National Assembly for Wales

Good afternoon. Could I welcome everyone to this afternoon's meeting of the Committee for the Scrutiny of the First Minister? To remind Members, the meeting is bilingual and simultaneous translation is available. If you're joining via Zoom, then the interpretation should be set to English, and if you're in the room, then on the headphones available, channel 1 is for your translation. Can I remind everyone, please, to turn your mobile phones either on silent or off, so they don't interfere with the broadcasting, and any other electronic equipment which may interfere with the broadcasting? If a fire alarm does take place, there's not one scheduled this afternoon, so please follow the directions of the ushers to a safe location. And with that, we'll move on to the business of the day. We have received apologies from Paul Davies and Llyr Gruffydd, and this afternoon can I welcome Peredur Owen Griffiths, who is attending in place of Llyr Gruffydd? We have no substitute for Paul Davies. Are there any Members wishing to declare an interest at this point in time? No. 

We move on to agenda item 2, which is the evidence session with the First Minister. This first part of the evidence session will be based upon the theme of economic strategy for coastal and rural communities. Can I welcome the First Minister this afternoon to the meeting? First Minister, would you like to introduce your officials, both in the room and online?

Thank you, First Minister. We have several themes within our remit for the session this afternoon. Before we go into those, perhaps I can just ask a generic question as to how the Welsh Government is now taking forward any strategy to improve the lives of the people in rural and coastal communities.

There isn't one single strategy, because the issues vary across portfolios, but every portfolio has a focus on rural communities in particular, and many portfolios will have a direct interest in coastal communities as well. So, there's a range of strategies, whether that's in the field of the economy or in health or in education, and all of them have components in them that will focus on the topics that we'll be looking at this afternoon. But there is no single strategy, because the nature of the action that you need is very portfolio specific, often.

Just on that point, is there any Member of the Cabinet that actually has responsibility to oversee, to ensure that the collective is being achieved?

Obviously, Lesley Griffiths has responsibility for rural affairs and she also has responsibility for north Wales, so she has a particular geographical component to that as well. Lesley does have that pan-Government set of responsibilities. In other areas, I think it is more that individual portfolio holders work with other Cabinet colleagues where there are issues that you need to take forward, but you can only take forward by working with others.

Okay. We'll move on to other themes now, and obviously, clearly, tourism is an important part of both of those communities. Over to Russell.

Good afternoon, Chair. Good afternoon, First Minister. The industry tell me that one in seven people in Wales rely on the tourism industry. If I can ask some questions around the tourism levy, or tourism tax, in making the decision to pursue the introduction of a tourism tax, can I ask what specific consideration you gave, or the Government gave, to the impact that this may have on rural and coastal areas in particular? I'm thinking also of the wider supply chains that might be affected.

I thank Russell George for the question, Chair. I think it's important just to make two introductory points. First of all, we are more likely these days to call this a 'visitor levy', because it isn't just people coming to Wales for tourism purposes; the levy will apply to visitors for other reasons as well. I just wanted to remind everybody that this is not a new idea here in Wales; it was first proposed in the Holtham commission report, which was over a decade ago.

I've probably told some people this story before, Chair, but when I was Chair of the Finance Committee, I made a statement on the floor of the Senedd asking for ideas as to how we could use a new procedure set out in the 2017 Government of Wales Act where we can propose new taxes to the UK Government. Uniquely in my experience, while I was on my feet and making the statement, I could see on my screen members of the public e-mailing me with ideas for new possibilities here in Wales. The majority of them were in the environment field, but the tourism tax was raised by members of the public then. So, we've had a continuous conversation with the sector and with communities in Wales. And, of course, this appeared in the manifesto of my party at the last election, and I believe in manifestos of other parties as well. So, there's been a further engagement with the public over it all.

As Members here will know, we intend to publish a consultation document on the visitor levy in the early autumn. There will be a full impact assessment [correction: a partial regulatory impact assessment] published alongside the consultation and there will be a rural-proofing assessment as part of that. Those impact assessments will be iterative documents, because we want them to be further informed by the responses to consultation. But we will issue them alongside the consultation document, so that for the questions of the sort that Mr George has asked, there will be the best answers that we have to them available to the public.

Thank you, First Minister. You mentioned in your answer that you've engaged with the industry. You set out some areas as well that talk about the visitor tax in a positive way, and you mentioned that it's not a new idea. There's huge opposition, particularly from sectors of the industry. The Wales Tourism Alliance and UKHospitality are both strongly against proposals for a visitor tax. Why do you think that you've not been able to persuade them of the merits of a visitor tax?

I don't think it's untypical, Chair, that, when these ideas are introduced—and they are incredibly common right around the world—there is opposition from the industry itself. I was in Holland just before the pandemic meeting the Minister in the Dutch Government responsible for introducing a visitor levy in Amsterdam. He told me that it was the single best decision that he had ever made as a Minister and that he was heavily opposed by the industry, which claimed that visitor numbers to Amsterdam would be badly affected and that the industry would be undermined. And he said to me, 'The single biggest problem we have in Amsterdam today is that we are overrun with visitors and are finding it very difficult to cope with them in a way that sustains the industry into the future'. So, I'm not surprised, because industries don't like change, and we will go on in a dialogue with them. I'd make this point to them: this is going to happen; this is in the manifesto of my party, won at an election; it is in the co-operation agreement with Plaid Cymru. We will consult on it carefully to make sure that the details are right, but the principle is one that we will take forward. If I was involved in the industry, I would want to engage positively and help to shape this for the future, rather than maintaining an oppositionist stance to it all.

Thank you, First Minister. I suppose what's behind my question is that you set out the reason why you think that the industry should be supportive, given examples elsewhere in Europe and the world, but I suppose I'm trying to understand why, then, the Government hasn't been able to persuade the industry. I appreciate that you say that, often, industries are against change, but if it's a change in a positive direction, as you've portrayed, I suppose I wonder why the organisations haven't more welcomed the proposals.

I notice, First Minister, that the Minister for Finance and Local Government recently approved funding for three research projects to support the advancement of the proposed visitor levy or tourism levy. There's not much known about this research, so can I ask, will that consider the economic impact of the introduction of the tourism tax? Is that the purpose of those three research projects?

Each research project is different, Chair. The first is research into the economic impacts of a visitor levy, looking at the experience elsewhere in the world. That contract has been let, it's been won by a private research company of the sort we use routinely for this sort of work, and we expect them to report on that in the autumn. The second strand is on the tax treatment of visitor levies, and again, drawing on the experience elsewhere in the world. Bangor University have won the contract for that, and again we expect them to report in the autumn. The third strand was, from the beginning, a bespoke strand to be carried out by the Office for National Statistics. We're a little bit less further forward in the third strand, but what that will do is it will provide a demography of the sector, as it's called; it will look at, over more than a decade, over about the last 15 years, the number of active businesses in the sector, the number of new businesses, the number of businesses that close, so that we've got a baseline from which we will be able to go on monitoring the impact of any further changes. ONS hold that data, they will be able to pull it together and make it available to us, and we continue to be in conversation with them about how quickly that can be done.

Thank you, First Minister. As I understand it, and you'll correct me if I'm wrong, for our local authorities that decide to take up a tourism or visitor tax, the money raised will be ring-fenced for tourism spend. But that can be obviously quite wide. Is the Welsh Government proposing to produce a list or criteria for what constitutes spend on tourism, or is that open for local authorities to decide themselves?

Mr George made an important point, which I should have mentioned. Just to remind everybody that what we are proposing is a power for local authorities to raise a visitor levy where they think that will be something that will be useful in their circumstances. So, this is a power for local determination. The consultation document will explore the different ways in which that money could be hypothecated. I have been very clear in my own thinking from the beginning that the purpose of a visitor levy is to raise funds that can be invested in those things that make the industry a success. So, local authorities provide a wide range of services, from public conveniences to dog wardens on beaches to car parking. All those things that make a visit to a part of Wales a successful experience, local authorities have to provide those things. A visitor levy, for some local authorities, will allow them to raise money to go on investing in the conditions that make tourism a success. That's one of the reasons why I think the industry itself would be wise to engage positively with these ideas, because then they can help to shape them and to make sure that the idea does what we would like it to do: to invest in the industry and to help it to go on having a successful future.

Is it your intention, then, that there would be a list or criteria that local authorities have to adhere to, if that funding is ring-fenced?

