Y Pwyllgor Cyllid - Y Bumed Senedd

Finance Committee - Fifth Senedd

24/02/2021

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Alun Davies MS
Llyr Gruffydd MS Cadeirydd y Pwyllgor
Committee Chair
Mark Isherwood MS
Mark Reckless MS
Mike Hedges MS
Rhianon Passmore MS
Sian Gwenllian MS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Andrew Jeffreys Cyfarwyddwr, Trysorlys Cymru, Llywodraeth Cymru
Director, Welsh Treasury, Welsh Government
Gawain Evans Cyfarwyddwr Cyllid, Llywodraeth Cymru
Director of Finance, Welsh Government
Matthew Denham-Jones Dirprwy Gyfarwyddwr yr Is-Adran Rheolaeth Ariannol, Llywodraeth Cymru
Deputy Director Financial Controls, Welsh Government
Rebecca Evans MS Y Gweinidog Cyllid a’r Trefnydd
Minister for Finance and Trefnydd

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Bethan Davies Clerc
Clerk
Georgina Owen Ail Glerc
Second Clerk
Leanne Hatcher Ail Glerc
Second Clerk
Martin Jennings Ymchwilydd
Researcher
Mike Lewis Dirprwy Glerc
Deputy Clerk
Owain Davies Ymchwilydd
Researcher

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

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

Cyfarfu'r pwyllgor drwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:31.

The committee met by video-conference.

The meeting began at 09:31.

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

Iawn, wel, croeso i chi gyd i gyfarfod Pwyllgor Cyllid Senedd Cymru, ac, yn unol â Rheol Sefydlog 34.19, dwi wedi penderfynu gwahardd y cyhoedd o gyfarfod y pwyllgor er mwyn diogelu iechyd y cyhoedd. Yn unol â Rheol Sefydlog 34.21, fe gafodd rhybudd o'r penderfyniad hwn ei nodi yn yr agenda ar gyfer y cyfarfod. Mae'r cyfarfod hwn yn cael ei ddarlledu'n fyw ar Senedd.tv, a bydd Cofnod o'r Trafodion yn cael ei gyhoeddi yn ôl yr arfer. Ac ar wahân i'r addasiad gweithdrefnol sy'n ymwneud â chynnal trafodion o bell, mae holl ofynion eraill y Rheolau Sefydlog ar gyfer pwyllgorau yn parhau.

Felly, ar y cychwyn, gaf i ofyn a oes gan unrhyw un o'r Aelodau fuddiannau i'w datgan? Nac oes. Iawn. Gaf i nodi, hefyd, fel sy'n arferol, wrth gwrs, yn y cyfarfodydd yma, os byddaf i'n colli cysylltiad am unrhyw reswm, fod y pwyllgor wedi cytuno'n flaenorol, yn unol â Rheol Sefydlog 17.22, mai Siân Gwenllian fydd yn cadeirio dros dro wrth i mi geisio ailymuno? 

Dwi hefyd eisiau cymryd y cyfle i ddiolch i Nick Ramsay am ei holl waith fel aelod o'r pwyllgor yma. Dyw Nick, wrth gwrs, bellach ddim yn aelod o'r pwyllgor, ond rŷn ni'n gwerthfawrogi'n fawr iawn y cyfraniad sylweddol mae wedi'i wneud i waith y pwyllgor yma dros nifer o flynyddoedd. A tra ein bod ni'n diolch ni'n gynnes iawn i Nick, mae ein croeso ni yr un mor gynnes, wrth gwrs, i Mark Isherwood, sy'n ymuno â'r pwyllgor yma am yr ychydig wythnosau, efallai, sydd ar ôl o'r Senedd yma, ond yn sicr dwi'n gwybod bydd Mark yn gwneud cyfraniad gwerthfawr iawn i'n gwaith ni yn y cyfnod byr yna.

Welcome, everybody, to this meeting of the Senedd's Finance Committee, and, in accordance with Standing Order 34.19, I have determined that the public are excluded from the committee's meeting in order to protect public health. In accordance with Standing Order 34.21, notice of this decision was included in the agenda for this meeting. This meeting is being broadcast live on Senedd.tv, and a Record of Proceedings will be published as usual. Aside from the procedural adaptation relating to conducting proceedings remotely, all other Standing Order requirements for committees remain in place.

So, at the outset, could I ask whether Members have any interests to declare? No. Could I also note, as is usual, that, for the record, if, for any reason, I lose connection, the committee has previously agreed, in accordance with Standing Order 17.22, that Siân Gwenllian will temporarily chair while I try to rejoin?

I also want to take the opportunity to thank Nick Ramsay for all of his work as a member of this committee. Nick isn't a member of the committee anymore, but we do greatly appreciate the significant contribution that he's made to the committee over a number of years. And while our thanks is very warm for Nick, we also extend a warm welcome to Mark Isherwood, who is joining this committee for the few weeks that are left of this Senedd, but I'm certainly sure that Mark will make a very valuable contribution to our work during that period.

2. Papurau i’w nodi
2. Papers to note

Awn ni ymlaen at yr ail eitem, felly, papurau i'w nodi. Mae yna lu o bapurau i'w nodi, felly fe wnaf i ofyn inni gymryd nhw i gyd gyda'i gilydd, efallai, oni bai bod Aelod eisiau tynnu sylw at unrhyw un yn benodol. Fe welwch chi fod yna bump set o gofnodion o fis Ionawr, ynghyd ag wyth papur arall i'w nodi. Ydych chi'n hapus i'w nodi nhw gyda'i gilydd fel yna? Iawn, pawb yn hapus. Dyna ni. Da iawn. Wel, dechrau da.

We'll move on, therefore, to item 2, papers to note. There are several papers to note, so I'll ask everyone to take them all together, unless any Members want to draw attention to any one in particular. You'll see that there are five sets of minutes, as well as eight other papers to note. Are you happy to move them all together? Yes, okay, everyone is content with that. Thank you very much. That's a good start.

3. Trydedd Gyllideb Atodol Llywodraeth Cymru ar gyfer 2020-21
3. Welsh Government Third Supplementary Budget 2020-21

Awn ni ymlaen, felly, at brif ffocws y cyfarfod y bore yma, sef i graffu ar drydedd gyllideb atodol Llywodraeth Cymru. Ac, unwaith eto, mae'n bleser croesawu y Gweinidog Cyllid a'r Trefnydd, Rebecca Evans, atom ni—croeso—ynghyd â'i swyddogion, sef Andrew Jeffreys, sy'n gyfarwyddwr Trysorlys Cymru, Gawain Evans, sy'n gyfarwyddwr cyllid, a Matthew Denham-Jones, sy'n ddirprwy-gyfarwyddwr rheolaeth ariannol yn y Llywodraeth. Croeso i bob un ohonoch chi. Mi wnaf i gychwyn, os caf i.

We move on, therefore, to the main focus of the meeting this morning, which is a scrutiny session on the third supplementary budget of the Welsh Government. And, once again, it's my pleasure to welcome the Minister for Finance and Trefnydd, Rebecca Evans—welcome to you—and her officials, namely Andrew Jeffreys, director of the Welsh Treasury, Gawain Evans, who is the director of finance, and Matthew Denham-Jones, deputy director, financial controls in the Government. So, welcome to all of you. I'll start, if I may.

I'll kick off, if I may, with a couple of questions. I was wondering, Minister, if you could maybe clarify whether the advance of up to £3.8 billion recently approved before the publication and approval of the UK supplementary estimate relates to funding you'd originally expected to receive and were planning to incorporate into planning for this supplementary budget?

Yes, the £3.8 billion advance from the UK contingencies fund was reflective of the amount of additional cash that we expected to be approved at the UK supplementary estimate. Because of the timing of the supplementary estimate and the volume of the additional expenditure undertaken this year, the cash limit authorised in the main estimates in July 2020 was insufficient for our cash needs through to when the supplementary estimate would be approved. And that's been a widespread issue, with at least seven UK Government departments being affected. The Department of Health and Social Care, for example, was affected to the tune of £34 billion, and the Department for Transport by £5.8 billion, so this is something that we've faced across our administrations and also across UK Government departments.

