Pwyllgor yr Economi, Masnach a Materion Gwledig

Economy, Trade, and Rural Affairs Committee

16/03/2023

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Darren Millar Cadeirydd dros dro
Temporary Chair
Hefin David
Luke Fletcher
Samuel Kurtz
Sarah Murphy
Vikki Howells

Y rhai eraill a oedd yn bresennol

Others in Attendance

Chris Hale Pennaeth Swyddfa Gwyddoniaeth Llywodraeth Cymru
Head of Welsh Government Office for Science
Duncan Hamer Cyfarwyddwr Gweithrediadau Busnes a Rhanbarthau, Llywodraeth Cymru
Director of Operations, Business and Regions, Welsh Government
Gavin Watkins Dirprwy Brif Swyddog Milfeddygol, Llywodraeth Cymru
Deputy Chief Veterinary Officer, Welsh Government
Gian Marco Currado Cyfarwyddwr, yr Amgylchedd a'r Môr, Llywodraeth Cymru
Director, Environment and Marine, Welsh Government
Jo Salway Cyfarwyddwr, Partneriaeth Gymdeithasol a Gwaith Teg, Llywodraeth Cymru
Director, Social Partnership and Fair Work, Welsh Government
Lesley Griffiths Y Gweinidog Materion Gwledig a Gogledd Cymru, a’r Trefnydd
Minister for Rural Affairs and North Wales, and Trefnydd
Vaughan Gething Gweinidog yr Economi
Minister for Economy

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Ceri Thomas Dirprwy Glerc
Deputy Clerk
Katy Orford Ymchwilydd
Researcher
Lorna Scurlock Ymchwilydd
Researcher
Robert Donovan Clerc
Clerk
Rosemary Hill Ymchwilydd
Researcher
Sara Moran 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 10:46.

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

The public part of the meeting began at 10:46.

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

Good morning, and welcome to today's meeting of the Economy, Trade and Rural Affairs Committee. I'm delighted to be able to welcome you today. We've got a few papers to note, and we'll do that in a second. There are no apologies for absence today. Are there any declarations of interest from Members?

Yes, please, Chair. I declare an interest as an honorary member of the British Veterinary Association. 

Thank you very much. Any further declarations? I can see that there aren't any.  

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

We move on to item 4, which is our papers to note. We have a number of papers to note on our agenda. We've got a letter from myself to the Secretary of State for Levelling Up, Housing and Communities. That's to request his attendance at a future committee meeting to support our evidence gathering on post-EU funding arrangements. I'll take it that that is noted. We have a letter also from the Minister for Rural Affairs and North Wales, and Trefnydd. This is the Welsh Government's formal response to our Stage 1 report on the Agriculture (Wales) Bill. I'll take it that that is noted. Obviously, it will help to inform our proceedings next week at Stage 2. And we also have a letter from the Llywydd and Chair of the Business Committee. This is regarding an exchange of correspondence with the Welsh Government in relation to the short timescales for the legislative consent memorandum on the Genetic Technology (Precision Breeding) Bill. Again, I'll take it that that is noted. Everybody happy with that? Okay. 

5. Craffu Cyffredinol ar Waith y Gweinidog - Y Gweinidog Materion Gwledig a Gogledd Cymru, a’r Trefnydd
5. General Ministerial Scrutiny - Minister for Rural Affairs and North Wales, and Trefnydd

We'll move on then to item 5 on our agenda today, the general ministerial scrutiny session with the Minister for Rural Affairs and North Wales, and Trefnydd. I'm very pleased to able to welcome virtually to our meeting today Lesley Griffiths, the Minister, Gavin Watkins, the Chief Veterinary Officer for Wales, and I think it's his first appearance before this committee, is it? Deputy chief. Is that right? Am I messing up already? I apologise. 

That's correct. 

And also Gian Marco Currado is joining us, and he is the Welsh Government's director of environment and marine. So, welcome to you all. Minister, we've obviously got a number of questions that Members want to raise with you today on a whole host of different subjects, the first of which we can turn to is organics and the organic sector, if I may. Minister, one of the things that the Welsh Government has committed to is to updating the regulations on the organic sector. Can you tell us where things are up to at present on this? 

Member
Lesley Griffiths 10:49:03
Minister for Rural Affairs and North Wales, and Trefnydd

Thank you, Chair. The organic regulations are due to be reviewed, following equivalent regulations in the European Union being updated, and obviously a lot of our legislation not just in Wales, but across Great Britain, is still very much entrenched in retained EU regulations. We have a four-nations working group on organic production, and what that group has done is establish an expert group to advise the four nations on future organic regulations. As far as I'm aware, they're still recruiting members to that expert group, but once that group is in place they will then advise us. 

So, the EU regulations are moving on and changing and developing, but you're trying to take a four-nation approach basically to change in the future. Do you think that the changes will be brought forward before December 2023? Is that a timescale that you're working to?

10:50

That is the timetable we're working to, but you would want me to be honest with you, and I think it's highly unlikely. They're very complex regulations, and, as I say, currently, the expert group is being brought together. The Department for the Environment, Food and Rural Affairs are leading on discussions with the European Union, and I know my officials are working very closely with DEFRA officials. But I think, in fairness, because of the nature of the regulations and the complexity, it's highly unlikely we will have done it by the end of this year.

So, what sort of timescale do you think you will be able to achieve?

Well, we—. As I say, we are working to it. It's probably best if I update Members once the expert group's in place. I think, once the expert group's in place, maybe things will shuffle along a little bit quicker than they have been, but we're certainly working to December 2023, and I know all four administrations are very keen to do that. But, as I say, it's very—. Some of the things that this will—you know, it's the size of a chicken veranda coop. It's a very complex area, so, you know, it's—.

I'd like to know what the size of a chicken veranda is myself, actually. So, to what extent do you think there'll be divergence from any new EU organic regulations? Have you got any indications of that at the moment, Minister?

No, not really, because, obviously, what we're waiting for is the expert group to advise us. So, it's all in motion, but I think we have to go through the process. So, the expert group's recommendations will, obviously, have a significant impact on our policy decisions, and that's for the four nations.

Okay. In terms of flexibility within the UK, obviously, the Welsh Government may take a slightly different view on what it might want to put in place. Is the view at the moment that you're more likely to be in tandem with the other nations of the UK, or will there be significant variation within the UK?

I think it would be good to have some common organic standards, and, certainly, if you look at other areas where we've worked very closely across the UK since leaving the European Union—. The agriculture Bill, for instance, that you referred to in your previous item—I've always said, obviously, agriculture is wholly devolved; at the end of the day, probably all four nations will have similar agricultural policies, and I think it's the same with organic, really, and many other types of policies we're having to bring forward. I think, if you look at organic policy, it is broadly devolved, but, of course, if you look at the subject matter of organics, it crosses over with reserved matters, such as trade and imports, for instance. So, we could legislate to set a different standard for organics to other parts, but I do think, because our supply chains are so integrated across the UK, it's likely that there won't be a huge amount of deviation between the four countries. But we do have the ability to do so, and, as I say, until the expert group comes forward with its recommendations, which will obviously have a significant impact on our policy decisions, it's probably a little hard to say.

Thanks for that, Minister. We'll move on, then, to Vikki Howells.

Thank you, Chair. Good morning, Minister. I've always taken an interest in peat, because there are some really fantastic peat bogs in the Cynon valley, and, obviously, they are a really good source of carbon storage, aren't they? So, I'd like to ask you a few questions around peat in horticulture, beginning with your plans to ban the sale of peat in horticulture following the December announcement—if you could tell us a little more about that.

That's right. So, back in December, I announced the retail sale of peat in horticulture will end in Wales. That included bagged compost as well, and peat in plant pots, for instance. You will be aware there was a public consultation, and I have to say the support for such a ban was quite overwhelming, really. I think it was about 92 per cent of Welsh respondents supported an overall ban on the sale of peat compost. I think also what came out of that consultation was it should be for the amateur sector as well, so we're having to look at that, going forward.

Thanks. So, would you be following the same timeline as England, then, in relation to banning the sale of peat to amateur gardeners by—I think it's 2024, they're planning?

Yes, I think that's probably the most likely thing. We are working very closely with the UK Government on next steps to implement that ban, so I think it is likely that that will happen at the same time as England, yes.

10:55

Thank you. And in relation to the professional horticulture sector, might there be any issues with this? Would there be any barriers that need to be overcome to ensure the transition to peat-free alternatives, and, if so, what work are you doing on that?

So, again, I'm working with the UK Government. They're going to introduce primary legislation and we're going to work with them on that so that that primary legislation will cover both England and Wales, but what it will do is include powers for Welsh Ministers to implement a ban in Wales by secondary legislation in order to give effect to the ban as soon as, really, is practicable.

And have you got any idea of a timeline for that ban with the professional sector?

I don't, at the moment. Officials are working closely with DEFRA officials to try and get that proposed timeline for the professional sector. I will ask Gian Marco if he's got any information around the timeline, but I don't, I'm afraid.

Thank you, Minister. No, not yet. We are working closely with the UK Government to determine a timeline. As the Member said, during the consultation, quite a few practical and technical issues were raised in relation to peat in the professional sector, so what we're looking at now is how we can help to address those and how taking those into account fits into a broader timeline.

Thank you. And one final question from me, which might relate to what Gian Marco alluded to there; I'm not sure. But the United Kingdom Internal Market Act 2020 has proved to be a thorn in the side of all sorts of things lately. Do you think that the practical effect of the ban could be impacted by that Act?

As you say, UKIMA is causing all sorts of difficulties. What was interesting—I think it was the first piece of work that the Office for the Internal Market did—was DEFRA made a request to them to do a report on this. I know—I think it was just a couple of weeks ago—DEFRA had that final report from the Office for the Internal Market. I think it was quite helpful and I think what it concluded was that there shouldn't be any major impact on intra-UK trade. There'll be some changes, I think, to the patterns of trade in peat-containing growing, but I think it's likely to be modest. So, I think that was quite reassuring.

I don't know if colleagues are aware, but the Scottish Government have also launched a consultation to end the sale of peat in Scotland. They've just literally launched their consultation; I think it's a three-month one as well. So, there is that push right across the UK now to do this. I think what it also shows is that a lot of people have volunteered towards peat-free growing as well, so I think that's good that there's been that voluntary approach taken ahead of a ban. But I think the ban will obviously firmly implement peat-free growing media as the standard within horticulture in Wales, and, as you know, I'm very keen to grow the horticulture sector here in Wales. But I think there's certainly been a—. The demand for peat extraction has been driven down by the consultations that we've had in England and Wales, and, as I say, now Scotland are doing the same thing. So, I think it makes us all more globally responsible in that area.

Diolch, Chair. Hello, Minister. I'm going to have some questions now about food insecurity. So, to begin with, evidence has shown that half of the adults in Great Britain at the moment are buying less food, but also that it's costing them more than it usually would. So, how are you working with key partners to tackle this—what's resulting in food insecurity? So, whether that's with the UK Government and the devolved administrations, across departments, within Welsh Government, but also the food sector, and including all parts of that supply chain.