The consultation document will rehearse a number of different options in relation to this, from hard hypothecation, which I think is the sort of thing that Mr George is suggesting—you know, a very specific list, you can only use the money for that—to a slightly softer form of hypothecation. It's not a discussion about the object, because the object is to make sure that the money is used for tourism-related purposes. The consultation will rehearse a variety of mechanisms, and the industry itself, as I say, I think, will have views about how that might best work, and it would be good if they put their energies into engaging in that way.

Thank you, Chair.

Just one final question, since you're talking about local authorities. And funnily enough, we've had a statement from the local government Minister on joint corporate bodies today. Clearly, one question will be raised in this: as part of the research, are you going to look at the impact of, perhaps, where there may be inconsistency in a visitor levy across Wales, where maybe one local authority decides not, another decides 'yes', and the implications of that? Will the research look at that type of impact?

Well, not prospectively, Chair, because, at the moment, we wouldn't have a sense of which local authorities might take this up and which authorities might not. But, retrospectively, we will have an evaluation programme, of course, alongside any implementation, and that, no doubt, will look at why some local authorities decide this is a useful power, why others may not, and what the impacts on the ability to go on supporting the industry would be.

Thank you. We move on to rural communities now, because tourism obviously has a major impact on those communities, but there are many other issues. So, over to Peredur on that.

Diolch yn fawr. I'd like to move on to rural communities and community assets. We seem to be lagging behind England and Scotland in legislating for community right to buy. I'm just wondering, is that something that's deliberate or is it something that's been dropped by mistake?

Well, it's not by mistake, Cadeirydd, because we looked very carefully at the arrangements that were put in place in England. The conclusion at the time was that we had other alternative ways of doing it here in Wales and that we didn't need to follow or just copy a set of arrangements that were put in place elsewhere. But, we do keep this under review because the question is asked regularly, and understandably and rightly. So, it's not as though we have set our minds completely against further developments in this area, but there are many ways in which we already support as a Welsh Government community asset transfer and investment in community facilities. I would have said that one of the most successful programmes of the whole of the devolution period has been the CFP programme, as it's called—the community facilities programme—where we invest as a Government millions of pounds every year in supporting local community groups, often faith groups, who have buildings that are no longer suitable for their original purpose but can be repurposed so that they provide a wider range of community assets and community use, and there will not be a constituency in the whole of Wales where you cannot find those practical examples having made a real difference. So, while we haven't done it like others have done it, that is not to say that we don't do things in a way that has been successful here in Wales.

So, I'd like to get an update on a similar sort of issue. What's the Welsh Government's response to the findings of the group established by the Deputy Minister for Climate Change to look at alternative finance models, including maintaining local ownership and protecting of productive farmlands? 

Thank you. So, Chair, I think the recommendations of that working group have now been published by the Minister. It may only be in the last day or so, but I believe they are now published, and we continue to work with the people who we drew together to help us with that agenda. There are a series of balancing acts that we need to find the right point on that balance in this area. We will not achieve our ambitions for tree planting in Wales without commercial investment alongside public investment. But, we want to make sure that the commercial investment that comes into Wales is organised in a way that is to the benefit of Wales rather than primarily to the benefit of the investor. So, you'll see that the recommendations of the working party help to find ways in which we can strike that balance better in the future. We need to make sure that the investment that the Welsh Government provides does not have any unintended or perverse incentives in it so that we end up attracting investment of the sort that we weren't intending to attract. You'll see in the recommendations that there are a series of things that we have to work through in the area of carbon credits. If you're planting woodland, you will do so sometimes—not always—in order to be able to secure carbon credits, which you can then sell. The working party's recommendations rehearse the arguments about where in the life cycle of the trees that you're planting ought those carbon credits to be realised. You take them at the very beginning, and there are some examples in Wales where that has happened, and some successful third sector organisations have financed their activity in this area by doing just that, but there are arguments as to why that might not be the best way to do that, and the working party's recommendations rehearse a set of decisions that the Welsh Government needs to make to guide those decisions—not to make them for people, but to guide the decisions that people will make as to when they want to realise the carbon credits that their investment will allow them to harvest.

And then, there are recommendations in there about commercial woodland as well. We want to plant more trees for all sorts of good reasons of a climate change sort, but we also want, in Wales, to be able to have an indigenous timber industry that means, when we are building our 20,000 social homes for rent, that we can construct them with materials that are locally produced. So, there are questions in the report you will see about how we can organise the industry of the future in a way that means that we're not importing those materials because we can grow them here, and farmers can secure an income in the process.  

Thank you. And just—

Can I ask one question?

Of course, yes.

Then, Jenny, you can come in after that, okay? You've just said, First Minister, that the plans are published and the recommendations available and the Welsh Government will be looking at them. Do we have an indication as to when the Welsh Government might be able to be in a position where it's producing an established set of actions based upon those plans and those recommendations?

I think we'll ask Gian Marco because he probably has a better grasp of the details. Some aspects of it we are responding to. We won't wait until we can respond to everything to respond to things we can do. So, we will publish the terms of the new woodland creation grant, which you will see also rehearsed in the working party's report, before the end of August. So, where there are things we can get on with, we are getting on with them. When we will publish our response to the whole of the report—.

First Minister, as you said, there's an awful lot of the recommendations that we're building into the work that we're doing at the moment. So, I think the new woodland creation grant is a very good example, which we're designing at the moment. And where Ministers still need to take decisions, we will look at some of the recommendations that the group has made in particular around how to ensure, in effect, equity for our farmers in being able to access some of these schemes. There's quite a lot in the report that is about that, and we will build that thinking into the development of the woodland creation grant. Some of the actions are linked to actions that the deep-dive group, which the Deputy Minister chaired a year ago now, are taking forward. So, those, again, we will take forward as part of that work. So, as the First Minister said, we're not waiting to have the whole package; we're just taking forward elements of it. And, obviously, you will see some of the responses in some of this action that we're taking over the coming months.

Jenny, and then I'll bring Peredur back in.

So, obviously, planning to plant trees for future construction needs is really important. What about planning orchards for future food needs, given that the situation with the European Union is difficult, fluid and could break down completely? And, clearly, that's something that also takes a few years to bear fruit. Previously, the Woodland Trust had taken a frustratingly purist view that we can only plant native trees, as if there aren't native fruit trees, when there are plenty of them. So, could you just tell us how the Government is resolving this issue?

I can offer some thoughts rather than necessarily having a resolution, and Gian Marco may have some things there. The general point that Jenny raised right at the end is a really important one. We've been having this debate in relation to the national forest. I do not believe that the national forest can be made up entirely of native species. It will not have the resilience it needs if we rely entirely on that. So, we're going to have to have aspects of the national forest, for resilience reasons, which have a wider spread of species in them.

On growing trees for fruit production, I'm not knowing enough here, but Gian Marco may. The Minister is very keen indeed on expanding the horticulture aspect of Welsh farming. It's very small indeed. I think Lesley has put a lot of energy and money into allowing that to expand. So, there may be some aspects of that that are to do with food production. Certainly, community orchards, and the community food strategy that the same Minister is developing—we're committed to that in the co-operation agreement with Plaid Cymru, so there are discussions about that going on at the moment—and supporting community orchards so that there is at least very local access to fruit grown in that way, will be an important strand in the strategy that she's developing there.

But not part of the national forest, then. 

I have not seen, as part of the national forest, plans for extensive fruit-growing trees to be part of it, no. 

Or walnuts, or—.

Yes. Well, maybe it will, but I haven't seen it. 

Okay.

Chair, I should have said, sorry, if I could—just in terms of how are we taking forward the recommendations, the original question, of course, in the sustainable farming scheme that the Minister published this week, or at the end of last week, in advance of the Royal Welsh Show, the proposal is that farmers wishing to enter the scheme would have 10 per cent tree coverage on their land in order to have access to the scheme. It would be a universal requirement for participation in the scheme that you reach 10 per cent tree coverage. So, that is another strand that you can see emerging from that report, and how we are not waiting till everything is in place in order to move ahead with the things we can move ahead with. 

First Minister, maybe just to add on the national forest, a big part of what we're doing at the moment and some of the tools we've got available publicly are very much about engaging communities in the national forest and giving communities the opportunity to look at what they could contribute in terms of this national plan. It may be that, as part of those discussions, some communities will look at community orchards et cetera, and may well think and make a case that that should be part of our plan. So, we're encouraging those conversations because we very much recognise that community ownership and buy-in is at the heart of us delivering a national forest across Wales. 