The supplementary estimate was published on Monday, and that includes an increase in cash of £4.36 billion to the Welsh block grant. The resources from which this cash limit is derived are reflected in the third supplementary budget, which we're discussing today, and it does include the £660 million that can be carried forward using our additional flexibilities that we've agreed with the UK Government. So, the main estimate authorised a cash limit of £18.6 billion, which is forecast to be exceeded by the end of this month, but, when the supplementary estimate is approved in full by the UK Government, we will then have that advance repaid in full. So, essentially, this isn't additional money, but it is a mechanism for us to be able to have the cash that we need to make the investments and payments that we need.

09:35

Yes, okay. So, for clarity, then, does this supplementary budget include the expected final funding position for Wales for 2020-21? Because, if it doesn't, then the question, obviously, is: how will additional allocations resulting from anything else, really—subsequent funding announcements—be authorised by the Senedd?

It does reflect the final expected position in respect of funding to Wales for this financial year. Although information on the UK supplementary estimate wasn't received until very recently, we have been able to incorporate the position into this budget. There has been an announcement just this morning, I think, of some additional funding in relation to education in England. Now, we're still working to understand whether any of that falls in this financial year and what the implications might be for us, but presumably that would be, if there were consequentials from it, funding that we could carry over into next year as well, as we have done with all of the additional funding that has been announced since the start of the year.

Okay, thank you for that. I'm going to ask you a question now, to which probably you're going to tell me it's not your responsibility, because it refers to asking something of the next Welsh Government, but I'm just wondering whether some sort of commitment could be made in relation to providing an outturn report setting out the detail, then, of the position as was provided for 2019-20, because it's really useful, really, for us as a committee.

Yes, I would expect a future Government to do that, particularly because we have established the protocol between the Welsh Government and the Senedd in order to do that. So, it is one of the set pieces that you would expect from the Welsh Government, and, obviously, I can't make that a commitment, but I'm sure that an incoming Government and the finance Minister at that point would be very keen to provide that.

And I would hope so as well, yes. Okay, thank you for that. Rhianon Passmore.

Thank you very much, Chair, and good morning, Minister. You've mentioned some key facts already in your opening statement, Minister, so, with confirmation of additional funding being provided so very, very late in the financial year, as you addressed a moment ago, are arrangements for carrying forward underspends—from this financial year, to be clear—to the Welsh reserve good enough, and are they sufficient as well in terms of accessing the funding in 2021-22?

Well, as you say, the final additions to our budget were confirmed very late in the financial year, and, actually, so much so that we had to delay the publication of this supplementary budget to accommodate that. The Chief Secretary to the Treasury did allow a degree of flexibility in terms of carrying forward any consequentials generated through the operation of the Barnett formula over and above that £5.2 billion guaranteed funding that was previously confirmed on 23 December. So, the supplementary budget that we have in front of us today details the £660 million that we'll be carrying over into next year, and that is because of the very late notification. So, those funds will be available for use in full next year, and this arrangement is in addition to the existing Wales reserve flexibility.

Thank you, and, although it is very late in the day, this is welcomed. So, outside of these remarks, are you still seeking additional flexibility regarding access to the Wales reserve and borrowing? And is there a need for a systemic process to be put in place so that this is not a Russian roulette every year?

09:40

Yes, our view is still that, as a matter of principle, we should have unfettered access to our entire Wales reserve. I think the case for additional access during the pandemic is clear, and, of course, there'll be additional pressures on Welsh Government next year, in the next financial year as well. Although the UK Government disagree in terms of that access, we're still continuing to press the case and it's something that we do in partnership with colleagues in Northern Ireland and Scotland. Our draft budget reflected our plans to borrow £150 million in the next financial year. That's the maximum that we can access in any single year within the fiscal framework. So, the limited capital settlement that we have, really, this financial year, does mean that we have to maximise all the levers at our disposal in order to deliver on our capital investments. So, we don't have the kind of flexibility that we would like, but it is certainly progress to have that ability to carry over the late funding into next year. 

Sorry, Rhianon, Andrew has indicated that he'd like to come in here. 

I think the Treasury's view is that, by allowing us to carry forward the £660 million, they're giving us a very substantial degree of flexibility there. Obviously, £660 million is a large amount of money, but I suppose a key point from our perspective is how ad hoc all of this is and how difficult it makes planning. So, obviously, that £660 million has emerged after our draft budget was published and before the final budget is published, and that significantly changes our position next year in a way that we weren't able to predict at the time we brought forward the draft budget. So, it makes the planning process—the lack of systematic, clear arrangements makes our job problematic and it also makes the Senedd's job of scrutinising the Government's plans more difficult, because these changes happen very late in the day and in a very ad hoc manner. So, it's that kind of systematic change, I think, that we're looking for, rather than the kind of ad hoc, unexpected or having to make a special case to the Chief Secretary for flexibility, which is currently the system. 

We both unmuted me then, sorry. Just, really, one comment and one question. The comment is that, of course, any council in Wales can carry forward whatever they wish into their reserves and hold them in their reserves and spend them as and when they wish. The question is: is it not true that, as long as the money goes out from the Welsh Government to bodies that are not part of the consolidated accounts, it counts as being spent?

I will let Andrew comment on some of the accounting issues, if that's acceptable, Chair. 

I might ask Gawain to come in on that, actually, because I think he's more expert on exactly what counts as spent in our accounting framework. 

Thank you. Yes, it is true that local authorities, local government, work to slightly different rules. We're bound by the same rules as other Governments across the UK. Unfortunately, there isn't a blanket rule for this. We always have to be very careful as a Government in terms of something called payment in advance of need. It's an area that Audit Wales will scrutinise us on when it comes to the year-end position, the year-end accounts. So, in the majority of cases with local government, then, there is a good reason why we will fund local government and they're then able to carry forward money in reserves. But, as I said, it's very difficult to say that there's a blanket rule on this. We have to almost consider each case on its particular merit. 

Can I just come back on two very brief points? The first one is that we're treated just the same as any other Government department, as opposed to a devolved Government, which I think is a matter of concern and one I think the First Minister amongst others needs to take up with Boris Johnson and the Westminster Government.

The second one is that I probably didn't make myself clear: if it's off the consolidated account, it counts as paid, is what my understanding is. There are a lot of words around this sort of thing, but it didn't actually clarify. Am I right: is it off there, or not?

09:45

As I said, unfortunately, there isn't a blanket rule for this. In the majority of cases where we could present a case that the money has gone to local authorities, the answer would be 'yes', but we do have to consider almost each case in isolation, I'm afraid.

Sorry, I hate to go on about this, but it's not just local authorities, it's any body that is not part of the consolidated account. Housing associations could be given money, for example, capital money, because they're not part of the consolidated account. Further education colleges could be given money because they're not part of the consolidated account. Universities could be given money, because they're not part of the consolidated account. If they're not part of the consolidated account, that money is counted as spent.

Unfortunately not; using the example there of universities, we would still have to consider were we making a payment in advance of need to that university, so under the consolidated rules, we couldn't just give a lump sum, say, next week to one of these organisations and expect that to be treated as having left our books. The Audit Wales would look at it in terms of were we paying that organisation in advance of need.

The last question: can Audit Wales do anything about it?

At the end of the day, Audit Wales—it's obviously up to the auditor general what they might wish to comment on, but they could qualify the Welsh Government accounts. If they're unhappy with anything that we do in terms of the funding we provide, it would be for the auditor general to decide whether we were to qualify. 

Okay. Thank you, Mike, for that. I hope you're not encouraging the Welsh Government to play the system.

Sorry, just to add, Chair, that the third supplementary budget, which we have in front of us, is very much aimed at spending usefully all of the funding that the Welsh Government has received as a result of the coronavirus-related Barnett consequentials that have come to Wales. Of course, we have the carry-forward of additional funding for next year, and I think that that is the right thing for us to do, because I'll be publishing the final budget next week and you'll see that we've been able then to provide some certainty to local government and health, for example. I've talked about my intention to do that before, so I think that we're able to manage the situation that we have. It's difficult and challenging, but it is at the end of the day something we have been able to manage.