Thank you. Well, we've certainly seen a perfect storm this year, haven't we, with the cost-of-living crisis, food inflation—prices have been more high, higher than ever before. So, we've had some real issues that we've had to contend with. So, food supply is tightly integrated across the UK. I don't think we can look just at Wales; you have to look across the whole of the UK—and international supply chains for that matter as well. So, a huge amount of work is undertaken by all four countries together. You have to think about Welsh products as well; a lot of those contain ingredients that they have to get from abroad, so that's why we have to look at global markets as well. So, my officials work very closely with DEFRA officials about food security matters. We have a variety of groups that they attend, and certainly, at our six-weekly inter-ministerial group meetings with DEFRA and my counterparts in Scotland and Northern Ireland, it's nearly always an agenda item and certainly it was when we met last month, and it will be when we meet next month. So, there's a huge amount of joint working. I'm very keen on cluster working and the food and drink sector here in Wales works very closely around those clusters, and I think, through that excellent cluster working that we have in Wales, we've been able to get some really good insight into issues that have happened and we've been able to react really quickly on that.

You ask about work within Welsh Government, and, again, whilst food and drink sits within my portfolio, I work very closely with many of my ministerial colleagues. I suppose the main relationship would be with the Minister for Social Justice and you'll be very well aware of the work that she does in relation to food poverty. We've done some excellent interventions. You've heard me mention Big Bocs Bwyd before. We've given financial support to all local authorities to improve grass-roots co-ordination of food issues. I work closely with the education department, with the foundational economy team. You'll be aware of the universal primary free school meals programme. That's probably the most formal approach that we've taken across the Welsh Government, and my officials, obviously, have input into all of those things. 

I think another area where we're working very closely on food production, and you'll be very aware of this, Sarah, is the agriculture Bill. Sustainable food production is absolutely at the heart of the agriculture Bill, which—. We'll be looking at Stage 2 next Thursday. So, we've worked very closely with officials across Government. So, my deputy director for land management reform chairs a policy oversight group and that includes all the relevant teams across Welsh Government. Ultimately, Cabinet is the forum where we make all the major decisions, and I keep all my ministerial colleagues updated on food—I prefer 'food security' to 'insecurity', but—on food security, because, clearly, everyone takes an interest in it.

11:00

Thanks very much, Minister. So, you talked then about collaborating with the Social Justice Minister, and I know that this is something that Jane Hutt is also very concerned about, about the emergency food parcels that are currently having to be given out in Wales. So, Trussell Trust foodbanks have said that there were 77,000 emergency food parcels between April and September in 2022—so, the highest that they've seen. So, what is the Welsh Government doing to support people experiencing that food insecurity right now?

Yes, unfortunately, we've seen a significant rise in the support that foodbanks are having to give our constituents right across Wales, and you'll be aware of the significant work that we did in relation to foodbanks, giving extra support during the COVID-19 pandemic. And we've had to be very focused on the cost-of-living crisis. The First Minister made it very clear to all Cabinet colleagues that the cost-of-living crisis had to be right at the fore when we were making policy decisions. Regrettably, we don't control all the levers, as you know. The UK Government do hold fiscal policy. The benefits system, for instance, is a very important tool, I think, for the UK Government to do much, much more than they're doing. 

You asked what we're doing in the here and now, and, obviously, the commencement of the universal free primary school meals policy is a groundbreaking step to break that long-term cost of poverty, which results in lower educational attainment. We all know our children learn much better when they've got food in their stomachs and we want to improve everybody's life chances and that's obviously our commitment to free school meals—to really provide that level playing field and ensure that all our primary school children get a decent meal every day.

Lots of financial support to our communities, led by the Minister for Social Justice—as you say, she's very focused on that. So, she's extending the Big Bocs Bwyd programme. That provides a pay-as-you-can-afford model for food and groceries. We've allocated just under £15 million, I think, in probably the last three years, three or four years, as a Government, to support community food organisations to tackle food poverty and provide a wider range of services also for individuals and households to be able to maximise the income they get and build a bit of resilience into their lives. Just this current financial year that's coming to an end now, we've allocated £2.5 million to support community food organisations to overcome barriers to accessing, storing and distributing additional supplies of good-quality food. And I know products such as baby milk and hot water bottles, for instance, have been bought to support well-being, healthy diets and personal dignity.

You'll be aware that we've also encouraged baby banks and uniform banks, two things that I think really help families save money at this very difficult time. And I know the Minister for Social Justice, if she were here, would want me to talk about Food Sense Wales, which I know she is really focusing on extending to help strengthen some local activity in that area. Certainly, we work very closely in partnership with Public Health Wales as well. 

11:05

And finally, you mentioned earlier on horticulture in Wales and how you want to support it more. So, how will this be achieved, and how also will this aspiration be kept under review and reactive to global events? I know that you mentioned last month the new Farming Connect programme and how that will now include horticulture, so if you could also expand a bit on that and how that will work and what kind of measurements and targets you'll be looking at.

So, the horticultural sector here in Wales is quite small. It was about 1 per cent of the entire agricultural sector that was horticulture. I was really pleased to hear from Gian Marco a couple of days ago that we're approaching 3 per cent now, so it shows the focus we've had on the horticultural sector is helping. I don't think we'll ever be in a position, certainly not in my career, to be able to provide all the vegetables and fruit that we need here in Wales, but I'm really committed to making sure we can maximise the potential and, where farmers do want to do a bit more around horticulture, that we have the support and the grant schemes that they are able to access to be able to do so. I think to have that vibrant horticultural sector has been something that I've been very keen to promote.

I think there's a lot more potential there, so that's the reason we've had a couple of capital grant schemes for horticulture, for people to be able to access. Of course, we've got Tyfu Cymru, and you mentioned Farming Connect and that I'd mentioned Farming Connect, and obviously there's support there for farmers to be able to, perhaps, explore what it would mean for them to expand their horticulture sector. So, if I can just talk about the horticulture development scheme first, that offers support for existing growers. So, if you're already doing horticulture, you can use that grant to invest in further equipment or technology that you think might enable you to enhance your production efficiency, for instance, and obviously your environmental performance. So, we had that first window—I think that was around £1.5 million, going forward. We then had a horticulture start-up scheme, which obviously does what it says on the tin. That was for people looking to enter the horticultural sector, and to really encourage them to establish a new commercial enterprise, either if they wanted to diversify into horticulture or if they just wanted a stand-alone new enterprise. And I think we had about £300,000 in the first window of that. 

We've now got a horticulture cluster. You've heard me referring to cluster working, which we have in the food and drink sector, and I was really pleased that we've got a horticulture cluster, because I think it's only by sharing your experiences and talking about best practice—. That's the way to try to encourage more people to enter the horticulture sector. And I've really been pleased to see the way that cluster is coming on—sharing best practice, sharing knowledge and, of course, also sharing the challenges, as well as the opportunities, going forward. Of course, we've got lots of opportunities in Wales around horticulture, and it's really good to see that our geographical indications family includes the Denbigh plum, and now we've got a Denbigh plum festival. So, it's great that, from very small beginnings, we've now got a whole festival. We've got a heritage orchard as well and lots of apple varieties that are unique to Wales, and I think we just really need to make the best use of that. 

11:10

Yes. Diolch. Thank you, Minister. Thank you, Chair.

I know that Gareth Davies is delighted with the news about the Denbigh plum festival. Moving on from Gareth to his colleague Sam Kurtz.

Thank you very much, Chair. Good morning, Minister. Good morning, panel. Just quickly, your annual bovine TB statement was due in November but has been delayed until, if I'm correct, the twenty-eighth of this month. Can I just ask the reasons behind the delay?

The main reason was that officials were having to work on the avian influenza outbreak, which, as you know, we didn't have any respite from. Also, I thought it was really important that I have input into that statement from the new chief veterinary officer. Just to clarify for Darren, Gavin Watkins was our interim chief veterinary officer, but he is of course our much loved deputy CVO. Last Monday, we welcomed Richard Irvine, the new chief veterinary officer. He didn't start until last Monday. I was hoping he perhaps would have started a little bit earlier in the year. But he knows that—. I met him on his front day, and the priority is for him to look at the work we've been doing getting ready for the TB oral statement, which, as you say, Sam, I will be doing in the Siambr on 28 March. Also, I want his input into the new delivery plan. So, that's the reason for the delay.

Moving on, back in November 2020, you issued a written statement regarding the establishment of a non-statutory rural development advisory board to advise on the content and delivery of the domestic rural support programme. I'm just wondering if you can confirm if that board has been established or not, and just provide information on its membership.

No, it hasn't, and I've changed my mind; I won't be having an advisory board.

Okay, no problem. Is there a specific reason for your decision to change your mind on that?

I think, just—. Is there a specific—? Well, we're not looking at having a replacement rural development programme in the way that we have had an RDP. As you know, we've got the rural investment scheme, and I just think, at the moment, there isn't a need for an advisory board. I'm not saying it's something that I might not go back to, but at the moment it's not a priority for me, no.

Okay, helpful—thank you very much. Just moving on quickly, as well, with 3,000 Glastir area-based contracts—I think they total approximately £35 million—due to come to an end at the end of this year, I'm just wondering when farmers can expect an announcement, possibly, that there won't be a cliff edge in funding and the equivalent will roll over into next year.

I'm waiting for advice from officials as to what we do in relation to Glastir. I met with both the farming unions last week and this was something I discussed with them. Obviously, like me, they don't want that cliff edge. I can't give you a timescale—I will ask Gian Marco—but at the moment I'm waiting for advice. As you know, I extended the Glastir contracts until the end of 2023, but I will ask Gian Marco if he can give me any timeline.

Just quickly before Gian Marco comes in, is it your anticipation that it will roll over and it's just waiting for when that announcement is to be made?

No, I'm waiting for advice as to whether it will, or what the advice is to me as to whether we should do that or not.

Thank you, Minister. As the Minister said, we're working through the options and the advice at the moment. It's one of our top priorities to provide that. We recognise that, for those Glastir contract holders, there is that uncertainty at the moment. We're just looking at what the options are that the Minister might have in relation to, in effect, that period between the end of 2023 and the planned implementation of the sustainable farming scheme in April 2025. So, that advice should be with the Minister very soon, but there are some complexities, as you can probably imagine, around the different options.

Okay, thank you. That's really helpful. Moving on to something that was mentioned on 5 October 2022 regarding an additional £20 million of funding to support compliance with the control of agricultural pollution regulations, I'm just wondering, Minister, if you can provide information on when and how this funding will be made available to farmers.

Well, as you know, we've not long finished the consultation on one aspect of the regulations, and I'll be bringing forward some further information—where are we now—probably by the end of this month, because, as you know, obviously, the timescale is very tight on that. As far as I know, and I'm going to look to Gian Marco now, the window for that £20 million will be opening—when?

The £20 million is basically a commitment as part of the overall rural investment scheme commitment that you've made. We've already got grant schemes that are available and have been available for farmers, particularly around infrastructure development that is needed to meet the new requirements. And we are looking—. We're basically working with stakeholders to see where the biggest demand is, so that we can tailor our offer, going forward, to where that demand is. 

