Pwyllgor yr Economi, Seilwaith a Sgiliau - Y Bumed Senedd

Economy, Infrastructure and Skills Committee - Fifth Senedd

24/02/2021

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Hefin David MS
Helen Mary Jones MS
Jack Sargeant MS Yn dirprwyo ar ran Joyce Watson
Substitute for Joyce Watson
Russell George MS Cadeirydd y Pwyllgor
Committee Chair
Suzy Davies MS
Vikki Howells MS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Adam Butcher Uwch Reolwr Ymgysylltu a Pholisi, Llywodraeth Cymru
Senior Engagement and Policy Manager, Welsh Government
Hannah Blythyn MS Y Dirprwy Weinidog Tai a Llywodraeth Leol
Deputy Minister for Housing and Local Government
Ian Williams Dirprwy Gyfarwyddwr, Cartrefi a Lleoedd, Llywodraeth Cymru
Deputy Director, Homes and Places, Welsh Government
Lea Beckerleg Pennaeth Polisi a Gweithrediadau Gweithio o Bell, Llywodraeth Cymru
Head of Remote Working Policy and Operations, Welsh Government
Lee Waters MS Dirprwy Weinidog yr Economi a Thrafnidiaeth
Deputy Minister for Economy and Transport
Richard Sewell Dirprwy Gyfarwyddwr, Seilwaith TGCh, Llywodraeth Cymru
Deputy Director, ICT Infrastructure, Welsh Government
Simon Jones Cyfarwyddwr, Seilwaith yr Economi, Llywodraeth Cymru
Director, Economic Infrastructure, Welsh Government
Viv Collins Uwch-reolwr Contractau, Llywodraeth Cymru
Senior Contracts Manager, Welsh Government

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Gareth David Thomas Ymchwilydd
Researcher
Robert Donovan Clerc
Clerk
Robert Lloyd-Williams Dirprwy Glerc
Deputy Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Cyfarfu'r pwyllgor drwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:47.

The committee met by video-conference.

The meeting began at 09:47. 

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

Croeso, bawb, i'r Pwyllgor Economi, Seilwaith a Sgiliau.

Good morning and welcome to the Economy, Infrastructure and Skills Committee.

I'd like to welcome Members to committee this morning. I move to item 1. Under Standing Order 34.19, I've excluded the public from the meeting this morning for the public session due to public health reasons, but the broadcast this morning is being streamed live on Senedd.tv. We have apologies from Joyce Watson this morning, and Jack Sargeant will be substituting for Joyce. That's right. Also, Suzy Davies will be standing in as temporary Chair should there be any problem, any technical issue this morning, which, if it is going to happen, will happen during the broadband session, no doubt. [Laughter.] I invite any Members to declare any interest they may have. Jack Sargeant.

Thanks, Chair. Good morning, all. I note in item 4 we are having a broadband update from the Deputy Minister for Economy and Transport. For the record of interests, I sit on a fifth-generation project consortium in north Wales, so I just want to declare that interest ahead of that session.

2. Papurau i'w nodi
2. Papers to note

In that case, I move to item 2, and there is just one paper to note: a letter from James Price as chief exec of Transport for Wales with just general information. So, if Members are happy to note that, thank you.

3. Gweithio o Bell: Y goblygiadau i Gymru—Gwaith craffu gyda'r Gweinidog
3. Remote Working: Implications for Wales—Ministerial Scrutiny

In that case, we move to item 3 this morning, and this is our final session in regards to our inquiry into the implications of the Welsh Government's remote working proposals. I'd like to welcome two Deputy Ministers this morning, Lee Waters and Hannah Blythyn, and if I could ask the officials just to introduce themselves for the public record. So, Simon Jones.

Good morning, everybody. My name's Simon Jones, I'm the director of economic infrastructure in the Welsh Government.

09:50

I'm Lea Beckerleg and I'm head of remote working in the Welsh Government.

Good morning. I'm Ian Williams, deputy director of homes and places in the Welsh Government.

Lovely. Thank you all for being with us this morning. Minister, perhaps if I can just ask the first question. Why set an ambition of a 30 per cent target?

Thank you very much for looking at this subject and for the evidence you've been taking. I think it will be very helpful to us to hear your recommendations, because this is an emerging policy area. We don't have all the answers, and obviously, it is an evolving picture. We were very keen as a Cabinet during the first lockdown to look at some things that we could salvage from the wretched experience of coronavirus that we'd want to maintain when we came out of lockdown, and there is no doubt that we've been dealing with the adverse effects of poor air quality, congestion and rising emissions from our commuting patterns for many decades. Clearly, during the first lockdown, we saw something like 45 per cent of people no longer doing that, working from home, with a very noticeable impact on our streets.

We were obviously aware that some people were still having to work and some people were doing this under duress, but nonetheless, we thought there was an opportunity to try and bottle some of the good things coming out of this, and to try and maintain the level of remote working, flexible working, homeworking, as a permanent feature of work in Wales. The Cabinet looked at a range of options for setting a target, and there were significant concerns in Cabinet about the equalities impacts in particular of having too high a level of ambition, so we settled on the lower end, I think it's fair to say, of 30 per cent. Given that, as of today, still around 40 per cent are working from home, we think that is achievable. It's not easy, there's going to be some stretch in there, but if we left things to drift back to how they were—there's a lot of good behaviour change evidence to show that if you want to maintain the impacts of a change of behaviour, you need to try and lock in some of these behaviours, to stop things drifting back to how they were. That's why we decided to have a target and on the target that we've set.

Thank you, Deputy Minister. I appreciate your words; we hope that our work will help shape thinking for the Government and, of course, the next Government as well. I suppose the reason I ask about the 30 per cent target is because your paper outlines to us that you're doing some evidence-building work. I was just trying to understand why you would perhaps set the target before that work has been completed.

We wanted a ballpark figure to aim towards, but, as I said, during the discussions we had and the concerns we had that homeworking and remote working aren't good for everyone—. There are a large number of people for whom home is not a happy place and requiring them to work there can entrench some existing inequalities and disadvantages. We were very mindful of that, so we set a rough figure and then committed to doing further work to consult and to better understand the evidence on the implications of that, and whether or not that was indeed a roughly right figure. If you want to know more about the workings out, I'm happy for us to ask one of the officials to explain the nuts and bolts of it.

I'm asking this because witnesses put this to us; it's not so much from me, because I like targets. But witnesses say, 'Well, where has it come from? It looks like it's plucked out of the air.' And that's not me saying that; that's some witnesses that have come to us to say that. Another witness, I think, from memory, pointed out, 'Do you need a target?' Especially business were deciding themselves what level of ambition they wanted for themselves. So, I suppose that's what's behind the question. But I think you've answered as you have, so how—?

Chair, may I come in?

Just to add something more to this, as the Minister was saying, we shouldn't just see this as a policy on its own; it's not a kind of stranded idea that is not connected to anything else. This is integral to the Wales transport strategy. The reason why this is being led by transport Ministers is because this is about taking the opportunity of reducing emissions from our transport networks, as the Minister said. I think, without some targets, it's going to be quite difficult for us to demonstrate the success of the policy. We've identified that removing the need to travel is the top of our transport choices hierarchy. This is a crucial piece of how we're going to deliver the carbon reduction requirement, which is more than a target—it's a statutory requirement on us that we reduce our carbon emissions. So, it would be a bit odd if we didn't have something to aim for, when, actually, what we're trying to achieve here is the 2050 carbon emission reductions.

09:55

Thank you, Simon. That is helpful. You mention measuring the success, and that's why there's a target. I suppose the question that follows from that is: how are you going to measure the success? I can see here that it could be through the national survey for Wales, it could be that it would involve it becoming a national indicator. Just tell us a little bit more about how you're going to measure that ambition.

There's a lot of work going on on this now. Lea is leading on this, so perhaps she can just explain a little bit about that.