There we are. Okay, thank you for that. Back to you, Rhianon, and thank you for your patience.

Thank you very much, Chair. So, under the current plans, what will the overall funding within the Wales reserve be at the end of the year and how much of this will you be able to access in 2021-22? You've partially answered that. Thank you.

As things stand, the Wales reserve will hold [correction: held] approximately £260 million at the end of this [correction: last] year, and that will then be supplemented by any underspend that might emerge against the totals that we have set out in the supplementary budget. Our draft proposals for next year were based on drawing down £125 million of revenue from the Wales reserve and in terms of the limits that we have next year, they remain unchanged in the sense that there's the maximum of £125 million revenue and £50 million of capital that we could draw down.

Thank you. And in regard to the substantive point this morning already in regard to transparency regarding funding and policy making between the UK Government and devolved nations, and it seems to be a matter for others as well, has this improved since you spotlighted, as has this committee, some frustrations with communication at ministerial level?

Things have remained quite difficult. It was good that we were able to negotiate that guarantee. I think that was a game changer in terms of allowing us to be able to plan ahead, but equally, it didn't come with the kind of clarity and transparency that we would have needed in order to understand the situation. So, there have been points in the year where we've been under the strong impression, and been given the information that, 'This is your final amount for this final financial year. Now operate within that.' But then randomly, at points in the year, then you'd have allocations of quite large amounts coming to Wales as a result of the Barnett formula. So, there hasn't really been that kind of transparency, which would have enabled us to plan better.

09:50

It seems to be a bit like a, 'Please, Sir, can I have some more?' scenario, and I presume that this situation, as far as you can see, is mirrored across the four nations, so is there a particular issue here in Wales?

No, I think this is an issue that has affected all of us, certainly in Wales, Northern Ireland and Scotland, and it's one of the issues that comes up frequently in our trilateral discussions that we have between ourselves, but then issues that we raise directly with the Chief Secretary as common concerns, if you like. But I think it goes back to Mike Hedges's point, and he is right that my sense is that the UK Government treats us as another—well, the Treasury at least treats us as another department, but we are a devolved administration and Government, and I think that that does require some different level of engagement, if you like, and understanding.

Thank you. The supplementary budget includes around £100 million revenue and £1 million in capital reserves, I'm told. With the ongoing pandemic situation, how are you managing the need to hold sufficient reserves with the risk of breaching limits to carry forward funding between financial years?

Yes, this is a really challenging balancing act. The plans set out in the budget hold just over £1 million [correction: £101 million] in reserve, which will be carried forward, and based on the current Wales reserve figures, this is around half of the headroom that we have in that overall £350 million that is placed on that reserve. I do think that the level that we have does provide a degree of additional contingency should we need to use it, because of course, if this last year's taught us anything it's that things can emerge late on and without much notice that we have to respond to very quickly. So, I do think that we've struck that balance, really, in terms of flexibility and planning.

Thank you. What is the rationale, finally, for not utilising your borrowing powers to draw down the extra £125 million—it says here—of funding to support your spending during the pandemic? You've also mentioned briefly at the beginning the additional funding for schools in England. I don't know if you've got any further comments on that, to close.

Well, I'll just refer to the funding in England. Since we've been in this meeting, I've understood now that that's funding for the next financial year, so that will be something that, if there is additional consequential funding available to us, we will look to allocate at a future point. But then in terms of this financial year, we're no longer planning to borrow. Our capital plans, however, have increased dramatically in this supplementary budget, and this has been financed by drawing on the Wales reserve, by transfers from other Government departments and also by switching revenue budgets to capital. So, there are a number of areas that you'll see in the supplementary budget where we have significantly boosted our capital spending plans to support people during the pandemic, but also to lay the plans for the recovery. You'll be familiar with the reconstruction package that we announced back in October, and that included over £220 million of capital spending, and of course we've talked lots about how we will only use borrowing for capital purposes once we've exhausted the other forms of finance. So we've certainly increased our investment in capital over the course of this year, but we're particularly recognising that in our supplementary budget.

And finally, if the Chair will indulge me, is that figure of £125 million or £150 million—I don't know which is correct—enough of a figure in terms of us as a nation to be able to borrow should we decide to do that?

Our position has always been that we should have a higher borrowing cap on an annual basis, but then a higher aggregate borrowing cap as well, and that would enable us to plan better ahead. I think that that's something that we continue to pursue with the UK Government in terms of the development over time of the fiscal framework that we have.

Diolch yn fawr, Rhianon. On we go, then, to Mark Isherwood.

Thank you. Bore da, good morning. When you responded to the committee's report on the second supplementary budget, before I was a member, I understand you reported that around £940 million of the £1.3 billion provision for COVID-19 funding for the NHS had already been allocated to individual bodies. What is the position in that respect now? What is your assessment of how much local health boards are expecting to spend on COVID over the remainder of this financial year? And again, what assessment have you made or what figures can you give us for any gap that might remain between that expected expenditure and the amount required to meet the resource and capital costs of those health boards for this purpose? 

09:55

Well, we've now allocated over £1.1 billion of funding to the NHS, and further allocations will be confirmed during March. All NHS organisations have confirmed to us that they do have the funding that they need in order to continue their response to COVID, including, I think, making that remarkable progress on the mass vaccination programme. And Welsh Government officials and health finance officials are in constant discussion in terms of monitoring the position in-year to explore whether or not additional funding is required, but we have had that confirmation that the organisations do have the funding that they need in order to respond to the pandemic. We anticipate the outturn will be close to the £1.3 billion funding allocated to the NHS, but that will be confirmed in early summer when the NHS accounts are completed. 

Thank you. It's the committee's understanding that Hywel Dda and Swansea bay university health boards are estimating an aggregate deficit of almost £50 million for the year. What is your proposed approach for dealing with that? 

Well, the forecast deficits in Hywel Dda and Swansea bay are not due to the impact of COVID, and they do relate to the planned position for this financial year, which was actually determined prior to the onset of the pandemic. And in terms of how we will approach that, the Minister for Health and Social Services has confirmed that he will be managing the impact of those deficits within the health and social services main expenditure group, so there's no requirement for further funding. 

Okay. What assumptions have been reflected in your allocation of an additional £15.7 million for contact tracing, and to what extent is the management information reflecting them? And will additional resources be required? 

Well, we had a review of contact tracing during the November firebreak, and that did identify at the time the need to urgently increase the workforce in order to rapidly ramp up the contact tracing capacity from 11,000 to 21,000 in new cases per week. And this was in accordance with what was at the time the reasonable worst-case scenario presented to us by the work that Swansea University does to advise us on that. So, based on that and the advice then from TAC, we calculated that the overall contact tracing workforce needed to be increased from 1,800 to 3,100 to cope with those projected numbers. And then, to accommodate that, we increased the funding for this part of our response to the pandemic by over £15 million. 

However, we've also, alongside that, taken some other actions in terms of responding to the need to trace contacts. For example, we've introduced a national surge team, so when you do get those hotspots and those outbreaks in certain areas, that national team can support the local response to contact tracing, which has been very successful. We've also introduced the e-forms so that individuals can alert the system to contacts that they've had online and, again, that's made things more efficient. So, as a result of those issues and the decline in case numbers, the contact tracing workforce now is around 2,500, so that's fewer than we'd actually planned for, but it is sufficient to meet the current needs. 

So, if there is any surplus funding in relation to this, I've agreed with the health Minister that it can be repurposed for other COVID response measures within the health and social services MEG. 

As you indicate and, obviously, you've done the review, the number of positive cases eligible for follow-up has decreased, and we hope that will remain the case, but were that not to sustain, what provision have you made for ramping up again?

We do have quite a good amount of flex within the system to move very rapidly, and I've put funding in for next year to ensure that that contact-tracing workforce can stay in place. So, there is £10 million already allocated within the draft budget to ensure that that's able to be carried forward into next year without any disruption to the service of the business there, but we're also having some further discussions to ensure that the amount that we've allocated is the right amount for next year, or whether we do need to bolster that with some additional funding. There will be more said about that at the final budget, which will be published next week.

