Y Pwyllgor Cyfrifon Cyhoeddus a Gweinyddiaeth Gyhoeddus

Public Accounts and Public Administration Committee

01/12/2021

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Cefin Campbell MS
Mark Isherwood MS Cadeirydd y Pwyllgor
Committee Chair
Mike Hedges MS
Natasha Asghar MS
Rhianon Passmore MS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Adrian Crompton Archwilydd Cyffredinol Cymru
Auditor General for Wales
Claire Germain Dirprwy Gyfarwyddwr Llywodraeth Leol: Perfformiad a Phartneriaethau
Deputy Director of Local Government: Performance & Partnerships
Judith Cole Dirprwy Gyfarwyddwr, Polisi Cyllid Llywodraeth Leol a Chynaliadwyedd
Deputy Director, Local Government Finance Policy and Sustainability Division
Mark Jeffs Archwilio Cymru
Audit Wales
Matthew Mortlock Archwilio Cymru
Audit Wales
Tracey Burke Cyfarwyddwr Cyffredinol, Y Grŵp Addysg a Gwasanaethau Cyhoeddus
Director General, Education and Public Services Group

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Claire Griffiths Dirprwy Glerc
Deputy Clerk
Fay Bowen Clerc
Clerk
Martin Jennings 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 yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd rhan gyhoeddus y cyfarfod am 11:02.

The committee met in the Senedd and by video-conference.

The public part of the meeting began at 11:02.

6. Cyflwyniad, ymddiheuriadau a dirprwyon
6. Introductions, apologies and substitutions

Bore da, croeso. Welcome to this morning's public session of the Senedd Public Accounts and Public Administration Committee. No apologies have been received. Do Members have any declarations of registrable interest they wish to declare? Obviously, the formal Members' register of interests—. Sorry, Cefin.

I need to declare I'm still a county councillor, so I'll just declare that interest—Carmarthenshire County Council, up until May.

Thank you. Otherwise, Members' interests are registered on the publicly accessible Senedd register of interests for each Member.

7. Papurau i’w nodi
7. Papers to Note

The Welsh Government have responded to the previous committee's report on the scrutiny of the consolidated accounts 2019-20, which contains 13 recommendations, all of which were accepted. However, regarding recommendation 7, which was:

'The Committee recommends that the Permanent Secretary provide an update about the progress made in developing the KPIs and provides the timetable for the completion of this work. Further correspondence on the KPI Framework took place with the Committee further to this report being issued',

which Members are aware of, Members have also been sent a confidential letter from the Welsh Government on key performance indicators. As you are aware, this document must not be shared—it's for information only. The response is generally positive, and will be considered as part of the briefing for scrutiny of the Welsh Government's accounts 2020-21, once they're signed off in the new year. The response has been tabled today for Members to note and consider as part of their preparation for the forthcoming scrutiny of accounts work. Can I invite Members—whether they have any comments, or are they happy to note this response?

8. COVID-19 a'i effaith ar faterion sy'n gysylltiedig â chylch gwaith y Pwyllgor Cyfrifon Cyhoeddus a Gweinyddiaeth Gyhoeddus: Sesiwn dystiolaeth gyda Llywodraeth Cymru ar faterion llywodraeth leol
8. COVID-19 and its impact on matters relating to the Public Accounts and Public Administration Committee’s remit: Evidence session with the Welsh Government on local government issues

That moves us to our formal evidence session, in relation to our inquiry, COVID-19 and its impact on matters relating to the Public Accounts and Public Administration Committee’s remit, a session with the Welsh Government on local government issues. We have a number of witnesses. I welcome you to the meeting, and I'd be grateful, rather than me naming you at this point, for you to identify yourselves and state your names and your roles for the Record. And, again, thanks for being with us. Perhaps starting with Tracey Burke.

11:05

Diolch, Cadeirydd. Thanks, Chair. So, I'm Tracey Burke; I'm the director general for education and public services in the Welsh Government. I'm joined by two colleagues. I'll ask Judith, then Claire, to introduce themselves.

Good morning, I'm Judith Cole. I head up the division that looks after local government finance policy.

Good morning, I'm Claire Germain. I head up the local government performance and partnerships division.

Thank you very much. As you'd expect, we've a number of questions for you. I'd like to ask both Members and yourselves to be as succinct as possible so that we can cover as wide a range of these as possible, given the number of issues generated by this topic. I shall begin: how has the Welsh Government been maintaining oversight of councils' financial sustainability throughout the pandemic and what triggers or processes, if any, have been identified or used for intervention?

Well, diolch, Cadeirydd. We've had a number of mechanisms during the pandemic, as you'd imagine. A number of those are ones that would normally apply, but they've been, I suppose, ramped-up, really, more so during the pandemic. So, they're both formal mechanisms—so, things like the partnership council, regular meetings with Ministers, different portfolio Ministers, for example, and of course the budget round itself. Plus there's been communication and discussion at official level, so through various groups; in fact, I think Judith was meeting daily with Welsh Government treasurers during the most intense part of the pandemic—in the early days, I suppose, between March and May. So, a lot of formal communication and a lot of informal communication. And I think the hardship fund, probably, has been the main way where, I suppose, triggers have been able to be released, I suppose, brought up, and we've provided additional funding through those. So, many, many ways of keeping oversight, really.

Thank you. What is or has the Welsh Government been doing to help reduce or at least manage uncertainty for councils over funding levels, and specifically how is the local government department working with other parts of government to consider demand and funding pressures on councils in the round?

So, obviously, uncertainty has been a key concern for local authorities throughout the pandemic and we've tried really hard to ease that uncertainty. As I say, I think the main way, really, has been the hardship fund, which has been a specific fund that we've set up in the short term to provide more certainty, and we've tried to be very flexible in our approach to the pandemic to respond to those issues of financial uncertainty. But, more generally, we're hoping to be able to provide a little bit more certainty going forward. Now we've got a three-year settlement from the comprehensive spending review, we should be able to provide local authorities generally with a bit more certainty over a longer period, so that's the plan.

