National Assembly for Wales

I'd like to welcome members to committee this morning, and I move to the first item. There are no apologies this morning. Oscar Asghar will be joining us shortly. If there are any declarations of interest, please do say so now.

In that case, I move to item 2, and there are two papers to note this morning. One is a letter from me to the WI, responding to a letter they sent to us, and the second is a letter from the economy and transport Minister regarding the state of roads and an update on progress. Neither need action. Are Members happy to note those two items? Thank you.

In that case, I move to item 3, and this is the very first session in a new inquiry that we're undertaking as a committee on the decarbonisation of transport. So, this morning is very much an opening scene-setting session for us, and we've got two witnesses before us who are going to help us to get our minds into gear on this. So, I would be grateful if you could just perhaps introduce yourselves for the public record.

Good morning. My name's Andy Eastlake. I'm the managing director of the Low Carbon Vehicle Partnership; the partnership is partly funded by the Department for Transport in Westminster and partly funded by our membership, which is over 200 companies spread across the whole of the UK. We work with a mission to accelerate the uptake of lower carbon vehicles and fuels, and also stimulate business opportunities for the UK. We work across the whole road sector, so everything from, effectively, electric motorbikes up to 44 tonne trucks, but we don't really spread into the aviation, rail or marine sectors.

Good morning, my name is Chaitanya—you can call me Kumar if it's easier. I work as a senior policy advisor at a think tank and charity called Green Alliance, based in London. We primarily focus on energy and climate policy, and I lead that team at the organisation. We've historically worked a lot on power sector policy, helping decarbonise that sector, and now have moved to the transport space, again majoring on electric vehicles, but expanding it to rail, aviation and other sectors as well.

Thank you, and thank you both for your time with us this morning. The Welsh Government has got its document, 'Prosperity for all: a low carbon Wales'. Is the decarbonisation of transport sufficiently prioritised in that document in your view?

I think, from my perspective, it is prioritised well. So, it's identified, and, clearly, as per the rest of the UK, transport is one of the major sectors. I think Wales is slightly different from the overall balance, in terms of across the UK as a whole transport is actually now the biggest sector. But it's also one of the key sectors that isn't actually reducing very quickly, so needs the priority and needs the focus if we're going to deliver on our long-term targets.

I think what I would say is that I think the document was constructed based on the original Climate Change Act 2008—the 80 per cent reductions target by 2050—and obviously we've now written into law the net zero target, so, if anything, the targets and the priorities are ramping up rather than reducing. So, I would say the priority is there, but we're probably going to have to go faster than is suggested at the moment if we're to meet the latest targets that the committee on climate change have proposed and that the national, the UK, Government has adopted into the Climate Change Act.

And, Kumar, if I ask you the same question, but perhaps ask you to expand and let us know any gaps you think that are in that plan.

Yes, just to start off by saying some of the policy detail, I suppose, is lacking there. Specific targets on cleaning up the taxi, private hire, public fleets and buses are definitely ambitious and laudable. How do we then put policy to achieve those targets is the next critical question, I suppose. In terms of gaps, I've identified in my notes at least about four that I think are critical. Obviously, we can look in more detail at other areas as well.

One is really making sure that the benefits of electric vehicles and electromobility actually have wider distribution across the country. If you look at the numbers today, half of all EV sales in the private market are basically owned and operated by the wealthiest 20 per cent in the country. The bottom 20 per cent owns about 4 per cent of that. So, there is a distribution where you're subsidising electric vehicles for the benefit of the rich, and also accruing the benefits of electric vehicles, i.e. lower operating costs, to a certain small demographic. Widening that distribution is really important, and that is something that—. We have produced the report here, 'Going electric', talking about how everyone can benefit from the electromobility transition. So, that's one: focusing on the distribution.

The second is on clean-air zones. It is something that has, again, taken off. If you looked at the news, from Monday this week, London basically announced that, in the last seven months since February, in fact, nitrous oxide pollution has fallen by about 29 per cent. The majority of it is because of the introduction of the ultra-low emissions zone in central London. So, there are benefits of clean-air zones, but I don't think the document, as it stands now, explores that in any detail.

The third is the bus fleet by 2028. Again, like I've said, it's ambitious. I've spent some time looking at some of the responses that the consultation received from bus operators. They do welcome this ambition, but, at the same time, they're highly sceptical of whether we will achieve this. So, I think some policy detail there as to how we'll achieve this ambitious target will be quite important.

The final thing to add—and I'll let Andy take it from there—is the upfront cost support. The thing with electric vehicles, or low-carbon vehicles in general, similar to renewable energy in this country, is it's high capital cost, low operational cost. So, once you actually procure the asset, then running it is far cheaper and easier. So, policies that actually support the reduction of the upfront cost of owning an asset—of purchasing an asset—become very important. So, really understanding how we do that in buses, in private-hire vehicles, in all modes of transport—. I'll pause there.

Andy, the Wales transport strategy is about to come forward. Is there anything that you think should be in that strategy, in terms of what we've talked about so far?

I think there's a little point of clarification that I think would be useful, because, through the documents, we talk about zero-emission fleets and we talk about decarbonisation, almost swapping the two directly. But I think it's really important to understand that, on the vehicle side, we're talking about zero-tailpipe-emission vehicles—an electric vehicle is zero tailpipe emissions. And carbon actually comes from the fuel. The vehicles don't generate carbon, so decarbonising the fuels or energy used is the way to reduce carbon. I think understanding that and also recognising, as policy is developing, that there is significant embedded carbon, embedded emissions, in the production of a vehicle and, potentially, in the recycling at the end of life.

So, the principles of lifecycle approach, lifecycle assessment, to vehicles and transport, I think, is definitely something that we will need to adopt far more widely as we go forward. The zero emissions at the tailpipe—and I think we have to be very clear about specifying zero tailpipe emissions—is really the huge benefit for air quality that we need to see very, very rapidly. So, I don't want to undermine any of the zero-emissions electrification of vehicles by highlighting the embedded carbon in batteries, but it's really important that we don't refer to a decarbonisation strategy—I think you've spoken about decarbonising the bus fleet and then you've also spoken about a zero-emissions bus fleet.

There are two ways of decarbonising. We need to decarbonise the energy. So, we could run a combustion fuel—a very low-carbon combustion fuel, a renewable diesel, renewable biomethane—in a vehicle and decarbonise it, as long as we've got very clean low, low emissions as well—Euro 6. I think that's an important aspect for us to take forward in the way that we think about our strategy. It ripples into some of the detail around how we might move to zero tailpipe emissions in city centres but decarbonise the rural elements of transport using renewable fuels where electrification is far more challenging. I think, by adopting that sort of approach, we can actually achieve our aims of a low-carbon economy in a more reasonable timeframe and a more economically-viable approach.

And, finally, a question from me on this section and I just require a short answer because I'm keen we get on to other Members to ask questions, but how can we engage, or how can the Welsh Government engage, the public? I notice in your evidence paper you talk about how the targets:

'May not be achievable in the timeframes indicated without more radical approaches and greater public support.'

So, how can the Welsh Government get that greater public support? 

I think you've highlighted in the document some very clear objectives on modal shift, moving people out of their private vehicles, and I think we need to be more aggressive about that, particularly in city centres, and engaging the public in the clean air agenda is one way of doing that, where we want to de-congest and remove the emissions from our city centres without necessarily saying, 'Thou shalt not own a car', but maybe parking your car at the outskirts of the city and using the clean public transport, high-capacity transport, in the city centre. We've got to engage people in that, and I think that's having a clearer vision of what we want our transport to be in the long-term future. And I've made this point variously elsewhere—that we probably don't want 40 million private vehicles circulating on the roads of the UK even if they are electric vehicles. We actually want a mobility system that supports moving people in the most efficient way, and, in congested areas, that is likely to be mass transit, not privately-owned vehicles. So, I think articulating that long-term vision and the steps that we are going to take to encourage the public to come on that journey with us is going to be really important. 

Okay, thank you. Vikki Howells. 

Thank you, Chair. I think it's fair to say that, while there's widespread support now for the notion of decarbonising our transport, we're far from reaching a consensus about how that should be funded. So, I just wanted to explore some issues around that with you both, starting with: are there any best practice examples from elsewhere that Wales could learn from and do you have any general ideas to kick off how you think it should be funded?

I could kick us off. One of the examples we've looked at was both in Scotland and in California. It goes back to my first point I made around the distribution, or distributive effects, of electric vehicles. One of the schemes was a rebate mechanism to reduce the upfront cost of these expensive vehicles, but they did it based on income. So, as of now, the Secretary of State for Transport and I both have the same access to the same amount of subsidy regardless of what our incomes are, but, moving forward, a revised subsidy scheme or rebate scheme should consider how incomes and how much you earn basically defines how much subsidy you get. And, obviously, a heavier weighting towards lower-income households would make more sense. So, that's one way of looking at it. 

The second is that active walking and cycling are often led by public finance. I think we've seen examples across the country. We've got a pot of money at the national level that local authorities and devolved administrations bid for and make use of. I think that needs to sustain and we need to increase or enhance the pot of money allocated for that. The National Infrastructure Commission, in its report last year, 'National Infrastructure Assessment', basically recommended spending £2 billion every year from now until 2040, to be spent by local authorities on their transport priorities moving forward—so, in Wales, as you're developing the transport strategy here, making sure that that money gets allocated by the central Government and we get to use it for our transport priorities like active walking and cycling or otherwise moving forward.

And the final thing to add would be some of the things around charging that we've spoken of. I know we're talking about how to fund it, but it often comes down to—. The transition in terms of electric vehicles is well under way. We're seeing a lot of fleet operators, for example, as a very clear sector that's adopting electric vehicles at base, but the question we seem to be being asked is, 'Is there enough adequate charging infrastructure?' Some of the recommendations of this committee, I believe, published last month—if I'm not wrong—has some good recommendations in it about being sure we fund that adequately through a variety of means; both public and private finance there would be quite critical. I've got a few more ideas on the back of that, which we can come back to.