10:00

The figure that you have just referred to, does that reflect work carried out to assess the potential cost or is that simply a sum of money that you hope might be sufficient?

No, we've based this on the work that was carried out in terms of the review, but then working very closely with local authorities in particular, and also health boards, to understand their concerns or their plans, really, for contact tracing, to ensure that we have the most robust system in place. It's very much based on constant discussions and information and intelligence gathering. So, there's £10 million for next year, but, as I say, in response to some of that additional information and intelligence that we have, I might be able to say more at the final budget next week.

Just to add that the model of delivery of this function has been evolving very rapidly since it was first put in place last year. I think for a function that needs to be geared up to deal with up to 20,000 cases a week, which could then fall to a very, very small number quite rapidly, which is what we're seeing now, it's very difficult to have a conventional delivery model for something of that nature, where your demand fluctuates so violently from period to period. So, there's a lot of work been going on about what does a sort of long-term, sustainable function of this nature look like, where you need really multifunctional people who aren't always doing contact tracing, because they won't always need to be doing contact tracing, but you need to have people who are able to do that work when it's required. So, the plans for next year have evolved a huge amount compared to perhaps where we were six months or so ago, in terms of thinking about how this function was going to operate and how it would be budgeted for.

Okay, thank you. My final question in this section: under the Welsh Government's vaccination strategy, how many people are assumed to be receiving or will receive first and second doses of the vaccine by the end of the financial year? And in that context, how does the £27 million allocated in the budget for the deployment of vaccines correlate with that?

We published our national vaccination strategy on 11 January, but we do intend to publish an update this week, potentially today, in terms of our national strategy, and that will reflect on the progress that has been made, but then also on the fact that we're moving into the second milestone in our strategy. And so, although this doesn't align exactly with the financial year, we would expect, within the second phase, to reach the point where 1.8 million people have been vaccinated. That's by the end of April. So, it doesn't align exactly with the financial year, but of course it is another one of those areas where provision has been made in order to ensure that there's no gap in business continuity in terms of delivering on that strategy.

Okay. Thank you very much. We move on then to Mike Hedges.

Thank you, Chair. Diolch, Gadeirydd. Allocations being made from the contingency fund: what criteria is used to decide what allocations are going to be made from the contingency fund, and what do you expect that to achieve?

We've made additional funding available for the largest of our spending portfolios, if you like, in terms of providing some element of contingency. Again, this is about enabling us to respond as an organisation very quickly to any changes or challenges that might appear between now and the end of the financial year, and I have to say any opportunities that might appear as well. So, in terms of what criteria we're putting around it, it is very, very flexible, but any use of the contingency funds will be agreed both by myself and the Minister responsible within the relevant MEGs to ensure that we continue the approach that we've had right throughout the pandemic of having that kind of central oversight, but the ability, obviously, of individual Ministers to determine what's necessary within their own portfolios.

10:05

Thank you for that. My next question is about primary care projects. One of the advantages we've had over COVID—not that there are very many—is that we've actually got primary care talking to secondary care and secondary care talking to primary care much more efficiently than they ever did before. Is any of this money available to continue this improvement of primary and secondary care working together? Because I know that people keep talking about health and social services working closer together; my big concern is getting primary and secondary care working closer together. And this idea that some people have that if you put something under the same director everything will work seamlessly, as if it is one, is something that we've discovered over a long period of time doesn't work.

Yes, I think that's one of the benefits, if you like, that will come out of the response to the pandemic, which is just that improvement in working relationships between different layers and different levels in different organisations. Another example would be the way in which the Welsh Government has worked in real partnership with local government in terms of delivering on the strategy, and then Mike Hedges's example of primary care and secondary care working much closer together. So, we need to find ways—and I don't think this is all about money—of ensuring that those ways of working are continued into the future and those relationships are built on. There is some funding specifically relating to primary care within the supplementary budget, although it's not for that relationship change work, it's more capital funding in terms of some of the projects that we're able to bring forward into this year.

I think the point I was trying to make is that IT systems have a history of being incompatible and it's about actually ensuring that there's compatibility, or spending money to make sure that there's compatibility between what hospitals hold on people, the information that hospitals want to provide for people who are being discharged, making sure that that gets directly to the GP practice and that the GP practice can then go back and ask further questions, so they have a dialogue and not, literally, a series of letters.

Yes and I know that I'm probably straying well outside of my own portfolio right now, but I do know that there's a lot of work going on in the health and social services portfolio in terms of better information sharing, both between those parts of the service that Mike Hedges has talked about, but also pharmacy as well, because that's really important in terms of having that level of information about an individual's needs and their case, and so forth. But I'd be more than happy to ask the health Minister to provide a more detailed update on that work, because it is important in terms of improving the care that people receive.

One comment before I move on to local government is that, for reasons that appear bizarre to me, GP practices are much better at dealing with pharmacy and providing information to them and having a return of information to them than they are with the major hospitals, and I think that that has to be a matter of concern, even though the hospitals come under the same organisation.

But moving on to local government, it's been a very difficult year for local government. Income has dropped, but it has not dropped the same for all local authorities. I mean, if you look at the bigger authorities, or the city authorities, they've lost a huge amount of car parking income, they've lost money from the major event centres. And I'm just looking, as Rebecca and I represent Swansea, at things like the leisure centres, things like the Swansea Grand Theatre, things like some of the other sporting venues that raise money to pay for their upkeep; that income hasn't come in. Also, if I can just move on to schools, schools themselves have lost money; they've lost money from a whole range of events. It's probably fair to say that parent teacher associations and the friends of schools have probably raised very little or no money in the last 12 months because the events they have to raise that money have not occurred. So, I'm just wondering really how you're going to ensure that local government, when it all comes out, isn't severely disadvantaged and that it won't have an effect on education, social services, and other key services.

10:10

We've made available, through the course of this financial year, around £0.5 billion of additional funding for local government through the local government hardship fund. Some of that funding does speak to exactly the point that Mike Hedges raised, in terms of loss of income for local authorities in all of those leisure services, the catering services that they provide and are able to generate funding from, the car parking, and so on. So, we have made some additional funding available there.

We've also made additional funding available in respect of the lower rate of collection of council tax, for example, and, of course, the expanded number of people who are now eligible for the council tax reduction scheme. We've made additional funding available in respect of some of the responses on free school meals. So, we've tried to work with local government to understand where the real pressures are and to provide a system that is fair to local government, because, as has been described, not every local government will face the same issues. So, the fund has been based largely on a claims basis so that we're able to respond appropriately to each of those local authorities' needs.

Mark Isherwood wants to come in before we move on to Mark Reckless.

If I may, thank you. At the interface between both primary and secondary healthcare and health and social care, we know the third sector in particular plays a key role in prevention and early intervention, and in delivering essential services in partnership with the statutory sector and in partnership with communities. And, of course, that's become even more essential during the pandemic, helping to support the statutory sector, but also reducing greater pressure on the statutory sector. What consideration, therefore, and budget provision have you given to incorporating that co-productive provision into these areas, reflecting not only the reality of the essential services they're providing, but also Welsh Government legislation—the Social Services and Well-being (Wales) Act 2014 and the Well-being of Future Generations (Wales) Act 2015—which require the Welsh Government to incorporate that?

Well, we've very much considered the third sector and the voluntary sector as one our four key pillars of our response to the pandemic. So, we've got the health and social care pillar, the local government pillar, transport, and also the role of the third sector, and we can see that reflected in the £24 million COVID-19 third sector response fund, which we put in place in April 2020. That aimed to do a number of things, one of which was supporting those third sector organisations to respond to the crisis, but also to support those organisations that were suffering as a result of the loss of fundraising income, just to help them support the crisis [correction: to help support them through the crisis]. So, there was a resilience fund allocation of around £10 million for that, recognising that, in the recovery, these organisations are going to play such an important role that they need to survive. So, we have made some significant funding available. I think, within this third supplementary budget you'll see £4.7 million allocated, but that's part of a larger picture that began at the start of the pandemic.