11:15

So, in terms of this £20 million that was announced back in October, though, there's no start date yet in the diary for when application—

We have some—. Oh, sorry. 

I was going to say we have some grant schemes that are already available that are contributing to that. What that is is basically a commitment the Minister has made to put more money into those schemes. If there are other interventions that farmers tell us are necessary, then, obviously, we can consider that and put advice to the Minister. So, it's an overall commitment, in effect, to spend more money in this area, if I can put it that way. 

So, in essence, it's a top-up to a grant scheme that was already in operation for support for farmers for compliance with the new regulations. Is that a summary version? Yes. Okay, helpful. 

And, then, just finally from me, terms of the spread of manure from slaughterhouses that slaughter TB-infected cattle, and the regulations around that, I've had concerns from a farmer in west Wales who is TB free but has had abattoir slurry spread next door to their farm. Obviously, as you can imagine, Minister, this causes them concern, as they want to keep their TB-free status. I'm just wondering, in your discussions around the new control of agricultural pollution regulations, whether that's something that's been raised with you by stakeholders.

Yes, it has been raised with me, because we know that it can exist in that slurry for, I think, up to six months. So, it is something that we've been talking about in relation to pollution regulations. So, it's something we can, obviously, look at more closely. But if you've got somebody who wants to specifically pass on their views, that would be really helpful, and, obviously, quite quickly. 

Yes, of course. I'll make sure that the farmer in question is able to write to you. I'll pass back to the Chair now. Thank you, Chair. 

Okay, thanks, Sam. We're going to come back to Vikki Howells now, on animal welfare. 

Thank you, Chair. So, Minister, the current animal welfare plan for Wales runs from 2021 to 2026. Could you give us an update on progress to achieving the goals within that plan to date?

Yes, so, as you know—I was going to say at the start of this term of Government, but it was probably six months into the term of Government—I announced an entire animal welfare plan for the whole term of Government, so for the five-year term of this Welsh Government. And we're making some significant progress, I think it's fair to say. From within that plan, there are four programme for government commitments. So, the focus, obviously, is on those programme for government commitments, which outline how we're going to take that sort of integral approach to all the animal welfare policy work. You'll be aware I've got a Wales animal health and welfare framework group, and that monitors and advises me on the implementation of that plan to make sure we are making the progress. 

So, if I could just highlight a couple of things, Chair, we've written to all local authorities and third sector organisations regarding a national model for regulation of animal welfare, and that includes registration for animal welfare establishments, commercial breeders for pets, or for shooting and animal exhibits. I funded the local authority enforcement project for three years. We've just announced another three-year extension, and, from that, we've been able to strengthen training for inspectors and extend that training. I'm aware there are about nine now, I think, officers, and two senior intelligence officers had further training. So, what that's doing is building a much higher level of expertise across local authorities, because we know some of them are faced with very complex cases. So, I think the project's been highly recognised, I think, as best practice, and we've had some awards, I think; I think some of the inspectors have received awards, and the programme itself received an award from the Royal Society for the Prevention of Cruelty to Animals. So, I'm really pleased that work has been undertaken, and I think it really shows that sort of added value we can do from, probably, not a huge amount of money, but you can just get that added value across the country. 

Another programme for government commitment is requiring CCTV in all slaughterhouses. And as you know, Vikki, all our large slaughterhouses already have CCTV—it's the smaller ones. What I wanted to do was try and get a voluntary approach and, again, we've got funding available so that owners could access funding if they wanted to put CCTV in on a voluntary basis. So, I think it's also about understanding the impact that the commitment will have on individual slaughterhouses. So, I've had abattoir owners who tell me that they absolutely don't think CCTV is necessary because, 'If you stand here, you can see everything that's going on and there's always a vet present', for instance. So, I think we need to make sure that there are no unintended consequences going forward, but that's another commitment.

Something that I know you're particularly interested in is restricting the use of cages for farmed animals, and we've been working with other devolved administrations and with DEFRA to consider how we can further improve standards of farmed animal welfare. You've probably heard me saying in another place, the UK Government's Animal Welfare (Kept Animals) Bill—we did a huge amount of work with DEFRA to make sure that we were part of that Bill. It's stalled, which is really annoying, because I think that will provide us with far more strengthening of our animal welfare standards. I raised it with Richard Benyon—Lord Benyon—who is one of the Ministers at DEFRA, to see if we could try and get a bit of progress, and I've also raised it at inter-ministerial group meetings, because I think that will really help us, as I say, with our improved standards of animal health and welfare. And one area that I think it will improve, where we are seeing, unfortunately, an increase, is in dog attacks and worrying livestock, and particularly at this time of year when we have lambing. This is something that's raised with me frequently. So, I really hope that they can unstall the Bill and really get some movement on that.

11:20

Thank you. In addition to what you've already just outlined, are there any strands that you feel are perhaps not on track, or any barriers that have been faced?

I suppose that last one is a bit of a barrier—the UK Bill—so, just trying to see what we can do to get some progress there. I think that's probably the only one. As I say, the office of the chief veterinary officer has really been stretched to the limit. Members of staff have been having to work, literally, 24/7; they haven't had any break because of the avian flu outbreak, so I think it's fair to say that they've done great work to be able to move this. And, of course, animal welfare is also one of the components of our sustainable farming scheme. So, I'm grateful for the significant input that OCVO have had into SFS as well.

Thank you. And just one final question, if I may. You talked us through the work that you're doing on restricting the use of cages for farmed animals, do you think that there is potential in the future to extend that work to game birds that are bred and caged as well?

Yes, absolutely. What we do with all these regulations and with the codes of practice is we have a sort of rolling programme, if you like, looking at all of them. So, as you tick one off—it's a bit like painting the Forth Bridge; as you tick one off, there's always another one to do. So, again, we've established a working group with other UK administrations to look at all of these aspects.

Thank you, Vikki. Luke Fletcher, you wanted to come in on this.

Diolch, Cadeirydd. Just very briefly, if I may, Minister. I was just wondering what engagement there will be now with the animal welfare sector going forward on the plan, as well as the timetable for delivery.

It's ongoing. So, as I say, it's a five-year plan. We won't do everything in the first year—well, we're obviously into the second year now. It is a five-year plan, and what I want to do is achieve all of the things set out in the animal welfare plan in the five-year term of this Government. It was something that I was very keen to start at the beginning of term. So, we constantly talk to stakeholders and with the other UK administrations, and the plan is that we deliver it all by 2026.

Can I just ask a couple of questions, Minister? Some of the things that have been live topics of discussion in the Senedd in recent months, of course, have been the potential banning of greyhound racing tracks in Wales, and I know that you've committed to undertaking some work to explore and have a consultation on that. And the microchipping of cats has been something that many Members of the Senedd have also been contacted about. As I understand it, the UK Government is moving ahead with the microchipping of cats in England, or has made some sort of commitment. Are those two things also going to be annexed to your animal welfare plan in some way?

11:25

Yes, absolutely—they're very much a part of it. So, in relation to greyhounds, as you know, we had a debate last week on the back of a petition that garnered a significant amount of support from across Wales. So, I have committed to going out to consultation, and officials are starting now to get that consultation ready. I've committed to doing it this year, 2023, so that's certainly going ahead.

In relation to the microchipping of cats, obviously we want to extend the compulsory microchipping of dogs that we currently have; we want to extend that to include cats and kittens. There was some UK-wide research done back in 2021, and we are currently analysing that research to see if any amendments are required on the current microchipping regulations for dogs, and whether we will actually need possible new measures for kittens and cats. Again, we'd have to go out to full public consultation if that were the case, but certainly, we are progressing that work. 

That's great. Thank you for that, Minister. Can I call Hefin David next?

Just to follow up on that question on the greyhound racing, as you know, I'm supportive of the Welsh Government's position, and, indeed, my position is the same as the Welsh Government's position. But, could you also give a commitment that, should the consultation come up with anything that causes a restriction in greyhound racing, the only track in Wales is considered, and that you have conversations with the climate change Minister on how flooding consequences of the track closure there would be alleviated? Because should the proposals go ahead to a ban, or even stronger regulation, that floodplain would be directly affected. So, would you be willing to have those conversations about remediation and Welsh Government support through NRW? 

Thank you. Obviously, the one track we have in Wales is in your constituency, and we met to discuss your concerns around that. I did commit to doing that, if that's what the consultation does show. But, as I say, we're a long way from that, but certainly I give my commitment.

I appreciate that on the record—that's really helpful. The other question I've got is about dangerous dogs. What is your current thinking on the regulation of dangerous dogs? Can you give us an update on how progress is being made there?

Well, as you know, the Dangerous Dogs Act 1991 is a UK Government piece of legislation that I don't think is fit for purpose. A lot of the animal welfare legislation that currently is with the UK Government, some of it goes back to the 1800s. I remember meeting with the current rural wildlife and crime commissioner, probably five or six years ago, and him going through the legislation with me, and I remember writing to the Home Secretary back in probably—let's have a think—2016 or 2017 about it. But there doesn't seem to have been much movement since probably that period of time. We can only look at what we can do; I can put pressure on the UK Government, but it doesn't seem to be doing much in relation to the dangerous dogs Act. We've had too many fatalities; I know you've had them in your constituency, and it's just unacceptable. So, we're doing what we can within our own competence as a Government.

And within that, are breeding controls within your competence? That's correct, isn't it?

Breeding controls are, yes. So, we've had revisions to our statutory guidance on dog breeding, and what we're doing now, we've got an animal licensing project, which, again, is something that we've brought forward. We're forming a working group to consider some issues around dog breeding. I don't know if Gavin can add anything further on dangerous dogs particularly.

Yes. The Minister and I have discussed this, because it is obviously a concern. I think there are two elements, really. One is the dogs themselves being dangerous, and the other is the owners acting responsibly. And where you have those tragic outcomes, it's a mixture of the dogs and the owners. So, the Minister has asked me to look and see, to explore the options of whether we could improve the responsible ownership regulations. This is complex, because some of these issues, as you know, are Home Office and therefore not devolved, but, as the Minister said, we're actively looking now at the Minister's request to see what we can do within our competence to improve responsible ownership and to really crack down on those people who are not keeping dogs responsibly.

11:30

I think one of the things we could do is get a little bit more clarity. So, with my MS hat on, I've had a case that probably would fall within the Dangerous Dogs Act 1991, and it's really hard to find out whether it's the police who need to deal with it or the local authority enforcement officer, and I think if we could get a bit of clarity around that, that would be a good starting point.

Okay. I appreciate that, and I'm sure those conversations will continue over the coming weeks and months. So, can I move on to access to the countryside and the work of the access reform groups? Can I ask about that, and specifically the details of progress in taking forward the access proposals in the 2017 sustainable management of national resources consultation?

Thank you. Well, the work of the access reform group ended in 2020, and we've now got a national access forum for Wales—I recently met with the chair, actually. So, despite the very real challenges to our budget, we've increased capital funding in recent years to enhance access provision. We had an access improvement grant established back in 2020, and that provided funding to authorities to implement access improvements, and I know that further funding has been given—I think it's a three-year project and it's about £5.5 million, I think, to enable those improvements to continue.