Thank you. Andy, anything to add to that?

I'd certainly concur, and we have a very small amount of means-tested funding in that a very expensive electric car doesn't get a grant over £60,000, I think it is, in some cases. So, perhaps some more progressive means testing on those upfront fundings.

I think one of the areas, and if we look at buses, for example, as a great example, there are some quite creative financing structures coming through now, where companies will finance the infrastructure, your energy and your battery, and provide that to you on a pence-per-mile basis. And you, as the operator, fund the bus and run the operation. So, I think we're seeing more creative approaches coming in.

An important point, and Chaitanya highlighted this, the operating costs of, typically, electric vehicles are much lower, and even now whether it's a bus or a car, actually, when you spread that out over the life of the vehicle, the total cost of ownership is already more cost-effective. Where we have a challenge in things like buses is franchising of the routes, the time frame. If those routes are only guaranteed for a few years, getting back your upfront cost over the life of the route can be a challenge. So, maybe longer term franchising on some of these things, where the operating cost-benefits can be realised with confidence over a longer period of time.

In the car sector, the studies that we've done recently show that, in fact, for quite a number of operating scenarios, an electric vehicle now can be cost-effective for an individual over a period of three or four years. I think there's a challenge there in providing really good information to the market. So, we're working with the leasing companies on not just looking at your monthly lease cost of a car, but also rolling in your fuel or operating costs. Because your petrol costs, on a monthly basis, can actually be quite significant, and if you go to an electric vehicle, that overall cost might well be cost-effective already. So, I think there's information, but there's certainly taking a slightly longer term view.

I think from a Government perspective, clarity of policy, and that gives any operator the confidence to buy in to a new technology, knowing the longer term costs. So, for example, we have no vision on what the price of electricity will be as a road fuel. We know that the taxation revenue from fuel duty will be dropping, but how that's going to be replaced and how any potential road user charging or different model might be constructed is a real gap. So, there's a natural wariness to jump in when we don't know what the financial, the economic models will be. So, I think longer term clarity that's predicated on having that longer term strategy would enable companies and operators to make very, very informed decisions about technology choices.

Okay. And talking about that longer term clarity from Government, I'd just like to ask you both, and you both touched on it a little in different ways, how you think the different funding sources should play their part in terms of the UK Government, the Welsh Government and the Development Bank of Wales.

I could just kick this off with—if I can hone in on the buses sector, for example, given there's clearly an ambitious target proposed here. We've looked at, broadly speaking, the three to four models or approaches that one could take. One is you basically pay upfront, so if you're a very profitable bus operator, which isn't the case for a lot of bus operators in the country, but if you are, then you can basically pay upfront and procure an electric bus, which, obviously, is quite significantly expensive.

The second, of course, which Andy touched upon, is, you strike a partnership where someone else pays for the battery in the bus, which is quite a significant cost, and also the charging infrastructure while the bus operator just pays for the actual bus, which means you're still paying the same amount that you might pay for a diesel, but the additional cost that you layer on top because of the battery and the charging infrastructure is paid by someone else.

One of the schemes that is emerging quite effectively, and we see a lot of promise there, possibly, is what is called a pay-as-you-save transport funding scheme for buses, where public utilities—so, your electricity companies, for example, that actually provide the electricity for these buses—will procure the batteries and the charging infrastructure. They strike a deal with the bus operator in terms of setting a tariff for the amount of electricity that they'd provide to those batteries. And then, some of the things that we operate in Wales and across the country—the bus service support grant, for instance—could then be modified to ensure that they actually pay an operational fee for paying for the electricity. That's one way of doing it.

And a couple of examples that I can offer outside of the UK is a US electric bus manufacturer called Proterra has teamed up with a Japanese investment firm, Mitsui, to create a $200 million credit facility for bus companies to lease the batteries over 20 years, the lifetime of their buses. And, Low CVP, Andy is part of a programme called Zenobe Energy, which I'll let Andy speak to, but that's another example of public-private partnership to provide reduced upfront costs of electric buses, so bus operators can continue investing in them.

The final option is on capital leasing. The idea is that the local authority leases the electric buses for a period of, say, five, six, eight years and then becomes the owner of it at the end of that period. An example of that is happening already in some parts of Poland, in the capital, Warsaw. The New York Metropolitan Transport Authority, for instance, is trying out this mechanism where it leases these buses for a period and after that it basically ends up owning them. There are several models that are emerging, but as of today, a large part of it is funded by grants from the national Government. Looking at the numbers of a recent bid that three operators in Wales won worth £10 million, I think those mechanisms will continue for the foreseeable future, but these new public-private partnerships are emerging rather quickly and it's something to look out for.

Before I bring you in, Andy, just because you focused so heavily, Kumar, on buses there, do you think that the Welsh Government should consider establishing a green bus fund? Is that part of the way you were explaining it there?

It could be an option, but it depends again on how much we're talking about in such a fund. If you're expecting to attract large amounts of capital, then you're looking at some of the options that I've mentioned here in terms of bringing in private actors into the mix. If Andy can speak to Zenobe Energy, which I think is a very good example, that have allocated a £120 million pot of money, which is quite a significant amount, where they basically lease the batteries and then the operators procure the rest. I wouldn't say 'no' to the idea, but I suppose it depends on the modality of how you set it up and how much money we're talking about in such a fund.

I think, without spending too much time on buses, there are some very interesting models coming through from the private sector in terms of financing this. Those are much more likely to emerge with clarity on policy, so having a long-term vision. Having long-term clarity allows the private sector to come in with creative solutions.

I think upfront grants and perhaps a bus fund, we've seen it work quite successfully in Scotland, who have run their own separate bus fund. There are some key points that I think are critical. Firstly, that we should have a UK-wide approach to the technology and the specifications. It becomes very divisive if we try to design one bus-type technology for Cardiff, a different one for Aberystwyth, another one for Leeds, another one for Glasgow. So, a UK-wide approach to the specifications, be that for clean air zone compliance, be that for grants, ultra-low emission bus. So, one of the things we're doing within our operation is defining those standards—an ultra-low emission car, an ultra-low emission bus, an ultra-low emission truck—and those would be the thresholds against which funding, be that national funding, would be predicated. That allows the manufacturers to have some stability and economies of scale.

One of the other problems that we've seen in the past is stop-start funding. So, we had criticism of the green bus funds that were operated as a pot of money that suddenly emerged and everyone scrabbled around to pitch for that, and then everyone waited and didn't buy any buses until the next pot of money was available. So, actually having an ongoing strategy helps stability and helps companies operate with a platform, and having said that, if we look at the car sector, we saw some very dramatic step changes in buying behaviour when grants were changed at short notice.

So, one of the things that I think the public sector is quite good at doing is identifying support for a sector, perhaps in terms of grants. What the public sector tends to be very poor at doing is working out an extraction strategy for that. So, planning how we get from a grant-supported subsidised market to a sustainable market without having a cliff-edge or a knee-jerk, and that's the sort of thing that—. So, actually laying out a plan: we're going to be supporting buses or cars over this period of time, progressively removing that, progressive taxation structures.

We've seen a funding model—I think the company car tax structure is one that is actually quite progressive. It's very clear that there's a carbon dioxide benefit, and that that benefit of having lower carbon dioxide will increase as you go forward, so the penalty for having a high carbon dioxide car increases every year in a progressive way. Those sorts of structures allow people to plan for the future and allow those investment decisions to be made, and for the private sector to come in with proposals around financing structures with some confidence for the longer term.

I'm just conscious we've got quite a lot of subject areas to cover, so if I could ask Members to prioritise your questions, and witnesses just to bear in mind we've got a lot to cover? Hefin David.

Some of those things that I want to raise about the bus industry you've covered, but I'd like to just make sure that we've covered everything I wanted to. With regard to some of the solutions you mentioned with regard to the conversion of buses, what about diesel buses that still have a lot of life left? Isn't that going to be a difficult one for companies that will require a subsidy or conversion approach that may actually be quite difficult to achieve?

For this hearing, I looked at some research in terms of retrofits of some of these older diesel buses into electric. The other forms of retrofit, like Andy mentioned, for less polluting vehicles that still run on fossil fuels, you could do that in the short term, but we are looking at a 2028 period for zero emissions, so there is a leap that one ought to make here from where we are to, potentially, electric or hydrogen, depending on how hydrogen technology evolves.

Some of the numbers. There's a company called e-troFit, based in Germany, which is pioneering some of these examples of retrofitting directly into electric, making that one leap into electric. Just looking at some of their numbers, for starters, these are supported by subsidies from the German Government, so that's a clear uplift there, but according to e-troFit, the conversion is, on average, 50 per cent cheaper than an electrical brand-new vehicle. So, in that sense, you are achieving cost reductions, so it's not a cost reduction as much as it's cost-efficient, compared to buying a new vehicle.

It's still going to cost, but—

It's still going to cost you, absolutely, and it will still cost nearly the same as the purchase of a new Euro 6 bus. So, there is money involved here, there's no denying that, but it is not something that can't be done. 'How do we incentivise that, how do we fund some of that?' are the critical questions here.

Okay. Are you confident now you've covered all the actions that need to be taken with the bus industry with regard to zero carbon, or is there anything else you'd like to—

I think one of the areas that we haven't really touched on is the charging infrastructure, because the cost of electric buses is one aspect, but the infrastructure to charge them, whether that be electric or hydrogen or whatever, has to be considered. And that is one of the big, big issues, and that's obviously a longer term capital investment. Multitasking that infrastructure, so thinking about where we put that infrastructure, thinking about how we use that, not only for buses, but possibly for taxis or other fleets, so that we can sweat those assets very, very aggressively, I think, is a really key aspect. That's where I think public support to help move that infrastructure forward is critical.