We're working with the statisticians, because there's an appetite across the UK and the devolved administrations to track these trends in changed work patterns, and at the moment, none of the indicators fit—they're all about working from home. So, there is a tentative agreement for inclusion in UK national surveys, which our statisticians have worked with the Department for Business, Energy and Industrial Strategy and the devolved administrations on. But also the national transport survey that will be coming out, we've asked for questions to go in that, and also things like the annual population survey and the Wales boost for that. So, there's appetite across the piece for this monitoring to go into national surveys.

Thank you, Lea. We're a bit pushed for time, so just a brief question, perhaps to you, Minister. In terms of defining remote working, how do you do that for the purpose of your ambition?

We've defined it as working outside of a traditional office or central place of work, which includes working at home or close to home in your local community. That's our working definition.

Thank you, Chair. My questions are around urban centres, so they're probably best directed to the Deputy Minister for Housing and Local Government. Firstly, what impacts do you consider that remote working is likely to have on town and city centres, and what kind of evidence is out there at the moment to support your thinking on this?

Thanks, Vikki, for the question. Sorry, I'm echoing slightly—I'll try not to move and shake my headphones, as I think it adds to the feedback.

I think I'm illustrating some of the challenges of remote working from home as we speak. We've seen evidence through things like—I think probably the committee will have seen the Wales Centre for Public Policy's report on the economic impacts of increased remote working, and we particularly requested that they look around the impacts on urban centres. That did indicate there'd be a shift in footfall from certain areas to other areas. I think the key thing to say here is that the long-term impacts on towns and larger cities—it's probably too early to make a call on what that's going to be and how those trends are going to adapt and change over time.

I think the key thing for us is to remember that this focus on remote working, or community hubs, or working closer to home, is one piece of a bigger jigsaw puzzle that we're trying to put together, as Simon said around the transport policy, but also in terms of our Transforming Towns agenda. What we've done just over a year ago, and it's become all the more prescient now, is that we've refocused our approach to regeneration and the reinvigoration of towns, and that also includes our larger towns and city centres as well. So, I think it's actually how we bring that all together and look at that emerging evidence to form our approach as we move forward.

Thank you. The written evidence that we've received states that retail still has a key role to play in our urban centres, despite the challenges that have of course been accelerated by the pandemic and the collapse of national chains that we've seen and so on. What steps will the Welsh Government take to support the retail sector through these challenges?

10:00

I think you're right to point out in the question how the pandemic has accelerated the challenges that are facing not just the retail sector but our towns and city centres as a whole. The challenges that we knew were already in existence just over a year ago, when we launched the Transforming Towns agenda, have obviously been accelerated by the impact of the pandemic. If you think about those anchor stores and the chains that used to be everywhere in town and city centres, and if I look back to when I was growing up—I live in a small town now, and I was brought up in a small town—I used to travel from where I lived, and where I live now, on the bus with my best friend on a Saturday, with just enough money to spare to pop into Woolworths for either some sweets or perhaps a single or something. So, we have that changing face of the high street, but also I think what we've seen over the pandemic is actually how some of those smaller businesses have diversified and looked at how they can perhaps increase their digital footprint or how they could produce a delivery model. So, one thing as a Government is we can actually look at how we can support those businesses to do that. 

Also, we're working very closely with the retail sector, I know—and Lee might want to come in on this. My colleague the Minister for economy and transport did touch on this yesterday in terms of the retail strategy that the Welsh Government is working on, and the retail sector are heavily involved in our ministerial town centre action group, which was set up on the back of the pandemic. I think there is a place for retail, but as part of, like I said, all the things that we are doing in terms of Transforming Towns—so, that mixed use, recognising the challenges and that the way we live, work and relax has changed and actually how we bring in that mixed usage to support our towns and city centres to thrive into the future, whether that's through how we support the repurposing of public space and the public realm, and looking at how we do things like repair and reuse and how we can arrange that and make that investment of £110 million around Transforming Towns to address those challenges, but in a way that we recognise that Government alone doesn't have all the answers, which is why we set up the action group and how we bring different stakeholders in to actually shape what that approach is in the future.

Thanks. I don't know if anyone wants to come in on that.

I can see Ian Williams indicating he wanted to come in.

Thank you, Chair. It's taken 30 years for the decline of the high street to truly manifest itself. This isn't a new problem. A year ago, when the Deputy Minister was launching Transforming Towns, we were talking about eventually 30 per cent of all retail shopping being online by 2030. Well, that didn't age very well. That happened rather sooner that we expected, but it was always going to happen. The likes of Debenhams and Topshop and all the other shops that anchor themselves around the bigger stores are going to leave massive holes. So, the point about 'town centre first', whether it's about primary care, whether it's about hubs for GPs being near public transport hubs, whether it's about public sector offices or any other kind of public sector investment like further education colleges, for example, is to bring them into the middle of town to create a different sort of footfall and a different vibe that will help the retail businesses that are still there. And they may be different businesses, but it's footfall that helps to reach our retail businesses more than subsidies, quite often. So, our new strategy, our new policy, Transforming Towns and 'town centre first' in particular, will help that. And we are taking a look at every single empty building as they pop up in our town centres, and have a fund to try and repurpose, even if it's for meanwhile uses only, those empty buildings.

Thank you. I'm having real trouble with my internet connection here, so apologies if I drop out or freeze or repeat something that somebody's already answered, because I was struggling to follow what people were saying. So, my final question is: looking at Ian's—[Inaudible.]

Vikki, you just dropped out. Do you want to just try and ask, briefly, your substantive question?

10:05

Yes. What is the Welsh Government looking at in order to repurpose urban centres for remote working? And, crucially, do you think there's a need for Welsh Government to ensure that any remote working hubs do actually locate in our urban centres, rather than, for example, on industrial estates or slightly out of town, because there are examples of that happening now?

Shall I make a start on this one? I think, as Simon highlighted earlier, this isn't an isolated policy, there's a whole range of things working together here. So, as part of our foundational economy approach, we have a focus on town centres and supporting local businesses, as well as redirecting public services into town centres. So that's part of the mix. We are looking, as Vikki said, for specific hubs for co-working, for desk sharing in town centres, but as to the initial question of Russell's on the target, this isn't just something the Welsh Government contributes to. The Welsh Government is setting this target to set a direction of travel and an ambition for Welsh society, in setting that tone for the way we think we should be going. It's for a myriad of actors to play a role in doing that.

This is primarily going to be private sector led. I've already had a number of businesses in Llanelli, for example, approach me who have spotted an opportunity here themselves to create co-working hubs, because they can see the way that human behaviour has changed, and business behaviour. So, I don't think primarily this is for the Government to lead. I think there are opportunities for the Government to try to shape this, to trial and test different things. I think you're absolutely right, Vikki, we obviously want more of this into the town centre, but again, to give a local example, Llanelli's Parc y Scarlets, for example, which is out of town, have seized this opportunity themselves. So, we're not going to discourage that; we want a variety of different approaches.

We've also tried to build this into other projects we're doing. So, the Valleys regional park, for example, we're trialling in two of the gateway hubs where we are building visitor centres to have them as co-working hubs—one in Llyn Llech Owain in Gorslas in Carmarthenshire and one in Parc Bryn Bach just outside Tredegar, where we're going to be creating a co-working hub and piloting that, where there's a huge draw for the natural environment. So, as well as having a coffee and spending a morning on your laptop, you can go for a walk around the lake in your lunch hour. So, that's one example; we're doing others in small town centres, we're doing others in existing public sector buildings, for example. So, at Transport for Wales's new headquarters in Pontypridd, we're looking at whether we can create some space there; I know Caerphilly council, in their Parc Penallta site, are looking at whether or not that can be a place that could be open for other public sector workers to come together.

So, at this stage, what the Government's focusing on is trialling a series of different approaches to understand what the barriers are. So, for example, there's a significant barrier in using Welsh Government buildings because of security considerations. We can't simply have any Tom, Dick or Harry wandering the corridors. So, that is a real impediment to us releasing that estate, which we'd like to do, to other workers. So, there are other teething problems we'll be hitting against, and that really is the purpose of the piloting approach, to figure out what can work, what the role for the public sector is and where the private sector is best left to get on with it.