In terms of how we're working internally, if it's okay, I'll ask Judith, who is responsible for that, as head of local finance—so, Judith, could you explain how you work across Welsh Government?

Thank you, yes. So, there's a range of methods. We have standing groups, where policy colleagues are doing something and I'll have membership of those groups, or my team will. 

In terms of the hardship fund in particular, what we have is a network of people who we go to to make sure that we understand the pressures coming from them and then we can absorb different ways in which they need to support local authorities into the overall mechanism. And then the loop around comes from all the various groups that I and my colleagues are on externally. So, we also have—. I sit regularly with the Society of Welsh Treasurers, but my colleagues in policy departments will be on similar groups. Colleagues in homelessness will be working with people outside there. The Association of Directors of Education and the ADSS, the social services one, have very close links with my colleagues. So, we have a web of connections, which are both formal and informal.

11:10

And you're the spider, Judith.

I think that's kind.

In a nice way.

In the nicest possible way, yes. I know some very nice spiders, but they terrify my children, who hate them, and they're grown up.

They play a very important function.

When developing the annual funding settlement for local government, how does the Welsh Government assess the potential impacts on the resilience of local services that are seen as essential by many, and can play an important part in wider policy ambitions, both in general and, of course, in the COVID context?

Local authorities do a lot of that assessment, I suppose, for us, in terms of the impact on those services, and one of the most significant things, I think, we rely on in the budget settlement is a formal submission from local government, which comes through the Welsh Local Government Association. That then sets out lots of issues like demand pressures, pay pressures—those sorts of issues. So, we have a formal submission as part of the budget process from local government, in terms of their pressures. But, obviously, we take account of a range of other things as well. We’ve got a lot of intelligence, as Judith has just said, from the kind of discussions that we have—so, through different portfolio Ministers and their discussions—and specific service concerns, which come up there and through our own discussions. So, we look at all of those in the round. Some of it’s taken account of in the overall settlement, but if there are specific concerns outside of that, then we can use specific grants to deal with those.

Diolch yn fawr iawn. Dwi'n mynd i ofyn y cwestiwn yn Gymraeg. Gaf i ofyn, o ran sut mae Llywodraeth Cymru yn ariannu gwasanaethau, p'un ai ydy gwahaniaethu rhwng gwasanaethau sydd yn statudol neu yn ddewisol yn helpu mewn gwirionedd? Achos mae cymaint o wasanaethau sydd ddim yn statudol yn cael eu hystyried gan bobl yn bwysig iawn, iawn, o ran eu llesiant personol a lles y gymuned yn fwy cyffredinol.

Thank you very much. I'm going to ask the question in Welsh. May I ask, in terms of the Welsh Government funding services, if differentiating between services that are statutory or discretionary really helps? Because so many services that aren't statutory are considered by people to be very, very important, in terms of their personal well-being and the well-being of society in general. 

I think that's a very good question, because one person’s essential is another person’s discretionary, I suppose, in that sense. I think it’s something that’s been debated for a very long time—whether it’s a helpful distinction between the two. And it’s complicated, because it’s all interwoven, really. Some of the discretionary services are actually essential to the statutory services or they expand those statutory services. For the purposes of our budgeting for local government, we don’t distinguish, really, between statutory and discretionary services, because we provide what we call unhypothecated funding. So, it’s up to the local authorities to determine what is spent on their statutory and what is spent on their non-statutory or discretionary services. The elected members will have their own views, I suppose, on those discretionary services, and it’s quite important that local elected members can have that discretion. I think if everything was in statute, we’d take away some of that democratic or political prioritisation in those areas. It’s not clear cut. I think it’s debatable whether it’s helpful or not, but, as I say, I think it reduces local government flexibility to put everything in statute.

Gaf i ddilyn ymlaen gyda chwestiwn arall? Fel cyn-aelod o gabinet ar gyngor sir, dwi’n cofio’r profiad yn iawn o orfod gwneud dewisiadau anodd o ran dyrannu arian, ac wrth fod yna wasgfa ariannol yn digwydd, fel rŷn ni wedi’i brofi dros y 10 mlynedd diwethaf, mae’r dewisiadau yn anodd, rhwng rhai statudol a rhai sydd yn ddewisol. Felly, pa gyngor mae Llywodraeth Cymru yn ei roi i awdurdodau lleol o gwmpas y perygl i rai gwasanaethau i'r dyfodol lle mae yna fwy o doriadau yn debygol o fod? 

May I follow on, therefore, with another question? As a former member of a cabinet on a county council, I remember the experience very well of having to make very difficult decisions in terms of allocating funding, and as there are financial pressures happening, as we've experienced over the last 10 years, then those choices are difficult, between those that are statutory and those that are discretionary. So, what advice would the Welsh Government give to local councils in terms of the risks for some services for the future where there are going to be more cuts likely?

11:15

There are incredibly tough choices. I think local government leaders and councillors, as with Welsh Ministers, have been and continue to be faced with very tough choices. Obviously, a lot of this we discuss during the budget discussions. There are meetings really regularly with portfolio Ministers and with officials throughout. We've provided significant extra funding throughout the pandemic, as I say, and Welsh Ministers have really tried to provide the best possible settlement that they can. But, if there are specific services or particular pinch points, there are opportunities to raise those, and, as I say, we do have a range of specific grants that we put in place for those specific priority areas. It doesn't take away the hard choices from local members, I agree, but there are a range of different funding mechanisms that we look at through the budget process.

Thank you, Cadeirydd. In regard to the comments and questions that have been placed around the definition of statutory and discretionary services, do you actually feel, in regard to the differences—and, obviously, the work 'flexibility' always crops up here, across Welsh local government across Wales—that it's a period, after and during COVID, where there needs to be a redefinition of what discretionary services should look like?