And what assessment's been made of the funding requirement to support those essential services, not just within stand-alone separate third sector budgets, but in terms of that joined-up working with the statutory sector at national and regional level, and local level of course?

We have really good engagement with the voluntary sector and the third sector, generally led by Jane Hutt in her role as Deputy Minister and Chief Whip. But I think most Ministers will have some kind of engagement with the third sector. I know that I've met with the third sector during my budget preparation work to ensure that we heard their voice and gave them the opportunity to set out their priorities for funding and to describe the challenges that they're facing as well. So, I think that, again, this is one of those areas where engagement has been exceptionally good. Our shadow social partnership council has been meeting fortnightly thorough the pandemic, and, again, that's an opportunity for the third sector to be directly involved in the response to the pandemic, and, like Mark Isherwood, I would pay real tribute to the work that they've been doing. 

10:15

Iawn, diolch yn fawr iawn. Mark Reckless.

Thank you very much. Mark Reckless.

Good morning, Minister. The supplementary budget allocates £90 million or so to the local authority hardship fund. Can you outline whether this funding has a specific purpose, or whether it's for general loss of income and additional costs? If the latter, can you outline how you've reached that figure?

It's allocated for a number of specific purposes. So, £25 million is allocated for lost savings, and that's because, despite the good settlement that local authorities had for the 2020-21 financial year with an overall increase of 4.3 per cent, local authorities were still planning on savings and reprioritisation of funding to support their inflationary pressures and their demand pressures. But, obviously, due to the pandemic, not all of those have been able to be realised, so we've worked with local authorities to provide additional funding to supplement that. All authorities were in a different place in terms of the achievement of their longer term saving plans. So, funding will be distributed on a formula basis, which I think I'm right in saying has been agreed now with local authorities and which my colleague Julie James has been leading on as the Minister for Housing and Local Government. 

Alongside that, there's £25 million for digital transformation, and that's in recognition of the fact that local authorities have delivered significant transformation in terms of supporting their workforce to work from home in line with the regulations, and £7.5 million has been allocated for free school meals, and that's to continue the current level of support right through to the Easter holidays this year. And then there's £5 million for the changes that are related to policy developments and developments in thinking. An example there would be additional funding to reflect the fact that pupils were required to wear face masks in certain areas. So, we've tried to reflect that and also tried to reflect the fact that local authorities have lost income in terms of court cases as well. So, exploring where those challenges lay for local authorities was a piece of work we did in partnership with them.

And then, finally, there's the £30 million contingency, which is in the same kind of sphere as that which I described when we talked with Mike Hedges earlier about the real flexibility that that will give to respond to issues emerging before the end of the year.

I wasn't clear about your reference to local authorities losing money through court cases—I wasn't quite clear what that is. But more broadly, could I ask you, when you refer to the formula, does that take account of the type of issues that Mike Hedges raised, and in particular his concern that larger cities were losing more but not having that made up because they generally had a higher proportion of non-council-tax income to start with?

So, just to be clear, the court cases reference is in relation to costs that they will receive for council tax cases—so, pursuing debt and so forth. There's lost income there, where we have sought to plug that gap for them in this particular case.

And then the formula that we allocate funding to varies depending on what we're trying to achieve. So, on the lost savings, for example, there was a formula. I can provide more information via the local government Minister on that, but, as I say, these things are done in partnership and in agreement with the Welsh Local Government Association. But then, on other cases through the hardship fund, it will be on a needs basis. So, local authorities, in respect of loss of council tax receipts, for example, will make that case on a very local basis and we allocate funding accordingly.

On the second supplementary budget, you allocated an additional £306.6 million in emergency funding to local authorities, of which £264 million was hardship fund. So, there's between £42 million and £43 million of stuff that was within the emergency funding, but not hardship fund. On this occasion, I believe you've allocated a further £92.5 million in emergency funding, and the figure I have says it's just over £90 million for the hardship fund. What's happened to that non-hardship-fund emerging local authority funding, and why don't you need it in this budget, having had a substantial slug in the last supplementary budget?

10:20

I will ask one of the officials at this point to step in, while I just consult my database. Thank you.

Shall I start? I'm not sure I fully followed the question. The bulk of funding for local authorities has been provided via the hardship fund, but there have been other streams of funding for local authorities, so—

There was quite a lot in the other streams of funding in the last supplementary budget but very little in this one, and I just wondered if there was a reason behind that.

I think, as we get closer to the end of the year, there's more clarity about what exactly the additional costs have been related to, although there is still some contingency built in to pick up things that aren't specifically identified, but I think it is probably worth noting that most of the funding that we'll end up giving to local authorities will have been allocated based on information provided by local authorities about where their additional costs have arisen, rather than through general allocations, if that's helpful.

Thank you. Shall I move on to education? The Children's Commissioner for Wales noted that a survey conducted in January this year showed that 42 per cent of schools and colleges did not have enough digital devices for learners to access remote learning. How have you ensured you've allocated sufficient funding in this budget to address this, or is funding not the only issue?

The education Minister was really aware of this and concerned about this at the start of the pandemic, and at that point she committed up to £3 million of the £30 million Hwb edtech programme allocation in terms of responding to that digital need, but clearly the need was very great. So, within this supplementary budget, you'll see that we've allocated additional funding of £11.9 million capital, and that will allow us to purchase an additional 50,000 devices for schools, and that will take the total number of devices that we've been able to allocate to children via their schools to over 180,000 to ensure that children are able to do their work from home. So, I think that that has significantly been ramped up over the course of the year, and I would always encourage any families who are still struggling to speak to their school, and schools, in my experience, have been very keen to access those devices to ensure that children can undertake their work.

We've also been really aware that there have been children who just don't have a suitable Wi-Fi connection to undertake work, so we've provided around 12,000 Mi-Fi devices to ensure that schoolchildren are able to access the internet to do their home learning as well. So, we try to be very responsive.

Thank you, and I accept this is a difficult issue. Do you accept, from the report I quoted, there was a mention of slow delivery of equipment from central Government. Does that reflect there not having been enough funding issued at points when there was demand, or is it a logistical issue of joining up the particular demand from particular pupils to the overall pot of funding Welsh Government has provided?

I would say it was a logistical issue, but probably a step removed from the scenario that you describe, in the sense that we were at a time where everybody in the country and across Europe and countries across all over the world were all trying to source the same kind of kit at the same time. So, there were certainly challenges there in terms of getting our hands, really, on the devices that we needed.

On the allocation of £50 million of revenue funding to higher education to target financial hardship and student mental health, isn't the real issue here that students are paying very large sums of money to universities in fees and to accommodation providers but are getting very little out of that, and that's impacting on their mental health?

10:25

I do recognise that that is a particular issue for students. I don't know if I should declare an interest at this point, as my husband is a full-time Master's student, and I know from his perspective it's been a very different experience to that which he thought he was going to have at the start. I do think there are several issues here. The £50 million is there both in terms of hardship and support for mental health. So, students who are experiencing financial hardship are able to access additional funding through the universities, and I would encourage students to do that if they are finding themselves in those difficult situations. And we were really aware that lots of students need to work to get themselves through university, and to do so often in those sectors that have had to close at the moment—the hospitality sector in particular. That's one of the reasons that we've included financial hardship within that fund. But, again, a significant amount of this funding is there for mental health to recognise the challenges that students are facing. 

One of our colleagues in the Senedd yesterday was asking the education Minister about that point of student fees and so forth, but she made the point, of course, that it's the UK Government that holds the student fees book—

Was it? Okay, so this is the same kind of issue that she described yesterday in terms of what it's possible for us to do in that particular area. But there's absolutely no denying the fact that this is a difficult area for all of us, and particularly for students. 

I'm encouraged that the finance Minister and the education Minister have at least given me the same answer to the question, albeit posed in different ways. Thank you. 

You've allocated £44 million from the general capital reserve in respect of Higher Education Funding Council for Wales research. Can you expand on this research and what that extra allocation is intended to achieve?