Just finally from me, just something that struck me: if Government is buying up land to plant trees and to create a national forest, what consideration is given to whether or not that land could be bought by a young farmer that's starting out? If it's agricultural land, I would expect that you wouldn't want the Government to be going in and gazumping a young farmer that's trying to get into the industry, or anything like that.

No, absolutely, Chair. Most of what we assume is not the Welsh Government buying land ourselves, but encouraging people who are landowners and farmers already to do more in this area. Now, there are some examples of where we are ourselves investing, and sometimes alongside others. The three commemorative woodlands that we will create to remember people caught up in the COVID experience, those are pieces of land that we are either directly buying ourselves or we're doing, as in north-east Wales, in partnership with the National Trust, for example. But the bulk of what we're intending to do is not in that way; it is to find ways of supporting, and financially supporting, existing landowners who are willing to play their part in what needs to be a national effort to increase the tree coverage we have here in Wales. 

And is there a way of helping to encourage young farmers to come into the industry? Buying land is an expensive way, so is there anything else that could be done?

There's a series of schemes that we've had over the years—a new entrants scheme, as we've had at different points; the work we do to encourage tenant farming possibilities for people who can't buy at the outset, but still wish to be in farming. And the Welsh Government absolutely does recognise that farming, probably to a greater extent than other industries, has an ageing profile to it, so we have to do things that will allow younger people wishing to play their part in the future to gain access to that, and there's a whole series of strands we do, from skills training and the things that equip young people to have a future in that industry to ways in which they can become directly involved in land management.

And we'll move on to some aspects of digital infrastructure, and over to Jack.

Diolch, Cadeirydd. Prynhawn da, First Minister and officials. Chair, I will declare an interest here as an unpaid member of the 5G EDC board project consortium, led by Bangor University. Further details are online for anyone who's interested in that.

First Minister, we've seen over the past eight years the gap between the availability of broadband in Wales and the United Kingdom reduce quite significantly, actually. And that's down to the investment and interventions from Welsh Government, in particular the Superfast Cymru programme. We've heard recently from the Deputy Minister for Climate Change, who takes the responsibility, or certainly has the responsibility given to him, that the Welsh Government should now, and I quote here, stop being so active in increasing the broadband coverage. He goes on to add, and I quote:

'It is for the UK Government to step in and step up into that space, not for us.'

This is also reflected in the Welsh Government's digital strategy, where you do say that you are not responsible for this area and you receive no devolved funding but you will step in and support delivery where there is a case for it, however, the Government will and must ensure that the UK Government fulfils its responsibilities to Wales. With all that in mind, then, can I ask you if you are satisfied that the UK Government is investing sufficiently in improving broadband coverage in Wales? And if you're not, what steps should they be taking to improve that connectivity?

Well, Chair, it's a matter of the balance here. So, in the Superfast Cymru area, 30 per cent of the funding came from the UK Government, everything else came from Wales—either our own funds directly or European funding that the Welsh Government was able to direct. So, that was not the right balance for a non-devolved responsibility. But we were stepping in because there was so little activity by the UK Government to make sure that the market functioned effectively in all parts of Wales. So, I think what Lee was referring to was not a sense that the Welsh Government will do nothing in this field in future, but that that balance, that 70:30 balance, should be in the opposite direction to as it was in the last Senedd term.

How optimistic are we? Well, we do have some grounds for optimism. There are some encouraging signs that the UK Government is now committing funds at a scale and with a reliability for what is, I think, called its Project Gigabit programme, and that that will result in greater expenditure here in Wales. So, that doesn't mean that we are going to stop funding altogether, but it should mean that the balance of funding in this area comes not from our funds but comes from the UK Government's funds. And our decisions are based on more encouraging signs of UK Government investment in the future. 

Thanks, First Minister. I take the view that residents across Wales, right across Wales, no matter where they live, and in particular we're focusing on rural communities now, of course they deserve and need a level of broadband that is suitable for modern day—or certainly today's environment that we're seeing. Well, it's my view that we shouldn't really stop there, we should be looking to the future and developing technologies that go further. Now, you mentioned Project Gigabit, and I think I'm right in saying that, when the Department for Digital, Culture, Media and Sport were considering this, particularly with 5G, they didn't invest in Wales; they decided to invest elsewhere, particularly in England. Could I encourage you, or certainly get your support for this: I'd like to see Wales become the nation that leads on this type of development—do you share that ambition in the Welsh Government?

Well, we'd never say 'no' to an ambition for Wales to be a leader in any field, but the fundamental difference here, Chair, would be that, for the UK Government, this is essentially a market responsibility: the state is a sort of enabler of the market and the state steps in when there is evidence of market failure. But their model is essentially that the market should sort this out: private investors will invest because there are members of the public willing to pay, and that's how it should be done. We would take a different view, of course, from the beginning. We would see broadband as, essentially, a public service. It's not an optional extra for people these days, is it, to have broadband? Many, many aspects of life depend on you being able to have access to it. Therefore, the state should assume a responsibility, not for following the market, but for leading the market. That's not to say that there isn't a very proper and probably quite significant space for the market in delivering all of this, but the market should be shaped by the Government, and the market should play its part within the overall ambition that a Government would set. So, we would come at it in a very different way were these responsibilities ours. They're not, and we still are prepared to go on investing to make sure—. And we are now down in many places to the hardest-to-reach properties, which are eye-wateringly expensive sometimes to provide a service to, but that's why the market will never work, because left to itself the market is never going to run the infrastructure down long, distant pathways to service a single property. We'd never have had electricity for everywhere if we'd expected it to be done in that way. The Welsh Government will continue to play our part in trying to make sure that those places that couldn't get a service if there wasn't Government intervention do get it. 

I appreciate that answer, and just moving away from broadband in particular, and moving to mobile networks and mobile connectivity, I do most of my work from my phone, but I'm relatively lucky to be either here or back home in Deeside with a relatively good provision. But, certainly, there are areas with gaps in Wales. I think the figures are similar to what they were eight years with broadband provision in the types of areas that you've mentioned in your previous answer. And I think the figures are that about 60, 61 per cent of Wales has 4G geographic coverage from all the four major operators and companies, again market-led across the United Kingdom. That's about an 8, 9 per cent difference with the rest of the United Kingdom. Under what circumstances would the Government—the Welsh Government in particular—consider stepping in and investing in this realm? 

Chair, I think, if I remember this correctly, it is about 60-odd per cent of Wales that has access to 4G from all providers, but it's much more like 90 per cent, isn't it, that has it from at least one provider. So, there are a number of things that we are involved in in this area. First of all, we have changed planning legislation here in Wales to make it easier for new masts to be constructed and greater reach to be achieved. We've done some work with the UK Government on the scheme, and I'm not going to remember the title of it now, Chair—it has the word 'rural' in it; I remember that. But this is a way in which all the networks can work together to improve coverage in rural areas. So, it's a competitive market out there, but the rules will be changed to allow the companies to work together as one to create better coverage in areas that otherwise would be harder to reach. 

Our direct investment in this area has been confined—and I think probably will go on being confined for the time being—to the genuinely innovative technologies. So, I'm not sure, Jack, when you declared an interest, it was over the scheme that we have recently funded with Bangor University digital signal processing sector; it sounds like it was.

Yes.

So, Chair, you may remember this. There was a proposal to the Welsh Government from Bangor University to do some work on Ynys Môn that would have extended 5G broadband to 400 properties on the island using a new and innovative form of delivery. And we did think very hard about whether we could fund that, because most of our money is spent on just making sure the maximum number of properties receive a service, and there was more of a research element in this funding bid, because it is innovative. But, in the end, we have agreed to fund it, so that's now going to go ahead on the island and it will allow us to learn from Bangor as to whether these new approaches can then be generalised and will be able to service more people.

In 5G, what we have done is to be part of a test bed and trials project. So, this is not major Government investment in the roll-out of 5G; it is helping companies to trial the technology in a particular geographical area so that they can then maximise the impact of that technology in other places that look the same. So, essentially, we've supported it in Valley communities, and then they've just learned, 'How do you configure technology to take account of Welsh geography?' 'You learn how to make it work, and we help you.' We help with money and the trialling of all that, and then the companies use that when they roll that out elsewhere. So, where it is innovative and when it is applying new technologies, we see a role for Government. In the broader sense of investing in the marketplace, I think we see less scope for the Welsh Government to be involved in that.