I was quite taken with the auditor general's description of 'essential services', because a lot of what ends up, I suppose, as discretionary services tends to be enrichment services, I suppose you might call them—culture, leisure. I know it's been long argued that those should be statutory services. I think, probably, Judith or Claire may be slightly longer steeped in this. Of course, this is always open for discussion, whether or not local authorities think that it would be better for those things to be in statute, and we can continue to have those discussions. As I say, I think we've been around the discussion a number of times and we've kind of landed back where we are again, and some of that has been simply because of the pressure on legislation. I don't know if Judith or Claire have got anything further that they could assist with on that.

If I may, I'm conscious that the auditor general noted how difficult it is to actually describe what's statutory and what's discretionary, because, quite often, it's a bit of a service. So, the obvious and easy example is always the waste services, where quite a lot of it is statutory, but your garden waste is a discretionary service, and some local authorities will see that as an opportunity to think about commercialisation as well as servicing their public. I'm also conscious that when we—. As Tracey says, the big budget, the unhypothecated one, doesn't make a distinction, and there's a difficult choice at budget time, therefore, about what goes into specific grants, which might very well be on things that are a bit more discretionary, and what goes into the unhypothecated settlement, and therefore leaves some of the choices with local authorities. I don't think there's a straightforward answer on every service. I'm sorry if that sounds unhelpful.

No, it isn't unhelpful. I'm just envisaging a time, and we're already at it, where there is such flexibility, and nobody is denying that needs to be inbuilt, but there is such a variance in terms of what local government is providing that you would almost assume one local authority area is absolutely disparate to another, and I think there should be some synergy across Wales. But thank you for that comment. Thank you, Chair.

Auditor general, do you wish to comment, given the reference to yourself, on the definitions?

No, not at all.

No, you don't. Thank you. Could I slip in a question before bringing in other colleagues? This is in the context of the Social Services and Well-being (Wales) Act 2014, which, of course, places duties on local authorities and

'puts in place a system where people are full partners in the design and operation of care and support. It gives people clear and unambiguous rights and responsibilities.'

I'm just quoting from the codes of practice applying to those duties. In the discussion over discretionary and statutory services and cost-benefit analysis, what consideration in terms of oversight is given to how the connectivity between discretionary and statutory services must be considered, i.e. where decommissioning discretionary services would impact on the duties, for example, under the social services and well-being Act and actually result in higher cost pressures being placed upon the statutory services? 

11:20

There are obviously consequences for those types of decisions and the impact that those can then have. Local authorities are covered by the Well-being of Future Generations (Wales) Act 2015 and by all of the other legislation, and they must pay due regard to that when planning their budget. So, they must put those issues at the heart of their decision making, and they've done a lot of very good work in that respect. It's a duty on us, as Government, to take those impacts into consideration, but it's also a duty for local authorities. 

In my experience, some have done very good work on that, but some, perhaps, could learn from the others about that. In terms, again, of oversight, how are you, if at all, addressing that and the need for them to work together in sharing that good practice, rather than challenging it because it's an idea from elsewhere?

Indeed. I think, actually, the future generations commissioner would probably share that view about variability, and, indeed, the auditor general, who has done a lot of work in this area. They have both provided opportunities for local authorities to share that good practice, and we've been a part of that. The Welsh Local Government Association too have been part of that community of practice, I suppose, but I think it is fair, Chair, to say that there are further opportunities for those who are leading the way, I suppose, to share that practice with those who are not as advanced as them. 

Good morning, ladies. Thank you so much, Chair. I'm going to ask you a few questions about the hardship fund, if that's okay. But firstly, before I go to what I was meant to ask you, let me go with what I just wanted to ask you now. I would like to know what provisions were put into place at the time, obviously, at the heat of COVID, to ensure that the hardship fund was actually administered to those people who were in sincere need of it, and if you had any learnings from that. So, if, for example, we are ever to enter that situation again, what learnings have you taken from the first round to now to ensure that those are implemented into the new wave if we ever experience one again? 

Thank you. On the fund, I might actually defer to Judith in a moment, as she's overseen the fund and will maybe give a little bit more detail than I can. But the prime purpose of the hardship fund was to do exactly what you've said, to make sure that those people, those most vulnerable people, were able to access services from their local authorities and that they were able to access those quickly and to the level that they needed to. I can talk a little bit about how the hardship has been working, but there's been a very good feedback loop in terms of what activities the hardship fund has been funding. There's a panel that considers them, and I think some of the learning that we've had from this in terms of, 'Is it getting to the right spot?', which I think is probably what your question is, has come back through that panel, because it's been very transparent exactly what local authorities have been targeting, what they've been claiming for. So, there have been quite a lot of eyes on that spending, and I think that transparency and the fact that we co-designed it with local authorities are probably some of the learning that we've taken from that in terms of if it happened again, how would we make sure the most vulnerable were being able to access the funding.

Okay. Thank you. I'd like to know, then, how the Welsh Government has ensured that additional funding available in response to COVID-19 is being spent on additional costs and pressures, and also income lost due to the pandemic itself.

11:25

The funding has all gone through local authorities, so the processes that we've had have been very transparent, with very clear guidance. And I think we have to remember that local councils are extremely high-trust organisations, and so we would expect them to be spending the money on the right things. But one of the fail-safes we've had is that we funded in arrears. So, councils have been only able to claim in retrospect, I suppose—once the funding has been committed, they are then able to claim. So, that enables us to look over the claims, as I say, through that panel process. So, I think it's unlikely that it would be spent not on the right things, because there's a huge degree of transparency. But also, local authorities have known that it could be audited in the future. So, as I say, there are a number of checks and balances in the process.

My question has just been answered there. Diolch yn fawr iawn.