Yes, there is £44 million allocated to HEFCW, but that's intended for estates and kit investment, bearing in mind the fact that they've scaled back their capital investment plans in light of the pandemic. Obviously, we see them as anchor institutions and want to invest in them. I'll review our documentation to make sure that that's clear in the narrative as to what that funding is specifically for, but it is more about kit and a focus on the green estate, decarbonisation and digital and so forth, rather than research. I'll look at that. 

Thank you. And finally from me, it's a smaller sum, so again if you don't know the detail I'm happy to have something in writing, but you've allocated £4.3 million to support needs-based educational projects, and I wonder if you could just tell us what the purpose of that was and whether the money will likely be sufficient. 

Yes, we've allocated capital reserves funding of £4.3 million to education projects, but that's to offset the reduction in EU income claimed in the current financial year. So, the deferred income will be drawn down now in future years and the budget allocation for those projects will be adjusted to incorporate the income stream. But there'll be no effect on the delivery of these projects; it's more about the profiling of funding for those projects to be paid on a needs basis, where the claims profile can be adjusted within a particular year. 

Thank you very much. I'm grateful to you for your time, Minister. You've made a number of statements through the current financial year, you and other Ministers, about support for business. I think it's fair to say that this has been one of the most contested parts of the overall spending programme on the pandemic. There have been a number of claims and counterclaims made through the year about spending, about value for money and the rest of it. I'd be interested, Minister, if you could reassure the committee that the money that is available to be spent supporting businesses is being spent supporting businesses. There have been a number of interventions, mainly from London, frankly, saying that there is £1 billion or more than £0.5 billion being held back for some reason. I wonder if you could answer those charges.

10:30

Yes, certainly. I want to be really, really clear that, in terms of the funding that the Welsh Government has received from the UK Government in consequential funding relating to spend to support businesses in England, we've actually spent more than the funding that we have received in that regard here in Wales, and that does speak to the priority that we've put on supporting our businesses here in Wales. So, we've allocated more than we've received. We've also allocated in the order of £2 billion to support businesses and, actually, £1.8 billion of that has already gone into the accounts of businesses. I think that that achievement is phenomenal in terms of the kind of speed that we're trying to get these business grants out to the necessary businesses. I think that we've done a very good job in that regard, but I appreciate that when you're waiting, days matter, don't they, when you're running a business, a small business in particular. I do appreciate that if you are waiting for a grant, it can be extremely frustrating, but we have managed to get the grants out very quickly, I think.

And of course, it's even more frustrating when you've got people who probably should know better telling you on your tv screens that the money is actually sitting in a Minister's back pocket somewhere. It might be useful, Minister, if you could write to the committee outlining perhaps a little more fully, really, a response to that question. I think committee Members would find that very useful.

In terms of where we are now, looking at this supplementary budget, the economy and transport department seems to be receiving the lion's share of funding available at the moment. Is this it? Is this the last allocation of funding available that will see people through this financial year? What plans do you have in terms of ensuring continuity of support through the coming few months?

Aligned to the outcome and alert levels that will be identified at the review on 2 March, I'm already actively looking at topping up the non-domestic rates based grants, for example, which are delivered by the economic resilience fund, in order to [correction: for example, in order to] ensure that money can rapidly be distributed to those businesses who may be affected should we not be moving out into a position where they're able to open again. So, that work is already in train with a view to providing additional funding this financial year, should it be necessary for businesses.

Just on next financial year, obviously the final budget is going to be published next week and that will say something about the Welsh Government's approach to providing funding for business support that might be necessary in the next financial year.

I appreciate that. It's the continuity of support across the financial years that I'm interested in. In terms of learning, the Welsh Government has made considerable amounts of money available to businesses, and you have evaluated some of those interventions already. To what extent are those evaluations determining and guiding and driving the decisions that you've taken to date?

As you say, we have undertaken some evaluation work specifically on our NDR grants, which has helped us in terms of determining the way forward and constantly seeking to improve the schemes that we've put in place, but also the swiftness of making those allocations. For the NDR-based grants delivered through the local restrictions funding, a registration system was introduced at the second phase, and that was able to allow us to target more clearly the support to businesses. And of course, we've changed the focus of the support that we've put in place, with the later phases looking specifically to support non-essential retail, hospitality, leisure and tourism, for example. Again, that's in response to the changing situation and the alert levels. We've also introduced the discretionary support, and I think that that has been absolutely invaluable in enabling us to plug the gaps as far as we possibly can for businesses that weren't in receipt of non-domestic rates bills. They weren't able to access that funding, but they could then make a case to the local authority for other funding. And we've looked to plug other gaps—our support for start-ups, for example, for freelancers. So, we've seen our role, alongside providing the kind of support you would expect for those sectors, as matching the kind of offers there are across the border, and actually looking for gaps in support from the UK Government that we can plug to ensure that those businesses here have the best possible deal that we can offer.

10:35

I think that's a fair analysis. I'm interested in the discretionary system that you've put in place. How tightly are you monitoring this, both in terms of the demands upon it and the ability of local government to make payments? One of the things that concerns me as a constituency Member is that, of the different structures available, and channels of funding that the Welsh Government has put in place, it's probably these discretionary elements where I feel that I would want or require or wish to see a greater sense of reassurance that the Welsh Government feel that sufficient funds are in place, and also that the structures to get those funds into businesses are in place to do that in a way that is timely, efficient and that meets the needs of business. So, those are the funds that I'd like to hear more reassurance on.

In terms of the discretionary fund in particular, we have issued guidance to local authorities and officials within Welsh Government have met with local authorities as well to ensure that the guidance is fully understood and that that full range of discretion is being used in terms of that particular fund. Obviously, sometimes people write to us with specific cases of local businesses who haven't accessed that funding, and whilst there isn't a formal procedure for making appeals, there is of course the recourse to the public services ombudsman, which might be there as an option for some businesses who feel that they have not had their case dealt with correctly.

I don't think anybody wants to go down that route at the moment. What people want is to see business support when they need it. It would be useful if you could reassure the committee that you are actively managing that—not just providing local government with the necessary guidance, but actively managing the delivery of that fund, and local government in delivering on that guidance. It's the active management that I'm concerned about, to ensure that that is actually getting out of the door.

We're actively supporting local government to deliver the scheme. Ultimately, we have put the discretion in the hands of local government, but we have sought to enable them to do that job by providing that robust guidance and also the support of officials here should they need it. It's not a fund that is directly delivered by Welsh Government, but it's one that we support local authorities to deliver as well as possible within the guidance that we have set for them.

Chair, with the Minister's agreement to write to the committee on the wider issues of business support, I'm very content with that.

Iawn. Diolch, Alun a diolch, Weinidog. Ymlaen, felly, at Siân Gwenllian.

Okay. Thank you, Alun and thank you, Minister. We move on to Siân Gwenllian.

Diolch, Gadeirydd. O ran dwyn symiau sylweddol o arian cyfalaf ymlaen i'r flwyddyn ariannol nesaf, pa ystyriaeth ydych chi wedi'i rhoi i gyflymu prosiectau sy'n buddsoddi mewn lliniaru'r risg o lifogydd, datgarboneiddio neu'r agenda newid hinsawdd?

Thank you, Chair. In terms of carrying forward significant sums of capital funding to the next financial year, what consideration have you given to accelerating projects that invest in mitigating the risk of flooding, decarbonisation or the climate change agenda?

You'll see in our third supplementary budget that we have tried to bring forward schemes that speak very much to all of those particular agendas that Siân Gwenllian has described. You'll see £21.6 million allocated to local authorities to help cover the costs incurred with dealing with the recovery from the impacts of the floods of last year. That's still an ongoing challenge for local authorities, and you'll see funding there for Rhondda Cynon Taf, Torfaen, Wrexham, Newport, Neath Port Talbot and Bridgend in recognising that this was an issue that impacted large parts of Wales. You'll also see funding within the third supplementary budget in relation to our innovative housing programme and optimised retrofit. We've allocated funding to bring some of that work forward and to accelerate the pace of that important work.