Thanks, First Minister. That was actually the interest I was declaring. I was proud to be a small part of the team of incredibly talented engineers and so on that we have in Wales, and I think that's something that we should certainly welcome and promote more. I'll leave it there, Chair.

Thank you. First Minister, in a previous answer, I think, on the national forest you were talking about, it raised questions on the possibility of fruit trees being part of the national forest, and I know Jenny wants to pursue the question on food production and that theme now.

Thank you, yes. You've already touched on the forthcoming agriculture Bill. How is the Welsh Government taking into account the cost-of-living crisis and the impact of the war in Ukraine on the food system in its development of the Bill?

The first thing to say is that the impact of the war in Ukraine is very real in the food sector. We are part of a UK system that shares information about the impact on food production in the United Kingdom of the war—fertiliser costs and so on—and Lesley Griffiths as the Minister is part of the ministerial oversight of that work. We have brought together a dedicated web-based resource for farmers in Wales, where they can get the best advice about how they can reduce the cost of inputs themselves, more targeted use of fertilisers, and so on, and where they can get the best market information about the way that costs are moving. Fertiliser prices are actually stabilising at the moment, and market prices for goods produced by Welsh farmers are very high at the moment as well. So, the website gives them access to all the best information that we can give them.

We will take a power in the Bill to allow Ministers to make a declaration of exceptional market conditions in agricultural markets. So, we've trailed this idea in the White Paper that was published back in September 2020, and while I mustn't give away too much of the Bill because I haven't actually seen the Bill myself, I have seen in the advice going to the Minister confirmation that we should include that within the Bill. So, where there are exceptional market conditions that would justify greater public investment in the industry to help it to cope with those exceptional conditions, the power will be available now to Ministers through the Bill.

That seems to be prudent in the context of the current conditions when there's so much upheaval in any case for farmers in Wales as well as for consumers, because of our disruptive relationship with our European partners, both for selling food to other parts of Europe and also importing food that we have just simply come to rely on, and, at the moment, it's not arriving in the quantities that we had become used to. So, it's good to know that at least you will have the powers to intervene when there are exceptional events, because, obviously, in conjunction with that we have the climate emergency, which is changing the conditions for farming, and the nature emergency. So, how are farmers being supported to understand that 'business as usual' isn't going to be possible for matters well beyond the Welsh Government's control?

Obviously, Chair, we are in continuous conversation with the industry and the farming unions, and change is difficult—it's difficult in this field, as it is in the field of tourism. Any time that you're faced with change, there will be people who want to defend the status quo and want arrangements simply to continue. We're absolutely not able to be in that position, not just for all the reasons that Jenny Rathbone has just mentioned, Chair, but because we've left the European Union. There was a very stable pattern of support for agriculture in the United Kingdom. I think there are many criticisms you could make of it, but the farming industry had become very familiar with the way that that system operated, and, when change is necessary, it's a journey that you've got to help to take people on with you. So, the sustainable farming scheme is the main vehicle through which we will be able to have that conversation and to bring about that change. It's why the Minister was very committed to publishing the scheme in advance of the show season—you know, there'll be a series of agricultural shows, and the idea is that the sustainable farming scheme will be debated and discussed there. Ill be at the Royal Welsh myself on Monday and will be in a session with the National Farmers Union, talking about the sustainable farming scheme. Lesley will be there for most of the week engaging in those conversations.

The sustainable farming scheme continues to make sustainable food production the first of its objectives. But, in the future, we will also want to reward active farmers for doing those other things that the public is prepared to pay money for, and that, obviously, is all the environmental and social benefits that farmers produce, and we want to reward them for doing that. But when there's only one pot of money available, you'll be more rewarded for doing some things and probably less rewarded for doing other things, compared to the way the previous regime was organised. And that change is challenging. But I think, increasingly—and I think there was quite a positive reaction from the farming unions to the sustainable farming scheme—that conversation is making progress, and we will need to pursue it, because change is inevitable in this area and there's an awful lot more we can do to sustain the sort of farming that we want to see here in Wales and to make sure the farmers are rewarded for doing so.

What is the Welsh Government doing to broker new relationships? I was at a farm recently—she knows about dairy farming, she doesn't know about horticulture farming, so how do we get that sort of partnership arrangement, where we've got environmental objectives and we've got food security objectives, to enable people to move into new areas of production that they simply don't know about?

I don't think it's easy, Chair, because we have to create a culture in which people come into these conversations prepared to think about the contribution that they themselves can make to finding those solutions, rather than coming into the conversation pointing to a problem that somebody else is creating. So, I will chair, at the Royal Welsh Show on Monday, another meeting that is to do with phosphate—the real problem that we have of overconcentration of phosphates. And I will be saying at the very beginning of that that I do not want to hear anybody's contribution focusing on the problem, because we know about the problem. I don't need people to spend their five minutes telling me more about the problem, and I don't want to hear from people what they think somebody else should be doing; I want to hear from everybody the contribution that they think they can make to addressing the issue that we all agree is an issue that has to be addressed. And that's a cultural shift, isn't it—that's a cultural shift in persuading people that the way you have those conversations and the way you get that sharing to take place is when everybody feels that their main responsibility is to make their contribution, whatever that will be, and it'll be different as some will have a bigger contribution than others. All of that I understand. But if your starting point is that you're coming through the door to help, rather than coming through the door to point the finger or to argue about the nature of a problem, that's part of the way in which I think we get an industry to mobilise itself to shape its future. 

Okay. That sounds a really useful way of approaching it. Just looking lastly at the Welsh Government's foundational economy ambitions, how are we supporting Welsh farmers to add value to their produce so that they can sell more of it, both into the public sector for our universal free school meals and also to ensure we don't have the problems we had at the beginning of COVID, where the milk wasn't being collected, so it was going down the drain, which was a tragedy?

Well, Chair, one of the more happier afternoons I've spent in recent times was to go to the showground in Llanelwedd, and it was to a celebration event to mark all the achievements of 10 years of the rural development programme here in Wales. And, actually, it was all about added value. I was really interested in it, because all the different stands—and there were loads and loads of food producers there—and the big thrust, as you went around, was everybody telling you what they had done, and the help that they had had, in order to be able to get greater value out of the food that they produce. So, I think there is some fantastic work that has gone on here in Wales.

Jenny, you will know about Project HELIX, which was very much at the forefront in that event. So, that is a project funded by the Welsh Government, but it's a partnership between agri-food businesses and universities to use research and innovative techniques to add value, and loads of the products that were on display there had been produced as a result of the Project HELIX intervention. But Farming Connect—. Another scheme that we have that advises farmers absolutely regularly on the way in which they can do more and add greater value—. Is it called Prosper from Pasture?

Indeed. Indeed.

It's right on the edge of my memory there, but Prosper from Pasture is one of the schemes that Farming Connect runs in the dairy sector, again to make sure that more can be done to turn the raw milk that is produced into things that can be sold that you can get greater commercial return from.

I think the grant scheme—the small efficiency grant scheme that the Welsh Government runs, of £14.5 million—the applications for it closed at the end of June, and those are all added-value efficiencies. So, they are all, you know, sometimes quite small pieces of equipment. When I was going around the display in Llanelwedd, somebody showed me what looked quite a modest piece of equipment, but they couldn't have afforded it themselves. They'd got a small grant, they were using it, and it really had made a much bigger difference to their business than you would've thought from looking at it, because it didn't, at first sight, look like it would make that difference. But it did, because it was innovative and it was targeted at exactly the business that that person was engaged in. So, there's a series of ways in which we will continue to invest alongside the industry, to make sure that—. We're never going to compete on volume, are we, in Wales? You know, if we're up against Australian ranch farming, we are never going to compete on volume; we have to compete on quality, and added value is the way that you create that value in the chain.