Chair, if I may just pick up on one point Vikki made there very quickly— 

—on the repurposing of urban centres and what support can be available for that. I think it's one of those things—. You said previously of when we're looking at the mix of offer for our town centres in the future, how our funding will be received, either town centre loans or we're looking at grants around more flexible spaces, so it could be co-working hubs, it could be meanwhile spaces, but all collectively adding up to increase the offer to bring people into town. I know we shared information on the different support available with the committee before, but it has been updated, so we'd be happy to do that again.

And what we're also trying to do as things move along, with the work with local authorities and other partners, is if there are already things on stream in terms of funding that's going forward, to be asking that question of whether there is an opportunity here to provide a co-working space as part of that. So, for example, one of the ones that has arisen as part of that is the old Costigan's building in Rhyl, which is really well located, because it's right by the relatively new bus station and train station, and that would form a co-working hub for the private sector and entrepreneurs as well. So, actually, how we can identify those opportunities through the work we're already doing and actually take into account those changes we've already seen in terms of where people are working, to make sure that all of our partners are considering that in their work moving forward.

10:10

Thank you. I think I'll just start with my questions at this point, if that's okay, Chair. I'm going to be talking about community hubs, so I don't know who wants to answer these questions, but if we're going to be changing the way we work as a society, that itself doesn't come without a cost. Lee, you mentioned that you think this should all be private sector led, which is not something I'm going to completely disagree with. But I imagine that when you're thinking strategically about this you'll want the private sector, the public sector and the third sector all to work together when we're designing any kind of hub to make sure that all needs are met, really. We don't want to be designing stuff that nobody uses. Which bits of the private sector do you envisage wanting to take part in this? I completely get the point from Hannah Blythyn that retail's going to be interested, because they want customers, but who do you think, from the private sector, is going to want to invest enough in this to actually put a lot of the money behind it? And that's inevitably going to have to happen, because, as you said yourself, Lee, public sector buildings are problematic for the reasons that you set out.

Well, to be fair, I didn't say this should be all done by the private sector; I said that I'd expect them to take—. They're going to be doing this anyway, regardless of what we're doing. As Russell pointed out at the beginning, employers are already deciding to get a large part of their workforce working from home. Regardless of a Welsh Government target, this is the way the market is moving by itself. So, in terms of the private sector, we already have actors in this space: we have Indycube, which is a social enterprise; we have Town Square in north Wales that were doing this before the pandemic. So, there are obviously opportunities for them to expand and for new entrants into the market. There's an opportunity for other private sector businesses to diversify, so maybe office space that isn't being used can be let out, and I've certainly had employers in my area approach me to demonstrate an interest in doing that. So, I think this will take multiple forms, really, and I think we're not really in the business of trying to control that.

I think what we're trying to do is to make sure that areas aren't left behind and, certainly in terms of the estate that we control, through the broader public sector, to make sure that opportunities are fully realised. So, back to the Tredegar example, it makes little sense for somebody travelling in from Tredegar every morning down the chock-a-block A470 to come to a Welsh Government office when they could be working in Parc Bryn Bach, or they could be sharing space in the council office. Similarly, for somebody in Powys, there are offices in Llandrindod Wells. Could we open that up for them rather than commuting further afield? So, can we use our existing estate in a more lateral way, so that there's collaboration amongst different bodies to offer space to reduce the need to travel? As Simon says, as part of our climate change objectives, can we also then create a magnet effect within town centres to create footfall? As I said, this is part of a broader agenda through the foundational economy to try and get a 'town centre first' approach, relocating public services into town centres. So, I would say there's a mix of approaches.

Okay. That's very helpful. I was thinking more from the point of view of a customer base rather than a provider base when I was talking about the private sector, really. I suppose one of my concerns is that certain bits of the private sector will run with this and think it's a great idea, but then they'll completely occupy that space and there won't be any room for change or late adopters finding a place in designing their local communities, if you like. It's just something I'm raising, because when you mention Indycube, for example, yes, they're great, actually—we've had one in Swansea for a long time—but it's only certain types of small businesses who want to start off there. Even though the collaboration between them is great, it doesn't necessarily mean that suddenly the whole of the Swansea employment piste is looking at working in an Indycube, for example.

Can I move on then and ask you why, as part of your pilot, you've chosen the particular locations that you have for the trials, if you like?

Well, some of this is pragmatic. Some of these were already under way, and we've been able to steer them in a different direction to try and take this on board. So, for example, we're already funding, through the Valleys taskforce, the investment in the Winding House in New Tredegar and also in Neath high street. So, there's a chance to try and reshape that investment to take on board this new agenda. But perhaps I can ask Lea to talk us through the different pilots and why they were chosen, because each trial is doing something slightly different.

10:15

Well, the two pilots that are run by Town Square and HaverHub, which we're hoping to launch later in March, once we've got all of the paperwork ready and they're ready to open their doors, are very much about giving the private sector a space to explore the new market. Because co-working spaces are normally freelancers and self-employed people, with a creative digitech vibe going on, so, actually, for ordinary employees in private sector companies, this is not a space that they would normally go to; it's not a space they would usually use. So, those pilots are around giving the workers and the business a safe space to explore that new market, so that if it works, they come out the other side with a new market with more business.

We are exploring a more community-based approach as well, that looks at linking up rural communities more, using things like village halls and local communities to allow people to work locally, but that's still in development. We're looking at something in the Swansea valley to pilot that approach, to bring together people who may not have any broadband connection at home, but then there's a central village space that does have that broadband and so on, where they can go and work locally.

Another two pilots that we are really interested in, from our perspective in the Valleys taskforce, are that the Rhondda Housing Association is creating a co-working space in the ground floor of their office in Tonypandy, and that will be really interesting because we aim for that to be a very community-focused space, where it's not run so much as a commercial operation, we hope, and that it services the tenants and the people who actually live there.

Well, that's a very interesting idea, that last one. But I suppose it illustrates what was behind my question to the Deputy Minister a little bit earlier on, about what the client base is for community hubs. We're not hearing that branches of Lloyds Bank, for example, are going to be sending people to work in these hubs or that big law firms are going to be having mini outreach offices in these hubs, or anything of that nature. So, it doesn't feel very mixed economy to me, and I'm just wondering if we're focusing too much on the type of things that you've just explained, that this won't actually achieve its aim of stopping people traipsing into the middle of our bigger towns and cities, because that's where headquarters are, for example. I don't know if you can give us a little bit of steer on the thinking behind that, and then I'll just have one final question, Chair.

Yes, well, I'm happy to try. We are not fully in control of this, and there's no point pretending that we are. There'll be a diversity of approaches. The intention of setting the target around flexible working and remote working was that—. You know, think of my own position: if I had a normal job, I'd quite like to work from home two, maybe three days a week, and then go into the office for the rest of the time. Now, in those two or three days a week, I might be quite happy to stay in my kitchen, or if there was a nearby hub, I might give that a go once a week. So, I don't think we're looking at wholesale shifts of a Lloyds Bank towards a town centre hub, although we'd be very open to that. I think we're looking at how we facilitate a diversity of experience so that people who don't want to be stuck at home have an attractive alternative in a nearby town, and they can go there and use that, and we want to test a variety of different approaches to see which work. This is virgin territory.

No, I appreciate that, but what's coming across clearly is that everything involved in this will be additional in terms of cost, and I'm not saying that's a bad thing, because this is not about replacing one set of working arrangements for another; it's allowing a choice of a working environment. So, that's going to be a net capital additional cost, isn't it?

My final question was, with your pilots, whether the traffic element is something that you're going to be examining closely, because I hear what you say about limiting traffic is one of the top reasons for thinking in the way that we are at the moment, but I just want to check whether there's likely to be any displacement of traffic rather than removal of traffic. We're still talking about people who will probably still need to do their shopping or sort out their childcare near to a community hub, for example, which, inevitably, is going to mean, at least for a period of time, people still using their cars, until your bigger ambitions for a big change in travel infrastructure come to fruition. That's a very long-term goal, whereas these hubs seem to be more short to medium term.