Can we start by going back down one point? You talked about the expenditure and statutory and non-statutory services, but isn't there an SSA for each service provided by the local authority?

I'd have to defer to Judith on that.

Not every service—as in, they won't each have an individual line. There is a catch-all. But I think it's also important to register that, of course, the SSA doesn't drive the expenditure—it is a way of distributing the funding. But then, at the end of the day, it's a big unhypothecated pot, and it doesn't drive the choices of a local authority on what to spend its money on.

Sorry, I wasn't raising that. Everything the local authority does is covered somewhere within the SSA was the point I was trying to get across. But if I can go on to reserves, and reserves are always a matter of great contention. I remember a former Minister for local government saying, 'This is the worst it gets'. I don't think they quite realised that we were going to have COVID coming here, to discover what was called 'the worst it gets' wasn't the worst it gets. But local authorities have reserves for all sorts of things. I don't expect you to be able to do it now, but can you, perhaps in a note, tell us how much of local authority reserves is unpaid COVID money that is committed? How many local authorities self-finance insurance? I know that, previously, two local authorities, instead of insuring schools, used their reserves to cover the cost of that, saving themselves several thousand pounds a year. How much are earmarked reserves especially for the building of new schools? And how much is cover for overspend on social services, which has happened in lots of authorities, not just in Wales but right the way across Britain? And how much of it is due to new houses coming in during the year and paying council tax, when they weren't in the council tax number that was created at the beginning of the year?

Thank you very much. I certainly wouldn't be in a position to answer that, and I think we might struggle to answer that in writing, actually, but, certainly, if the clerk would put those questions to us following this, we could go out to the Welsh Local Government Association and to the Society of Welsh Treasurers. Because, actually, the decisions on reserves are matters for councils themselves, and, as I say, we don't really have the powers to intervene in that, and we wouldn't know or hold that information. But I will certainly take those questions, if the clerking team could send those to us, and we will liaise with the Society of Welsh Treasurers and the WLGA, and ask them for a response.

Thank you. And I think the key thing there is that as you don't have that sort of information, you're not in a position to criticise local authorities for their reserves.

No, it's certainly a matter for local authorities on their levels of reserves. We would be concerned if reserve levels were extremely low, obviously, but, generally, the size of the reserves is a matter for local authorities.

Can I just lead on further a little bit on that subject? A graph provided for us by Audit Wales shows the varying levels of usable reserves held by local authorities, relative to the net cost of their service budgets. And there appears to be from that graph not an absolute but a general correlation between RSG funding per head. So, why do you think councils hold such variable levels of usable reserves, where, looking at the graphs, the range seems to be quite wide?

11:30

I think there's a variety of reasons why, at any one point, councils may build up reserves. They could be for capital projects, they could be for significant service changes, for example, and they're changing their overall approach to certain types of services, but also, what I think we have to remember is that the reserves positions are a snapshot, really—they're just at a particular point in time. I think, from the auditor general's work, that's from the end of the financial year—I think it was March of this year—and so there could be all sorts of reasons why councils might have different levels of reserves in terms of what their planning, projects or programmes are. Judith, is there anything else you could add on the relative to the level of RSG, or something?

I think that there may just be something about the fact that a larger authority, getting a larger grant, also has larger reserves, but it's not an assessment I have specifically done. If there's anything in the data that throws light on it, perhaps we can include that in the note that we do back to Mr Hedges's questions.

Thanks, and in the context of my question, which looked not at overall levels, of course the relative size of the council impacts on the overall pot of money they receive, but I looked at the funding-per-head issue and whether there's any correlation there, because it would appear that, year on year, the local authorities with the highest reserve ratios appear to be the same ones, and the ones at the bottom seem to be the same ones, also. But, moving on—

Chair, we'll definitely look at that for you. If the clerk could include that in the note following the meeting, we'd be pleased to look into that for you.

Thank you. And more broadly, in the context of the additional COVID-related funding that's been provided to local authorities, why do you believe that councils' reserves appear to have increased by over £450 million during the 2020-21 financial year, based on Audit Wales's definition?

Yes, I've seen that also, Chair, and, as I say, I think that's a reflection of the snapshot in a particular period of time. It's a figure that was taken right at the end of the financial year, and there could be lots of reasons why that figure is higher than it's been in previous years. So, these have been quite exceptional times, and I think that uncertainty does breed a little bit of conservatism—sometimes, that you might hold a little bit more in reserve because of uncertainty about what might happen in the future. But, also, local authorities had a range of new responsibilities during the year, from supporting retail, leisure and hospitality—things that they hadn't done before, really—to significant increases in free school meals, and those schemes all ran over the financial year period. The end of the financial year is quite an artificial thing, whereas the schemes actually ran throughout that period. So, they may have had obligations on those funds, but the figure was taken at the end of that financial year, and we had given local authorities flexibility to carry over more reserves at the end of that financial year because of the impact of COVID. So, I think it'll be interesting to see how it works its way through, but I think that maybe explains the position as of March 2021.

Thanks. Just before I bring Rhianon Passmore in, you referred to the funding local authorities received to support business et cetera, and hospitality, was that funding demand led and so received retrospectively, once a local authority knew what the bids for that funding were going to be, or were they provided with an upfront pot of money, in which case, if there was an underspend, was it returned to Welsh Government, or was it retained in their reserves?

Can I go to Judith on that, because, Judith, I know you didn't manage that fund but you are closer than me, so you can answer in slightly more detail than I can?

So, on the business one, I think—and if it's not right, then we'll cover it back in a note—that there was a bit of a mix. There were some money upfront and then there was an adjustment afterwards to take account of whether or not that allocation was right when they actually did the payments. But then, on other schemes, it will have gone through the hardship fund, and those were all retrospective. So, it would have been paid once the money had gone out. 

11:35

And in terms of business grants, if there was an underspend, would that money have been held in their reserves or returned to Welsh Government?