We're also continuing to take forward a number of important proposals that were outlined in the sustainable management of natural resources consultation back in 2017. We've also recently consulted on measures to repeal or disapply legislative provisions from across the statute book that are obsolete or no longer of practical utility in relation to Wales. And you'll be aware of the draft Statute Law (Repeals) (Wales) Bill, I think it's called, which is looking at provisions for a cut-off date by which historic footpaths and bridleways must be included on definitive maps will not apply to Wales. And again, that comes about following the consultation that I referred to, because we do know a lot of the areas of the Act are proving very costly and probably inefficient, so therefore should be removed.

We've also got reforms to the role of local access forums; they're in development at the current time, and there's been initial work commissioned from NRW and Welsh Government, working with those forum representatives, to review and update the regulations and guidance in the area. And I know we're currently funding NRW as well to do some further work in respect of proposals of dogs on leads and also the countryside code. Because, going back to what Gavin was saying about responsible ownership, I think we need to do further work in relation to that area as well, and I know NRW have been working on a behavioural insight-based approach to take that forward around responsible recreation of dogs.

And the countryside code—I'm sure that we are all very well aware of that, and Welsh Government provided some funding for NRW to develop a more strategic approach to the countryside code and really promote that across Wales.

Okay. Thank you for that comprehensive answer. I think you'll realise from my earlier questions that some of the responsibilities that you have, and the actions you take, have direct consequences in the climate change portfolio, so I assume you work very closely with the Minister for Climate Change. With regard to access to water, is that within your department, because the climate change Minister has issued statements on water quality? So, could you clarify that, and are you able to give us an update on progress in this area?

Okay. So, the first thing to say is, 'no', access to water doesn't sit with me, it sits with the Minister for Climate Change. You'll be aware that our department is called climate change and rural affairs, and we work very, very closely together, but the actual access to water sits with the Minister for Climate Change, as does water safety, for instance. The inland waterways, water quality, that sits within the Minister for Climate Change's portfolio, but obviously, you'll be very well aware that we have to work very closely together on that. I hope that clarifies it.

11:35

That's fine with me, yes. I'm happy if the Chair's happy.

I'm happy with that. Can I just ask, Minister, as a follow-up, on this issue of access to the countryside? Obviously, many people in north Wales are very excited about the prospect of there being a new national park. And this is something that the Welsh Government has agreed to take forward, in respect of the Clwydian range and Dee valley area of outstanding natural beauty, and converting that to national park status. Can you give us an update on progress with that, please?

Yes, absolutely. So, I think it was a very exciting manifesto pledge of my party and certainly, here in north Wales—I'm sure it's the same in your constituency, Darren—it was very much welcomed. It's just—. I say it's 'just' come into my portfolio; it's probably about six months now. So, yes, it sits in my portfolio. I meet every month with NRW, who have been commissioned, obviously, to look at this. It's incredibly complex; I had no idea until it came into my portfolio just how complex it is. So, work is progressing. The First Minister's made it very clear, not just to me, but also to NRW, that he expects this to be brought forward in this term of Government. So, probably not a huge amount that I can report on to you at the moment. There's a significant amount of background work being undertaken, but, at the most appropriate time, I will update Members. But as I say, I do meet monthly with NRW, and if there's anything specific that anybody wants to know, please write to me.

Thank you for that, Minister. Can I just ask, as a follow-up, are you considering any kinds of reforms to national parks, to go alongside this piece of legislation that might need to be brought forward for the establishment of a new national park?

So, that hasn't come across my desk, as yet. As I say, I'm only having monthly meetings with NRW, and I don't tend to get much information in between those monthly meetings, but I can't think of anything specifically at the moment around reform.

Diolch, Cadeirydd. If I could touch on the Retained EU Law (Revocation and Reform) Bill—no doubt causing a bit of a headache for you at the moment, Minister—I was wondering if I could get some further details on the inter-governmental engagement on the Bill. I'm specifically interested in details around what you mentioned in your written statement on 23 January, around DEFRA's plans for managing the portfolio, and some of those implications for Wales.

It's certainly going to be a huge amount of work; I cannot begin to say how much work this is going to mean—not just for Welsh Government, but for the Senedd as well. Officials are, and have been, working on this now for some significant time. I think it's fair to say at the outset that, as a Government, we have made very clear to the UK Government our fundamental opposition to the Bill. We've had many meetings. I attended a meeting on behalf of the Counsel General during the half-term recess—while he was out in Ukraine—around amendments, to try and work with other people to try and address the concerns that we have here in Wales. And I know there was a further meeting, which I haven't had an update on—I think it was Tuesday that the Counsel General had a further meeting.

You mentioned my written statement. So, we discuss this at our IMG, at every meeting, I think it's fair to say. I think it's a little bit unfortunate that, the last three out of four IMG meetings, the Secretary of State hasn't attended, and I think it's her that gives the political impetus, if you like, in these meetings. So, at our last meeting—no, probably not the last meeting, probably the one before that—the Minister for, I think it's food and farming, Mark Spencer, indicated that DEFRA's intention was to preserve the majority of rule and to only revoke that which is obsolete or is amending legislation. DEFRA only intend to reform a very small number of legislative items in 2023, and that includes where reform was previously being planned.

But regardless of DEFRA's default position, the size of the task to be completed by the end of this year is just incredible. And I don't understand why that deadline can't be moved, that date deadline of December 2023, and we've really been putting some pressure on the UK Government. And I think, in fairness to DEFRA, they accept the challenge of completing that work by the end of 2023. I did have a discussion with officials yesterday, because at the last IMG meeting we were promised an updated spreadsheet, if you like, which runs into tens of pages, which we've just had this week. So, now officials are having to go through that updated spreadsheet. I just think the timescale that the UK Government just will not budge on is just completely unacceptable. It's just too big a body of work to be completed by the end of this year. It reminds me of the work we did when we thought we were going to have a no-deal Brexit; it's just such a massive amount of work.

We're also working with Scottish Government colleagues because they, clearly, have lots of concerns similar to ours, and we're really trying to—. While we oppose the Bill, we are trying to, as I say, seek changes to it. Both myself and my Scottish counterparts have met with UK Government Ministers to see what we can do to directly pressurise them, I suppose, to change the dates. But it's a huge amount of work. I cannot begin to tell you how big this work is and, obviously, officials are working on this work when they could be working on other things, and it's just an unnecessary distraction, I would say.

11:40

Thank you for that, Minister. It was a very clear assessment of the Bill from your perspective, and the scale of the challenge you outlined, the timescales, the drain on resources you touched on at the end. Are there any other particular implications of this Bill that we need to be aware of as a committee?

Yes. So, if I tell you, I think there are close to 1,800 pieces of retained EU law identified by DEFRA between my portfolio and that of the Minister for Climate Change, because, as I say, we work as a group and as a unit between the two of us. So, that is a huge proportion of the retained EU law. It was the same, as I say, when we were working on statutory instruments, et cetera, when we first left the European Union. Probably the majority of the legislation that affected Welsh Government actually sat within my portfolio. So, to analyse all this legislation and ensure that DEFRA aren't intending to revoke or reform essential legislation is a huge challenge. What I've made very clear to officials is that I know they are working under incredible pressure to do this in an unacceptable timescale. We don't want errors to happen, but I think we have to be realistic that we need to put a huge focus on this to try and avoid any errors happening. I mentioned the updated spreadsheet of DEFRA rule that's going to be removed, and adding further legislation from their list. So, we need to look at that very carefully. 

What the Bill also does, which is something that we're very unhappy about, is that it contains several powers to revoke or update rule conferred on a Minister of the Crown, and that could result in a UK Minister using those powers in devolved areas without the consent of Welsh Ministers. So, that is a major constitutional concern, and I know it's something that the Counsel General has taken up with the UK Government. And, obviously, when I meet with DEFRA, I discuss it, and other Ministers will do it within their portfolios as well. Powers to amend devolved legislation should rest solely with Welsh Ministers, or if it's held concurrently with a Minister of the Crown, we should have that input. So, there should be a requirement on the face of the Bill for them to have to seek the consent of Welsh Ministers, or for a Welsh Minister to exercise their consent within a devolved area. So, that's a real concern as well.

Thank you for highlighting that, Minister. You touched on some of the preparation that's going on now in your department for the Bill. I was just wondering if you could give some further details around those preparations.

So, as I say, officials have been working on this now for some considerable time. I think it's fair to say—and Gian Marco can tell me if I'm wrong—that that's had to increase over the past few weeks. And, as I say, when you get an updated spreadsheet, that has to be gone through with a fine-toothed comb, and I think I'm right in saying it was tens of pages, because I did ask to see it, and was told there were tens and tens of pages. They'll do some preparatory work and then they'll pass it over to me to have a look at.

I think if the Bill does come into force with no meaningful changes, the workload to preserve devolved retained EU law and deal with the potential knock-on implications of the reforms that would happen in England is very significant. So, in preparing for the Bill, we have to consider options to address the challenges that arise from that Bill, and that’s a piece of work that officials are having to do alongside that. There could be, potentially, a massive volume of work to look at preserving our ability to deliver our own legislative programme and programme for government, which are our priorities, and that could obviously have an impact. So, what we’re doing, and what officials have been doing for some considerable time, is having a look at the overall analysis of DEFRA’s proposals, so that we can better understand the implications for our own legislation here in Wales alongside the Bill as well. We’re doing this across, as I say, both my and Julie James’s portfolio. We only have so much available resource, I think it’s fair to say. As I say, officials are having to be taken off things to work on this, but it’s too important and too vital that we don’t make any errors, that we have to really have this focus of resources onto it.

You’ll be aware—I’m sure you will have heard me say in other places, along with the Counsel General as well—that we have asked for an extension, and I go back to what I was saying about that self-imposed date of 31 December 2023, to see if that could be extended to give us a bit more time. But unfortunately, we haven’t been able to make any progress there, either.

11:45

Yes, thank you very much, Chair. Moving on to fisheries, I’m just wondering if there was an update on the development and publication of the fisheries operational agreements?

When it was published, the provisional fisheries framework memorandum of understanding committed to producing and publishing operational agreements in eight areas. So, we are finalising plans into the operational agreement. We’ve got a senior steering group work programme for 2023, so they’re being developed by policy-specific working groups, and again, this is being done across the four UK administrations—it’s not just being done in Wales. So, we’re working very closely with UK Government and devolved administrations. I’m really keen that our stakeholders are very engaged in the development of the operational agreements, because I think they’re the ones that will be impacted, and we need to know their concerns. So, as soon as those operational agreements are finalised, I’m very happy to share them with committee, Chair.

Great. Thank you. And just in terms of the membership and current focus of the ministerial advisory group for Welsh fisheries, I’m just wondering what those are and whether the minutes are published.

