at the right level, and that those influencers have sufficient knowledge of the stuff that they procure and how they procure it. And that's where you start to lever. What the public sector forget is you are frequently the largest employers and frequently the largest spenders in the grid squares in which you operate, and you don't lever that, and it's a golden opportunity.

Okay.

Thank you, Mr McPherson. Is there anything else you think you can say that adds to helping our work that's not been drawn out through questions?

No. I commend the fact you're doing it; I think it's commendable. And there are areas of best practice. Cardiff Council did a lot of work, some years ago, and I commend Cardiff University, who are trying to improve the way they spend their Welsh pound. But I think the opportunities are huge. If you think about the amount of spend you influence versus the private sector within Wales, you have a huge advantage, and you've got to grasp it.

I agree, and it's a really interesting piece of work. We had two sessions last week that were fascinating, and your evidence today. So, thank you very much for your time. We appreciate it. You should get a record of the proceedings, following this session, so, look through it, and if there's anything you want to add, or you want to follow the rest of the sessions and add further evidence, then we'd certainly welcome that. But thank you for your time today.

Absolute pleasure—I've enjoyed it. Thank you. Sorry for the hearing aid failure.

No, that's fine. Thank you. Right, that draws us to the end of our public session today. Thank you.