I'd have to double-check, but I don't believe there was an underspend, because what happened was that we then reallocated it to authorities where they had to pay out more. But, as I say, we'll probably have to double-check with the colleagues who run that scheme. 

Thank you very much, Chair. Just a few quick points to underscore the discussion around reserves. We seem to revisit this quite frequently, and obviously I understand why. But I think it needs to be totally understood, the new responsibilities and duties in local government, the ability to be able to flexibly carry forward reserves, and also the fact that, during COVID as well, in particular, a lot of local authorities are still holding in preparedness for big infrastructure projects—for instance, twenty-first century schools. So, when we do get information, it's really important that this is disaggregated for this committee, because quite frankly Welsh local government has been the engine and the arms and legs in terms of COVID delivery as we move forward, and it's almost like, 'Oh, you can't be trusted with your reserves.' So, I do think we need to get the tone of that correct, and I think we need to make sure that, when this information comes to us, as per the discussion, we understand exactly what is being held back and for what purpose. Diolch.

Thank you. Do you wish to respond to that, or just note it?

Only to say that we regularly publish information on local authority reserves, but not down into the level that Mr Hedges has asked for. So, we will do our best to take account of Ms Passmore's points and provide as much detail as we can, coming back to you. And yes, she's absolutely right, they carry them for a variety of reasons, and major projects have understandably been stalled because of the pandemic. And local authorities clearly still intend to put those projects into place when they have the capacity to do so. 

Thank you. Moving on to local government strategy, capacity and performance, could I bring Natasha Asghar in, please?

Thank you very much, Chair. I'm sure you're all aware that, over the past 20 months, there's been a huge churn of jobs. People have been leaving jobs, moving, wanting to have more flexible working, et cetera. But, it has been noted that a lot more people, particularly at senior levels within local government organisations, are indeed stepping away from their positions. So, what exactly are you doing, what provision is being made, to ensure that those senior level roles are being filled with the correct, adequate candidates who know the job, have the skills to carry out the job in the most effective and efficient manner?

I think it's a very good challenge, that. We've experienced that exactly ourselves within the Welsh Government, where colleagues—in fact, some of the colleagues on this call—had to step away from some of their responsibilities. And I think the difficulty for local government, as it is for all of us, is that this isn't a textbook; there isn't a pandemic and then you recover with a distinct response phase and a distinct recovery phase. So, there isn't a linear route out. And I think that recent developments, in the last week, really show us that. So, local authorities and local councils are trying to do both. They're both trying to manage the response and plan for a better future. And it is fair to say, I think, that many public services and servants are quite stretched at the moment. So, we try to maintain a regular dialogue with local government, both informally and formally, where we can pick up these issues, on their overall capacity and also to try to identify the challenges that they have, and, where we see those, to support them in that. And we pick up that intelligence through a range of different sources, sometimes ourselves, sometimes through our regulators, and then we have a range of different mechanisms that we can use then to try to provide some support. 

Can I just ask what some of those mechanisms actually are that you have in place?

Yes. So, we've got something called an improvement and support conference, which brings together ourselves, the Welsh Local Government Association and all of the regulators. The auditor general—or the auditor general's colleagues, I should say—is on that, and that allows us to talk through challenges and appropriate solutions. So, I think that's probably one of the mechanisms that we would use.

11:40

I go back to the days when there were over 270 key performance indicators. Many of us complained, so another three were added. I think that where there are problems, local authorities are inspected by lots of people: SSIW; they're inspected by the auditor general; they're inspected by Estyn; there's a whole range of people inspecting them. Really, two questions: how many key performance indicators are there now, and the second point is: at what stage do you say, 'We know enough about what's going on and we don't need to know any more, as long as the services are meeting statutory requirements'?

Thank you. We are moving away from an indicators-based oversight of local government, I think. As you say, there were a large number of indicators, and some of that was driving, I suppose, not the right behaviours—so, a focus on reaching the targets, as opposed to improving the performance more generally. So, that's something that's come through in the local government and elections Act, so we're moving now to more of a self-assessment approach. I don't know—Claire might know exactly how many indicators there are or were. Are you able to ask answer that part of the question, Claire?

Claire, we're not hearing you. I don't think we can hear Claire, unless that's just me.

No, it's not just you. I just want to move on slightly. Sometimes, these things tell you something about the local authority. Cardiff and Swansea have greater problems with homelessness, and therefore don't do as well as Merthyr or Blaenau Gwent, who have fewer problems with homelessness—sometimes you collect data that tells you about the local authority rather than telling you about how good or bad a service they're providing.

Yes, I think that can be the case. The important thing for us is how good—. Well, two things, really: how good is the service, and are the council themselves performing well corporately. And the new self-assessment process that we're bringing in allows local authorities themselves to make that as a self-assessment of how well they're operating. It doesn't mean to say that we still won't be looking at indicators on homelessness and that type of performance; that will be something that portfolio Ministers will be working with their local authority counterparts with.

Thank you very much, Chair. In regard, then, to the capacity and resilience of local government, the fact that many senior officers and many operational staff are vired across into COVID work and obviously isolation and the effect that that's having within local government, working with key stakeholders, what work is being undertaken to the all-Wales approach on these workforce pressures in local government? And in regard to the plans to maintain the oversight of council performance, we've touched upon the new self-assessment—the greater emphasis, I should say, on self-assessment—and panel review regarding the new local government Act. How will that impact? And then I've got one final question, if I may, and that is in regard to the corporate joint committee work, and how well Welsh Government believes this is going to embed in terms of oversight. I'm happy to repeat any of those.

Thank you. I'll make a start, and perhaps you can let me know, then, if there's anything I haven't picked up on. So, the workforce pressures—I think we're all so aware, aren't we, of those pressures. You as Members of the Senedd will be extremely aware, and from your contacts locally, but also you only need to turn the television on, really, don't you, to see where those pressures are, and it's not an individual local authority issue, it's not a Wales issue, it's a UK-wide issue. I know that from discussions with counterparts elsewhere. 