10:20

[Inaudible.]—answers, because we've got more to get through, I'm sorry. Deputy Minister.

Okay. So, very briefly, I think, we'll be looking to try and reduce longer journeys and medium-distance journeys, people cycling from—sorry, commuting from—Cardiff to Swansea or Neath to Llanelli. So, you know, we're going to be reducing the numbers of those. Yes, of course, that'll create different journeys through people travelling more locally to hubs, or people not travelling at all if they're working from home. That's what we're currently modelling. Simon may want to talk about some of the work we're doing as part of the transport strategy and the carbon reduction work, which is looking at some of this.

Sure. I was actually going to come in on another point, if I may. Just to go back to Suzy Davies's point about what we're trying to do with these hubs, a big part of this exercise with the pilots is to try and work out what the business model is here. What does a revenue stream look like? How much would employers be prepared to pay? What could we do in terms of aggregating demand from the public sector, in particular? What does the price point look like? What are the facilities that will be required for employers to be able to be satisfied to pay for their staff to use one of these places? Is there any market for employers to pay for these things? We don't know those questions, so we need to do the pilots to work out some of those things to put into our business case, business model, to understand what the future might look like. And some of this stuff about displacement and all the rest of it will also be modelled through the work that we're doing on integrated impact assessment, because there are a whole load of other consequences, which we've touched on partly already, about what the impact of this is on things beyond the cohort of people that we're perhaps talking to here.

Thank you, Simon. Helen Mary Jones, I think you have some supplementaries, and also please come on to your area of questioning as well.

Just one supplementary arising out of Suzy Davies's questions, and Simon Jones has begun to sort of partly answer it, was that I was wondering, as part of the initial stages of this work, what discussions you have had with some of those big companies. I'm particularly thinking of, say, Lloyds in Cardiff or Admiral, where you have traditionally had lots of people coming down on the Valleys lines to work in office environments, and, obviously, that's been radically changed during lockdown. Have you had any discussions yet with some of those big companies about whether they might be in the market for contributing, for paying towards spaces that their staff could use closer to home? Because I know that some of them have been quite supportive of people working from home, but, as the Deputy Minister has rightly identified, that isn't right for everyone.

Well, I've certainly met with the Confederation of British Industry and major employers on the broader points, and they're way ahead of us on this, frankly; they're already planning to do it. Universally, the large employers tell us that they have no intention of moving back to how things were, so they're expecting a mixed model.

In terms of the discussions we've had, as Simon said, the purpose of this is to trial and to pilot and to explore if there are partnerships that are possible. I see Ian is indicating he wants to speak—I'm not sure if he has something to add on this particular point. He's on mute though, Ian.

Am I unmuted?

Only to point out—and it relates back, again, to the point that Suzy Davies was making—that we know that the large and some of the best employers in Wales are in a constant war for talent, and the ability to have this employee-valued proposition that allows people to work a little bit more flexibly will be an additional weapon in their armoury to attract the very best people to work for them. So, all of them are thinking in terms of new flexible-working opportunities. And this is why we—. We keep saying it: we don't have the answers, because we don't know exactly how it's going to pan out in three months, six months, six years. But we're trying some things out to try to work with some of these employers and with the public sector together, and, of course, the third sector as well, who, for years, needed and wanted maybe this galvanising opportunity to work in the same place, because there is a magic and power that happens when people work in the same place, and I think, in the third sector particularly, this could be very powerful.

10:25

I think, just very briefly, there is a really important point about access to other employment markets. So, anecdotally, there is a train carriage that goes from Swansea every Monday morning of people who are commuting up to work in London because they can't get the jobs that pay the sort of salaries they want locally. Well, those people don't need to be commuting up to London quite so often now, and it opens up the possibility in rural Wales of people being able to live and have a family and a career in a hamlet, but work in a more competitive market elsewhere. This whole agenda opens up huge possibilities, I think, for broader opportunities.

Shall I move on to my planned questions then, Chair? Thank you. Right at the beginning of this session, the Deputy Minister identified that working from home/remote working isn't necessarily for everybody, and it isn't easy for everybody. There are issues around things like maintaining health and safety standards, particularly when people are actually physically working from home rather than in hubs; that might be a bit easier. In your written evidence, you tell us that the Welsh Government is scoping financial and non-financial support for businesses and workers over the longer term as part of this agenda. Can you outline some of the support measures that might be being considered?

Yes. Can I see if one of the officials wants to lead on this?

Do you want me to kick off, then bring one of the officials in?

To be frank, at this point, I've got an open mind about what that could look like, and I think Lea will probably come in with a bit more detail in terms of the demand-mapping exercise that we're undertaking at the moment, which is not only looking at demand in terms of the obvious way in terms of people that would want to work in these facilities and where they could be, but also what would need to be in place to support that. So, a lot of people are saying, obviously, they would do it if there was that support from their employer financially to do it. And, actually, you may see organisations across private and public sector come back thinking, 'We are going to reconfigure our physical estate', and then that would bring savings with it that then could be redirected into supporting things like community hubs. But, in terms of actually how we develop that support, clearly we're going to do it in partnership with, as Lee has said, business stakeholders like the Federation of Small Businesses and CBI, but also with our trade union colleagues in terms of actually what support needs to be there for workers working in a very different workplace too. So, I think it's really important that all those bases are involved in how we develop that policy going forward. But I don't know whether Lea wants to come in at this point, and perhaps Ian.

I will say something, if I may. Received wisdom in economic development for the last 25 years has been that we focus on fewer and bigger strategic projects, and that's almost certainly still true, except that, over the last year, we've learnt we have to be a lot more nimble, a lot more flexible and a lot more wide-ranging in the terms that we are willing and able to help. So, I think the scheme—. I know it wasn't enormous, but the £9 million that you introduced, Deputy Minister, for a flexible placemaking grant has been one of the most popular and well-received ones we've ever run. Because it hasn't necessarily been on big, strategic projects, but it has helped a lot of organisations on both the health and safety of reopening and repurposing the outsides of their buildings and, partly, the insides as well. So, it's not just big regen, but little regen, that's been working over the last 12 months very successfully—well, I say 'successfully', but as successfully as it can do.

Thank you. We've heard in evidence that the move towards working remotely and working from home places different challenges on management staff, that the low-level, casual, 'Are you okay?', just the touching-base stuff is much more difficult to do. In terms of developing support for employers in how they might adapt to this, have you given any consideration to whether it is appropriate for Welsh Government to give any support for different kinds of management training to enable people to manage these kinds of remote working teams successfully, or is that something that you could perhaps discuss with employers' organisations in going forward?

Shall I take that? So, I think there's a suite of—and you touched on it in your earlier question—. There's a suite of things that we can do, which aren't just about the bricks and mortar of the remote hubs, around guidance and advice. And some of these are non-financial interventions, really, because, as we've all said earlier on, this is a whole new area for us. So, there isn't much in the way of guidance, there isn't much in the way of published best practice, that we can socialise with employers and employees. And I guess one of our roles is to try to pull that together and make that information, as it becomes available, available to employers and employees in Wales. The issue of training, I think, is something that we should look at, but this whole policy area is really, really broad and, as I say, it's more than just the bricks and mortar of the hubs that we were talking about earlier on, although that's a really eye-catching part of the policy. This kind of support network piece is also really, really important. 

10:30

Thank you. I think it would be true to say that I've got some concerns about workers' rights in this context, and, while I can see huge possibilities for some people, I can also see that there might be some employers who might unscrupulously pressurise people to work from home if that turns out to be cheaper for them, for example, and I know that would be absolutely the last thing Welsh Government would want to see. So, can I ask what consideration Welsh Government is giving to using the levers that it has when it deals with businesses, like the economic contract, like the potential forthcoming social partnership legislation, to ensure that fair work outcomes are delivered through remote working? And will those kinds of levers need to be reconsidered in the context of this kind of remote working increase and the target to increase—? I think somebody told us they didn't like the term 'remote working'—working away from base, or whatever it is we want to call it. 