I hadn’t intended to publish the minutes. I’ll certainly ask the group if they will consider that possibility. As you know, the group’s been established to advise me and my officials on broader, strategic fisheries issues. There’s another meeting—I think it’s a week today. They’ve had one meeting, but there is another meeting next week, and I will certainly ask if they are willing for minutes to be published. I haven’t considered that at the moment. What I was, Chair, aware of was that I promised to share the terms of reference with the committee, and I know those terms of reference are going to be finalised at the meeting next Thursday, so I will then be in a position, Chair, to share them with committee members.

I think what I was really keen to do when I established this group was make sure that the membership was a little bit more wide-reaching than its predecessor. I felt that perhaps the Wales marine fisheries advisory group, WMFAG, as it was then, wasn’t as broad as it could have been, so I’m also going to keep the membership under review to make sure—. It needs that flexibility, I think, to bring other people in, maybe, as we go through it. But, at the moment, the group consists of representatives from the industry, from the aquaculture sector—because that’s a very important sector for Wales—the environmental non-governmental organisations, our exporters and, of course, academia.

Okay. Are you still intending to bring forward a Welsh fisheries Bill?

11:50

So, obviously, the legislative programme is a matter for the First Minister. We've certainly done the preparatory work. It's up to the First Minister, working with the Counsel General, to determine whether a Welsh fisheries Bill will be considered amongst the legislative requirements for this term of Government. As you know, our programme for government commitments are where we are focusing, statutory duties, and, as you know, around fisheries, I have many statutory duties, and delivering sustainable fisheries and supporting the sector to develop are a significant part of that. Fisheries management plans are very important, and they'll really be key to setting out our policies, but we have done the preparatory work for a fisheries Bill, yes. 

Okay. So, in terms of the preparatory work, what's the general scope within that preparatory work, with regards to the Bill?

Well, we did a consultation, so that obviously gave us a starting point. There's no work being done on it at the moment. The focus of the department—it's a very small team—is on the other aspects, as I say, of my statutory duties.

Okay, thank you. Just moving forward, in terms of the—. I'm just wondering what work has been undertaken to change the vessel monitoring system reporting requirement for vessels of 12m and over, to provide parity throughout the Welsh fleet.

Yes, that work is ongoing. You have probably heard me say in other places that we were the first country—we were the only country—in the UK to start with under 12m. I think that that was a really good news story. It's good to see other parts of the UK chasing us and looking to us, at the work we've done there. But, obviously, now we move on to the over-12m vessels. So, work is ongoing to consider those changes to the VMS reporting rate. 

Again, we're working as four countries in relation to this. So, I know that officials are working with their counterparts across the UK to see what changes need to be made. I have to say it's very complex. The under 12m was complex. It's not something you can do quickly, but I'm very pleased that the work is ongoing, because I absolutely recognise the benefits of parity of reporting across the fleet. Certainly, seeing the improvement that has been brought forward in managing the under 12m is really good.

So, as I say, I think it's a really big step forward, and the data that we're getting from that reporting of under-12m vessels is really helping us when we're looking at the work that we need to do about the sustainable management of fisheries. 

Okay. In terms of sustainability, then, I'm just wondering about an update on the introduction of REM requirements for the Welsh fleet to ensure its sustainability.

Yes. So, the joint fisheries statement commits us to exploring, where appropriate, the use of technologies such as REM, which is remote electronic monitoring, not just for sustainable management but also for scientific purposes and, of course, control of fisheries. I don't think that a blanket approach to fisheries monitoring solutions would be proportionate or even appropriate. So, I think we need to tailor technologies to match the nature and profile of the fishing fleet that we have, both in terms of vessels required to carry REM and the type of REM that we use.

So, I think I would anticipate the introduction of REM in some form during the lifetime of the current joint fisheries statement. But that, obviously, will be guided by the fisheries management plan process that's set out in the JFS, and each plan will determine the measures that are required to manage the stock going forward, and the technologies that should be used. I will certainly look to introduce REM where a plan identifies that that management measure should be in place to manage the stocks sustainably. But it's something that all four countries, as I say, are working on at the current time. 

Thank you, Minister. Just, finally, a slight segue away—and I refer to my declaration of interest once again—I know that the BVA have welcomed the Chancellor's commitment to provide 30 hours' free childcare, or to extend that. Given the shortages of vets and the squeeze on the profession in Wales, I'm just wondering if you're going to be having any discussions with your Cabinet colleagues for a similar introduction here in Wales, to help the veterinary profession and other professions as well.

Well, what happens when we get a Barnett consequential of funding is that we have a Cabinet discussion, led by the First Minister and Minister for Finance. You'll appreciate that we haven't had a formal Cabinet since the budget yesterday.

11:55

That will be something that will obviously be discussed. We have met as a Cabinet informally, this morning, obviously, on the back of the budget, but those formal discussions will go ahead. But you'll be aware of our already very good childcare offer that we have here in Wales. 

So, will you be looking to extend—or looking to make representations specifically to support the vet industry and profession in Wales? 

Well, I'll be looking across my portfolio. There are several aspects that can be looked after. You've just mentioned one very specific one. Childcare, I have to say, hasn't been something that's been raised with me by vets in relation to getting more vets. What has really hampered our ability to bring more vets into Wales is leaving the European Union. 

I should express an interest, given my son is training to be a vet at the moment, shouldn't I? 

Sarah Murphy, you wanted to come back in on animal welfare. 

Yes. Minister, I just had a further question to do with animal welfare. So, Companion Animal Welfare Group Wales—they're the ones that aim to improve the welfare of companion animals—. So, they give support to thousands of them across Wales, including veterinary clinics and rehoming services, information centres, community and school education, low-cost neutering and outreach. I know that we have some companion dogs in my constituency and they're absolutely loved to bits by the teachers and the students. So, I'm just wondering how much work you've done with them around the animal welfare plan, and how you intend to work with them and the sector going forward as well. 

So, I know my officials work very closely with the third sector. A very significant part of animal welfare is the variety of rescue centres we have, and, as you say, there are groups that work very closely. I'm not aware of anything specific in relation to companion animals, but I will certainly ask officials, and, unless Gavin is aware of anything, I'll ask officials perhaps to provide a note to committee, Chair. 

I'm happy to do that, but I can just confirm that we are in regular contact with the companion animal welfare sector, and we work very closely with them. We have to, because there isn't a state service for animal health in the same way that we have an NHS or a social service, so we have to work through the third sector and we do that, but happy to give you a more detailed update, if you wish. 

Are there any further questions from Members? No. If there aren't, then, if I can just thank you, Minister, for your attendance at committee today, and thank you, Gavin Watkins and Gian Marco Currado. You'll obviously have a copy of the transcript of today's proceedings so that you can correct anything that is inaccurate, and we look forward to engaging with you further, particularly, in the future, next week. 

Thank you. Take care. We'll take a short break now, before our next item on the agenda, and we'll reconvene at 12.30. 

Gohiriwyd y cyfarfod rhwng 11:58 a 12:33. 

The meeting adjourned between 11:58 and 12:33. 

12:30
6. Gwaith Craffu Cyffredinol ar Waith y Gweinidogion - Gweinidog yr Economi
6. General Ministerial Scrutiny - Minister for Economy

Good afternoon and welcome back to today's meeting of the committee. We're going to move on to item 6 on our agenda now, which is a general ministerial scrutiny session with the Minister for Economy, Vaughan Gething. Welcome to you, Minister. He's joined today by Duncan Hamer, director of operations, business and the regions; Jo Salway, director of social partnership and fair work—welcome to you, Jo—and Chris Hale, head of Welsh Government's office for science. 

If it's okay with you, Minister, we'd like to go straight into questions—

—if that's all right. So, obviously, the Welsh Government's approach to roads and investment in roads has changed significantly. We appreciate that this is not within your portfolio directly, but, clearly, roads have an impact on the economy and can be drivers of the economy. Can I ask you: what consideration has the Welsh Government, and your team particularly, given to that economic impact, and have you undertaken any assessments at all?

So, obviously, there has been the report of the panel, and the panel's report isn't Government policy, but it has informed the discussions that we have had within the Government. You'll have heard the First Minister talk about this in the last two First Minister's questions—both that we do need to reconsider our approach to road building, because we do have climate change challenges, and transport is one of the drivers of that; but also you'll have heard, the previous week, the First Minister describing some of the investment that we have made within the last term, when he was the Finance Minister, on taking forward the A465. So, there is a recognition that the transport infrastructure can directly impact how we develop the economy, and, actually, you'll see that in the Government response.

So, Government policy sets out four tests for road building, four areas, and within that we do consider our approach to the future of the economy. We're not in a position to say we have done a detailed assessment of all of the areas, because, actually, the other thing that underpins the need to have a different approach on road building is the reality of our budget. The road building programme that we had before the roads review is unaffordable because of the changes the budget we have, so actually we need to reprioritise what we're going to do on road building. We also need to think about we need for different pieces of infrastructure, and that's why we've got the approach that we've now got, with four particular tests to consider.

So, it's a good deal more nuanced than I think some people are—. Understandably, there's concern when you see some of the headlines, but I do think, when you look at those four tests, the opportunity to deliver economic development is one of those tests, and some of the concern, I think, has been to make sure that doesn't become a rat-run or a bypass by another name. And if you're going to do that, to still think about those tests of how can you increase and maximise sustainable public transport and active travel. That will be different in different parts of Wales, of course. So, the road network around Swansea, Cardiff or Newport is different to the Valleys, is different to north Wales, is different to the middle of rural Wales as well. So, we're going to need to think about each of the areas where there's economic development potential and how that meets the four new tests that we've got in Government policy and the strategy that you'll have heard the Deputy Minister for Climate Change outline. 

12:35

Thank you for that, Minister. Can I just check? We were having some issues with the microphone for our virtual attendees. Has that been resolved for people yet? It hasn't. Can I suggest we just suspend proceedings for just a minute while we get that situation sorted? Thank you.

Gohiriwyd y cyfarfod rhwng 12:36 ac 12:39.

The meeting adjourned between 12:36 and 12:39.

Apologies to our viewers there—we did have a problem with the microphones, but it now has been resolved. And thank you for that initial answer, Minister, to the question on the roads review and its impact on the economy. One of the things that I know has been raised with some Members is that some of the growth deal projects are dependent on investment in parts of the road network, and some of those projects were, obviously, subject to the roads review and it was recommended that they shouldn't proceed. So, I don't know whether you or your officials might be able to comment on the potential impacts of the review on the growth deal projects at all, or whether that's something you might want to write to us about if you don't have it to hand.

We're having conversations with each of the growth deals. As you'll know, they're jointly funded by the UK and Welsh Governments. I met with the north Wales growth deal group this week. I've previously met the Swansea bay growth deal. It's now the junior Minister, James Davies, who's, if you like, the point Minister for the UK Government in the Wales Office. So, we're going through it, and we're looking to understand, on each of those growth deals, how delivery is progressing and if there are factors. So, in north Wales, in many ways, the biggest issue for them is whether or not Trawsfynydd proceeds, because Trawsfynydd is their biggest project to lever in private sector development. We do, though, need to talk about the outcomes from the roads review, Government policy, and what that then means for it, because, as I say, the panel have provided recommendations that have informed Government policy; with Government policy, we issued a statement on it.