When you think of the topography of Wales, it doesn't lend itself easily to electrically charged vehicles, so is that what you're referring to, introducing the charging routes?

I come back to—. I believe that the ambition for 2028 for a zero-tailpipe-emission bus fleet is very, very ambitious, and I'm not sure that, with the current financing mechanisms, the bus companies could economically support that, because it still requires them to replace their buses. But to have the funding to replace their buses, and, typically, we have funded the incremental cost of the zero-emission element—

What I'm saying is, even with that, does the technology allow for long-distance and difficult terrain routes that you might be looking at in areas like rural Wales?

Well, we do now have technologies, so plug-in hybrid technologies that have a significant zero-emission range for the city centres. But a plug-in hybrid technology that would enable you to cover the very rural routes, potentially using a low-carbon fuel so we could decarbonise our bus fleet, but it would be zero tailpipe emissions in a more focused way in the city centres where we have the very significant air quality concerns, and I think that approach—. There are now emerging some fully electric coaches that can cover maybe up to 200 miles, so we could potentially have a coach route that runs all the way across Wales, but they are very large battery and there are quite significant charging infrastructure requirements as well.

Okay. And just to check with you, Kumar, can I make sure that you've covered everything you wanted to with regard to the report you gave us with regard to buses? You said that

'Investment in low carbon buses is very welcome. Given the relative ambition of this policy, an innovation angle should be introduced for the new bus fleet',

and you expanded on that. Are you confident you've covered everything you wanted to say on that in the evidence you've given verbally today?

Absolutely. Just this one final point: when we speak of innovation, the emphasis is not just on product innovation, i.e. a new technology, hydrogen, a new battery, solid-state batteries, things like that. I think there's significant investment being made by the central Government into research and development. We're not too worried about that as much as the new innovation around business models, and that we've touched upon already. The only thing to mention at the end would be: electric buses will be cost-effective if we manage to actually run those assets quite heavily, because if you spread them over an extended period of time, run them a lot, then the operational costs, being lower, mean that the overall cost of the vehicle is cheaper. Therefore, bus usage needs to see an uplift. Looking at the numbers here, bus mileage has fallen by more than 20 per cent in the last 12, 14 years here. If you have a trend where patronage of buses is going down but you're also adding electric buses, then they don't necessarily turn out to be cost-effective. You have to really run those assets.

Okay. Diolch.

Bethan Sayed.

I think the taxi sector is a really interesting sector and the focus on that as an electrification is, I believe, right and proper. There are some very good models of fully electric taxi fleets operating in a number of places. Cornwall, obviously quite a rural environment, has some fully electric taxi fleets operating effectively. The challenge with some taxis is you obviously don't know what route, what journey your fare is going to want to take, so if you're running low on your battery and you've got to go and charge up for 20 minutes or half an hour, it's a challenge. That's where we've seen the LEVC, the London Electric Vehicle Company taxi, the new LTI black cab, which is a range extender solution from a technology perspective, with 70 or 80 miles of electric range and then a range extender engine. That provides you with the best of both worlds. It electrifies most of your miles, but allows you to still do the odd long journey or drive in. In fact, the LEVC is now 10 per cent of the taxi fleet in London, so if we look at electrification of different vehicle sectors, that's actually the fastest electrifying sector, the London cab fleet, of any vehicle sector that we've seen. That was driven by some quite ambitious and aggressive taxi licensing regimes that London were able to put in. They have a very strong capability. But I think local authorities do have some significant licensing control and should be using that to drive forward the electrification of taxi fleets. They are a well-utilised asset, so electrification of a highly utilised urban-centric asset is exactly what we want to see in the near term, so I believe it's exactly the right thing to do, to try and electrify that sector.

So, the taxis themselves were eligible for a grant from the Office for Low Emission Vehicles, so, a central grant. London, I believe, topped up that grant, so they did provide some funding to the taxi drivers, but then it was sticks and carrots. So, there was the carrot of the grant support—I think they provided an extra £7,000 and Birmingham provided grant funding for their taxi fleet to convert to LPG—but they also used their licensing rules to mandate that you will have to change, and that I think has been very successful so far.

Okay. Chaitanya.

I'd just add by saying, firstly, I echo most of what Andy's already mentioned, especially in the context of London. I live in central London and I've already seen a lot of these cabs and taxis shuttling back and forth for the last two years. There's been a significant change there. The only thing to add would be that unlike private consumers—unlike you and I—car companies, taxis could make more economically rational choices. So, if you look at the total cost of ownership basis, some of these cars are cheaper as of today. So, if you're looking at running the asset, depending on the mileage that you use it for, these numbers are much more favourable in the context of electric taxis as opposed to private individuals. So, that works in favour of taxis.

I think it's partly pragmatism. I speak from experience. I drive a range-extended vehicle, and 95 per cent of the time that is operating on electricity. I think the statistics that we saw in the 'Road to Zero' strategy said that 98 per cent of journeys are less than 50 miles, so, actually, a very large percentage of journeys can be covered by a relatively small battery capacity. A lot of the restrictions, or, if you like, the perceptions of barriers to uptake of electric vehicles pertain to charging and range and the time it takes to charge, and if you're doing a long journey, adding in a half hour charge time. So, if we can remove that barrier to uptake from a large majority of the population and encourage them to plug in as much as possible, actually, we can get that transition, I believe, to electrifying as many miles as possible more quickly than relying purely on pure electric vehicles. That's our objective: electrifying as many miles as possible. 

I think we also need to look at where electricity works best. So, for 1kWh of electricity, if it's used in a city centre operation, it displaces probably twice or three times as much fuel as if it's used on the motorway, where a conventional engine is actually quite efficient. So, if we're looking at displacing the maximum amount of fuel with the minimum amount of battery in the short term, actually, plug-in hybrids used with zero emission city centre regimes and encouraging that operation is the right way of going forward.  

Ultimately, we want a zero-tailpipe-emission fleet, but we want to get as far and as near to that as quickly as possible, and I think that is about getting more people to use as many plugs as possible. 

I'd only add to that by saying the target is why we have suggested zero emissions, because if you're looking at 2028, we basically have to sell only zero emission tailpipes from the next couple of years. So, I think that's the reason why we insist on that. One of the reasons, again, why the plug-in grant scheme has moved from a variety of models to only zero carbon or zero tailpipe emissions is because of the fact that evidence seems to be suggesting that a lot of these miles weren't really electric in plug-in hybrids—they were actually driven by fuel. So, that's one of the reasons. Because the incentives were locked in at least three years ago, it drove a lot of people to procure these plug-in hybrids, but, at the same time, not really run them on an electric motor. So, there was a challenge there.  

I would agree with you that we do need to see and we need to use the tools that we have to drive the reforms and the pace of change that we need to see. Zero-tailpipe-emission vehicles in city centres, and discouraging private vehicle use from city centres, naturally leads us to quite a—. It leads to a successful bus industry by utilising that higher, and, actually, a potentially successful taxi industry as well. So, if we've got a clear picture of where we want to get to, and we work with those industries to bring us along that pathway, I think there's a lot of public education, and encouraging the public to come with us on this journey, because, at the moment, everybody wants to use their own car for every journey if they possibly can, because—

I'm just trying to, because I know we're short on time—. What I'm trying to understand is that if they're being taken out of the reforms, can it happen without licensing reform? That's what I really want to know, because if they're being taken out of the White Paper, the taxis may then not be part of this wider agenda at all. But, can it be done anyway?

I think there are examples where it has been done. As I say, Cornwall and places like that, where they have adopted some very progressive taxi fleets; Nottingham has done it.

Yes. So, it doesn't necessarily mean it has to be legislated for.

It doesn't necessarily mean it has to be legislated. I think the legislation should bring it up, but we want to be moving faster than legislation. Typically, we want to be moving faster than legislation is able to move. 

Okay.

Joyce Watson. 

I want to move on to freight and the HGV sector, and how we're going to decarbonise those areas that haven't been talked about, but might be the most pollutant. So, in your opinion, what is the most viable option to decarbonise the freight transport, the heavy goods vehicles, aviation, all those ones we haven't talked about?

I think, from my perspective, right now, the fastest thing we can do in the freight sector is move the current fleet to a very low-carbon fuel. So, we have options on operating vehicles on methane and biomethane, which are a very low-carbon solution. The heavy vehicle sector actually now has quite a good record on air quality emissions. So, Euro 6 emissions standards for heavy duty vehicles are performing and delivering good air quality performance. It's not zero, but it's very good air quality performance. But, decarbonising it is proving very challenging. I don't think we fully know what the right end goal is, whether battery electric, zero tailpipe, whether hydrogen fuel cell, whether electric with catenary charging on the fly is going to be the ultimate solution for heavy vehicles. So, I think we need to establish exactly where we go with that, because any one of those would require significant infrastructure investment. So, we need to make the right choice about that infrastructure for heavy fleets, and my personal view is, right now, we don't know what that choice should be.

So, therefore, in the meantime, investment in low-carbon fuels, I believe, will ultimately be of significant value, because that is likely to be the solution for aviation in the long term, to have a very low-carbon liquid fuel. And that might be from a renewable source; it might be from a synthetically generated liquid fuel. So, investment in that liquid fuel sector ultimately will move from heavy freight into aviation, so it wouldn't be a short-term investment. So, I think that is actually one of the biggest opportunities in the near term for the heavy sector. 