Do you want me to start on that one? I think in terms of—. You have a really good point there, and I think it links to what Simon just said in response to the last point, around that it's not just the bricks and mortar, it's about the whole thing linking together, in terms of not just the support for employers to be able to do this but support for workers too, and actually how you—. And I think social partnership and the forthcoming draft social partnership Bill, which we hope to launch a consultation on imminently around that, that does look at things around—. Well, considering fair work, actually it considers it in a way that looks at the changing nature of the workplace. So, when we talk about flexibility, we also talk about security, because flexibility for one person might not be the flexibility that another person needs. And actually I think you've seen a big shift in the instances. I think, over a year ago, perhaps if you'd spoken to trade union representatives, or just anecdotally to somebody you might know, there was a perceived wisdom, perhaps, in some circles that, if people worked from home, it would be obstructive and they wouldn't do anything. And I think we've found that's busted that myth now. But it's actually how you make sure you put that support and guidance in place. And I think actually the social partnership approach in Wales does offer us a good platform to do that that actually brings all those stakeholders around the table, or the virtual table at the moment, to make sure that that's all unpicked and we can then actually develop the support and guidelines that need to be in place to actually support businesses to make sure that they can get the measures in place and do the right thing, but also to make sure that workers feel comfortable that they have the choice—

Helen Mary Jones, do you have any final questions at all?

No, I think my final point has been broadly covered. Thank you, Chair. 

I'm sorry to have interrupted, I just want to make sure I give five minutes each at least to the next two speakers. Hefin David. 

I'd like to understand more about the equality impacts of remote working, and particularly how will equality considerations be part of the development of the policy. 

So, that is a very important consideration that we're working through. So, Lea can tell us about the various different impact assessments that we are working on, so I'll ask her to lead on that. 

I think it's quite important that we've made some assumptions that this is about very well-off, office based, white-collar workers, and that this could induce a two-tier workforce, where it's blue collar versus white collar, but we don't actually have the data. So, the demand-mapping exercise that we're doing actually asks things like what people's salary is and it asks the demographic questions—you know, who is interested in working locally and working at home through planned work, locally and work at home, and then who's left outside of that. That doesn't just cover equality considerations. So, the integrated impact assessment that we're pulling together at the moment also looks at issues for children and young people, because obviously, at some point in the future, this policy will bleed into new ways of studying in higher education and so on. We can see further down the road where this can kind of lead. It's also about issues of rurality, so that the integrated impact assessment is about who benefits, who doesn't, what can we do, and is that work for this policy, is it for another area of Government, is it to be pushed out to local authorities, and so on and so forth. So, we should have the integrated impact assessment in final draft in the summer, and what we want to do after that, once it's published, is take it back to stakeholders and actually produce an action plan from that that allows us to mitigate those issues that we're all thinking that we see but we've got the evidence against it then. I'm not sure that's a very comprehensive answer.

10:35

Yes. I'd like to focus in on two groups. First of all, working parents. A lot of the dialogue has been around the role of mothers in this. In my experience, and those people I've spoken to, it's very much an issue for parents. Those parents who are trying to work from home would struggle because, traditionally, if they're going somewhere to work, then grandparents step in, whereas through the pandemic, that hasn't happened, and if you're going to maintain the culture in order to reach the 30 per cent, then that culture has been one of having children at home while working. So, how are you looking at the expectations and pressures on parents, first of all?

I think I'd say—I'll hand back to Lea in a second—we need to make a distinction between the pandemic working during lockdown and the return to normal. So, clearly, the circumstances of the pandemic are particularly difficult and strange but unusual, and we would hope that, as we go into more of a new normality, then it'll settle into a different pattern. I completely acknowledge Hefin David's point—it is very stressful on parents trying to juggle childcare and work.

Can I just interject at that point? If you're talking about this policy being successful, and I understand the value of it, you're talking about building a momentum from where we are currently in order to achieve what you want to do. You're not talking about, in a normal landscape, suddenly introducing this policy; you're using the momentum, but if the momentum carries through, the culture that currently exists is not that which you'd want it to be for working parents.

I think it's a fair point. I don't have all the answers to this, Hefin. These are really difficult situations. I think we acknowledge that this is going to be different for everyone. We're not saying there has to be a mandatory push here. This needs to be judged by the circumstances people have. The whole point of saying we want flexibility is to give people the option to do this if it works for them and if it works for their employer. What we don't want to go back to is everybody back into the office at 9 o'clock and leaving at 5 p.m. again.

No, I understand that, and I'm not trying to suggest that the policy is not going to work, but I'm trying to get down to how are you going to address that particular challenge.

I would welcome your recommendations on what we should do. I guess one of the things we ought to be looking at as part of the town-centre hubs is whether or not there are creche and childcare facilities nearby that can be offered as part of that package, and I think that is something perhaps we could look to pilot. I'm not sure if Lea's given that any further consideration as part of her equalities impact work.

I'll just come in briefly on that, if that's okay. I think Lee picked up on a good point in terms of this as part of all the work we're doing across the reinvigoration of particularly town and community centres. So, in the medium to longer term, could we look at the co-location of services that included that support as well? But Hefin absolutely makes the point that it's about language, isn't it—the momentum. So, it's actually taking things that have been different, but getting the best of it and the positives, and recognising what hasn't worked. It's not just working parents too. Working at home, and particularly if you're younger and you haven't got the space to work from home in a way that can be as productive as you'd like to be, then it's a challenge. I think, specifically where the policy isn't talking about homeworking but a mixture, it can mean a different way of working. I'm very lucky—I've got a space to work at home, and the only interruption I'm likely to get is an over-excited Labrador. But I think it's recognising that it's not a one-size-fits-all approach for people whose jobs would enable them to work differently, but also, likewise, for people who, actually, it's not an option to work closer to home or at home because the nature of their work wouldn't allow them do to that. That goes back to the broader piece of work we're doing within Government about how we actually work in partnership to look at how we can perhaps address fair work in sectors right across the country.

10:40

I appreciate that, and I think if the Government has a socioeconomic duty, that needs to be built into the development of the policy, and I think you need to persuade us now that that will happen. 

Yes, the whole point of taking a pilot approach is that we discover the challenges and the issues that need working through, and I think you've raised a very fair point.

And I think that's probably something the committee can come back to. Research by Legally Disabled? suggests that increased availability of remote working could have widespread positive benefits for disabled people. How is the Welsh Government going to develop a policy that delivers those benefits?

Well, I think it's making sure that the equalities impacts are fully understood as we design the policy, and I think Legally Disabled? make a very good point—there are real upsides. Just as I mentioned earlier, the ability for people to work from their Welsh town for a job in London is an advantage that otherwise wouldn't have been there. Equally, for people who are disabled, it allows them to access jobs that might be hard to reach if they physically had to attend a workplace. So, there are definite upsides for disadvantaged groups in this as well. 

Thank you, Chair. What steps are the Welsh Government taking to understand the potential impact of its remote working policy on transport demand, particularly public transport? In answering that, I wonder if the Minister can comment on how and when public transport operators will be involved in the development of the policy.

I noticed the comments of public transport operators that they hadn't been involved in the dialogue on this specific policy. I'm sure they're sick of talking to us about other things, so the idea we're not in constant dialogue with public transport operators is a little far from my reality, for sure. We definitely want to involve them further in understanding the implications of this. But, as Simon said at the start, this is an important part of our Wales transport strategy, and when you see the final version, reducing the need to travel will be a key part of it, as well as achieving modal shift where travel is required. So, getting people travelling shorter distances or not travelling at all is a crucial feature of the policy.

In terms of the modelling and the impact, perhaps Simon can talk a little bit about the work that's being done on that.