So, I'm more than happy to write back, or whether it might make more sense for the Deputy Minister to write back, or to write jointly, once we've gone through and had those conversations, because each of the growth deal areas are looking at what a variety of different perspectives mean. So, there's the roads review on the one hand. There's the outcome of the second round of the levelling-up fund, and the reality of the shared prosperity fund as well. There's a range of different things that affect what they're able to do, so I'd rather give you a rounded view when we complete those conversations, and perhaps we can then write back—I'd say probably jointly, rather than trying to get different responses from myself and the Deputy Minister. 

12:40

Absolutely. That would be helpful, I think, Minister. Thank you very much. I'm going to come now to Hefin David. Hefin, over to you. 

Yes, I'd like to ask—probably to the Minister it's no surprise—about skills. First of all, given the proportion of young people who are not in education, employment or training seems to have risen, are you confident that the young person's guarantee is going to reach the people who need it most? And could there be more support for young people to remain in education or training, along the lines of the increased training allowance for Jobs Growth Wales+? 

The statistical release on young people not in education, employment or training predates the young person's guarantee becoming active, so they're slightly misaligned in that sense. I don't think it's comparing the impact of the young person's guarantee itself. And as you know, in the first annual report for the young person's guarantee, we've been able to demonstrate about 20,000 interventions. Eleven thousand young people have been supported into employment, education or training. So, the guarantee is starting to have an effect. And actually, the fact that we designed the guarantee to deal with the realities of the pandemic, and then, actually, immediately post pandemic, there was a very tight labour market, with, actually, more jobs than people at one point—. But still, the design for the guarantee I think has been more important, as has been change to the economic picture, and things are much tighter now. 

The Chancellor's statement yesterday—. Whilst the Office for Budget Responsibility don't think we'll have a technical recession, they still think the economy in the UK will shrink over the next year. So, the picture is still flat, and that's likely to affect new entrants to the labour market. But it's also because we're dealing with some of the long tail of the pandemic, especially mental health and well-being for young people as well. We're all fortunate in this room in that we haven't had to go through adolescence and early adult years—I appreciate Luke Fletcher is still genuinely young compared to the rest of us, but it's not the same as being from the ages of 12 to 18 in going through the pandemic and having a very, very different experience. So, we're still dealing with some of that. 

What we are doing is looking at what we can do in the areas that we are responsible for, and you're right that Jobs Growth Wales+, there's more support available. The education maintenance allowance, which I know that I do get asked about from time to time, there's a choice for the Welsh Government's education Minister to make on that, but we are seeing a range of our areas actually, I think, making a real difference with the flexibility in the support we've got. So, I'm optimistic that we have the right broad approaches in place. We could, of course, always do more with more resource, but we know there's a budget challenge for the whole Government.

What I have done, though, is I've moved money into areas to try to make sure that our employability programmes have the resource that we think they're going to need. And of course, we may well need to flex our approach, because, if there are large unemployment effects like we're seeing in 2 Sisters, and that happens in more than one place in the country, we may need to reconsider the resources we've got. But that's part of the business of reacting to what happens in front of you. 

Okay, and can I ask the Minister about his view on the impact of the UK-wide apprenticeship levy on the apprenticeship programmes in Wales? How does he see it, since he's taken up post with responsibility for apprenticeships? 

Well, I'll ask Jo if she disagrees with me, but the UK apprenticeship levy doesn't work for Wales. It doesn't work for lots of sectors of the economy. So, you take in money through the apprenticeship levy and it doesn't actually add to the extra resource that goes into apprenticeships overall. And of course, in Wales, we've lost money to support our apprenticeship programme because of post-EU funds and the way they've been offered up. So, I don't think the apprenticeship levy works in what it was—. Well, it depends how cynical you want to be about the apprenticeship levy in the first place: was it just another way of raising money for the Treasury at a UK level, or was it deliberately designed to try to help put more investment into apprenticeships? I don't think it's done that.

12:45

I know the UK Government are using digital vouchers. Would you feel that money comes back from the Treasury, via the apprenticeship levy, to supplement the apprenticeship programme in Wales, or do you feel that it isn't recognised in the budget?

I think, the last time we looked, it didn't add extra money to Wales, did it, the apprenticeship levy?

It carries through as a Barnett consequential, so it just comes through as the core funding, and then the normal decision making goes around where the money goes.

And of course, you have to balance that up against the loss we've definitely had on apprenticeship funding through European money changes. So, the overall amount we're getting for apprenticeships doesn't get us to where we need to. So, it's part of the reason why, in the budget—and I know, in the budget scrutiny, we went through some of this—I've moved money from other parts of the portfolio to put it into skills. Inflation means we're actually getting less for our money, so there's both an increase in the cost of some of the apprenticeship frameworks to make sure they're providing people with the right skills that the learner and the employer need, but we've also got general inflation and less money. So, it's part of the reason why—and the committee pointed this out—there are some areas of the budget where there have been reductions to make sure we can still put extra money into this area.

So, if we just continue from that, logically continue from that, can you give us an update on the target for 125,000 apprenticeships by the end of this Senedd term? I think you've recognised that that target won't be met—that's correct, isn't it?

That's correct. I've been upfront and public about the fact that it'll take six years, not five, to reach that. We still expect that we'll deliver more apprenticeships than the 100,000 we achieved in the last term, but we won't get to 125,000—that's even after the extra money that I've put in. And it's partly—. During the pandemic, we obviously saw a reduction in apprenticeship completion—no surprise, given that significant chunks of the economy were closed for different periods of time. So, we're looking to both rebuild what we're able to deliver and, like I say, the delivery and the inflationary challenges we've got. So, we're not going to get to 125,000 before the end of this Senedd term; we would expect to do that by the end of a year into the next Senedd term.

Yes, the success rate was down 14.6 percentage points after the COVID restrictions were lifted, and you've identified that. Do you think that that will continue as a trend, or do you think you've arrested—I wouldn't say it's your direct responsibility, but that that will be arrested and turned around?

Yes, I expect we will see an increase in completion rates. And obviously, this committee, and predecessor committees, have acknowledged that completion rates in Wales compared very well with other parts of the UK. So, we're confident that we can improve our completion rates again, post pandemic. And it's part of the reason why I've announced extra support as well—so, the £1 million I announced recently to support apprentices with the increased challenges we've recognised lots of people will have with their mental health; it's all about supporting people to complete their apprenticeships. But it's also some of the challenge we're seeing in other parts of the economy, where some apprentices will have moved into full-time employment, because they've got their own cost-of-living challenges as well.

And you said in the Chamber this week that you'd be open to a discussion about the future of degree apprenticeships and how they may be supported and funded in future. Have you got anything to say specifically about that, or is that currently an ongoing area of consideration?

It's an ongoing area of consideration, because we still want to increase degree apprenticeships, and the commitment we've got will maintain that. Because, in protecting the money and investing more in this area, I want to be really clear that I wouldn't go for an approach that prioritised numbers over quality, and so the degree apprenticeship programme is an important part of that. It's then also about the unfinished conversation we're having about what does co-funding look like, what does the future of degree apprenticeships look like? Lots of sectors want more degree apprenticeships. I was at a sector conference today on future opportunities in the supply chain for renewable energy in the Celtic sea. Well, obviously, there is a sector where we know we're going to need more people with skills—skills for jobs that aren't necessarily there at present—but, actually, to do that, we're going to need to talk about the money we have, what that can deliver, and a broader conversation about quality and the potential for co-funding with the sector. I understand there's some work being done within Government, and I'm looking forward to some of the work that you're looking at as well. I should say that Hefin David has, at various points, spoken to me in corridors to indicate he thinks there is an answer, and there are examples of what we might do better in Wales. So, I'll be genuinely interested in not just what this committee has to say, but the work that I know that Dr David is doing.

12:50

I appreciate that, and I think the discussion needs to be had in the area you identify, the co-funding of apprenticeships. That is an area of discussion that needs to be had, but also how work-based skills are grown and developed, particularly in the area of net-zero skills. I think you've just said that. Is there anything more you want to say about a net-zero skills strategy that would achieve the aims of bridging that gap in the current skills system?

Obviously, it's been recently published, and we'll need to have action plans in different sectors, but we can only do that having had an understanding of where the sector sees itself. There is some different knowledge about some of these things as well. One of the things I found really interesting was that, for some businesses and sectors, they thought that this was really about recycling and not seeing a much broader perspective on the needs of every sector and the change that's going to take place. So, we're going to do more work within sectors. Offshore wind is one where there's some distinct opportunities but it goes across into some of the work we're doing in other areas. On advanced manufacturing, we're reviewing our manufacturing action plan in Wales, and obviously, we'd like to see manufacturing taking place in Wales that helps us to take advantage of the opportunities from offshore wind. So, there's more for us to do, and when I announced the net-zero skills plan, I did indicate we will work through, with sectors, to understand a clearer plan of action for each sector, to do that within this year. That will take in businesses, trade union views, the Government, we'd like to have a constructive conversation with the UK Government, but we'd also need to have a conversation with our providers as well, so in further and higher education, to make sure that we have agreement on what the skills gaps look like and the courses to give people those skills, and how regularly we review the provision to make sure the skills acquisition is provided in a way that actually relates to the job that people will do. And that's both thinking about the assessment process for that as well as the teaching and the learning.

Thanks, Chair. I'll just say I'm looking forward to ongoing discussions on that, because it is ongoing, so I'll stop there at this point.

Diolch, Cadeirydd. If I could touch on the innovation strategy. You've mentioned previously that higher education stands to lose researchers as EU-funded projects come to an end. How would the loss of that talent and skills potentially affect the delivery of the innovation strategy?

Diolch am y cwestiwn.

Thank you for the question.

I think that it will have a material effect. Higher education in Wales think that there are about 1,000 imminent redundancies in this space. I know these are jobs that everyone, regardless of party, would want to see more of in Wales, so it plainly isn't good news that those people are either already seeking and securing alternative work or are going to lose their job in the not-too-distant future because of the changes in post-EU funding. As well as that difficult reality, I do think there is still room to have some optimism about the future. We could do more if that loss wasn't going to take place, but we also know we've got areas of strength in Wales and strength that will come. My concern is that we'll have to go backwards to then step forwards. So, I'm certainly not celebrating the loss. I think it's a significant problem, and further and higher education across Wales recognise it's a problem. You'd have the same conversation with the further and higher education sector in every part of the UK; it's a general problem about the design of post-EU funds that locked them out of access to that.

I do hope that we'll see a resolution in Northern Ireland that will allow an unlocking of a number of things. For example, access to Horizon, for the UK to have associate membership, would make a difference, both in terms of money but also maintaining the partnerships that exist, because otherwise, those partnerships will be designed without us. At the moment, European institutions want to see the UK, including Wales and our institutions here, as part of that. So, there's a moment of opportunity to try to mitigate some of the harm that's been done, but we shouldn't shy away from the fact that harm is going to be done, with 1,000 decent, knowledge-intensive jobs not being here in the coming month or two.

12:55

In terms of mitigating those losses, then, what role do you see your department playing?