Chair, if I may add, the scheme that the First Minister mentioned is part of the bigger announcement that the Minister for rural affairs made a few weeks ago around the £227 million of funding over the next three years. What we're doing with those schemes is—some of them have launched already, some are due to be launched—that they're all very much targeted at exactly that. It's talking with the farming sector about what is the best way in which we can support them to add value to become more environmental, more social, more economically efficient throughout the supply chain in order to get that extra value from the produce. And, actually, one of the ones I think the Member may be interested in, which we've launched early on, is around horticulture: a start-up scheme, which we've never had before, which, again, was a response to the sector, but also a development scheme—so, for those who are already in the horticulture sector, it very much does very similar things to the efficiency scheme the First Minister mentioned, which actually looks to take their business to the next level and to support them in that. So, that's very much, I guess, the philosophy around the next three years as we transition into the sustainable farming scheme, which will come online in 2025. 

Both those schemes are very welcome, it's just we haven't been doing them fast enough, because we are facing the abyss at the moment, unfortunately. But the key is, really, how we multiply good practice, because some of those LEADER schemes, which you'll be familiar with, were wonderful, but we never thought, 'This has worked so brilliantly here we need to do it in another 30 communities and online.'

Part of the reason we had the event that the First Minister alluded to was very much to try and draw as much of that learning from all that good work that's happened under the rural development programme, to draw the good learning, put it into the development of schemes over the next three years and then feed that into the co-designed process for the sustainable farming scheme, so that we don't lose the learning and the lessons we've learned. Some things have worked really well; some, as is the nature of things, maybe less well. What we need to do is to take that learning and to build it into the work that we're doing, going forward.

Thank you.

We'll move on now to areas of coastal and marine policy, and, before we discuss the coastal and marine policy agenda, obviously, ports are an important aspect of the coastal world, and John Griffiths will ask questions on free ports.

Diolch, Cadeirydd. I think it's fair to say, First Minister, that free ports have had a rather interesting brief history since they were first seriously mooted by the current UK Government in terms of the relationship with Welsh Government and Welsh Government's views, and, obviously, there have been negotiations between Governments and we seem to have reached a reasonable position in terms of a way forward that's satisfactory to both. But we now have what I think it's fairly objective to say is a rather chaotic situation within UK Government, and some of the drivers of the policy, Rishi Sunak and Michael Gove, are no longer in office. So, I wonder if you could just update us, First Minister, on what you see as the current position and how we move forward from here. I appreciate that it might be difficult to provide much certainty, given the state of flux at a UK level.

Chair, this is one of the more successful aspects of the Welsh Government's relationship with the UK Government in recent months—a relatively rare positive spot on the landscape. The history of it is that free ports are a UK Government idea. I continue myself to have a series of reservations about the nature of the idea itself, but the UK Government was very keen to have a free port in Wales. I wrote to the Treasury, probably 18 months ago, setting out conditions on which we would be prepared to have that conversation, and months and months went by without any response to that letter of any sort, and then, in November of last year, the British-Irish Council was held here in Cardiff, it was attended by Michael Gove, and the issue of free ports was revived in one of the meetings that were held between the Welsh Government and the UK Government there.

The good news is, as I say, that there were four conditions that we set out as preconditions to our participation: that we would be funded in Wales to the same extent as any free port in England—the original Treasury offer offered us £8 million. Whereas a free port in England cost £25 million, we were to get £8 million and we were going to be asked to pay the rest ourselves, for a policy that wasn't ours and that we weren't that keen on. So, the first was that we had to be funded to the same degree. We needed guarantees that there would be no regression on environmental standards, we needed guarantees that there would be no regression on employment standards, and we needed a guarantee that we would be co-decision makers. In some ways, that last one was the most important one of all, that the decisions that will be taken over location, remit and so on, that those would be joint decisions between the Welsh Government and the UK Government.

And to give credit where it is due, Michael Gove made all that happen within a few months, compared to months and months of nothing at all happening previously. So, we do have an agreement now. We will be publishing a joint prospectus on all of this. Bids will come in and we will have a free port in Wales on a basis that we are prepared to agree to. And a lot of that work does go on at the moment at official level between officials in the Welsh Government and officials in the UK departments.

The current anxiety is the one that John Griffiths mentioned, Chair, isn't it? Free ports were the brain child of the then Chancellor of the Exchequer, Rishi Sunak. He drove that idea through the Treasury, and the practical negotiations of it all were led by Michael Gove. Now, I was the finance Minister in the Welsh Government at the point that George Osbourne ceased to be Chancellor of the Exchequer, and I can tell you that, for a couple of years afterwards, you daren't mention his name in any discussion with any Treasury officials because he was a person never to be spoken about. He belonged to the past and, if you mentioned his name, people dived under the desk in case they were found to be associated with it. So, there is a risk, isn't there? There is a risk that, in a new Government and a new regime, ideas that were prominently associated with the previous regime now are regarded differently. So, that's my anxiety about the free ports at the moment. It's not the fact that we don't have an agreement, because we do. It's not the fact that work isn't going on, because it is. But will there be the same political enthusiasm and political commitment to this idea in a future UK Government? Well, I suppose it will depend on who ends up leading that Government. But there's a different level of uncertainty around it, John, at the moment, than there would have been six weeks ago.

Given that context, First Minister, are you able to say anything about timescales, on the basis that there will be that ongoing commitment from UK Government and it will proceed as it would have otherwise, if we weren't in this state of flux? 

Well, our aim, and it was the agreed aim of both Governments, was to put together the prospectus against which bids would come in and to be in a position to publish that early in the autumn. Now, I have a feeling—I've not seen anything, there's been no formal suggestion of this, but I have a feeling—that that will become more difficult now, because there will be new Ministers, and possibly different sorts of portfolios, and people will want time to learn what they're now responsible for and so on, and pressing ahead to the original timetable may be more challenging. But that was the ambition. We had a major event on 1 July, bringing all stakeholders together, trade unions and others involved in that to help with the planning of the prospectus. The original ambition, as I say, was to get all that done and ready to be published early in the autumn.

Okay. Could I ask as well whether Welsh Government has a preference for a single site or more than one site, or does that depend on the bids that come forward and their quality?

Well, one of the things that we achieved positively in our negotiations with the UK Government is that, unlike in England or in Scotland, our free port prospectus will allow for a joint bid to come forward by more than one port. That wasn't possible in Scotland or England because you couldn't have a free port within—was it 45 km of one that had been agreed? So, joint bids weren't possible. In discussion with Michael Gove he agreed—well, we agreed together—that we would construct the prospectus in a way that would allow single bids and joint bids to come forward. I don't have a view; I shouldn't have a view, because the Welsh Government will end up having to help decide between bids. So, I should have a view on whether I prefer one sort or another; it will be on the merit of the proposal.

Could I ask, just finally, Cadeirydd—? You had those four basic requirements, First Minister, that needed to be met before Welsh Government would give its support to a free port or free ports in Wales. Are you now in a position where, on the more specific aspects of free ports, you feel that you've reached an agreement with UK Government as to the way forward, or is that yet to be thrashed out? Will any lingering concerns that you have be met by the requirements around the prospectus and what bids will have to satisfy?

Chair, I think, on the big things that concerned us, we got an agreement. Now, when it comes to weighing up bids, it is possible that there will be some aspects that will be of greater significance to us than they would be to the UK Government, and no doubt the other way round. But, for us, fair work, decarbonisation, climate adaptation, sustaining the natural environment—all of those things will be important to us, as well as what might be described as the narrower economic benefits of free ports. So, when we come to assessing bids and making decisions it's inevitable that different perspectives will be applied to that and we will take a wider idea of what we think the benefits are that you could get from a free port than simply they would, if it were to—. That's what I mean by being slightly sceptical about the whole premise. Sorry, I don't want to divert ourselves, but, Chair, you will be very familiar, because this was the case, very much, in Swansea, wasn't it? The enterprise zone didn't create new enterprises; it just relocated enterprises that had been in the centre of the city out to the enterprise zone where people didn't have to pay rates. So, there was no aggregate gain in economic activity; it just displaced it from one place to the next. Now, we must hope that that isn't true of free ports, and that they do contribute to a gain in the round in economic activity, but we will be interested in more than just that. 

Okay. Diolch yn fawr. 

Thank you, and I'll put on record my interest, obviously, representing the greatest deep-water harbour in the area in Port Talbot, which may well be involved in those, but also it links into the next question I'll bring to you, which is on the benefits that offshore development might give to coastal communities, and, clearly, the aspect of the Crown Estate agenda, which I know is a part of the co-operation agreement. So, where are we in moving forward on that aspect to look at how we can actually start gaining some control over the Crown Estate? Because it has a huge impact upon developments here in Wales. 