It's a pretty complicated picture at the moment, because of the COVID impact as well, which kind of overshadows everything else. So, there are changes of behaviour that we're seeing at the moment that are temporary features, we hope, of COVID because of the various lockdowns. As the Minister says, though, this is part of a bigger suite of activities to encourage modal shift. So, what we don't want to do is displace people from buses and trains to work from home and then allow people to continue in the same volume travelling by car. What we want to see is a shift of choices that people make, so that actually people are choosing not to travel by car and choosing more to travel by bus and train and walk and cycle and work remotely. So, that's the aspiration. In terms of the modelling, we're still in very early days, and the picture is clouded, as I say, by what's going on with COVID.

Okay, thanks for that. It seems to me that the ambitions of both policies complement each other, so the more involvement these stakeholders can have, clearly, the better. Just moving on briefly, Chair, to another type of connectivity, and I know we've got a wider session on this, so I'll be brief, but what is the Welsh Government doing to address the geographical differences in people's ability to work remotely caused by the varying levels of broadband? And just on that point, perhaps the Minister can comment on any conversation he's had with the Department for Digital, Culture, Media and Sport on this matter.  

10:45

Chair, we've got 45 minutes of this after the break. Do you think we could address that properly then, rather than me giving a half-cocked answer now? 

I'm more than happy for that to be the case. That probably makes some sense as well. Are there any other questions you've got on this, outside of connectivity, Jack? 

That might help us with timing, so we'll pick that up. In that case, then, we'll draw this particular item to an end. We'll have a four-minute technical break, and if we can just come back just before 10:50.  

Gohiriwyd y cyfarfod rhwng 10:45 a 10:53.

The meeting adjourned between 10:45 and 10:53.

10:50
4. Diweddariad ar Fand Eang—Dirprwy Weinidog yr Economi a Thrafnidiaeth
4. Broadband Update—Deputy Minister for Economy and Transport

Croeso, bawb. I'd like to welcome back everybody to item 4 on our agenda today, and this is very much continuing our previous session on homeworking or working remotely, so there's quite a degree of overlap here, which we'll also pick up on as well. So, I'd like to welcome the Deputy Minister, Lee Waters, back to committee, and perhaps if I can ask the officials to introduce themselves as well on my screen. Viv, would you like to go first?  

Yes. I'm Viv Collins. I'm the delivery lead for the broadband infrastructure and digital infrastructure division.

I'm Adam Butcher. I'm the senior policy manager in the digital infrastructure division. 

Hi. I'm Richard. I'm head of the digital infrastructure division of the Welsh Government. 

Thank you. Appreciate you being with us this morning, and we've got a lot to get through, so I'll crack on with the first question. So, if I've understood this right, BT initially had a deadline of March 2021—so, next month—to connect 26,000 premises, and that was before the scheme was extended by a further 13,000 premises. So, that makes a total of 39,000 to be connected by June 2022. So, I hope I've got that right. If I haven't, please correct me.

10:55

Thank you. Openreach have recently told us that the number of premises to be connected by March 2021, so next month, has been reduced to 20,000. So, I just want to try and understand why that's the case.

Well, perhaps Viv, who manages the contract, is best placed to answer that.

Thank you. Yes, I can answer that. There are a number of reasons why this has happened, and you're correct; it is now 20,000. The first thing was, when the contract was initially let, there were a number of fibre-to-the-cabinet premises that were modelled. We didn't want to delay the contract, so we let the contract and then through a change request process we asked them to remodel them as fibre to the premises, which is obviously a more complex build and takes longer, so that moved about 1,500 premises from the core timescale into the quarter beyond—the quarter beyond March 2021. So, they're still being built, but they're just a quarter late. When we did extend the contracts to add additional premises, the delivery plan was reprofiled so that they would be building adjacent structures at the same time rather than building a structure in an area in the core contract and then going back in the extension to build a new structure. We smoothed the delivery plan a bit, so that moved some of the 26,000 into the extension phases. There has been a little bit of de-scoping, mainly due to high costs or where there already is a superfast connection, but we're talking about the low 100s for these premises. These are the main reasons.

All right, then. Thank you, Viv, for the explanation. Helen Mary Jones.

I'd like to just pick up on that answer, actually, from Ms Collins. Openreach explained to us that when premises are removed from the scope of the project that it's a joint decision by Welsh Government. Some of us have had constituents who've been very disappointed by that, but in the scope of the overall project one can see how it does happen. Can the Welsh Government tell us how does it prioritise premises that should be connected and what's that process? How do you decide when premises were in the original plan and now they're not? What's the decision-making process around that?

Again, these are technical exercises, so perhaps Viv is the best person to answer again.

Yes, no problem. We hold weekly meetings with the team at Openreach where we go through all the survey results. It's different from the original superfast contracts. We agree the premises and the deployment plan. Openreach then do a survey. They actually go out to the areas and survey the areas, and they come back to us on a weekly basis with these survey results. Within the survey results, there will be a cost per premises. So, we don't actually prioritise the premises, but if that survey comes in with excessively high costs, then we can't prove value for money, so these would generally be de-scoped. But we're talking £20,000 or £50,000 for a single premises for these ones that are de-scoped.

I can understand that process. I suppose I would also want to understand where does the responsibility lie for communicating to property owners who thought they were in the scheme and then they find, for perfectly valid reasons, as you say, Ms Collins, that they're not—would that be a job for Openreach to do, to tell them why that's happened?

It could either be through Openreach or they could ask us, send a question into us—either way. 

Okay, that's helpful. Could you tell us again, what's the total value of the contract?

Together with the extension it's around £56 million.

That's helpful to know. To what extent is the Welsh Government limited in its ability to negotiate the contract, given that BT Openreach has won every large-scale superfast broadband contract that's ever been advertised by Welsh Government? Is this because they're the only ones who are in the market for this kind of work, or—? What's the explanation for that? Have they just always been the best bidder?

Yes. The telecoms market across the UK is monitored and categorised by Ofcom, and it's true that large parts of Wales are what Ofcom classifies as 'market 3', which is an area where there is only one infrastructure provider. There are other markets, like market 1 and market 2, where there are other infrastructure providers, so you can have infrastructure-level competition. I think we have to accept that, in large parts of Wales, it is only Openreach, and a lot of that is historic because of the way Openreach inherited the network from the old GPO network, I suppose, over many years. So, in that instance, where we get the competition, I guess, is in that sort of retail space in terms of the providers using Openreach's infrastructure. So, it's a fact that we have to work around, I suppose.

11:00

That's really helpful. Just one final question from me, if I can. Are you aware of any examples in the contract where Openreach has put in the hardwiring, if you like, they've put in the infrastructure and there have been issues about commercial providers wanting to step into that space to provide? I've had one specific case raised with me, but I have a sense that maybe there's a misunderstanding about the different roles. So, is that an issue that's come up, where the infrastructure is there but the providers are not stepping into the space?

Yes, I can take this one. There is a particular area in Monmouthshire where there is a provider who is doing quite a large-scale deployment. So, the only thing we can do, really, is work together with Monmouthshire County Council and the other provider. What has happened is we've got the plans for where this other provider is going, so if it makes sense for us to de-scope a structure because the other provider is going there, say within the next 12 months, then we would work with Monmouthshire council and do that.

Yes. I was just going to add, I suppose, there is a process now and it's a well-established process, really, about this kind of testing the market, these open-market reviews that we run regularly. I think our call is to invite suppliers to participate in that process. Because that's the route for us to understand what the market is planning to do. Now, these things, there are always going to be overlaps and new plans from new suppliers, and our starting point is that if we don't have to invest, we'll try not to, but also, the lead-in time for infrastructure can mean that, sometimes, the train has already left the station and we have to kind of tiptoe around that. But we're planning to refresh the open-market review shortly in the coming weeks, hopefully, and we're going to try and do that on a regular basis. And at some point, we think that the UK Government might pick up the reins for these open-market reviews on a once-for-the-UK basis. But it's participation in that process that unlocks everything, I think.

Can I just say, finally, I think that this whole set of questions illustrates, really, the environment that we're operating in? We're operating to compensate for the failures of the market and for the disinterest from the UK Government in having a strategic universal service provided, as we have for Royal Mail or for the key utilities, which, as we've said repeatedly, we think this should be. So, we are stepping in to try and harness what we can to try and connect as many people as we can, but there are limitations.