Also, in terms of responding to the climate emergency, you'll see allocations for Swansea Bay University Health Board's solar farm at Morriston, and that will help the hospital offset some of its energy costs and move it towards that carbon-neutral contribution to the public sector that we all want to see by 2030. You'll also see an expansion of the circular economy fund, and that additional funding of £12.5 million is allowing another 50 projects to be brought forward as well. There's additional funding for local renewable energy, a green energy stimulus, smart living hydrogen hubs and additional funding for the resilient national parks and decarbonisation of transport infrastructure, which I know is something you're particularly interested in, because we had some discussion in the Chamber on that yesterday. So, there's a lot, I think, in this supplementary budget that accelerates the work that we're doing in this area.  

10:40

Diolch yn fawr iawn. Dwi'n cael trafferth efo'r cysylltiad, dwi'n meddwl. Dwi ddim yn siŵr iawn os ydych chi'n fy nghlywed i. 

Thank you very much. I'm having some problems with the connection, I think. I'm not sure if you can hear me. 

Ydyn, rydyn ni'n eich clywed. 

Yes, we can hear you. 

Ocê. Mae o'n rhyw fynd a dŵad, mae arnaf ofn. Mae'r gyllideb atodol yn nodi bod £1 miliwn o gyllid canlyniadol wedi ei gynnwys mewn perthynas ag atgyweirio tomenni glo sydd yn arbennig o agored i niwed. Pa ddyraniadau sydd wedi cael eu cynnwys yng nghyllideb eleni i ddechrau mynd i'r afael â'r risgiau uniongyrchol, a sut mae'r trafodaethau efo Llywodraeth y Deyrnas Unedig yn mynd yn eu blaenau o safbwynt y cyllid fydd angen i'r dyfodol efo hyn? 

Okay. It's coming and going, I'm afraid. The supplementary budget does note that £1 million in consequential funding is included in respect of the repair of coal tips that are particularly vulnerable. What allocations have been included within this year's budget to start addressing the immediate risks, and how are the discussions with the UK Government proceeding in terms of the funding that will be needed in the future to tackle this? 

Well, £8 million of funding has been allocated to address the immediate coal tip maintenance and remediation works in this financial year. We're still having those ongoing discussions with the UK Government. We continue to push for a long-term settlement and a joint programme of work to protect the affected communities. The work that the Coal Authority has undertaken has demonstrated the sheer scale of the issue here in Wales. We are talking, really, about a 10-year programme of work in the order of £500 million or £600 million, so this is a really significant piece of work. We don't believe that the Barnett formula was ever intended to include this kind of funding, in the sense that Wales has 40 per cent of the coal tips out of the whole of the UK. The needs-based formula within the Barnett formula just doesn't come close. We think that we need a joint piece of work, in which Welsh Government is very pleased to play its part, but it does need to be joint with the UK Government over a number of years. We're continuing to have these discussions. I'm not sure how much traction we're getting, but, as I say, we continue to press it. 

Ydych chi o'r farn y dylai Llywodraeth y Deyrnas Unedig fod yn talu am y cwbl o'r gwaith yma? 

Are you of the opinion that the UK Government should be paying for all of this work? 

Ideally, that would be the case, bearing in mind that this is an issue that specifically affects Wales; it affects Wales to a greater extent than elsewhere. However, there are parts of England that are also subject to the challenges of the legacy of our industrial and coal heritage, in particular. I do envisage a joint piece of work. There would be, I think, a level that the Welsh Government would be willing to contribute. I think that we're happy to play our part, but that £500 million or £600 million over 10 years is well beyond anything that our existing funding streams are intended to absorb or deliver. 

Mae'r gyllideb atodol yn dyrannu £318 miliwn yn benodol ar gyfer ail-greu ar ôl COVID. Fedrwch chi roi rhyw fath o gyd-destun i hynny? Faint o'r arian ydych chi'n ei fwriadu ar gyfer ail-greu yn y tymor byr ac wedyn yn y tymor hir? 

Okay. The supplementary budget allocates £318 million specifically for reconstruction post COVID. Could you provide some context for that? How much funding do you intend to allocate for reconstruction in the short term and then the long term? 

In the short term, that £318 million allocated in this supplementary budget is very much for some immediate actions, and all of the interventions that sit under that umbrella of the £318 million reconstruction package are designed to be delivered within this financial year. That's very much an initial stimulus and an initial boost. However, we're also very clear that this is going to be a very long recovery as well, which is why, yesterday, in Ken Skates's statement, he announced that we've provided an additional £270 million to the Development Bank of Wales's flexible investment fund, and that will bring the total invested by 2030 to £0.5 billion. So, we're taking both the immediate steps that we need to, but also looking to that longer-term investment that businesses in particular will need.

10:45

Ac o'r £318 miliwn yma, ydych chi yn hyderus ei fod o wedi cael ei ddyrannu yn y ffordd gywir rhwng y gwahanol adrannau? Ydy'r pwyslais yn y lle iawn o ran gwariant?

And of the £318 million, are you confident that that has been allocated in the right way between the different departments? Is the emphasis in the right place in terms of the spending?

Yes, I think it is, and I think we can be confident of that because of just the sheer amount of work that got us to that place of making those allocations. So, it was very much based on the work that Jeremy Miles was leading on, in terms of looking at reconstruction, what kind of Wales we want to have emerging from the pandemic. He consulted really widely—took international expert evidence, but also consulted with businesses in Wales, with the farming community, with the third sector, with everybody with an interest, really, in being part of this agenda—and then you'll remember in October he published a document that set out eight priority areas for spend, and that ranged from housing to mental health. Each of those priority areas, then, has very much informed the spending within that £318 million package that we've put in place. So, it really did come from a  good deal of consultation and co-operative working.

Ond debyg bydd y blaenoriaethau yna yn newid wrth i'r blynyddoedd symud yn eu blaen, wrth i'r gwaith mwy hir dymor—. Faint o waith mae'r Llywodraeth yn ei wneud ar hynny?

But it's likely that those priorities will change, will they, as the years progress, as the more long-term work proceeds. How much work is the Government doing on that?

I think that the priorities that are set out in that document put us in good stead for the start of the recovery, but clearly there will be emerging themes and challenges over the coming years. As I mentioned earlier, things have changed beyond all recognition, I think, within this year, and I think that there will be new challenges ahead that perhaps we haven't yet fully seen coming or fully understood, so I think that that level of flexibility will be important. But, certainly, the work Jeremy Miles did puts us in a really good position for a green and fair recovery in the immediate term. And I think—. We've talked lots with the Finance Committee previously about the importance of multi-year funding and having our comprehensive spending review, so, when that finally comes, I think that will give us a better chance as well to do some financial planning over years in a way that we're not able to at the moment.

Ac mae'r gyllideb yn cynnwys buddsoddiad o £25 miliwn ar gyfer canol trefi. Sut mae'r arian yna yn mynd i gael ei ddefnyddio, a pha rôl strategol fydd gan Lywodraeth Cymru o ran ategu'r gwaith o drawsnewid canol trefi ar ôl y pandemig?

And the budget includes an investment of £25 million for town centres. How is that funding going to be used, and what strategic role will the Welsh Government have in supporting the work of transforming town centres post pandemic?

Well, we're really fortunate in the sense that we already had a really strong strategic approach to this through our £110 million Transforming Towns programme. And so we—. Town centres were facing difficult times even before the pandemic, but of course the situation has deteriorated significantly and the challenges have got much bigger. But the funding that we've allocated within this supplementary budget includes £5 million for the Transforming Towns strategic sites acquisition fund. So, that will allow local authority partners to identify and review available buildings and land within or closely aligned to town and city centres that can be used for new purposes in future. Local hubs for businesses and the third sector or other public uses might be a useful use of those sites, for example.

There's also—. Some of the £25 million is in respect of community and volunteering. So, that reflects on the important role that that sector can play in terms of vibrant town centres. There's action in here for biodiversity—so, £2 million in terms of increasing the delivery of the Local Places for Nature, and that's to support the greening of our town centres, to try and improve that—and also funding of £7.7 million for the reuse and repair shops. So, that's £7.7 million capital and £5.5 million revenue, and, again, those are really important to our circular economy, and we think that really sits well with our efforts for a green recovery in town centres too. So, several different programmes all coming together within that money.