We've had a suggestion by Cardiff business school that maybe we could run the private and the public freight transport together. So, for example, buses could carry some light goods along their journey and drop them off. And I think we have to recognise, don't we, that behaviours have changed? So, it isn't always the case—in fact, it's far more often not the case that goods are being delivered to town centres any more—heavy goods. They might be delivered in lighter vans and the frequency could be greater. So, we need to look at those things. But also, they might not be coming into the city centres at all, anyway. They might actually be going to the streets where people live. So, I think the challenge as you've described it is right, but we have to think beyond that. So, any suggestions that you have in thinking beyond that and whether we need to actually do some planning as a Government for that—.

I think you're absolutely right. The fuel solution is more around the heavy end of the freight sector. You're absolutely right that, in the urban delivery, there are some very good examples of fully electric delivery fleets operating already very successfully. And, again, we come back to the electrification of city centre vehicle operation being critical.

We have a challenge at the moment that home delivery is not costed in particularly effectively, so the perception and public behaviour is such that deliveries are increasing. I think quite a large proportion of that is not very well controlled. So, some of these big distribution companies use third party delivery agents, which aren't regulated, they aren't necessarily in a regulated vehicle type, so I think there are a lot of things that are going on at the moment where we do need to take a more constructed and planned approach in how we adopt those. But I think there are certainly some behaviour changes in terms of when and how things are delivered that we will need to see, or we will need to encourage in order to get, ultimately, what we want, which is an efficient mobility system. So, you're absolutely right, we might want smaller vehicles, but highly utilised in terms of delivering very, very efficiently into domestic properties or local collection hubs. And there are a lot of opportunities in that space. I think there are probably some areas where pilot projects and consolidation centres may well be an opportunity to look at in specific areas to try and demonstrate what model will work, going forward. So, we haven't got the answer, but there are opportunities at a Government level to try to shape the evidence building to try to get that answer that we want. 

And I can speak to rail and aviation, if that's useful. On rail, the Committee on Climate Change produced a couple of useful reports on the back of this. One of the headline suggestions, I suppose, is the fact that more than a third of passenger car trips could be moved to active travel and modal shift. So, there is significant potential in changing the way we move, and rail is one of those options we ought to consider.

There are two families of technology that most talk about when it comes to rail. One is electrification of railways, the other is hydrogen trains. Hydrogen trains have only recently entered operation, in places like Germany. We've got a trial scheduled sometime in the early 2020s for hydrogen in the UK, but these are, as you can see, very early days for that. Electric trains, unfortunately, have been much more expensive than we expected them to be. So, there is a cost element again. Another challenge, of course, is that the average life of a train is about 30 or 35 years. So if you're looking at some of the targets that the rail sector and the CCC looks at, which is net zero by 2040 or 2050, you're looking at some of these diesel units to be procured now, the last ones to be procured somewhere around now, or the next five years. So, we haven't got a lot of time to make that transition in rail either.

Having said that, rail electrification seems to be the most cost-effective option on the busiest lines. So, anywhere in the country where you've got trains running much more frequently, a longer duration, electrification, as we've seen with buses, seems to be the most cost-effective option for us.

It only goes as far as Cardiff, I'm afraid.

Yes. The technology is obviously applied depending on, like I said, the mileage, how we run these trains, the accessibility of electrification, the possibility of electrification on some of these lines. Hydrogen trains, for example—I've looked at the numbers here, and for lines operating under 75 mph, for instance, that are not electrified, hydrogen could be an option there. But how do we fund it—I guess that becomes the question. The recommendation again from the Committee on Climate Change is this ought to be a taxpayer-funded programme of electrification. But in the net zero bit, rail is the net part, i.e. even in 2040, 2050, we're looking at some nominal emissions coming from rail, but they're being offset by other sectors, i.e. more forest, for example. So, it indicates a significant challenge of rail as well.

Speaking of aviation, again there is competition between different technology families. Electrification is a very small solution to aviation—maybe short-haul flights. We'd rather see high-speed rail substituting aviation if it's a commuting distance of less than 800km. There's no need for taking flights—we'd like to actively discourage flights if possible and instead move people on to high-speed trains and rail.

The challenge, of course, is the Committee on Climate Change—again, I go back to them because they made a very clear recommendation to include aviation targets, international aviation shipping targets, within the carbon budgets, while the Government has so far, in fact until yesterday, basically held that that's not going to be the case. We're expecting an aviation strategy to be published next year, which will be a nationwide aviation strategy, and within that we might see some options open up.

However, aviation still seems to be an international challenge, and we've got the International Civil Aviation Organization and the International Maritime Organization—these bodies have been entrusted to come up with transition pathways for these two sectors, but they seem to be the hardest sectors to decarbonise, as you can imagine.

But specifically on the question of what the Welsh Government could be doing, I suppose really pushing the central Government in Wales to bring in some of these recommendations of the CCC and taking them much more seriously and bringing them within our carbon budgets would be the first step I'd suggest we take, because it's a reserved matter for the UK Parliament so there's little, I suppose, we could do here.

Finally from me, we've not mentioned planning at all—do you have any views or suggestions on how the planning system in itself can assist the decarbonisation aims and objectives that we want to achieve?

I think it's a really important aspect. We're just about to report on a taskforce, an electric vehicle energy taskforce, that we conducted for the Westminster Government. If you like, the key message in there is that the planning, not only for the buildings—and we do embrace transport planning within that—but the energy system, and planning the energy system requirements, and embedding that into a holistic approach, I think is critical, because we are going to need a different energy model. Electrification of transport will require significant energy to the same places as we are planning, and I think there is definitely opportunity there to think about planning in a holistic sense and using that to shape the structure and the mobility system that we want long term.

I don't have much to add on this. We are working on a report ourselves, looking at, broadly, climate in the context of planning as well, so transport is one aspect of it, but we do not have any early results to talk about, but I second what Andy's just mentioned. 

Just briefly, you've mentioned rail and aviation, is there anything the Welsh Government can do with regard to improving emissions for shipping, given the fact that there's only so much they've got at their disposal in terms of the ability to make a change there?

I do not have, to be honest. I can come back to the committee on any specific recommendations there, but, like I've said, there is an international target, looking at the maritime sector, of halving emissions by 2050. As you see, in that zero context, that does not make sense. Whether we trial some of these technology options here—just a couple of weeks ago, I was part of a trial project sat in a hydrogen-powered boat that can house about 10 people. Again, it's a very small-scale example—a demonstration model—but hydrogen is emerging as one of the top solutions for decarbonising the shipping sector. Trialling some of those here could be one of the options, but how we do that—I'll have to come back to the committee on that.

It's not my area of expertise, but one thing I would trail is that, last week, the Westminster Government announced that they will be working on a transport decarbonisation plan over the next year to try and bring together the strategies that we now have—the 'Road to Zero' strategy last year, the maritime strategy and an aviation strategy. But one thing we haven't done particularly effectively is bring all of that transport and, consequently, energy into one place, so I think engaging with that process to think about this in a broader sense, because, typically, maritime goes to a port, where we're going to have large volumes of freight and road transport or rail transport—the energy required for that makes sense if we can co-ordinate that energy and transport in a good way. So, that, I would say, is an area where engaging with that discussion over the next nine months would be very, very useful.

Okay. Well, thank you both for your time this morning. Unless there's anything pressing you want to add that's not been drawn out—thank you. In that case, we greatly appreciate your time with us this morning and your papers in advance. Thank you very much. Diolch yn fawr. We'll take a 10-minute break and be back just before 11 o'clock.

Welcome back. This is our fifth and final session in regard to our inquiry on the foundational economy, and I'd like to welcome two Ministers with us this morning with their officials as well. So, perhaps I could just ask the—. Well, I welcome the Ministers themselves—Rebecca Evans and Lee Waters—and perhaps I could ask the officials to introduce themselves for the public record.

Hi. I'm Jonathan Hopkins. I'm deputy director for commercial and procurement at Welsh Government.

I'm Marcella Maxwell, economic strategy.

Thank you. Thanks for both being with us this morning as well. If I could ask for your response on this: the office of the future generations commissioner has said that, three years on from the well-being and future generations legislation coming into force, the extent to which the Act is informing the procurement process and procurement decisions in the public sector is not clear. What would be your response to that view?

Well, I know the Future Generations Commissioner for Wales is keen to undertake a piece of work to understand how well the Act is embedded in procurement practices across Wales, and I'm very supportive of that. So, I've written to the commissioner, outlining the fact that I'm keen that Welsh Government officials are involved in that work. We think it'll be a really valuable piece of work for us.

We're also keen to ensure the Act is embedded. So, we have a supply chain analytics and intervention programme, which is based on the goals of the Act—the five ways of working—and also the national indicators, and that really does give us a better insight, really, into procurement activity and to what extent and how it is helping to drive forward the well-being of future generations Act.

I think we've got a fantastic example of how we've managed to do that in the Better Jobs Closer to Home programme. So, that was very much a case of using the Act to develop a programme from the start—so, not a case of developing a programme and then trying to work out to what extent it meets those goals of the Act; actually it had the goals right at the heart of it. Just an example, really: in terms of a globally responsible Wales, the Better Jobs Closer to Home programme is driving sustainable growth in areas of market failure, delivering the circular economy principles in all pilots, reducing embedded carbon in products that are manufactured by manufacturing them closer to home and reusing materials that would otherwise be waste. And that's just one of the examples of the ways in which the Act has been embedded. Now, that's not to say we've cracked it everywhere, of course, but we're keen to learn from the commissioner's work.

And I'd just add, the whole point of the foundational economy agenda is to give effect to the principles of the future generations Act and part of the work we're doing with the public services boards is to challenge them, really, to put that into practice. What we don't want the PSBs to become is strategy factories. The work that we're doing alongside them and helping them through this agenda is getting them to put meat on the bone of the future generations Act principles.

And do you think the public services boards are clear on what they need to achieve?

Well, the work that we're doing now is about working alongside them to get the clarity, and to experiment, and this is the whole point of this approach. We don't have an exact template that we can lift and shift and apply to each public services board. This is about a place-based approach.