So, I think, in Wales, workforce pressures have tended to be looked at on a sector-by-sector basis. I think that's because of the diversity of the sectors and the occupations within them. So, there's quite a bit of work under way, for example, in social care, where there are a number of activities to look at workforce pressures there. There's a new advertising and recruitment campaign. Additional funding has been put in place for extensive engagement on that, more career advisers working across the regions, new jobs portals et cetera, and a lot more our social services colleagues could provide on. But in education, again, we've put in place I think it's 400 now newly-qualified teachers to help with those supplies shortages, but we're working with local education directors on recruitment into initial training in education. So, as I say, I think it's a sector-by-sector approach that we've taken, rather than a national, all-public-services approach to workforce pressures. So, those are some examples of what we've been doing. 

11:45

On that particular point, Chair, if I may, there is obviously a need across local government for a recruitment drive around a general, perhaps, accreditation to be able to work within local government. Is there any general local government recruitment, bearing in mind the fact that so many staff are viring across into different sectors? And although I don't disagree with the sector-by-sector approach, there is also, in a sense, a place-based need as well. Has there been any thought given to that? 

I'm personally not aware of general recruitment into local government, but there's a local government human resources directors network. Now, I know local authorities are, you know—. We've spoken about their budget pressures already. They will have financial limitations to how many more staff that they can take on because of those financial pressures, but I'll certainly ask the local government HR network what they're doing more generally on recruitment on that. 

Should I move to corporate joint committees, maybe? 

So, with the corporate joint committees, we've been taking a phased approach to our preparations for corporate joint committees and, in fact, actually, you should have all seen, I think, phase 2 of the regulations going through yesterday on those. So, phase 1 was, I think, in March of this year, which set up—. It had these founding—establishment, I think they're called, aren't they—regulations. So, regulations went through yesterday on the powers, and then there's a third and fourth phase. I think the third phase is out for consultation, and the fourth phase will be around standing orders. So, we've taken a phased approach, but that's been hand in hand with local government as to how we've approached corporate joint committees.  

But, my question really, Chair, if I may, is: how well prepared do you feel local government is at this stage in the journey?

Yes, that's a good question and they're not all one thing. So, I would say some are more advanced than others. I think that would be a fair thing to say. But, again, I think it's fair to say good progress is being made across all of the regions. I think—you know, not everybody was in favour, I think, of corporate joint committees, but I think even those who were perhaps a little bit less enthusiastic have got an absolute commitment to making them work, and good progress is being made across. But, as I say, it is variable. But we've been trying to support that, working very closely with local government, and we've provided some funding for each lead authority to help establish the corporate joint committees, and we're working very closely with them. So, I suppose, in summary, good progress but variable. 

Could I—? I think Claire Germain, who couldn't join us earlier to respond, would like to say something now, so can I bring Claire in, please? 

Thank you, Chair. Firstly, to apologise; I had technical issues. I couldn't hear any of you, but apparently you couldn't hear me either. So, I was going to add that—. When Tracey was talking about the phased roll-out of the legislation, I thought you might want to know that part of what the fourth phase will do is to apply the performance regime to CJCs, so they'll be caught by the same new performance regime as local authorities in terms of considering their performance requirements, being very practical in assessment, and taking part in that regime.

In terms of the support, I just wanted to note that we work very closely with all four regions, through the provision of the grant but also in a range of other ways, and also that the four regions come together on a regular basis to share experiences in operationalising the CJCs. So, we're certainly learning the lessons as we go along and sharing that learning.

11:50

Thank you. So, Rhianon, had you further any points to make?

No. Thank you. Just on the corporate joint committees, can I just throw in one final question from prospective issues raised with me? How will the work of the corporate joint committees correlate with, for example, the city deal bodies and the north Wales growth board, which already include representatives of the local authorities in the areas covered?

Well, we expect that to be very close working. Claire, I don't know whether you can say a little bit more, but obviously some of the people will be on the deal structures, so there will be quite a good read-across there.

Thanks, Tracey. Yes. So, one of the powers that CJCs will have from the start is the power to promote economic well-being in their areas. Our expectation is that they'll use that power to think about how they align that with the existing work around city and growth deals. As you've said, the growth deals are already based on a collaborative model, where local authorities come together, but currently that's a joint committee structure. The CJCs offer them the opportunity to bring that work across and take advantage of the CJC model, with its separate legal status and ability to employ staff, hold assets, manage their own budgets. So, I know that at least two of the regions—but I think possibly all of them—are looking closely at whether they can transition those arrangements across and bring them together.

So, will the CJCs therefore support, rather than attempt to change, the programmes that have been agreed by the local multi-agency bodies and both Governments?

Absolutely. They're a vehicle for delivery of those programmes, potentially, and driven very much by the regional priorities for economic development, within the city growth deals and beyond. So, locally driven.

Okay, thank you. We can move on to, briefly, town and community councils, and could I invite Natasha to start the questioning?

Thank you so much, Chair. They often say, when there's an adverse situation, you see the best in people and best in organisations. Now, a previous Minister described some councils in February 2020 as 'thriving'. I know the past year, per se, hasn't exactly been the best to use as an example, but I'd like to know from each and every single one of you: are there any specific community councils that have stood out in your minds as to have thrived in the past 20 months or so, or in fact, probably, the last year or so, and what are the reasons? And particularly, if you can mention specific regions or specific councils, that would be really appreciated as well in your answer.

Thank you. That's such a positive question, because normally, when we're asked about community and town councils, it's not always as positive, because there have been some issues there.