10:50

Diolch. Mae Mike Hedges eisiau gwneud pwynt hefyd.

Thank you. Mike Hedges wants to come in on this point.

I can tell you one thing that I can guarantee: January 2030, town centres will be substantially different to what they were in January 2020. I think that we've seen three major events taking place: the huge growth in online shopping, which is now over a third of all shopping; the number of people who are working from home who like it and want to continue it; and something that we tend not to talk about, which is the use of 3D printers so you've got manufacturing within a home or within a small area like a small workshop. Have the Welsh Government done any work on actually how they see town and city centres in 2030? Because, if people aren't travelling, then they're more local. But there are a whole lot of things happening there. I can't claim to be an expert on this, but I know that things are happening; I can see in my own community that things are happening. So, what work is the Welsh Government doing on trying to get ahead of the curve?

Well, we've done some work through the Minister for Housing and Local Government's portfolio in respect of teaming up with the Carnegie UK Trust, for example, to have that vision for town centres for the future. Perhaps some of that work might now need to be revisited in the light of the pandemic, but it was very much in the context of understanding that town centres are absolutely going to be changing. I think the kinds of issues that Mike Hedges has just described are things that will very much just accelerate the changing nature of our town centres. So, the whole working from home and the online shopping and so forth, that's going to change things much more rapidly than perhaps things were moving in the first instance.

But, through the housing department, we've also been making great strides, I think, in terms of town-centre living and trying to have that housing-led approach to regeneration, which I think will become all the more relevant and important in future. But I agree: it will be interesting in 2030 to see those town centres and the changes that will be in place.

Diolch yn fawr. Mae gen i un neu ddau gwestiwn cyn ein bod ni'n dod i ddiwedd yr amser sydd gennym ni, oni bai bod Aelod eisiau codi rhywbeth reit ar y diwedd.

Roeddwn i eisiau jest gofyn un neu ddau o bethau, wrth gwrs, ynglŷn â'r berthynas newydd rhwng y Deyrnas Unedig a'r Undeb Ewropeaidd a goblygiadau ariannol hynny i Gymru. Achos fe ddywedodd cyfarwyddwr cyffredinol yr economi, sgiliau a chyfoeth naturiol yn y Llywodraeth wrth y Pwyllgor Cyfrifon Cyhoeddus y byddai'r buddsoddiad seilwaith sydd ei angen ar gyfer porthladdoedd Cymru i ddelio â'r rheolau masnach newydd yn costio degau o filiynau o bunnoedd. Felly, dwi eisiau gwybod a ydych chi wedi cael unrhyw fath o guarantee gan Lywodraeth y Deyrnas Unedig erbyn hyn y byddan nhw'n cyllido costau'r seilwaith hwnnw. Ac os ydych chi, wel, pryd ŷch chi'n disgwyl derbyn y cymorth hwnnw? Hefyd, wrth gwrs, yn y cyfamser, pa gymorth mae'ch cyllideb chi'n ei ddarparu i borthladdoedd, o ystyried y gostyngiad mewn traffig mae llefydd fel porthladd Caergybi, wrth gwrs, wedi'i weld ers diwedd y cyfnod pontio?

Thank you very much. I have a couple of questions before we come to the end of the time that we have, unless other Members want to raise anything at the end.

I wanted to ask a couple of things about the new relationship between the UK and the EU and the financial implications for Wales. Because the director general of the economy, skills and natural resources group in the Government told the Public Accounts Committee that the infrastructure investment required for Welsh ports to deal with the new trading rules would cost tens of millions of pounds. So, I want to know whether you've received any guarantees from the UK Government that it will fund these infrastructure costs, and, if so, when do you expect to receive that support. And, of course, in the meantime, what support does your budget provide to ports, given the reduction in traffic that places such as Holyhead have seen since the end of the transition period?

Well, Welsh Government is still in discussion with the UK Government in terms of support for ports, particularly with that focus on the infrastructure that will be required. Those discussions haven't yet concluded. I think I'm okay to say that we have heard some relatively positive noises in relation to this, but we haven't had anything by way of formal confirmation. So, as soon as we do have anything useful to share with you, Chair, I'd be more than happy to do that.

Felly, ar hyn o bryd, does gennych chi ddim eglurder ynglŷn â phryd, os o gwbl, bydden ni'n cael unrhyw gefnogaeth—er eich bod chi'n teimlo'n weddol bositif, does yna ddim sicrwydd ar hyn o bryd.

So, at present, you don't have any clarity about when, if at all, we will receive any support—even though you do feel quite positive, there's no certainty at present.

Not yet, but, as I say, those discussions are ongoing at the moment.

Ocê. Diolch am hynny. Rŷch chi hefyd wedi derbyn £3.8 miliwn gan Lywodraeth y Deyrnas Unedig. Yn ôl naratif y gyllideb, rŷch chi'n dweud ei fod mewn perthynas â chronfeydd strwythurol yr Undeb Ewropeaidd. Allwch chi efallai ddarparu mwy o wybodaeth i ni ynglŷn â phwrpas yr arian yma a sut gafodd e ei ddosbarthu yn y gyllideb?

Okay, thank you very much. You have also received £3.8 million from the UK Government. According to the budget narrative, you say that it's in relation to EU structural funds. Could you provide some additional information about the purpose of this funding and how it was distributed in the budget? 

10:55

This is the last year of a seven-year annual transfer from HM Treasury supporting EU structural funds programme 2014-2020, and that was agreed with HM Treasury back in 2013, in recognition of the reduction in structural funds for west Wales as part of the overall EU funding available, compared to the prior EU programming period. Similar transfers were agreed with the Department for Business, Energy and Industrial Strategy in respect of the reduction available in Cornwall, for example, so this is something that we negotiated and sits outside our normal arrangements via the Barnett formula. So, what it means in practice is that this transfer is allocated to the central services and administration main expenditure group, and it's used then to supplement the EU funds drawn down as part of the 2014-2020 programming period, and they support then the programmes that are run by the Welsh European Funding Office.

Dyna ni. Diolch am yr eglurder yna. Os nad oes yna unrhyw gwestiynau pellach gan Aelodau, a gaf i felly ddiolch ichi, Gweinidog, a'ch swyddogion, am eich presenoldeb y bore yma? Diolch am eich tystiolaeth. Mi fyddwch chi, wrth gwrs, fel arfer, yn derbyn copi drafft o'r trawsgrifiad i wneud yn siŵr ei fod e'n gywir. Mi fyddwn ni fel pwyllgor yn pwyso a mesur y dystiolaeth rŷch chi wedi ei rhoi i ni ac, wrth gwrs, yn adrodd mewn pryd ar gyfer y ddadl ar y drydedd gyllideb atodol, dwi'n meddwl ar 9 Mawrth, felly fe edrychwn ni i gyd ymlaen at hynny. Diolch yn fawr iawn ichi am fod gyda ni y bore yma. 

Thank you very much for that clarity. If there are no further questions from Members, could I thank you, Minister, and your officials, for your attendance this morning? Thank you for your evidence. You will, as usual, receive a draft copy of the transcript to check that it's accurate. We as a committee will be evaluating the evidence that you've given and we'll be reporting in time for the debate on the third supplementary budget on 9 March, so we all look forward to that. Thank you very much to you for your attendance this morning.

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

Mi wnaiff y pwyllgor, felly, symud i sesiwn breifat ac, yn unol â Rheol Sefydlog 17.42(ix), dwi'n cynnig bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod hwn. Ydy'r Aelodau i gyd y fodlon ar hynny? Ie, pawb yn hapus. Felly, mi arhoswn ni ychydig eiliadau er mwyn inni gael dod â'r darllediad i ben a symud i sesiwn breifat. Diolch.

The committee will now move into private session, and I propose, in accordance with Standing Order 17.42(ix), that the committee resolves to exclude the public from the remainder of this meeting. Are Members content with that? Yes, everyone's content. So, we'll wait a few seconds for us to bring the broadcast to an end and move into private session. Thank you.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 10:56.

Motion agreed.

The public part of the meeting ended at 10:56.