I've met with the leads of the public services boards, and there's a lot of buy-in from them about taking this agenda forward. And the exciting thing about working through the PSBs is this isn't just a singular agenda. So, we know you've taken evidence on the Preston experiment, which is a borough council in England. What we want is to go beyond a local-authority approach to all the different partners who sit around the PSB table so we reach right across the public sector into every community in Wales.

Do you think that PSBs have got—do you think they understand what they want to achieve from a strategic point of view? 

Well, it's a mixed picture, I think is the honest answer to that. I think some are ahead of others on that. So, we've been working with the Centre for Local Economic Strategies from Manchester, which did the work with Preston with Manchester and Islington and others on local wealth building, and they've made some recommendations to us about working intensively with around eight public services boards in the first year to take this work forward. So, that's what—we're currently discussing how we best do that. And that will involve taking a different approach with each. The point that CLES has made to us is that we're way ahead from where Preston were when they started, because, through the work that Rebecca has just mentioned with the Better Jobs Closer to Home project, which is a commercial procurement activity within the Welsh Government, we've done a lot of the mapping of the supply chains and understanding where the spend is and where the potential for intervention is and where the rules are on state aid, and so on. So, we've got quite a sophisticated picture of where the local anchor institutions are, how we can work with them, and what the rules are, through that initial Better Jobs pilot.

And, when you say there's a mixed picture, there are some that are performing better than others, is there a mechanism for support for those PSBs that are performing better to support those that are perhaps weaker?

Well, that's the nub of it, really, isn't it? Because we know—. The public services boards' framework is not for the Welsh Government to impose on them what we think their priorities should be. It is a bottom-up movement. So, we can enthuse and encourage, and we can't enforce. So, I'm willing to test the boundaries of that, but there will be some more enthusiastic than others, and the evidence that Kevin Morgan and others have given you about the mixed picture in procurement practice already speaks to that. So, we know that that exists at the moment and we know the reasons for that, and I'm sure we'll explore it further around capacity and de-skilled and all the rest of it. So, this is not an easy policy problem to tackle and it's multi-faceted, but I think we've got some clear ideas in each of the elements where work needs to be done, and we're keen to progress it at pace.

And the methodology that we're developing with the public services boards will help in terms of a kind of common approach in terms of the understanding that we want, but, actually, it will probably lead to different impacts and different outcomes. So, the work, for example, on analytics: we need to understand where we are, and so that involves a deep dive into data—so, information about what procurement spend is happening, by whom, what potential gaps there are and what the opportunities are. And that's something that is being undertaken with all of the public services boards that'll be involved in this work.

And then, that will follow then what we're calling 'insight', so looking at the data we have and working out what it means for us—so, does the market have capacity for improvements to be made, and would our role and the role of the public services boards then be to stimulate that or to create some of that? So, these kinds of questions will be asked differently in each—or answered differently, I think, in each of those public services boards' discussions.

Thank you, Minister. Hefin David.

I think the £1.5 million that was earmarked for the foundational economy was floating around before you became the Deputy Minister. That's correct, isn't it?

Well, you can characterise it as you wish, but—

It was there, wasn't it?

Yes.

I was going to actually say, to your credit, it's now become the foundational economy challenge fund.

It has.

And it's been expanded.

Tripled in size, in fact.

Tripled in size. So, with that in mind, is it good value for money? What are you getting in?

So, it's an experiment, isn't it? So, by definition, we don't know exactly if it's going to be a success or not, but we want to be bold and we want to give it a try. So, we'll be announcing tomorrow—. We've announced some three initial projects we're funding, for me to give a flavour of the sort of projects that we want to support. So, just briefly, we're giving £27,000 to Swansea council to help small construction firms bid for local authority contracts; we're giving £81,000 to a private sector company gas and oil project for a scheme to provide work experience placements for young people, targeting individuals at risk of falling out of the education system into unemployment; and, perhaps a little more boldly, we're giving £100,000 to Circular Economy Wales for essentially a Welsh currency, based on the Sardinian model—a system that allows businesses to trade with each other without using cash to make sure that that money remains within the local economy. So, that's the first three.

We're going to be announcing tomorrow projects for the Valleys taskforce, because the £1.5 million you said initially was there as part of the Plaid Cymru budget agreement, we've added to that £1.5 million from the Valleys taskforce, because this is now one of the thematic priorities within the Valleys taskforce and we've added a further £1.6 million from within the economy department's budgets. So, over the next three to four weeks, we'll be making some thematic and regional announcements of where these projects are going to be. They're quite diverse.

The crucial bit, though, is that what we don't want is a series of 50 pilot projects; it's the learning from this that is really important. So, we're setting up communities of practice to get the people doing these projects to work together, to share their experiences. And failure is okay, as long as we learn from failure, because we are trying things that haven't been tried at scale before. So, we're going to be seeing how that goes.

But, for me, the really important thing is that—. Clearly, this inquiry is focusing on procurement. Procurement is an important part of the foundational economy, but it's only a part of the foundational economy. The three strands we're looking at— the first is the experimental, which isn't just about procurement; there are some procurement projects in there, but most of them aren't about procurement. The second, then, is scaling existing practice through the public services boards, and that's where procurement is coming in, because we think that's existing good practice from Preston and elsewhere that we can, hopefully, scale first and, I hope, quickly, but I'm not naïve about that. But that's just the first thing we scale, so what I'd like to see, and here's the ambition—as the projects and the experimental fund start to show progress, we need to find a way to be able to scale them at pace so that they can be spread around Wales. And then the third element is: as we're doing that, how can we grow the grounded firms, fill the missing middle and aggregate demand? So, that's the challenge.

Can I just—it's a technical question, which I'm sure you'll find irritating, but how did you decide who would be approved for these projects?

Well, it's a perfectly good question. Perhaps Marcella is in the best place to go through the detail of the scoring process.

Yes, we had a rigorous internal appraisal and diligence process. We kept the categories quite open deliberately. We didn't want to stymie people coming forward, so it was quite a broad categorisation, but then we had a group of colleagues across Welsh Government from all different sections—so, social care, housing, regeneration—who looked at the projects and assessed them against some criteria. We also had input from Professor Karel Williams, who's on the economy network Wales. He didn't approve projects, but he looked at the process and was giving advice on that. So, we came up with a number of projects. About 208 applied across—a really good cross-section regionally, and in terms of the public, private and third sector, so we were pleased with that. So, our assessment has enabled us to select, I think, around 50, with the additional money that we've had—the £1.5 million, I think as the Minister has said, from the Valleys taskforce was allocated as well, so there are number of projects that are ring-fenced around the Valleys taskforce.

Okay. That's helpful to understand that process, and I suppose the final okay came from the Minister and Deputy Minister then.

Yes. So, there were some projects, for example, that I thought were not sufficiently challenging and were repetitive, that, even though they scored well, I didn't accept, and some I thought were more interesting than the scoring suggested—because these are subjective judgments, after all—that I decided should be funded. So, it was 95 per cent or more driven by the recommendations of the panel, and some subjective, finger-in-the-air from me.

Okay, and the last question then about the risk—you've mentioned risk, obviously. Can you quantify that risk in percentage terms? Is it—? Are you going to say that some of this money is not going to achieve anything, or is there a proportion that you'd say, 'We're very confident that this is going to do something?'

Well, the intention is that 100 per cent of it achieves something. Whether that's through positive learning or negative learning is what we've got to discover now, and the same has happened through Better Jobs Closer to Home. We've learnt a lot from that—some of it has been through failure, but I think that's an important part of understanding, in a novel and experimental approach, what works and what doesn't work.

And it's an approach we're taking in other areas across Government as well, so the innovative housing programme, I think, is a perfect example of that, in the sense that it allows us space to do very, very different things with housing, particularly with a view to decarbonisation and creating better housing for the future, but the aim there, really, isn't just to have lovely, exciting projects that inspire us in little pockets around Wales, but, actually, to be the kind of catalyst to change things more widely so that these buildings that we are developing through the innovative housing programme start to become the norm and the mainstream of building.

Can I just add to that the community of practice that we're establishing as well, which is a key part of this fund? So, each project that gets approved becomes part of the community of practice, so we're building the learning in right from the beginning. That will inform future policy work and the scaling up as well.

Joyce Watson.

Good morning all. I want to explore and hopefully obtain some further details on the Welsh Government's intended approach to increasing the amount of local procurement, and, of course, within that there would be a need for a strategy or an action plan to enable it. So, does the Welsh Government have any proposals to bring forward such a strategy or action plan?

Yes, we're working on exactly that at the moment. So we're doing a major piece of work really to refocus the way that we do undertake procurement, not just in Welsh Government but across the public sector in Wales, and it's really important that that piece of work is done in collaboration with the NHS, with local authorities and so on. So, that's ongoing at the moment. I can say that we're looking at various themes where the major difference needs to be made, so leadership, for example, is one of them, skills and capacity and capability within the sector—that's a huge issue where we need to make some interventions there—marketing and engagement and so on. So, we've got a number of themes where we think that we need more work to be done, and that action plan is being drawn together. It specifically responds, really, to the First Minister's manifesto, which had a number of items in there relating to procurement, but it also links very, very closely to the economic action plan and our work to make Wales a fair work nation. So it's bringing together all of these strands to use the power of the public sector's purchasing power, if you like, to drive forward improvements.

Are we likely to see that strategy and action plan before the end of this Assembly term?

Yes. We're aiming, at the moment, towards spring. Now, we could have done it very quickly if it had been an internal Welsh Government piece of work, but the only way that this is going to work and make a difference is if it has complete buy-in and is co-produced by those people who will be operating through that action plan, which is why we're doing that extensive piece of work with partners.

We heard, looking at a suggestion from Professor Karel Williams that was mentioned just now, that localising supply, and I quote, is a 'dubious objective' and that

'local preference by anchors institutions risks creating incapable client firms, where small scale employment depends on local preference within a small area'.