Although it's a positive question, it's not actually a very easy one to answer, actually, because there's a lot of community town councils. I think there are over 700—730, I think—and they vary in terms of their size, their budgets, their scope. So, some of them are very small, representing maybe about 500 people; I think Barry, which is the nearest to me, represents over 50,000 people. So, there's quite a variety, and a very big variety in scale as well. Some of them have budgets as little as £1,000, some up to £1 million. I think most are about £10,000, I think. And they do very different things. Some of them do a wide range of services. Some of them are literally just representative; that's just the main thing that they do. So, I think, when you think about good examples, it's quite hard, because they're so different.

But I think one really good way of looking at thriving councils, as you call them, is perhaps the One Voice Wales awards. So, they're the sector body and they do a range of awards for best in class around themes—so, things like environment, around tourism, around youth engagement, those sorts of things. Claire may have some examples that she could raise from there. I only know one that is in my head just for family reasons, which is Llanwenog, because they took old phone boxes and used those initially for book swaps in the community, but then they used them for defibrillators. So, they have defibrillators in each of those phone boxes, and I just thought, for family reasons, that that was an absolutely fantastic thing to do, so I'd probably single them out. Claire, any that you'd particularly single out?

11:55

Well, certainly, One Voice Wales weren't able to hold their award ceremony last year because of the pandemic, but I know that they issued a number of awards to councils that were seen in their sectors to be best in class. For example, Aberystwyth town council won the best environmental project for their work turning a wasteland area into a community park and skate park, which I think shows real local initiative. And more in the cultural space, Criccieth town council had—[Inaudible.]—tourism by using the ninetieth anniversary of Robert Graves's poem, 'Welsh Incident' as the inspiration for a range of activities. So, there are certainly examples coming through of that.

In terms of the particular impact of the pandemic, I couldn't offer you particular councils or particular regions, but I do know that they played a key part more generally in identifying known vulnerabilities in their areas, making the link with local authority services and other aspects, and helping volunteering to take place but also, often, leading on volunteering. So, I couldn't give you individual councils, but I do know that they played an active role, as you said, in this period.

They've been fantastic, Claire, haven't they? I mean, it would've been so much harder to provide that support without community and town councils, because they had information at street level, really, didn't they, on vulnerable people, and they played an absolutely crucial role in partnership with their local councils.

Thank you. We have a series of questions for you around how the Welsh Government has worked with community councils during the pandemic, and areas for action set out in the Welsh Government's January 2020 update to us—I think the last one we had. And also, issues around the use of the extra funding provided to the sector. But, due to time constraints, can we write to you about those?

Of course, Chair. Absolutely.

Thank you very much. I do have another question on this before we move on to the next set of questions. Could you detail how the Welsh Government is responding to the latest set of public interest reports from the auditor general about town and community councils, and the concerns that they again raise about financial management and governance?

Thank you, Chair. I think I've obviously seen those public interest reports—not just seen them, I've read them—and I think some are much more disturbing than others. Because I think, in some, the actions have been intentional, so it's not just a case of poor administration or something that better training could resolve—areas where I think we've been active in terms of our efforts to improve financial management. These have actually been intentional cases. We expect all councils to have robust financial management and control arrangements and in these cases, those councils have clearly failed to do that. I haven't actually seen their responses yet, so I think that's the next step for us would be to see what their response is to that.

Okay, thank you. I will slip in a supplementary to that. What is current Welsh Government thinking about whether Ministers should have proportionate intervention powers?

Yes. I think, again, that's something that we have discussed quite a bit, and ultimately, obviously, it'll be a decision for the Minister for finance—the new Minister, actually, for finance and local government. We've begun to explore what intervention powers might entail, but I think we have to be clear that they would need to be proportionate, as I've said, they're such diverse councils, such diverse characteristics, and I think we'd need to be clear about what is proportionate. We couldn't have our intervention cost being more than the budget of the council, for example, and there are lots of other significant questions, and it would require legislation as well. So, I think—. Sorry, in short, Chair, I'm rambling a bit here, I think we are exploring it, but I think we need to do significantly more work to develop proposals.

12:00

Okay, thank you. We'll move on to our last set of questions, which stay with town and community councils but look at the general power of competence. Again, can I invite Natasha Asghar to start the questions?

Thank you very much, Chair. Recently, the Welsh Government said that they see the greatest potential for community councils to deploy the general power of competence, and they referred to what the Minister previously described as an untapped resources. So, I'd like to ask you what untapped resources do you feel that there are that we can, I should say, use, administer or introduce, or can be introduced by our community councils?

That's a big question again, because it's so varied. I think the big thing that the general power of competence brings is it provides opportunities for those councils to innovate. I think that's probably the biggest potential that it provides. It's something that's been requested for a long time, for a number of years. It came out very strongly during the consultation on the Local Government and Elections (Wales) Act 2021. What it enables community councils to have is a sort of power of first resort. So, previously, they would have had to have sought relevant legislation for what they wanted to do, whereas now it's a power of first resort. So, I think it kind of frees them up and allows them to innovate, and some of that—I suppose the potential might be for some of them to  undertake some commercial activity, for example. There's potential there. For example, I think some of the councils have staff to maintain lawns and grounds, so there are opportunities there, for example, if a local sports team wanted their sports field cut—the council currently wouldn't be able to do that. So, I think there's quite a bit of potential there for them to innovate. But, obviously, it will be for the councils themselves to decide.

My follow-up question was going to be, 'Can you actually give me some examples of how you would innovate?', but you actually gave me one example right there. So, I'd like to ask your colleagues, do you have any examples of innovative techniques that can be introduced, or perhaps you've been made aware of by councils who want to take up new initiatives?

Nothing in particular has been raised by councils, but again, as Tracey says, they're keen to have the potential to have this power and to be able to think about where they might be able to innovate. It feels like it's going to be mainly initially in that kind of commercial space that Tracey outlined, but because it removes the requirement to rely on a particular piece of legislation, it could be used in a range of ways, where they felt that previously they couldn't quite operate in terms of provision of services, provision of assets in the area. So, no particular issues have been raised, but I'll be very interested when we have the new councils come into place after the elections in May to see where they might want to take this.