Thank you, Chair. Some of my questions have already been dealt with, to be fair, but I wonder if we could just hear a little bit more about where you think the planning regime might be able to assist in progress towards a universal roll-out, if I can put it that way. I mean, are there problems at the moment that you think between you, within Welsh Government, you might be able to resolve to make things like wayleaves easier?

Wayleaves, specifically, are not devolved, so that's not something we have any control over. There's a distinction between mobile coverage and the planning regime and the broadband infrastructure. I don't think the biggest issue is the planning; the biggest issue is who takes the lead here and who does a long-term strategic intervention to understand where the areas not served by the market are and how we can reach them. Now, we have been repeatedly trying to get the UK Government to step into this space and Ofcom to also be more challenging. There are some encouraging signs that the UK Government are now waking up to this. And to be fair to the Welsh Government and to European funding more generally, we were ahead of the game here and we were able to use European funding, both in Wales and in Cornwall—I'm not claiming any credit for the Cornish—to step in ahead of where the market was building to act, and as a result, we've got levels up from something like 40 per cent connectivity, which it would've been if it had just been left to the market, and now to more than 95 per cent.

But really, the UK Government have been very slow in learning the lessons of that intervention that we've done. They have said that they are now—. Part of the problem is they use language that is misleading. So, they talk about a universal service obligation, which sounds great, but in fact it's anything but. It's a universal right to request a connection—and that's all it is—and it's then a judgment for the commercial providers to see whether or not that is affordable. And often, the amounts of money individuals have been asked for are in excess of £100,000 in order to get a connection. So, it's meaningless.

There was also a grand-sounding intention to have an outside-in approach, by 2025, to provide all premises in the UK with access to gigabit broadband. That's been watered down. And the initial £5 billion of funding they talked about has now been reduced to £1.2 billion, and their ambition scaled back from all premises to 85 per cent of premises. As Richard Sewell just alluded to there, as I said, we are having some encouraging conversations with DCMS recently, who are indicating an appetite to do more in this space, and to work with us to deliver that—so taking over the open-market reviews, which we've been doing out of our own funding, even though this is not devolved, for many years, to identify where the so-called white premises are. And there are now something like 72,000 white premises in Wales—so they're properties that currently have no connection, and the market has no plan to give them a connection. And so, really, that intelligence and that data should be then used by the Government to develop a plan to get them connected, and that has not been happening, and that needs to happen, and I hope the encouraging conversations we're having do materialise in that happening.

11:05

Well, how do you respond then—on behalf of both Governments, if you like—to claims that BT itself makes that Openreach can actually extend the availability of broadband without public subsidy, from 64 per cent up to 73 per cent in Wales, which is about 138,000 premises? Why haven't they done that?

Well, that's a question you need to ask them, isn't it? They're a commercial investor, and they will obviously put the connections in where they think they can get a profit back. And that's great, and that's the way the market works, and Virgin are doing the same. And where that competition is able to happen, it takes care of itself, in terms of providing connectivity. But there are areas where BT don't feel that the return they will get as a commercial company—I make no judgments about this; this is entirely fair. They make a judgment of the investment they have at their disposal and how quickly they can get a return on it, and they prioritise their scarce capital to do that.

Well, doesn't that suggest then that the Government work on this should be targeted at those places that Openreach isn't interested in?

So, why haven't we got further with it if, actually, Openreach can deal with the lower-hanging fruit itself without public subsidy?

With respect, I think there's a misunderstanding of what our role here is. We are using Government funding to reach the properties the commercial market are not interested in reaching. We've done that, we've gone out to competition, and we've found a private sector provider to work with us to do that, and Openreach has won that tender. So, where they are providing connections to non-viable commercial properties, it's because we're incentivising them to do so. They're not doing that by themselves.

No, I do understand. What I was trying to get across is that the number of properties that didn't require public subsidy in the first place is bigger than we thought, and therefore the—. I guess I'm asking: has public subsidy gone into providing difficult places—I accept that—which, actually, Openreach could have done without public subsidy to support? Do we know that?

Oh, well, there's shaking of heads, so that's helpful.

No, that hasn't happened—that's offset. I think one of the confusions is that there are two different activities, I suppose. So, if we are thinking about those 79,000 that we were talking about, they were difficult ones that we didn't get covered under superfast; they're the remainders of that superfast race—trying to get to 100 per cent of superfast coverage. What the UK Government is talking about now, and what BT is talking about, is in this gigabit space, where you're talking about full fibre connections, where you're starting the race again to some extent. And full fibre penetration is currently around 19 per cent, I think it is, across the UK. And in that respect, what BT are saying is that commercial companies will eventually roll that out up to a point of about 60 per cent, and they're saying that, actually, that can be 73 per cent in Wales if you have some adjustments made to planning, and street works, and all that kind of stuff. It's what we classify, potentially, as barrier-busting conversations, I think, smoothing the process. And, I think, we are actively involved in that space, but there are a few different channels, and what we're saying to the UK Government is, 'If you're going to make this gigabit investment, then please start with those 79,000 that we didn't reach under superfast. Don't start nearer down to the ones that we've already done once.' So, it's that dual investment. 

11:10

I'm so sorry, we're really struggling for time. So, the only brief question I would have to the Minister, Lee—. You say, in your response to Suzy Davies, the UK Government has been slow on x, y and z. The industry tell us the Welsh Government is slow. They tell us that the planning regime has changed in every other part of the UK appropriately—in Scotland, England and Northern Ireland—and that they've been slow to make change in Wales. How do you respond to that? And what can the Welsh Government do? 

So, I think there are two different things there. My point is this shouldn't be left to the Welsh Government. Telecommunications is a non-devolved subject. Broadband is a universal service that is now required for everyday services. We've just been discussing the impact of the lockdown on homeworking. Everybody needs broadband. It should be done at a UK level, not dependent on the market, in a planned intervention to make sure that everybody, regardless of their affordability to purchase a connection, can get a connection. So, that's my point. [Interruption.] I'm sorry. 

I was saying, it's not entirely devolved, because there are many levers that the Welsh—[Inaudible.

If I can answer the question, I think we are talking about two slightly separate things. My premise is, I don't think it should be left to the Welsh Government. So, this should be directed centrally. As it is, it is not directed centrally, it is left to the Welsh Government and it is left to the market. So, the market are, then, saying, in order for them to be able to connect they can do certain things commercially off their own back, which they'll turn a profit on. There are other things they could do more of, if we were to reduce costs for them and remove impediments and if we could incentivise them further by subsidising their work. So, that's the space that we're currently in. I don't think we should be in that space, but we're in that space, and so we're looking at what we can do, and we've done an awful lot, and we've just been discussing the additional properties we've connected. There's another piece of work we haven't touched upon about our local broadband fund, which is further intervention, again, from devolved funds to do that. 

On the specific point you're raising there, Russell, about the complaints of the industry that there are barriers in the way that could be busted, I think there was a National Infrastructure Commission for Wales report on digital infrastructure recently. They made a recommendation for a barrier-busting taskforce. We are happy to accept that recommendation. We already do have a sub-group working on removing barriers. But I think the commission report is very helpful and persuasively makes the point. And, so, we'll be accepting the recommendation to name a senior official to lead that, and Richard Sewell will be asked to do that work, to work with the existing partners we have and the industry, to see what more can be done to reduce the barriers that exist. 

Thank you, Minister. Hefin David—just waiting for Hefin to come in. 

[Inaudible.] I was just having some technical issues here. The Superfast Cymru successor scheme still leaves an estimated 79,000 premises without access to superfast, so will there need to be another large-scale Government-funded programme?   

Well, as I say, I don't think this should be for the Welsh Government to do. This should be a UK Government initiative. Broadband and telecommunications is not devolved. We've already stepped into the space and done a good job of it. We shouldn't be spending further devolved funding in an area that is not devolved. 