Do you have anything to say?

Well, I think he's right to highlight the dangers. What we don't want to do is achieve displacement, where we're just simply pushing existing spend around. I've asked Karel Williams to join the sub-group of the ministerial advisory board we've created on the foundational economy, so we have challenge. There's also, outside of Government, the foundational economy network, which again I explicitly invite to challenge us, because this is a new field, so it's important that we find a way through this together. The point that Karel Williams made in his evidence to the committee I thought was right—we need to move beyond a postcode approach to procurement where it's possible to massage the figures and make us look good, being as most of the spend from local anchors is in salaries, and move to what he described as a relational approach, which is where supporting the grounded firms and growing the missing middle comes in. Those three different elements—the experimental, the scaling and the grounded firms—are all equally important and they need to inform each other.

Okay. So, there is a need, clearly, to grow the anchor institutions and to work with them within this foundational economy. We have seen evidence where we've got the middle that try to grow and they collapse. So, we don't want the same happening here. How are you going to manage that? What are your proposals for trying to grow the small to the medium?

I think there is a tension in the economic policy here that we need to confront and be open about, and politics is about managing tensions. There's nothing wrong in tensions, but let's just be clear what the tensions are. And, because of our relative historical economic performance, we look for ways to quickly circumvent that. So, we do understand that and, rightly, we have policies to get firms growing fast, we have policies to get productivity up, to increase innovation. But that sometimes then excludes the slower growing, more patiently growing, firms.

I know Hefin David has done a lot of work on and talked a lot about the propensity of small businesses not to want to grow, not to want to take on additional employees, and that is a phenomenon. So, I think that's where we've got to carefully walk the tightrope, really. What we don't want is to encourage more stagnant firms, if you like. This is why I talk about not just growing the foundational sectors, but changing the way the foundational economy works. So, we improve fair work through the foundational economy and we get more innovation, we harness artificial intelligence within the foundational sectors, but also we then grow that, but we grow it in a sustainable and patient way. And that, I think, is the change in focus. And we need to do both of those things. It's not either/or. The Welsh economy needs both of those things, but I think we have focused on one more than the other and this is, hopefully, trying to address that. 

Okay.

Bethan Sayed. 

Just to carry on quickly with that, I think what was interesting—I'm not sure which session it was; it may have been Preston, actually, or one of the other areas—was that, in changing their procurement initiative, they were able to provide contracts to SMEs that would lead within a structure, as opposed to the anchor companies leading. The SME with the expertise was able to do that and therefore gain more experience from that but also have the opportunity to not be on the bottom rung of any sort of procurement pathway. So, is that something that you're looking at, by means of addressing the tension between the SMEs and anchor businesses, or is that something that you're yet to look into?

So, just to be clear on the terminology, we talk, and Preston talks, about local anchor institutions, whereas the Welsh Government has the more standard understandable terminology we are used to around anchor institutions, which are large firms. Now, we want to work with both, but the procurement work is primarily, in the first instance, around the local anchor institutions in the public sector. And we've mapped, in all parts of Wales, where we think, in each local authority and public service board area, and who those local anchor institutions are. And that's what Preston managed to get its success through.

But we also want to work with larger firms. So, for example, I've had an initial conversation with Dŵr Cymru about whether or not—because they want to increase their local procurement—we can work alongside them too. And also, in the experimental fund, I think, if I'm correct, Marcella, roughly a third of the projects, certainly at the first sift stage, were private sector bids. So, this is sector-neutral in terms of it's not just about food or care, for example, as the initial economic action plan talked about. It's a sector-neutral approach, but it's also an anchor-neutral approach, in a sense. So, we'll focus to begin with on local anchors, but we also want to explore how we can work with the larger anchors. But, to directly answer your point, absolutely, growing SMEs is part of that; it is what we want to do, which is why we talk about aggregating demand.

So, in the third strand of the foundational economy work—so, we've got experimental, spreading and scaling, and the grounded firms—there we want to look at how we can create larger contracts. So, for example—. Let me think of an example that doesn't give away one of the schemes we have yet to announce—

You can announce it here, if you want to. 

Well, I could do, but that's not the plan. [Laughter.]

It's hard to do that without revealing the identity of the scheme. So, we will be looking, as we experiment, at can we—. So, for example, through Better Jobs Closer to Home—this is a better example; we've already done this—. Through the commercial—and Jonathan can talk in more detail about this—procurement exercise, we've identified where there is a gap in demand and we've looked to aggregate it. Jonathan, do you want to talk about the Ebbw Vale project?

Okay, yes. As part of the analysis work that the Minister alluded to earlier, the team actually analysed the spend across Wales from across the whole of the public sector. And we're in the position now where we have got that information, so that's very helpful. They looked at that spend to identify opportunities to supply things where there weren't already existing Welsh suppliers, because one of the fundamental aspects of the programme is not to do something if that displaces another supplier. So, they found that, whilst there were lots of protective clothing distributors that were being used by Welsh public bodies, there weren't any that were actually manufacturing the products in Wales. So, as part of the actual analysis, they looked at the demand—the amount of these products that were actually being purchased by public bodies in Wales—established that that demand was significant, sufficient, and, because of the nature of what it was, ongoing. So, they've undertaken several interventions to establish a manufacturing centre in Ebbw Vale and, at the moment, that's in the middle of being set up and staff are just coming in and being trained. It's worth saying that, whilst this is a commercial intervention or procurement intervention, the driver has been the employability and skills agenda. So, really, it was about getting people into work but, actually, by tapping into an existing demand. 

So, in brass tacks, we've created 50 jobs for people out of work in hard-to-reach groups in Ebbw Vale making uniforms for Transport for Wales and for Cadw. It's a social enterprise we've created. We purchased a Kevlar licence for that manufacture—I think that's right, isn't it, Jonathan—because one didn't exist in Wales. And then we—. So, back to the aggregating demand, we're now looking at others in the public sector. Is it possible to ensure that some of the contracts that the Welsh public sector is currently spending on outside of Wales goes to facilities like that one, and growing it with sister plants? So, manufacturing in Wales things that we need, and that's the aggregating demand process. So, more opportunities like that for SMEs, for social enterprises, are something that we're going to be actively doing through analysing the data.    

Okay. It's going back to the issues earlier, but I'm just a bit confused, so perhaps you could help me, because you've said a lot about the fact that Preston have this model that is postcoded and such. Does that mean that your definition of local procurement is different to theirs? Because my understanding was with the—. The paper says that Welsh-based suppliers win 52 per cent of the public sector expenditure. That's calculated using the same model as Preston. So, if you want to go beyond that, what is the most sophisticated way that we can understand what you're doing? Because a clearer understanding from our perspective would help us know how we can understand what you're doing, and what your differences are with that particular model. 

I think that's a fair question. Jonathan. 

In practical terms, we haven't actually come to any conclusions in terms of more sophisticated definitions. We use the same one—basically, because you have to start somewhere. It's worth saying that, a couple of years ago, we didn't have this data, we didn't have this information. We've now got it, and it's able to give us this information. It's also worth saying that, from a Welsh Government perspective, we're looking at this globally. So, we know that, on average, 52 per cent of our spend goes to suppliers based in Wales or with a Welsh postcode, but, if you're a local authority or an institution located somewhere in Wales, you've got your own figures and you've got your own targets. So, as we actually work towards developing a more—

Well, I used the words 'more sophisticated', but it was, you know, what you were going to be doing differently, I guess, to that model that would let us understand the figures or the data better. 

To be honest, I think the answer is: we're figuring that out. So, it's a known issue and we're figuring out the best way to tackle it.

Okay, because that was my next question, really, in terms of the objectives. Care and Repair have said there shouldn't be so much focus on local procurement in relation to target-driven as a means to an end—i.e. yes, a company in Llanelli has got that tick type of thing, but is that the best company for the job? What's your view on that type of analysis?  

I think from our perspective, what's really important is to be in control of the narrative as to what we're actually buying, rather than taking a broad-brush approach. We've got the data, and that data provides us with the information as to what the public sector is buying and how the £6.2 billion breaks down. If you're looking at, say, IT, for example, or IT licences, it doesn't make sense to actually look at doing that locally because of the nature of the industry, because of the way technology develops. But if you're looking at things like, I don't know, maintenance of vehicles, that's actually undertaken in your local community. So, I think what we want to do is have an analysis and a narrative that clearly conveys to people to people the mixed economy approach that we want to take, in terms of taking this agenda forward. And, in some instances, if it's not actually appropriate to implement local procurement because of what the thing we're buying is, just to be clear about that, just to be open about that. And, certainly, then, I think, in terms of the—. That's looking at it from a procurement perspective. From an objective of the public body perspective, I think what we'll be looking to do there is to provide the public bodies with the data, the information that they need, to actually be able to inform their supply choices, in order that they can actually make those choices based on delivering their overall objectives and what's best for their specific communities.

And when will all this—? You say you're still experimenting and thinking about it—when will you have a clear idea? Is this for the spring announcement?

I think what's interesting in the Preston model is that they did this—they spent about five or six years working on this. We've done what they spent the first two years doing, in terms of getting this data, getting this analysis together. So, some of the guys whose brains work in ways that mine doesn't have been actually analysing this data, and they've got a lot of this ready. We've already been engaging with the Welsh Local Government Association procurement network, and so we have a lot of this available. It's just a case of actually sharing this with them in the right way, and in a way that supports them taking forward their specific agendas.

I think Bethan's point is a really important one, in the sense that this isn't just about the bottom line anymore in terms of procurement; it's about social value, it's about the things that we look at through our economic action plan, it's about trying to ensure that our spend delivers more than just the bottom line—that it delivers public good in our local economies as well.