Well, Chair, you're right—the co-operation agreement commits us to pursuing devolution of the Crown Estate to Wales. We think that is the right thing to do. It is devolved in Scotland. It would give us a greater flexibility if we were to have it devolved here in Wales. The Deputy Minister for Climate Change met the Crown Estate at the end of last year. Julie James and Vaughan Gething both met the new chief executive, I think it was, of the Crown Estate on 8 June. It's fair to say the argument over whether to devolve is not for the Crown Estate itself; that is for the UK Government, and the appetite for any further devolution there is pretty limited, you can be sure. But we will nevertheless continue to make the case.

In the meantime, the best way we can pursue the outcomes that you were referring to is to work as closely with the Crown Estate as we can. I think there are some encouraging signs there, both in the latest leasing round and probably even more on the announcement that the Crown Estate made on 5 July—I think I'm remembering that right—where it identified five broad areas of search in the Celtic sea for further leasing rounds. You know I went to Oslo recently, mostly for the Urdd and its hundredth year celebrations, but while I was there I met two major investors in the marine energy field: Statkraft, which is the marine renewable energy arm of the sovereign wealth fund of Norway, who told me that they intend to open an office in Cardiff because of the significant interest they have in Celtic sea developments, and Olsen, which is another major renewable investor and has very significant investments in Scotland already and also want to come to Wales. They both said that what they wanted out of the Crown Estate was long-term security in terms of knowing where the future leases would be located. And the announcement on 5 July, I think, does go quite a long way to giving those investors a longer term horizon of where those five search areas are going to be found. So, I think there are some good signs that the Crown Estate is thinking ahead over that longer run, which will allow us to pursue some of our ambitions for renewable energy in the marine environment. If we had it ourselves, we could do more, but that doesn't mean to say we can't do a lot to work with the current arrangements. 

I think that the offshore renewable energy developments have huge potential for our coastal communities, but I also have a concern that the infrastructure, and the grid in particular, may be limited as to what is possible. So, are you having discussions as to how we can improve the infrastructure to allow developments to take place, which can then benefit our coastal communities?

Well, Chair, the National Grid is one of those topics that I occasionally think I've understood, then I look away from the person who has explained it to me and found that I've forgotten it all. And on a Friday afternoon at the end of term, if you don't mind, I did bring a note with me because I thought maybe that this would come up. So, I'm going to refer to the note more than I would normally want to, because some very significant changes have happened very recently, in the last few days, which might give us some grounds for greater optimism than we've had with the National Grid for some time. The grid in Wales has been an inhibitor to our ability to move in the direction that we wanted to. But, just a couple of days ago, the National Grid energy system operator announced what it calls the holistic national design. And this is a map that essentially looks ahead to what the National Grid will need to provide in future in order to be able to harvest the energy that can be produced in the North sea around Scotland, and in the Celtic sea as well.

And the reason that this is a breakthrough is this: our big argument with the National Grid has been about the way in which the basic model that Ofgem use is constructed. Up until now, if you were a developer and you wanted to get a grid connection, you had to demonstrate that there was an existing demand that needed to be fulfilled, and if you could do that you might get agreement from the National Grid and they'd tell you how much it would cost and it would happen. But what they weren't prepared to do was to plan on the basis of what's called anticipatory demand—demand that might be needed in the future. And our argument with Ofgem all along was, 'We have an anticipatory industry here in Wales. We're talking about an industry of the future and we're talking about the grid connections that we will need in the future, and your system doesn't allow for that to be taken into account.' So, the fact that we now have a map—and it's got some very interesting things as far as Wales is concerned on the map, including an interconnector from north to south Wales, which I think is really interesting in terms of onshore wind in mid Wales, where, as you know, grid connections have been one of the things that have been a real struggle to persuade local communities to allow such investment to go ahead—actually does give us quite a different basis on which we can have those conversations for the future.

It also chimes in with a piece of work that you'll know the Welsh Government has already initiated. So, we have let a contract to Energy Systems Catapult here in Wales to bring together the suppliers of renewable energy and those who deal with demand for energy and the Welsh Government to try and reach a consensus statement on what the needs of the future in Wales are going to be. And that's a necessary piece of work because there has not been agreement. There has often been a series of quarrels between the developers on the one hand and the infrastructure suppliers on the other, and what we're trying to do in Wales is to bring everybody around the table and to reach an agreement on what the energy needs of Wales will be in the future, and how you can then get a supply of renewable energy that will be enabled to meet those demands, and the enabler is the grid. So, that's how it comes back to your original question—apologies for the slightly long way round back to it. I think if I'd been here a year ago, I would have had a bleaker story to tell about the challenge to get the National Grid into a state that we could say it will enable that energy of the future to flourish here in Wales. In the last 12 months, the developments, I think, have moved in the right direction. 

Russell has been indicating that he wants to ask a supplementary on this, so Russell George. 

Thank you, Chair. Thank you, First Minister. I actually have quite a bit of sympathy with your points around the previous model not being very effective in terms of bringing forward projects to the National Grid and Ofgem. I think a more strategic approach is probably sensible. I forget the document you refer to that maps out the grid or plans a proposed grid now across Wales. Is that a proposal that's been brought forward in the past few days? As far as the Welsh Government is concerned and you're concerned, does that fulfil what you expected and what you wanted in terms of that mapping for the future grid for Wales? 

The map was published on 7 July, Chair. I'm sure we would be able to share the map with members of the committee, if that was of interest; I don't think it's a map shared just with us. And, of course, our officials will be studying it at the moment. The initial reaction was that we were positively pleased with what the map was showing as far as Wales is concerned. It shows, I'm told, what the briefing note that came to me describes as a 'bootstrap'. I don't know what a 'bootstrap' is, but it is a bootstrap—Jack looks like he might know—that will link the west coast of Scotland down to the north-west of Wales, and then a further connector that goes from the north-west of Wales down to, well, on the map, the Swansea area, and then a further outward link from south-west Wales down towards Cornwall as well. Now, whether when people study it and get more detail about it, we think it does everything that we need, I really do not know, but the initial reaction, I think, was reasonably positive, that we were pleased to see—. Well, we were pleased to see a map at all to begin with, because of the way that it allows that more strategic sense of what's needed, and some interesting proposals in relation to the needs of Wales.  

Thank you, First Minister, and we'll take you up on your offer—if you could give us an indication of where we can find the map, if it's in the public domain. 

Of course. 

I've got two quick questions to finish off the thematic section. One is on the coastal communities fund, which I know the UK Government has stopped funding and the Welsh Government has kept going, but it hasn't yet indicated as to whether it will continue beyond this current round. Is it going to continue? Have you looked at it yet?  

The coastal communities fund is not a happy story, Chair. As you know, it was financed by revenues generated from the Crown Estate marine activities; it's another argument for devolution of the Crown Estate. The UK Government decided not to fund the coastal communities fund in England and, as a result, we got no consequential for it in Wales. As far as I can tell, money has been lost to Wales altogether, and all that money is now being spent somewhere else, but not for that purpose. So, we then financed ourselves £6 million to allow the sixth round of the coastal communities fund to continue. I can't give a guarantee that we will have a further round of that programme by itself, but there are a series of programmes that we will continue to invest in. The Brilliant Basics fund that has been running in the tourism sector in recent times, and there are probably Members around the table whose areas have benefited from that. The tourism attractor destination programme is still to be completed in Wales. I went to Saundersfoot last week to see fantastic work that's been done there through that programme. The tourism strategy for Wales is to spread the season, so people don't just come to Wales for six weeks in the holidays; to spread tourism so people don't just go to Tenby, but they go to other places as well, and Saundersfoot is ideally placed to help with the spread of that, and then to get people to spend more money while they're here. And the tourist attractor destination programme is designed to invest in 11 places across Wales where we think there are outstanding natural resources and opportunities to attract more people to them. So, that will continue. The Wales tourism investment fund will continue, and there are often one-off investments that we provide in this field. This year, we've been investing in the tenth anniversary of the all-Wales coastal path that John, of course, inaugurated when he was the Minister, and this year we've been trying to highlight the tenth anniversary and find some money to invest in the future of the path and to extend its reach and its range. So, even if the coastal communities fund itself, even if there isn't a further round of that, that does not mean that there will not be significant other expenditure designed to support the future of those coastal communities.