I think we've got a key role. We've published and led on the innovation strategy. It's a strategy for the whole Government. But it is also about the ongoing conversations we have with colleagues in all of those sectors. I discuss, as well as the education Minister, what's happening in the higher education sector. I've met them to look at what they're able to do and how they'll both respond positively to and take a lead on what we set out in the innovation strategy itself. In the business community as well, they were positive about the fact we've got a strategy. We set out 'here are the missions we want to achieve'. And the clarity in that perspective from the Government does help those business groups to plan what they want to do, because we're trying to identify, in that strategy, areas of current strength and future strength as well. The Institute of Biological, Environmental and Rural Sciences in Aberystwyth—I should acknowledge I'm a former student in Aberystwyth, I got my law degree there—have actually got real strength in grassland research, and so actually that's a strength not just for Wales, but more broadly afield. So, we're looking at areas where we think we have current and future strength, to build on those and to do more, because, as I've said in the Chamber, we've had to choose areas where we think we can be genuinely internationally impactful, and then to apply that to Wales, rather than looking to do everything. Because that, I think, would mean we do a number of things, but not necessarily as well as we could do.

On the transparency of the strategy, how does it support transparency around Ministers' interests and ownership of research and innovation in Wales?

I think it makes it very clear. You've got the four missions: you've got the economy; you've got education; you've got health and well-being; and you've got climate and nature. We're setting out four broad missions, and then there's the challenge about how each of the Ministers have leadership roles within that, but across those spaces as well. I've got an interest in all of those areas because there's economic benefit and return in each one of them. But it's then about the transparency and what are we then doing and are we then doing what we said we'd do in actually having a more co-ordinated approach that delivers practical benefit to Wales. It's part of the reason that having the one-year, three-year and five-year reviews will help us as well. After a year, we'll see more of the impact of the changed funding landscape. The reality of post-EU funds will be clearer again in a year's time—the impact, going back to your first question, of what's going to happen with some of the unfortunate flux that will take place for some people leaving the sector here in Wales, and then looking to understand what does that then mean as we hope those things calm down. And then by year, 3 we expect to see more delivery. By year 5, we see more and application as well. So, there's a deliberate purpose to how that one, three, and five-year landscape is going to be developed, and of course there's more to do in some of the sectoral delivery plans that should help us to do that as well.

You've touched on some of the overlap between different portfolios. There are some clear overlaps with the net-zero skills strategy, with the new curriculum, Net Zero Wales. I'd be interested to know how the Government is bringing all of that together.

In some of those areas—. Let's think about net-zero skills Wales; actually, that also links back to our broader net-zero plan. There were deliberate conversations, not between officials in my department and the climate change department, but we had ministerial meetings to make sure that we were doing things that were consistent with each other, and not looking to set different directions on the same subject. And all of those things do feed into to the innovation strategy.

And, actually, when you think about the curriculum, it's both responding to where learners are as well as to guide them to make sure they're ready for the world they're going to enter into. It's not just a truism about generation Z being much more socially conscious and much more environmentally conscious—that takes place within our schools as well. My son is in year 4, and he has a much greater awareness of the world around us and the reality that our choices affect other people in different parts of the world, as well as the built environment, the natural environment, and animal and plant life, than I ever had when I was his age. So, actually, we are equipping them in a different way, and I think the curriculum is all about making sure they're ready to meet the future. And that definitely helps to build into these areas of work and what we want to do for the future we want for the country.

And finally on this, Chair, do you see a role for the new commission for tertiary education and research in delivering this?

Yes, they have got a role, and it's envisaged in the innovation strategy. They have got an important role. So, first of all, they've got a convening role for the whole of the sector. And part of their mission is around innovation and research, but they're not the only body. So, we've looked at how to co-ordinate that activity, so there'll be a team in my department that tries to co-ordinate what we're doing in Government, and for the Government to sort of hold the ring. But, certainly, the new commission will have an important role for higher education and beyond, because of all the partnership that takes place. It's one of the things that I think we should be proud of, that every university institution in Wales could already point to a range of partnerships it has with business, with industry, where it's making a real difference. You could go up to north Wales, and,in Bangor you could see research on marine and nuclear; the semiconductors, obviously, have a big footprint here as well. So, there are areas of speciality where we're already having an impact, and it's about building on that in the future. 

13:00

I'm going to ask some questions now about trade. On 27 February, the UK and EU agreed changes to the Northern Ireland protocol in the Windsor framework. We've already heard that our First Minister, Mark Drakeford, welcomes this, and we found out just before the meeting this morning that the vote on the Stormont break will actually happen on Wednesday. 

Professor Andrew Potter has said, though, that the framework doesn't really make things any better for Welsh ports, which will still be disadvantaged compared to English and Scottish ports; that Welsh exporters will need to use direct routes to Northern Ireland from English or Scottish ports to benefit from the green lane; and also that simplified requirements for parcels and agri products could reopen the market for Welsh exporters. In your view, what are the implications for Wales, including for trade and ports, in relation to what I've just said there?

Those are risks, but those things aren't nailed on and certain. A large amount of my time—more than I thought at the start of this Senedd term—has been taken up on borders and ports. There's been significant trade dislocation already, a significant increase in direct routes from the island of Ireland to continental Europe, avoiding the land bridge. The land bridge is quicker, but, actually, part of the issue is traders have chosen certainty over cost. That's part of the issue. So, having some certainty in what that looks like will help all of us.

It isn't entirely clear yet what the Windsor framework, if it's implemented, will mean for the trade between the island of Ireland and ports on the western seaboard of the UK, including, obviously, Welsh ports—the two in Pembrokeshire, and Holyhead—as well as what it might mean for Cairnryan in Scotland and Liverpool in England. We need to be clear about what that means. It's tied up with a number of things.

I understand why Mr Potter suggested that this may not help. Actually, we want to get to a position where there is a common approach to the western seaboard of the UK and its relationship with the island of Ireland, and that would help all of us. It would help some of the choices that I still need to make that we haven't made yet, but it will open up other opportunities as well, because, as I said in earlier questions, without resolving this, our ability to associate to Horizon is unlikely to materialise, and that has a significant additional benefit as well. But I'm genuinely concerned about the length of time we're taking to get to this point, and the fact that it has meant that trade's been diverted.

Getting to a point where there's a stable environment to make choices will be really helpful for all of us, and I hope that means that I can spend less time on seeing a shifting picture, which is the other point; we've had lots of changes in approach from the UK Government on some of this, so I hope we'll get some stability. To be fair, I've had really constructive engagement with the current Cabinet Office Minister, Baroness Neville-Rolfe, and the Department for Environment, Food and Rural Affairs Minister, Richard Benyon, who's in the House of Lords; I think he's been helpful and solution focused, so that's helped to make some progress. We'd like to get it over the line. When I'm able to say more, I'll be very happy to.

Thank you very much. Checks on EU ports are scheduled to begin on 31 January 2024, and you told the committee in December that you were expecting information from HM Revenue and Customs, the UK Government and Kier, the successful tender on the Holyhead border control post, to inform your next steps. Could you provide an update on progress for the planned BCPs at Holyhead, Pembroke Dock and Fishguard, please?

Around Holyhead, you're right; Kier construction are our preferred bidder. They've come through the tender process, and we've got the outlining and the design for a BCP that we're working through with them. We've also got a bit more data from HMRC, so there's been more data sharing, which has been helpful. It doesn't give us a precise picture, because we need pre-notification to help us to do that, but we're in a better place around the BCP. What we'll need to do in—. In respect of your first question and this one, they're definitely linked, so understanding what the agreement is going to look like will be really important for us. We've broadly reached a place where, on the biosecurity issues, we think we can get that agreed, and that's really important for all of us, because biosecurity is only as strong as the weakest link, because, as you'll know, lots of the plant and animal goods that come in don't stay in Wales, they go through to other parts of the UK, and most of them end up being destined for England. So, if we have a different approach here, it would definitely affect colleagues on the other side of Offa's Dyke.

The challenge in forming our next steps is that we need to agree the operating model on borders, and that will then inform the choices that we need to make around our border control posts, and your point about the Windsor framework and understanding what green and red lanes will look like. Will it be that you can't access a green lane unless you have a direct route from Northern Ireland? Or will there be a way to certify that goods that come from Northern Ireland can come through Dublin and then end up in Wales? That then means that you don't need to have trade dislocation. Those things need to be agreed, and that level of detail may not grab all the headlines but it's really important to understand if that's going to happen. Because traders from both parts of the island of Ireland are going to want to know, and they will then make practical choices. So, there's a real risk that, if we can't resolve that part of what the Windsor framework means, you will see trade dislocation direct from Northern Ireland into Cairnryan, or to Liverpool, potentially, and that isn't the intended effect, is my understanding. There has certainly been no indication from the UK Government that they deliberately want to see that. But we've got to have some practical answers to see that happen.

And that will definitely inform the border control posts around our Pembrokeshire ports as well, because, at one point, we were discussing a proposal to have all of them in one venue, and as is often the case, there was opposition to the preferred venue, if that's what we were going to do. Because of the reduction in trade, though, which we think is permanent, I'm afraid, it means that we're more likely to be able to accommodate those on the port if not near the port as well. There's a particular issue with Pembrokeshire, because it's where we get, apart from horses, all other live animals come through Pembrokeshire. We need to have an answer there as well. So, that work isn't completed. Again, as soon as it is, I'll be very pleased to inform you and the Chamber, not just with Mr Kurtz's constituency interests, but it's a broader issue for all of us, and I'd like to get to agreement and then delivery.

13:05

Thank you, Chair, and good afternoon, Minister. I've got some questions around the cost of doing business. Firstly, of course, we saw the UK Government's spring budget announcement yesterday, so, I'd like to ask how you would assess the support available to help with the rising cost of doing business in Wales, and whether there are any further Welsh Government interventions planned to fill any gaps that you might have identified with the assistance available.

The rolling forward of the energy bills discount scheme is helpful insofar as it goes, but it's one more quarter of support, and that's a problem. The potential cliff edge that businesses have has moved forward. I'm not sure that that's going to help every business, because the costs of doing business don't necessarily dramatically reduce at that point, and most businesses would see a very limited amount of help. We've had very robust and direct representations from business groups around that. Some of them have said that, with the level of support that might be available, it wouldn't be worth their while to fill out the forms, because the cost in time to fill out the forms would be more than the financial benefit they'd get, and I'm sure that all of you have had representations from the Federation of Small Businesses, from Chambers Wales, from Make UK and the Confederation of British Industry around what that really looks like.

We also, though, have a challenge in that the way that energy providers are looking at this is difficult. Now, I'm looking to hold a round-table with a range of energy providers in early April, because we've had consistent messages from all of those business groups around requirements from providers for a level of understanding about future orders and future profits, but some of those are asking for upfront payments. Now, a lot of our businesses are able to survive and to keep going, and are able to run from month to month and have the prospect of doing better in the future. Not all of those businesses are cash-rich enough to afford the sort of deposits that some of them are being asked for. So, there's a point around, if you like, the soft power and the convening ability of the Government to have that conversation, but if that carries on, there may be a need for a current or future UK Government to look again at whether there's a need for regulation, because otherwise we could see viable businesses not functioning. And every one of our constituencies or regions could be affected by that. 