And my last question, just because I want to know for the record: you mentioned earlier the relational procurement concept, and I know that we've had a separate paper on it, but I'm just wanting to understand: is that something that the Welsh Government are then embracing, or is part of your wider plan, just because it seems, in the evidence that you've given us, to be separate from what you're saying currently, that we should rely on their evidence as—?

We recognise the importance of the concept. What we're working on is how we operationalise that.

With them?

With who, sorry?

You say in your evidence that Karel Williams and Professor Keith Morgan will have a separate paper that has been submitted—

So, as I say, Karel Williams is on our foundational economy sub-group of the ministerial advisory board, and we're engaging in dialogue with him and others to challenge us and help shape our thinking. So, for example, on the missing middle and grounded firms, Karel Williams, Josh Miles from the Federation of Small Businesses, and James Davies from Industry Wales, have done a series of papers for us kicking the tyres, essentially, of our approach for SMEs and medium-sized firms and how to grow them, with a series of recommendations, which we're working through with them. So, it's—I hate the word 'co-production', but we're working alongside experts in the field to try and work through the detail of this.

But not all of them may be ending up as Government policy. It's policy advice that you're looking at and assessing, and whether you then move forward with it.

Well, the key thing about this is it's 'doing'. That's the whole emphasis of this. We're trying stuff out, and the emphasis is on doing. And that's again the challenge back to the public services boards, and the criticisms many have made of the PSBs is that they've been better on the words factory than they have in the doing stuff. And we need to move into that phase now. So, as I say, we don't have an exact template on this. We need to trial, and we need to figure it out in practice, alongside local authorities, and the partners in those PSBs, to see what's going to work in practice, because when you speak to local authorities, they say, 'Well, we're trying to do this anyway; you're not telling us something we don't know here. We want to improve local procurement, but there are a bunch of frustrations we're facing in doing it.' So, we want to understand what those frustrations are and work with them to achieve their existing objectives.

Okay. 

Hefin David. 

Can I consider the supply now? You talked about aggregated demand, and one of the things you said earlier was that a lot of small firms don't want to grow, but that doesn't mean they don't want to be successful—what they want to do is collaborate, and collaborate with other firms to do similar things and work together to be mutually beneficial. That's kind of an idealist view of this microfirm sector. It certainly can happen. But one of the problems would be creating collaborative bids. Are you able to consider how you're able to encourage collaborative bids for aggregated-demand projects?

Yes. So, this is a particular focus of ours to ensure that small and medium-sized enterprises, and also those microbusinesses as well, are able to come together to joint-bid for work. And we've done that, in the first instance, through refreshing our joint bidding policy, which assists those organisations, then, to be able to bid for work. Am I right in thinking that it's around a third of Sell2Wales's projects that are available for joint bidding? Is that right?

Yes, that is correct.

But in the evidence we received from Liz Lucas who is head of procurement at Caerphilly County Borough Council and considered by Kevin Morgan to be one of the experts in this area, one of the things that she said was that, with regard to, for example, the Welsh housing quality standard, they were unable to sustain collaborative bids because of collapsing relationships between collaborative firms that were bidding for it. So, really, have you been able to crack this problem of being able to create sustainable collaborative sequential bids for projects over the long term or are we talking too soon for that? It's something that would certainly lead to a bigger growth in sustainability amongst microfirms that may never become middle-sized firms?

The short answer to the question is that we haven't cracked it. I think what we've identified as one of the key ways of actually avoiding the situation that you've actually described is to give advance notice to the market of what the opportunities actually are, and what the public bodies are likely to be buying. And when I say 'advance notice', at the moment, a lot of the good, strong public bodies in Wales are already giving notice of a year or 18 months and so forth. We're looking at three, four or five years. Because for organisations to be able to get together to start working together to get their business plans in place to be able to put these bids together, they need that time to actually be working towards it. Because a lot of the feedback we've had is that the first time we've known that you're looking for something is when you place your advert.

That's the demand side still, though, isn't it? You're presenting to the market. How can you create the sustainability within the market to enable firms to—?

Can I test the premise here a little bit? This is a product of cultural change and one of the problems is that there isn't always an appetite for collaboration amongst SMEs. So, the construction sector, for example, Julie James and I met with them this week, and one of our challenges to them is that they are very like this—they see each other as competitors, so they're not collaborating. So, there's definitely a challenge for the public sector in how they're procured, but there's also a challenge for the private sector in how they work together. So, for instance—

That's what I'm getting at and I'm wondering, is there anything we can do to—?

Yes, absolutely. So, again, we're figuring this out. So, I went to meet with Wynne Construction in Bodelwyddan recently. They've been recognised in their field for proactively growing their supply chain—seeing it as their responsibility to grow their suppliers, which I think is a very interesting one. Now, that's partly borne out of necessity because they were one of the few contractors in north Wales to get on the twenty-first century schools procurement framework, so they needed local suppliers to help them to succeed. And that threw up a whole host of issues—the way the tier 1s and the tier 2s and the tier 3s work together and whether or not the lower-down tiers are able to demonstrate the tests necessary to get on those upper tiers—for example, the length of accounts you're meant to show and their ability to operate at that level. And that's difficult. So, there are knotty problems there that we need to figure out, and how we improve their capacity to do that.

And is it the role of Government to do that?

Well, if we're interested in growing local economies, then, yes, it is.

Right, good. I'm glad you said that. [Laughter.]

One of the early things that we've done in this area is to develop a joint bidding e-learning module. So, not just for SMEs so that they can understand the opportunities and how to grasp them, but also for buyers so that they can understand how best to support and deal with SMEs who'd like to put through a joint bid together. Of course, you're probably preaching to the converted in the sense that if you've got an interest in this kind of agenda, then you're going to do the e-learning tool. So, there's a role for us, I think, in promoting that tool.

But also at the vocational education stage, where people are learning their trade and thinking about going into business—there's an opportunity there to say, 'Look, collaboration may not lead to short-term profit. If you collaborate, you may see someone else earning a bit more tier 3 and less than tier 2, but over the longer term you've got an opportunity here to sustain an income that you wouldn't otherwise be able to do.' And I don't think there's a culture there at the moment that accepts that. And, certainly, when I've visited Coleg y Cymoedd, they've said it's a real problem.

I think it's about creating an ecosystem and getting all the players within it to understand their roles and the interplay between them, and that's tough—that is a culture change. So, let's not be naive about how difficult this is going to be—all of this stuff is really difficult. It's a simple concept, but operationalising it is really tricky.

But I think it is encouraging that Government can take that on. I think that is an interventionist approach that is a significant policy issue.

To be frank about it, the challenge we face in the era of austerity and Brexit is having the capacity and the headroom to do this stuff, because a lot of this is time-consuming, hand-holding, resource-intensive work to bring about culture change. We know, for example, Business Wales has been operating in this sphere for a while, but Business Wales funding comes to an end in 2021, and unless we get some guarantees on the future of the convergence funding and the shared prosperity fund, we don't know whether we'll have any money to replace Business Wales on a like-for-like basis.

So, if we don't have that capacity to be able to work with the local firms and the local authorities—because we know one of the main inhibitors to procurement is not a lack of local authorities wanting to do this, it's that they haven't got the bodies and the know-how of how to do it. Through the work we're going to be doing in supporting the PSBs and the first phase of pilot work I described through the—[Inaudible.]—report, we're going to be looking at how we provide some of that. We're looking now at the resource that's going to be needed for that. But without the resource, without capacity, without the headspace, when there are a 1,000 other things falling apart around us, it's going to be extremely challenging to do that.

Can I just mention one practical example? Transport for Wales have put an open advert out to SMEs and local suppliers—they've got an event in a couple of weeks' time; I noticed it in the Wales on Sunday as I was getting to the rugby part of it—inviting any interested supplier to come along to understand what it is they're looking to do going forward and how they can get involved.

Okay. Have I got time for one more?

Yes.

And all of this is connected into how we map our supply chains and how we understand supply chains in various different sectors across Wales. We're not convinced, I think from the evidence we've received, that that knowledge is there. What is Government doing to gain that knowledge about supply chains in the various sectors in which you want to establish?

It's a fair question. I think some of the points that Jonathan made about the data-mapping that we've already done and we'll be doing more of with the public services boards is understanding the terrain, and, clearly, understanding the supply chain as part of that is crucial. So, I think that's a fair challenge and I think that's something that we know is a known known.

I wouldn't disagree with that. Most private sector firms stay in business by understanding their supply chains. I think they're often quite surprised at the public sector—and that is a common thing—that they don't necessarily operate in the same way. But having the data that we've now got through the system, that we get provided to us by the public bodies, gives us a chance to actually start analysing that. The example I gave earlier about the uniforms—that came from undertaking that sort of an analysis.

That was quite emergent, wasn't it?

Very much so, yes. 

Vikki Howells.

Thank you, Chair. The Welsh Government could have the best ideas in the world when it comes to procurement, and some might argue that it is developing world-class ideas around that, but if we haven't got the expertise on the ground within local authorities, how can we actually deliver the Welsh Government's ideas?

I think regional collaboration has got to be part of this. Local authorities have to confront the fact that the capacity isn't there and they need to collaborate. We're working with the 19 public services boards, but the public services boards need to be collaborating with each other to share the knowledge and know-how that does exist. So, Kevin Morgan, who we've mentioned a couple of times here, has done a lot of work on this, and one of the points he's always made is that leader and laggard sit side by side. So, you have a best-practice local authority next to a struggling local authority and they're just not helping and talking to each other. So, there's a challenge for local authorities there.

I think there's also a challenge, then, for us of how we provide expertise and help from the centre. So, this can't be a centrally imposed model. This has got to be one that's right for local circumstances, but as Jonathan and Rebecca have mentioned, the work that we've done through Better Jobs, the mapping—that is an example of central resource, a central team of experts applying their knowledge and know-how and data and helping the others.