Peredur has a short supplementary.

Just a quick one, following on from what Jenny said around food production, fisheries and aquaculture obviously are based in these communities and would help stimulate some of that economic growth. When can the industry expect a fisheries and aquaculture strategy from the Government?

We do plan to produce such a strategy, Chair. It's a very difficult moment, I think, to do that because the Brexit impact on that part of Welsh industry is still so unsettled. It's one of the tragedies of Brexit that our seafood industry, or the mussel production in the Menai strait, for example, built up over 20 years, largely with European investment and fantastic dedication by the people who've done it, now faces a very, very less certain future because 90 per cent of its product went to the southern Mediterranean and, with current barriers to trade, the fact that you're held up so often as you try to get the product from Anglesey to Marseille—it was a single journey—means that has become a much, more difficult prospect.

One of the interesting things at that event in Builth Wells was to hear about the efforts that are being made to secure other markets for that industry, including added-value issues to make the product more attractive in a home market that doesn't buy that many mussels, for example. It's complicated by the fact that UK Government used the internal market Act powers directly to fund our fishing in Wales when it has no responsibility for it and ought to have provided that money to the Welsh Government for us to fund the industry in a way that we understand and they can't possibly. So, producing a strategy for it while all of this is still very much in flux means that it's not been possible to bring it forward probably as early as we would have originally expected, because we are just having to wait until some of those fundamentals settle enough for us to be able to found a strategy on sufficiently reliable foundations.

But it's certainly on your radar as something—

Yes, very much so.

The other thing, Chair, if I add to that, is that we used to have the European maritime fisheries fund, which is now coming to an end. We are doing work at the moment to see what that placement could look like in Wales in order to support the kind of activities that we would want to support in our coastal communities in that area. So, that's another strand of the work, to add to what the First Minister said.

And just as a final question, I'm fully aware of the investment that the Welsh Government's putting into measures to protect communities and homes from risk of flooding and coastal erosion, but, unfortunately, that's not going to be for everybody and there are going to be some communities and some homes that will probably suffer more. What are you doing to put into place a strategy to actually support those who are unable to be protected?

Well, there's a series of strands in that, Chair, and Gian Marco will maybe give you some of the detail of the current investment. It is important to just put a bit of perspective into it. I think we protect over 400 km of the Welsh coast by the infrastructure that is already in place, and, in the last 100 years, we have lost 1.4 km of the Welsh coastline to coastal erosion. So, the problem is that the future may not look like the past because of climate change and rising sea levels and so on, and that's what we're talking about here. Shoreline management plans, which are the essential way in which those communities are protected, are the responsibility of local authorities, and we work with those local authorities that face particular challenges in that area. And you will know, and people here will know, that the Fairbourne community in Gwynedd is the one that has most often been talked about in this context, and Gwynedd has worked hard, and I think with some success in recent times, to develop its shoreline management plan for that community. Even on the projections that we have, that community is not threatened next week or next year; we're still talking decades before it might not be possible to inhabit that part of the coast in the way that it is today, and we don't have plans at this point to intervene in a way that would cast a greater doubt over the continuation of those communities, because that has all sorts of implications for people who own property and have created futures and things there. So, there's a lot of work. We're investing £71 million this year in coastal flood defences, so we go on protecting where we can, but there will be, on current projections, some parts of the Welsh coast where a managed future, rather than a defended future, will have to be found, and working with those local communities and with our local authorities will be the way to do it. 

Thank you. We've come to the end of our thematic section. We've gone a bit beyond the time, but we've got a few questions on topical matters. Are you prepared to go straight into those, First Minister?

Yes, of course.

In that case, I'll hand over to Peredur.

Yes. If you cast your mind back a few weeks, we spent a pleasant evening watching Blackadder Goes Forth, and an excellent production it was, but we saw in there the futility of repeating plans and the final push. The centralisation of vascular services in Betsi was calamitous. What makes you think that the centralisation of vascular services in the south-east is going to be any better, or do you have a cunning plan?

Well, first of all, Chair, I wouldn't accept the characterisation of the north Wales plan as disastrous. There have undoubtedly been some implementation challenges in it. But the plan itself, and the plan in south-east Wales, is the right plan. It is supported by the Royal College of Surgeons, it is supported by the Vascular Society of Britain and Ireland, and it's supported for very good reasons. It is supported on the basis that, if you need a vascular procedure that is one that requires a certain level of skill by the surgeon that is operating on you, you don't want to be having someone who's willing to have a go at it locally; you want to be treated by someone who is a specialist in that complex and challenging surgery. So, the concentration of the specialist end of vascular services is to make sure that Welsh patients get the best possible service. That does not mean that you will not continue to get an awful lot of what you get in the vascular service more locally. The routine side of it, the after care, the preventive work—all of that will continue to be done much closer to home. But if you need an operation that needs somebody who spends their working life doing that sort of operation, you want to go somewhere where someone has the opportunity to develop those sorts of skills and to be able to practice them so that, when you go there, you know that you're going to get the service you need. And that's why the model is so powerfully supported by the profession, because they know that that is the way in which you get the best clinical outcomes for patients.

Just to follow on with regard to staffing, then, and making sure that we've got enough staff—and I was talking to the Royal College of Nursing earlier this week—we're in danger of losing good quality staff, nurses, through burnout, through being fed up and not having the flexibility in their contracts to be able to do some of the work that they're able to do on an agency basis but not in the NHS. Do you have a view on how we go about fixing that element? And how are you reacting to a comment made by a senior member to myself at the opening of the Grange who said, 'We've got four hospitals in the south-east and only enough staff, really, to fill three of them'?

Well, I think there are a number of different questions there. Look, when I was the health Minister, I remember the King's Fund produced a paper that said that there are only three problems with reforming the health service: the public, the patients and the professionals; apart from that, it's easy. And you try shutting one of those four hospitals in south Wales and see how far you get. One of our problems in Wales is that, if you were starting from scratch, you would not have the disposition of services geographically where they are and you probably wouldn't have the same number as you do. But, once you have a service there, the attachment of members of the public to it, patients, and, indeed, staff, is very significant indeed. And simple, rational solutions often can't be made to happen because you deal with the human realities of how people feel about where they are and the service they need and how it's best provided. So, I'm quite sure that there will be some truth in what was said—that, if you were designing an entirely rational service, you'd have fewer sites and you'd concentrate the staff you had in a different sort of way, but you have more than rationality to think about.

The question that Peredur asked about skill use—I used to bang on a lot, so I won't this afternoon, about the way in which we need a health service where people operate at the top of their clinical licence. A GP should never be seeing somebody who does not need the skills of a GP in order to be able to respond to them. That person should be seen by somebody else in the clinical team who has got the right set of clinical skills and can respond properly to that person. In other words, consultants should only ever be seeing somebody who needs the skill of a consultant to see them, and we we're quite a long way off, not just in our health service, but in most modern health services, in maximising the clinical abilities of the people we have. And it's very frustrating when you hear from people that they are prevented by whatever protocol it will be from doing something that they are perfectly capable of doing and would be allowed to do somewhere else or in another context. But these are often jealously guarded professional boundaries.

Jenny, do you want to come in?

I just wanted to go back to the business of the flexibility of the nursing contract, because it does drive people into becoming agency workers, because they simply can't get that partnership approach to enabling the system to understand their particular needs. They've got children they need to deliver to school—all those problems—and if you go into an agency, you can dictate that; you're only going to be available three days a week, when you'll do your 12-hour shifts because you've got the granny involved or whatever it might be. We don't seem to have that flexibility in the NHS and it's costing us more money and we're losing good people.

And we've got bank nursing within the NHS that could potentially fill that gap, but we're not doing it.

Well, that was exactly the point that I was going to make. We have invested quite a lot, as the Welsh Government, in supporting health boards to build up inside the NHS bank arrangements, where people do have that flexibility and can make choices about when they can and cannot work, and the NHS does definitely need to make bigger efforts to use that as one of the tools that it uses. But the NHS is an industrial-scale provider, isn't it? It has 100,000 people working for it in Wales, and there is a tension between the sort of mass production effort that we need the health service to be, and being able to offer individualised, niche arrangements in which you can choose how you yourself are going to be able to work within it. I'm just saying it's not an easy circle to square, but, certainly, there are better ways in which efforts can be made in that direction.