Unfortunately, there wasn't a significant amount of extra money for business support beyond the extra quarter of the energy bills discount scheme. So, the overall news that, whilst we may avoid a technical recession, the economy will still be flat and shrink a little over this next year, according to the OBR, is still problematic. So, I think it'll be quite difficult for businesses, because inflation is due to fall but it's still going to be high for a period of time extra. So, there isn't much extra support available in the budget. The one part where I'd say it helps us to move along in a conversation is the Holyhead breakwater, which we've been calling for investment for for some time. So, it's good to see that the UK Government have made some movement, and we hope that will unlock the ability to complete that piece of work with Welsh Government and Stena providing the bulk of the ability to do that, because otherwise that significant economic asset that the Holyhead port represents could face a much more difficult future. So, it's fair to point out that that's a piece of good news in Holyhead, but for the rest of it, it's harder to see. 

13:10

Thank you. Turning to decarbonisation, because support for that, I know, is very welcome for businesses across Wales, Business Wales has been assisting businesses to decarbonise through its specialist resource efficiency advisers and also by encouraging businesses to sign up to the green growth pledge. Can you tell us what outcomes that support has provided?

Well, I think the last time I checked there were over 4,500 businesses in Wales that had signed up successfully to the green growth pledge, but it's an area that Duncan—forewarning; I'm going to come to Duncan to give you some more detail on what that looks like in terms of outcomes within the sector and what it means for our ability to do more in the future. Duncan.

Yes, thanks, Minister. So, it has been a really successful approach. We built on the actual green growth pledge with an online toolkit as well, which has seen around 130,000 active users. But, in terms of impact, with each pledge, a company commits to one or more actions that deliver green growth. Obviously, they are motivated very often by the bottom line and margins, and that, really, is where we're seeing the impact. That, then, allows re-investment through the more normal key performance indicators, and we see jobs growth, et cetera, coming out as a result of those. So, we're then linking that, as you know, with the work that the Development Bank of Wales is doing around its green loans fund. So, in the round, we're really trying to put that package together. And I think it's probably important to note that this is becoming—. Not so long ago, this was quite a hard sell for business; that has changed really quickly in the last couple of years, where people are actively looking to engage with us. So, I really hope that we're going to see this area growing and those impacts coming through more directly as well. So, it's certainly a growth area of work that we want to continue to explore. 

I think it's interesting that this is both a bottom line activity, where there are opportunities to reduce your bottom line, as well as areas to expand into for business opportunity. It's also partly driven by customer behaviour as well. Within a range of sectors, there's a much greater expectation that people can understand their impact on the environment, their carbon footprint, and more and more people are asking about them, which I think is a positive. So, it's driving people into this area for really practical reasons as well. 

Could I just also add that we're also looking at how this goes into specific sectors as well? So, we're starting to do some work with tourism businesses, for example, on water usage and those broader opportunities. So, I think this is really quite a quickly expanding area of our work. 

And to dig deeper into the green business loan scheme there with you, the development bank told the committee that, over the next three years of the £10 million scheme, they expect to support around 170 businesses in total. So, could I ask how you decided on the size of the fund and whether you're content that it will provide sufficient support to help businesses in Wales to decarbonise and cut their energy costs?

Yes, I think the green business loans scheme is a really important intervention, but it's a pilot. So, we're not suggesting that this on its own will decarbonise the whole of the economy in Wales—it plainly won't. But it will kickstart a range of people into further action and into thinking about the support, because it's both the consultancy support to understand where there are opportunities as well as the possibility of some loan support to be able to undertake some of that action.

The DBW is looking at gaps that exist as well, and so, I hope this will see an unlocking of the headline pledges that main high-street banks and lenders have said they want to see take place. So, I think it's partly a disruption into the market, but in a positive way to show that it's possible to do this to still generate a return and to help companies to improve their bottom line and decarbonise at the same time. As we go through the three years and we report on the activity that's taken place, there may be opportunities to think again as we're progressing. It isn't about the limit on DBW's funds, but we think this'll be a big enough intervention to understand what it's possible to do and, as I say, hopefully change behaviour in other parts of the sector.

13:15

Thank you, and one final question. I know that you've responded to our work on the cost of doing business and in relation to the green business loan scheme itself, you said, and I quote:

'We stand ready to expand or amend the scheme as required based on demand'.

So, could you tell us a little more about what initial demand is looking like
so far, and whether you do have any early ideas about expanding the scheme at this stage? 

So, initially, in the first four weeks—so, it's not been open for a very long time—we have 10 completed applications and another 25 in progress. On one of those completed applications, there's support of £1.5 million—so, a significant project that's going ahead. And we've had a lot of engagement in the publicity campaign. You'll have seen joyous pictures of myself and the climate change Minister talking to camera, as well as people from the development bank, but also, active examples of the sort of investment support that we want to see more of taking place.

So, we've had quite good social media engagement, but it's really the strength of the number of people who are already coming forward with opportunities that I think gives us reason to be optimistic that we've reached a number of people. And I'm looking to make sure that we re-advertise successful applicants, because the initial stage, when it's new, is one thing, but in another quarter and another quarter, we'll be able to report on the fact that here are the businesses that are now case studies of what's being done to encourage others to continue to look in this area. And, as I say, the resource available to the development bank isn't limited to £10 million. They have other products and lending sources available. We need to understand the relative success, the impact we're having and then we can take a judgment on whether this is something that we'd want to see expanded in the course of the pilot or at the end of the three years. So, I'm generally positive about where we are now.

Thank you, Vikki. Can I just ask, in terms of the whole decarbonisation agenda, Minister, obviously one of the big carbon-consuming industries in Wales is steel. We know that and we want Wales to be able to produce the greenest steel in the world, and, of course, it is possible, but it's going to take an almighty dose of investment in order to deliver. We know that the UK Government's clean steel fund has been spoken of and that there has been some sort of commitment to—I think it's £300 million or something for decarbonisation of the industry here in Wales, specifically for Tata and another £300 million, I think, for Liberty Steel as well. To what extent will those steel businesses perhaps also need some Welsh Government support in order to get over the line, because they're very intensive energy users and it seems to me that there may still need to be some additional support on top?

So, we have regular and really constructive and open conversations with both steel unions, steel businesses and actually, on an official level, there's been a good level of dialogue between my officials and those in what will now be the new Department for Business and Trade, following the reorganisation. The challenge still comes, though, in two things, and the biggest factors are whether there'll be progress on energy prices, because steel producers in Britain pay a much higher level for their energy than competitors in France, Germany and Spain and it will then be about whether the headline announcements and the ongoing negotiations on the transformation that would need to take place—. So, £300 million to British Steel, which is now end-ownership in China, and the £300 million for Tata steel is what's been announced in headline. There's a negotiation ongoing about that and whether that's going to get everyone to where they need to be.

There are two things within that. There is the move to electric arc production. Celsa Steel—and again declaring an interest, as Celsa Steel's significant plant is in viewing distance when you go up a couple of floors in this building, so it's in my constituency—already produce their steel by electric arc, as indeed Liberty have been doing, although Liberty may not be with us. But there is a challenge and an opportunity to do that, and that certainly requires action on prices. It also, I think, will require some action on procurement, which we can do something on here in Wales. The major procurement levers are still across UK infrastructure projects, and we may or may not talk about HS2 today or in the future, but the economic reality of that is there.

Also, though, I think we need to action on policy around scrap metal. We export most of our scrap at the moment and if we want to see more steel being produced by electric arc, then we're going to need the scrap metal and the volume and the quality of it for that to happen, otherwise you could find new entrants to electric arc steel production competing with those already in the sector, and that might not produce the expansion and the strength in the sector that we want. If we want floating offshore wind and turbines to take place and we want them to be built with as much British steel as possible, the sector here in Wales has to be a big part of that because we're still such a significant chunk of the steel sector across the UK. So, there's a strategic choice about whether steel making is a sovereign asset for the UK or whether we become the only G7 country not to have significant steel-making production. If you don't do that, then those things can be built somewhere else, and I'd much rather that what happens here has maximum content from Welsh and British steel production.

The other thing where I think we can still make some progress here is on the skills agenda. So, the Welsh Government, that's devolved responsibility, and we've always been prepared to have, I think, a really sensible and constructive can-do approach to what we can do on skills.

The one area where I think there's still a choice to be made, where I think the UK Treasury would need to make a significant choice that they haven't been willing to make, and that's actually about hydrogen potential to replace coal-fired blast furnace technology. There are lots of jobs that rely on that in Port Talbot and if the UK Government were prepared to invest in that alongside the sector, you could see a new way of delivering virgin steel from a blast furnace in Wales. If that doesn't happen, then there is a significant consequence for employment here in Wales.

13:20

Okay. Thank you for that, Minister. I'm going to come to Luke Fletcher.

Diolch, Cadeirydd. Vikki, in her line of questioning, touched on the Development Bank of Wales and of course, last week, we scrutinised their annual report for the 2021-22 financial year. Within that report, the development bank missed two of their four headline targets in the first five years of their operation. I'd be interested to hear the Minister's view on that.

Well, if I deal with one of those and ask Duncan to deal with the private sector leverage point. The development bank have compared themselves against the business-as-usual approach and, on that, they haven't met their headline target, but, of course, it's been far from business as usual in the last few years. When you look at the work and the support the development bank provided during the COVID pandemic, they actually helped to safeguard about 16,000 jobs. So, if you do what they have actually done through the pandemic, together with their business-as-usual activity, their number is 32,000, so it's well above a 20,000 headline measure. I think there are times when you can be so cautious about not wanting to misdescribe what you're doing that you end up presenting a failure rather than, actually, it's a success. And I've been really struck by the number of businesses I have met who still talk about the support they were provided with in the pandemic as to why they're trading here today, both through the direct provision from the Welsh Government as well as what the development bank did. So, it has definitely been a success, together with—to be fair—the way that the UK Treasury supported through furlough—[Inaudible.]—and what we did on top, including with the development bank, has made a real difference to those jobs being safeguarded. Duncan, do you want to deal with the private sector leverage point?

Yes, so I think you heard an amount of evidence from the chief executive and chair last week on public sector leverage. A couple of things to note. When the plan was set out for the five years, obviously it's been a period of unexpected flux, so two to three years of the COVID pandemic had an impact on business investment, which is the big driver of PSI. The more positive line is that the bank is also delivering much more property-based funds, which we didn't envisage, frankly, at the beginning of that five-year period. So, it's a really positive intervention in the market, but the way that fund works, and one of the quirks of the reporting system, is that we can't count the developer funds in those activities. So, in effect, you'd only see that same level of PSI. So, I think there are two factors that have really driven that drop-off of target. We are building that now into our planning, in the way that the bank's evolving its next five years, which is a really active piece of work that the board and I, as the Minister's representative on the board, are looking at, to make sure we understand those numbers and achieve challenging targets. That's definitely the opportunity for the bank going forward.

13:25