So, the things I've been quite clear on, in terms of the Better Jobs Closer to Home pilot, which came, as you remember, from a Wales TUC project—. We've done a number of pilots, some are coming to successful fruition, some still have some stumbling blocks, but will come to fruition. So, the question, then, in all this: should we have more pilots? I've said quite clearly I don't want any more pilots. We now need to apply that learning at scale through the public services boards. So, that's one bit of central help and capacity we'll now be doing for the next stage of this work to help with that local capacity problem we know exists.

Okay, thank you. My understanding is that a big part of the problem is the fact that procurement specialists can earn far more in the private sector than they can in the public sector. So, going back to your answer then about joint working, would that mean, in effect, that we'd be asking successful procurement specialists in one local authority to do the job for another local authority, doubling their workload whilst still earning far less than in the private sector? If so, how do we expect to retain that sort of expertise?

This is part of the problem that we've seen over the years of austerity. So, you've had procurement professionals in local authorities at quite a senior level who are able to bring with them lots of expertise and experience and able to take really strategic decisions. But, actually, once those people leave, potentially to go to more attractive jobs in the private sector, then there hasn't been the replacement of those people, due, I think in part, to local authority pressures in funding. You see it in other areas, don't you—planning departments and so on.

So, we're really aware that skills, expertise and capacity are a big issue in the sector, but also the kudos of the role of procurement—I don't think that it gets the recognition that it deserves. The procurement role is incredibly powerful. All of the things that we've talked about this morning set out the difference that decisions in procurement can make, but that isn't fully recognised yet. So, we are developing, as part of our overall strategy, a specific work plan in terms of skills and capability. We're doing that in partnership, in the first instance, with the public sector, but also really keen to be involving academia in this to see what kind of skills and qualifications are needed for procurement in the future, especially with that shifted focus now from the bottom line to additional value, social value and so on.

So, one idea that we're exploring is whether or not a new MSc should be introduced in procurement, and we're having some early discussions with academia there as to what that might involve and what kind of qualification could really assist the public sector, particularly here in Wales—so, lots of pieces of work going on in terms of raising skills and capability in the sector, also work that we plan to do with Careers Wales and the further education sector, because we know they have an important role to play, and also with those members of the team who are not at the commercial end of things in public bodies as well so that there's just a broad understanding of the opportunities of procurement.

Can I just quickly add that there is a parallel with the other agenda Rebecca and I are working closely on, which is digital? So, often, within local authorities, somebody working on digital would be seen as part of an information technology function, working in human resources. Similarly, in local authorities, somebody working in procurement will be seen as part of a finance function and some kind of, you know, gubbins role, whereas, actually, these are engines of social justice. We need to talk about progressive procurement as a way of achieving social change. 

So, these aren't mundane functionaries. This is a powerful role, and it's about challenging the way, within the culture of large organisations, that the potential of these roles as enablers of social change is seen. That is a big change of mindset, and then how we reward them and value their skill set, I think needs to change.

We're developing new e-learning tools, looking at our new Government priorities, if you like—so, in terms of decarbonisation, the whole fair-work agenda, project bank accounts; all of these kinds of things that we're keen to develop and promote.

I couldn't agree more about raising the status of the profession and the further professionalisation as well that you've talked about. But, to my mind, that just brings me back to this vicious circle that, if you further professionalise the sector and add more kudos to it, surely that makes them even more attractive to be poached by the private sector, thus just exacerbating the vicious cycle that we find ourselves in.

Again, if we see this as a pipeline, back to the digital parallel, if we are creating an incubator of skilled professionals who have a vision of progressive procurement, seeing procurement as a tool for change, well, okay, we're going to lose some of those to the private sector, but, if they go into the private sector with that mindset, that lifts everybody. So, when skills are short, you're inevitably going to have competition and you're going to lose good people. So, there are going to be some short-term tensions, which is why collaboration is so important. 

To your point about somebody overworked doing two jobs for the same salary, well, you know, we're in that age of austerity, and we can't just see this as the responsibility of the procurement officer. The leadership of local authorities and organisations need to understand the importance of this for the overall strategic vision, and this needs to be mainstreamed as the job of everybody, not just the job of the procurement officer. 

Okay, thank you. If I can pick up on your point, Rebecca, about the new skills and capability programme, what's the timescale for the publication of that?

Similarly with the action plan, we're actually—. We've scoped out what's needed. The good thing with this is everybody wants it. There's nothing in here that nobody wants. So, we're working with local authorities and our colleagues and academia to actually make this real and turn it into something that actually delivers not only the improvement in the commercial skills of existing procurement people, but in the commercial awareness of non-procurement people, to use that term, but also then to change the culture and the perception of procurement in the public services because, just going back to your first point, I've noticed the difference between the salaries in the private sector and the public sector, but I'm also aware, to be fair, that it is a different role. When I've looked at private sector roles before I joined Welsh Government, they were asking for different things. They were asking for you to actually deliver stronger value to the organisation as being part of that organisation's board, and you have a supplies or buying department within that organisation that undertakes the practical stuff. When I come to the public sector, I see the perception of procurement people is to do that practical stuff, but they're not up there to actually, as you mentioned, be the drivers of social justice. So, I think there's a lot to do there around changing the perception of procurement people as not being blockers but also giving them the environment within which to deliver the best value. And I don't see it so much as having procurement people; I see it more as having people delivering the aims of the organisation with more commercial skills than they've got at the moment and almost applying the five ways of working internally. 

That's very interesting, thank you. What level of financial resource is being committed to deliver the skills and capability programme? 

I think that we'll have to determine that once the plan is in a more mature state. 

And there are lots of ways of funding the different elements of it, because there's going to be a lot of different aspects.

I think, certainly, that's a very challenging aspect, which we do need to confront, but it's all about as well—. Just as public procurement itself is not about spending more money in public services, it's spending the money we have better—so, we spend £6 billion a year in Wales on procuring public goods, and how can we use that in a way that benefits the local economies better. It's also—the same can be said that we need to tackle the professional end of it. So, what I have been fascinated by in some of the work in the Better Jobs project was not just tackling the procurement officers but tackling the buyers, because, often, the buyers within the organisations were easier to influence than the procurement officers might be, stuck within this very conservative culture. So, I think upskilling and investing in that is—we know that's important, and, in a very tight budget settlement, we're going to have to see what we can do about that, but, even within our existing spend, there are ways of working differently that can achieve some of these objectives. 

Thank you. Diolch.

Thank you, Vikki. Deputy Minister, you've declined to give a timescale on the development of the enabling plan. Is it your intention to publish that plan before the end of this Assembly?

Well, you make it sound terribly shifty that I declined to give a timescale. [Laughter.] 

Give us a timescale, then. [Laughter.] 

I think the point is that we had through the economic action plan a commitment to fund the sectors and produce an enabling plan in those sectors, and I wanted to put more of a focus on the doing and the experimenting rather than the plan producing. So, that's why I've declined, as you put it, to give a timescale, because we've shifted away from that. So, we're going to do the doing first and the learning, and, once you've done the doing and the learning, then we can reflect on what we've learned and then come up with a plan that cuts across sectors. Now, when we'll be in a position to do that, I'm not sure. So, I think, ideally, we'd want to do that this term, but—. So, I'm going to continue to be shifty on that point because we're not there yet and there's no point putting the cart before the horse and coming up with more strategies and plans. I want us to get it right delivery-wise and then work backwards from that and distil some thoughts on how we put that in the plan. 

So, I'm getting an intention to publish the plan before the end of this Assembly. Is that right?

Well, you know, all other things being equal, I think that would be desirable, but I'm not hung up about it. I'd rather make sure that we mainstream good practice. 

Okay. And, as a closing question, really, what will success look like?

That's a very good question, isn't it? And I think that's—. So, I don't want us to fetishise procurement. I think procurement is a really important part of a battery of approaches we have. I think it's—. Part of what success looks like is talking about local economies and valuing local economies and improving the way they work. That paradigm shift, I think, is part of what success is about. It's about getting the public services boards functioning properly and seeing their role as being delivery, putting the principles of the Well-being of Future Generations (Wales) Act 2015 into practice, and, I think, embracing this agenda in all its elements—the experimental, the continuing to experiment, to iterate, to fail fast, to scale and spread and then, in doing it, to agglomerate demand and apply it to grow local firms, grounded firms, and to create middle-sized firms that don't then cash out. So, it's a whole spectrum of things.

So, I think it's hard to isolate simple indicators of what success looks like, but I think a different approach to local economic development in which all different parts, the private and the public sectors, are working together to harness that ecosystem. So, we improve well-being, but we also improve local wealth. And for me—I hate to be the one who mentions Brexit in this meeting, but, for me, this is as much a response to the Brexit referendum as anything else, because a lot of the communities who voted to leave, who told us they felt neglected and the economy wasn't working for them and they wanted to shake things up, this agenda's about addressing that cry of pain, that sense that the economy is broken. And it's about understanding at a granular level and nurturing and harnessing the fabric of those communities. 

Okay. And that was going to be my last question, but perhaps this is my last question: how can this committee, or a future committee, measure success?

Well, that's something you can reflect on, isn't it? [Laughter.] 

I think it's industry betterment, isn't it? It's about more efficient supply chains and market improvement—so, local suppliers filling those gaps that we've talked about—measuring local spend: is there more local spend, are there more employment opportunities for people who live particularly in deprived areas across Wales, and, ultimately, are people's lives improved by the procurement decisions that we make?

That was a better answer than mine. [Laughter.]

Well, thank you, Ministers, for your time this morning, and your officials as well. We're very grateful and no doubt you'll be excited to read our report when it's published shortly. So, thank you. 

Thank you very much.

Thank you. 

That brings us to the end of today's meeting. Diolch yn fawr.