I'll take the opportunity to ask a topical question: clearly, the biggest topic at the moment is the possible change of Government at the UK level, not in the sense of political-party change, but personnel change, and, by the time we come back after the summer recess, there will be a new Prime Minister and there will be a new Government as a consequence. Now, I understand that the inter-ministerial review has established a dispute resolution system in place. You've mentioned yourself this afternoon the United Kingdom Internal Market Act 2020 and how challenging that has been to Welsh Government in some decisions. You've also mentioned how there's been some co-operation on the free ports agenda. How do you see the future of the Government relationships going with, perhaps, a new leadership, and do you think and do you have confidence in the dispute mechanism that has been agreed?

Well, as to the future of those IGR arrangements, they've never really got fully off the ground. They were signed in March of this year; the Northern Ireland elections were triggered within a week or so of that, so there was a period when Northern Ireland couldn't be around the table, because they were in election mode and, of course, we don't have an Executive in Northern Ireland ever since. So, one of the inhibitors in getting those arrangements up and working is one of the four wheels on the car hasn't been available. I do not think you could say that the outgoing Prime Minister has regarded these things as much of a priority in his diary. So, those changes were driven by Michael Gove—again, that was his responsibility, and I think he did work hard and succeeded in getting agreement from all four Governments across the United Kingdom to those arrangements. And some parts of those arrangements have worked since. So, the F:ISC, the Finance: Interministerial Standing Committee, has met regularly, albeit with only three participants rather than four. But the top part of the arrangement was meant to be a Prime Minister's council that he would have chaired and would have involved the First Ministers of Northern Ireland, Scotland and Wales—that has never met. How much investment there will be by an incoming Prime Minister in those arrangements, I just find it very hard to say. I will say this: a Prime Minister interested in the future of the United Kingdom would surely want to invest in them. There will be a referendum in Scotland next year, I think, one way or another. It may not be exactly as the Scottish Government currently envisage it when the Supreme Court has made—. But, one way or another, there'll be a referendum, and an incoming Prime Minister interested in the future of the United Kingdom surely ought to regard the way in which the United Kingdom operates as one of their top priorities. It's not been like that since December 2019, and I'm not following the leadership election all that closely, but, in every report I've heard, I don't think I've heard a single word said by any candidate as to how they would make the future of the United Kingdom a top priority for them, were they to be elected.

Have any Members got any further questions? You've got time, Peredur.

If there's time, then, just following on from the priorities debate we had on Wednesday, the finance Minister said she was open to talking about the budget protocol and that element. Wearing my Finance Committee hat, we're also interested in looking at, potentially, the finance architecture of this place in light of Senedd reform and, potentially, this place getting bigger. What are your thoughts around the budget process and the potential of a legislative process, or how do you see that developing over, possibly, the next 10 years and maybe some insight into how that might work?

One of your predecessors, Peredur, as Chair of the Finance Committee, did quite a bit of work on what a finance Bill procedure for Wales would look like. I think the feeling at the time was that fiscal devolution—. It was too soon, because we'd only just begun to take on those fiscal responsibilities. But, at the time, I felt persuaded that, over the longer run, that was the direction in which the Senedd would move, to have something more like a Westminster-style finance Bill to take those annual changes through the Senedd. The Bill that was passed this week gives us now the powers that we think we need to deal with emergency occasions.

I do think, Chair, that one of the big things that faces the current Senedd is a series of issues that we will need to grapple with. These are not governmental issues; these are issues to do with the way the Senedd operates when it has 96 Members, and that's going to be in just a few years' time. Again, these are just my own personal views as a Member of the Senedd and nothing to do with the Welsh Government, but I don't think that just carrying on the way the Senedd organises itself now with more people is the right answer. I think it's an opportunity to think more fundamentally about some of the processes, when we meet, how we meet, how committees are organised. Now is an opportunity to stand back a bit and think, 'Well, if you're going to get 96 Members here, ought we not to revisit some of those things that are basically unchanged since 1999?' In 1999, the then Assembly met—John was here—on a Tuesday and Wednesday afternoon, starting at 1.30 p.m., and that's what we do now. That's a quarter of a century on, in a very different institution with the powers that it has, and, after 2026, with a very different number of Members as well. So, as well as whether the way to deal with those finance issues should be moved in the direction of a finance Bill, the Minister did say, didn't she, that she was very open to considering those conversations, but I think, for me, that's part of a wider package of thinking that we need to get on with it, because some of these things are quite big issues and would involve Standing Order changes and all of that, and if we don't start thinking about it very soon, 2026 will be heading towards us very fast.

On the back of that, especially more on the finance element, would you be in favour of setting up, maybe, an independent group to review some of those constitutional elements and maybe to help draw in more widely how we redesign this place and how we move things forward?

In the finance space particularly, I'm sure Rebecca Evans will have ideas and I don't want to say anything that trespasses into thinking she may be having. As to how the Senedd as a Parliament grapples with those issues, it really isn't for the Government to have a view. I think the Government will now get on with the instructions that we have had from the Parliament to bring forward a Bill, and we're committed through the co-operation agreement to doing that between 12 and 18 months after the publication of the special committee's report. We are on track to do that, and there will be a lot of very hard work and detailed things that we will need to work on there, and machinery is being set up. There is some joint work with the Commission, because some of these things cross over between the responsibilities of Government and the working arrangements of the Senedd, so there are some joint arrangements being put in place there. There was a project board already established. It has people from both sides of the co-operation agreement represented on the project board, it has five work streams already identified, and that's going to be a really intense piece of work, to get a Bill in front of the Senedd in time to allow all the arrangements for 2026 to be in place. But I think, alongside that, going back to Peredur's original question, there is a challenge for the Parliament as well as for the Government in thinking through how this place will operate the other side of the next election. 

And that's probably through committee structures, to start thinking through in those areas.

I think so. It's not a party issue, I don't think. There are people in every party here who will have ideas and experiences of the way the Senedd works, and how that might be improved or amended to take account of the new circumstances. 

Thank you. Well, we're almost concluding, and I might take the opportunity to perhaps make a point and ask a question, First Minister, because I'm not always able to ask questions of you. Clearly, in my own area, steel is the issue, and the very important decarbonisation agenda is critical in that field. Will you continue to urge the UK Government—? While there's been a change of personnel, we tend to see that different Ministers to the Secretaries of State have different priorities in terms of strengths, on steel in particular. If we don't get some action from the UK Government soon, investment decisions that have to be made now, effectively, for the future will not be made. So, can you continue to press the UK Government to start looking at decisions on helping the industry and decarbonisation so that those investment decisions can be made, and we can see the investment and, therefore, make sure our steel industry stays here?

Chair, as you know, Vaughan Gething and I met the managing director of Tata here in this building on a Saturday a few weeks ago when he was here from India, and there was a series of messages he was keen to convey to us and to ask for some help in making sure that those messages landed properly with the UK Government. We have both pursued that since. There was a meeting of the Steel Council—the last meeting of the Steel Council was here in Cardiff, and Vaughan chaired that, and he used that opportunity, and I've had conversations with very senior civil servants and with Ministers in the UK Government as a result of that conversation. 

One of the slightly more optimistic opportunities we may have is that, although Michael Gove has now left the Government, his temporary replacement, at least, is Greg Clark. Our relationship with him as an individual was mostly around the industrial strategy and around the steel industry, and I think Ken, who did those face-to-face negotiations, generally reported that he was a Minister that you could have a proper discussion with. He was well informed and he was open to taking contributions from others. So, I hope to have my first meeting with him next week. He won't have steel as his responsibility, but he will, as I understand it, be taking on Michael Gove's responsibilities for contact with devolved Governments. So, my plan is, if that meeting is able to happen, to have steel as one of the things that I will go back to, and to remind him of his previous responsibilities and the challenges that he was grappling with then, and some of those are still unresolved.

Thank you, First Minister. I'm sure you know that I'll keep on nagging you, sometimes, on that issue.

We've come to the end of our session. Can I therefore thank you for attending this afternoon, and thank your officials for joining you? We very much appreciate it. 

I now propose, in accordance with Standing Order 17.42, to resolve to exclude the public from the remainder of the meeting. Are Members content to agree? I see they are, and, in that case, we'll now move into private session.