It's the same principle as the reason the Welsh Government stepped in in the first place, though, isn't it?

It is, but, as I say, there are some signs now coming out of Whitehall that the UK Government are waking up on this and are willing to step in and take the lead, which we warmly welcome, and we are very keen to work with them, both operationally and politically, to try and let them have the benefit of the lessons we've learnt over the last 10 years or so, and work with them on a granular level to use our operational experience to make sure that as many people can be reached as quickly as possible. 

What's caused that change? Has it been better relationships between Welsh Government and the relevant Ministers in Westminster?

I can only assume they've been taking attention of my speeches and my tweets. 

As do we all. [Laughter.] Okay. The national infrastructure commission have said that they think Wales can and should be doing more with its mobile infrastructure. I suspect I know what you're going to say, but do you agree with that? And what do you think? 

Perhaps Adam can come in on this, because he's leading for us on mobile, but we have an action plan that he can talk us through. 

Okay. Yes, thanks, Minister. The mobile action plan has been delivering quite a lot around—I know the point has just been made about planning—planning, around regulation, public assets. On some of it, we were proposing to intervene by building physical infrastructure ourselves, but with the development of the shared rural network by the industry, that's almost made that—. That is something that they need to do, and then we may look again at that once they've completed their work. So, it's not that we've not been doing a lot on mobile, but the influence on mobile is really around the commercial sector and their development around the shared rural network at the moment.

11:15

More mobile coverage?

So, the shared rural network is starting to roll out now. The first mast in Wales went live in Devauden in Monmouthshire before Christmas. There are now plans for the mobile industry themselves—. It's all coming in two parts: the first part is the mobile industry tackling what we call 'partial notspots', which is where you have one, two or three mobile providers rather than all four. So, that part is about getting all four providers to cover a certain area, and then the UK Government will tackle the 'total notspots'—so, those are areas where there is no coverage whatsoever. It's about a £1 billion programme. So, that will do all the heavy lifting in terms of improving mobile coverage in terms of actually deploying infrastructure on the ground.

And that'll be a big improvement, but it'll still leave a significant section of the Welsh land mass without coverage for many years to come, and we've been pressurising Ofcom to put additional pressure on the sector to bring forward those plans.

Yes, it'll leave about 20 per cent still not covered—of the land mass.

Thank you, Chair. The majority of my questions have been answered by the Minister, but I do have a few, and I'm glad Hefin brought up mobile coverage there. I note that, on the shared rural network, the Minister—the Under-Secretary of State in the Department for Digital, Culture, Media and Sport, I think it was last week, or the week before, certainly the week before—mentioned this in Parliament to a question from a Welsh MP and he mentioned that I think the Ministers are due a meeting. So, hopefully, that's happening soon. I just wondered—perhaps in that meeting—whether the Minister has had any conversations with DCMS about innovation in terms of mobile technology and how we develop that in Wales. It is true that the Welsh Government owns some infrastructure already, so perhaps that can be used as part of those conversations in encouraging the UK Government to use the Welsh Government-owned infrastructure instead of perhaps wasting money in implementing new infrastructure. So, I wonder if you've had any conversations on that, Minister. I think, in north Wales in particular, the Welsh Government infrastructure is FibreSpeed, which reaches right across from Anglesey through to Deeside.

Yes, that's a really good question and I'll ask Richard to come in to supplement it on some of the details around the thinking on innovation and DCMS contacts. But we have made an initial step of our own through the creation of the local broadband fund, and that's recognising that the cost of getting fibre to the premises connectivity to hard-to-reach premises is prohibitive at the moment, but there are things through innovation that can be effective in giving far better quality of connectivity than they have now. We've talked before about the experiment in Monmouthshire, based on the work on the Isle of Arran around tv white space, where you're using the old interference and the old television signal, which can carry a broadband signal of up to 10 Mbps. So, that's relatively easy to roll out and we are funding some of that roll-out and we've created this fund that local authorities can bid to for innovative non-fibre to the premises interventions. So, we've made an early start on that and there's more that can be done there for sure. 

In terms of the north Wales fibre link, that's not within the control of the Welsh Government at the moment. It's coming back into its control in the next coming years, and we're having active conversations now on how we can use that and similarly how we can use the cable we're going to be laying as part of the core Valleys line control that we now have with Transport for Wales, and how that can be spun out and made the most of, but perhaps Richard can say a bit more about that. 

The FibreSpeed network is also a series of 15 telecoms masts along that route as well. So, it's not just fibre and duct infrastructure that we have an opportunity to open up to the market and get more out of it; it's actual mobile infrastructure as well, which is very useful. And we know, in north Wales, there's a lot of active conversations going on now with our colleagues in UK Government around innovation and the digital signal processing centre in Bangor University. There's a lot of exciting stuff. We're hoping to harness that momentum. But, yes, a lot's going on, I think.  

11:20

Thank you for those answers, and I suppose I would stress the matter of urgency, really, and the speed of getting that technology delivered in north Wales, and then we could branch that out further, couldn't we, and use that as the competitiveness of Wales.

My final question just touches on the national infrastructure commission's report, and that highlights the dominance of Openreach. I think we've talked about that quite a lot throughout today's session. They suggest that this could be slowing down commercial broadband deployment in Wales. Does the Minister agree with that and, if so, how can it be addressed? I just want to pick up, and I'll just search, because I've had a lot of complaints about this in my constituency—. A company called People's Fibre were looking to deploy and start work in Deeside, and I'm conscious that the Minister might not have seen this, and the committee, but I'll send that through in due course. They started to establish the fibre network there and then, with no announcement, Openreach decided to deploy their own, and the words are,

'directly blocking both our progress and investment.'

Now, obviously, that doesn't seem sensible from the wider benefit for Wales point of view, and I just want to touch on one of the frequently asked questions that I found just as we were speaking. One of the FAQs following that announcement was,

'Why can't I get your service on Openreach's network?'

And the response was,

'After careful consideration, we've decided against this as it would mean that we wouldn't be able to offer the same speeds at the same affordable prices.'

Now, I'm conscious that you can't answer that in full, but surely it needs looking at to make sure this is a universal approach, and perhaps some conversations with UK Government as well.

I think that's a really good example of how inappropriate the privatisation of this utility was in the first place, because it assumes a level of competition that doesn't exist in lots of Welsh communities. So, much as we have encouraged a plurality of providers, there does remain a monopoly for BT and Openreach, and that's a good example of how, in practice, the theory doesn't quite work. So, I'd certainly encourage you, Jack, to raise that with Ofcom and the Competition and Markets Authority, because that is an example of the inadequacy of the current system.

Just briefly, do you agree, Minister, with the national infrastructure commission that the market is, potentially, being slowed down, then, by the dominance of Openreach?

I think there's a lot of good stuff in the infrastructure commission. They've benefited, clearly—. One of their commissioners is a former head of public affairs for Vodafone who, obviously, sees the great potential for the mobile market to play more and understands, from commercial experience, no doubt, the limits to competition. So, I'll just note that.

I think it's a good point well made. I think there are two solutions to that, neither of which we have any control over. One is for the competition regime to be sharpened and for Ofcom and the CMA to be more muscular in intervention, or for a more strategic role by the UK Government to take a planned approach to make sure that no communities are left behind, because, as we've discussed, these are now key utilities but they're not regulated as such by the Government.

Thank you, Jack. I've got about 20 more questions in my head, but we've got no time left. So, we will write, Minister, from the committee, and if it's possible to get a reasonably quick reply to any points that we raise—I can see Richard nodding—we'd really appreciate that. I don't think half an hour has done this justice, but we appreciate you agreeing to come into this slot so late in the day. We greatly appreciate that. With that, thank you, Deputy Minister and officials. I appreciate your time this morning.  

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

Cynnig:

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

Motion:

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

Cynigiwyd y cynnig.

Motion moved.

With that, I move to item 5 and, under Standing Order 17.42, I resolve to exclude the public from the remainder of the meeting.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 11:24.

Motion agreed.

The public part of the meeting ended at 11:24.