Town and community councils vary from those like Barry and Bridgend down to those in the hundreds on the Gower peninsula, so they cover a very wide range. Talking about commercial activity and the ability to carry out commercial activity, major councils have been able to carry out commercial activity as long as it was, I think the law says, 'Incidental to their main purpose'. So, they could do work for a sports club if they wanted to because that was incidental to their work of looking after their own grounds. That's not true of community councils from the answer I heard earlier.

I would have to ask colleagues for some input here. Claire. Oh dear, Claire, have we lost you again?

I'm so sorry. Hopefully, Claire will rejoin us, in which case I'll put your question to her. If not, we will write to you.

The second part of the question is: is there a limit to the commercial activity? Many of us have been very concerned about the activities of some English district councils who've bought up shopping centres and their debt is an order of magnitude greater that their annual income. They've done it for the best of reasons, to get an income. Will there be any sorts of rules that you cannot engage in commercial activity where the expenditure on that exceeds your current income?

There will certainly be guidance. Judith, on the commercial side of things with local authorities—. Actually, we've been to the Public Accounts Committee previously to discuss the commercial activities, and the auditor general has written a report—time flies, doesn't it, with the pandemic, so it must have been 2019, I think that was—setting out some of the risks associated with commercialism, and some of the capability and capacity issues that principal councils have experienced. And we're very aware of some of the English local authority issues that you described. So, we do have quite—. We have set out things in guidance, Judith, haven't we?

12:05

Definitely, and we've also discussed with Audit Wales colleagues about the level of risk that they see in the sector as well, because, in England, they've certainly been making some changes to their rules and guidance to reflect that increased risk. But, at present, our assessment is, certainly at the principal council level, there's no evidence that we need to tighten up, and where a town and community council was engaged in this, I think I'm right in saying that our current guidance points out that they need to also be aware of our guidance and follow it. So, there is very clear statutory advice on how they manage that risk. 

Sorry, you talk about English local authorities there; Welsh local authorities—I hope you'd generally agree with me—have engaged in very little dangerous, potentially problematic activity, whereas some English district councils have tried to turn themselves into property developers. 

Thank you. I think, presumably, the guidance that will be issued will take account of wider experience. I believe Claire is unfrozen. Are you able to come back in and respond to the question you missed earlier? You're silent.  

Oh dear. Claire, we can't hear you. 

Yes, maybe; apologies for that, Chair. 

Okay. Can you hear us, Claire? Just nod. Yes. Right, so you heard, you'll write to us, as Tracey as indicated. 

Okay. Any more questions from you, Mike?

Key, of course, to the effective working of a town and community council is the relationship between the clerk and the members. In that context, what, if any, data does the Welsh Government hold about the number of clerks who already hold one or more of the four qualifications that it is proposed would be expected as a condition of eligibility for the general power, and how have those proposals been received? And turning that in reverse, what data or consideration is given to the extent to which members, particularly new members who might be elected next year, will be helped to understand their duties as corporate employers of the clerks, in terms of their employment rights?

Thank you, Chair. So, we don't collect data ourselves and hold it on the number of clerks who are qualified, but, gosh, let me get this acronym right, the Society of Local Council Clerks, they do report to us on the numbers taking their qualifications each year, and that's part of our bursary offer which we've put in, and which we've stepped up this year. So, I know that we had a sizeable increase in people taking up the training for qualification this year, and I think that's been helped a lot by us covering the cost of the whole of the training, as opposed to a proportion previously. So, I can get that figure for you. If Claire were able to join us, I'm sure she would have that number, but I will provide that in the note that we're providing for you, Chair. 

Similarly, obviously, we'll have new councillors coming in, and there is training and development available to all councillors. We'll be pushing that extremely hard with One Voice Wales, so that new members are aware of their responsibilities. 

Would that include their responsibilities under employment law?

12:10

Oh, gosh, I would assume so, Chair, because it will be about their responsibilities—about both their conduct and their responsibilities as councillors. So, I would assume that would include their responsibilities in relation to the clerk, but I will double-check that for you.

Thank you. Well, as we have a couple of minutes, I'll go back to one of the questions we missed because of expected time constraints, but not the matter I said we would write to you about. When does the Welsh Government expect to be able to provide guidance on expectations around annual reporting and training plans, and how prescriptive do you anticipate that guidance is likely to be?

We are, I think, about just a week or two away in providing that guidance. It will certainly be available before Christmas, and that's a clear undertaking by us. So, that's been co-developed with the sector. And is it prescriptive? It's not very prescriptive; it is, I think, perhaps slightly more descriptive, probably, than prescriptive, because we set out examples of what we would expect to see. So, these are examples that will help people who are working on this to see exactly what we're expecting in terms of our guidance. I hope that helps, Chair. But it will be out before Christmas.

Okay. Thank you. Do Members have any other questions or matters they'd like to raise before the witnesses leave us? Okay. Thank you. Well, it falls to me to thank Tracey Burke, Judith Cole, and Claire Germain. And we sympathise with your IT problems—we all have them from time to time. I advise you that a transcript of today's meeting will be published in draft form and sent to you so you can check it for accuracy before publication of the final version. So, thanks once again for being with us today.

Thank you very much, Chair, and thank you very much to all of the Members for their questions.

Thank you very much.

9. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o’r cyfarfod ar gyfer eitem 10
9. Motion under Standing Order 17.42 to resolve to exclude the public from the meeting for item 10

Cynnig:

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

Motion:

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

Cynigiwyd y cynnig.

Motion moved.

Okay. I propose now that, in accordance with Standing Order 17.42, the committee resolves to meet in private for item 10 of today's meeting. Are Members content? Thank you.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 12:13.

Motion agreed.

The public part of the meeting ended at 12:13.