Pwyllgor yr Economi, Seilwaith a Sgiliau - Y Bumed Senedd

Economy, Infrastructure and Skills Committee - Fifth Senedd


Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Bethan Sayed AM
David J. Rowlands AM
Joyce Watson AM
Lee Waters AM
Mohammad Asghar AM
Russell George AM Cadeirydd y Pwyllgor
Committee Chair
Vikki Howells AM

Y rhai eraill a oedd yn bresennol

Others in Attendance

Andrew Clark Dirprwy Gyfarwyddwr, Addysg Bellach a Phrentisiaethau, Llywodraeth Cymru
Deputy Director Further Education and Apprenticeship Division, Welsh Government
Eluned Morgan AM Gweinidog y Gymraeg a Dysgu Gydol Oes
Minister for Welsh Language and Lifelong Learning

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Abigail Phillips Ail Glerc
Second Clerk
Phil Boshier Ymchwilydd
Robert Lloyd-Williams Dirprwy Glerc
Deputy Clerk

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

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

Dechreuodd y cyfarfod am 09:32. 

The meeting began at 09:32. 

Croeso, bawb. 

Welcome, everyone.  

I'd like to welcome Members to our committee this morning. 

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

I move to item 1. We have one apology from Hefin David this morning. Are there any declarations of interest? There are none. I would like to welcome Bethan Sayed to our committee, who's joined us today and, of course, we wish Adam Price well, who's now left our committee.  

2. Craffu ar y gyllideb gydag Gweinidog y Gymraeg a Dysgu Gydol Oes
2. Budget scrutiny with the Minister for Welsh Language and Lifelong Learning

I move to item 2. This morning we have Eluned Morgan AM, the Minister for Welsh Language and Lifelong Learning with us, and if I could perhaps ask Andrew Clark if you would like to introduce yourself as well.

Andrew Clark, deputy director for further education and apprenticeships in Welsh Government. 

Thank you for being with us this morning. Minister, can I ask what's the projected spend on apprenticeships for the 2019-20 year? How does that compare to the previous year? 

Well, we've got £115 million in the budget, and we are confident that we will be able to meet our target of 100,000 apprenticeships over the term of this Parliament. So, we're more than halfway there already. I think that that money that we've got in the budget should help us to make sure that we reach that manifesto commitment. 

Is that a greater spend or less spend than the previous year?

Well, things have shifted around slightly, because we've got a new programme starting next year, Working Wales, so that means that in the past what we've had is apprenticeships, and traineeships have also been almost a part of it. We've now transferred the traineeship money into a new programme we'll be starting in April. 

No, that's the new programme called Working Wales and that's—. That's what's going to happen in the future. But the money this year is more or less the same as it was last year in terms of apprenticeships, yes. 

Okay. The paper that you provided us in advance of this session for apprenticeships is—you say that the Welsh Government budget for the year 2019-20 is being maintained, and you're also saying in your paper that rising demand will be met by the increased use of EU money. So, to me that is suggesting that, on European funding to meet demand—. Sorry, I'm getting my question wrong. In the past, we've relied heavily on European funding and, as a result of losing that funding, what's your—can you give us your perspective on that? 

Well, we're not losing the funding, we've very much got that as part of the budget, and we've still got guarantees, we're still part of the European Union, and that funding is in place and will remain in place. We've got a Treasury guarantee if there is a problem in terms of leaving the European Union. So, we have worked on the assumption that that money will be there, and we are confident that that situation where we can respond to the demand—. The demand is increasing, which is quite interesting, but we're confident that we've got the money in place to respond to that demand. There may come a point where we'll have to restrict the kinds of numbers, but we will keep to our manifesto commitment.

What we've seen is an increase in demand in terms of apprenticeships, partly, I think, as a result of the apprenticeship levy that's been introduced. So, employers are saying, 'We're paying into this, we'd like a bit of return on it.' So, we have seen an increase in demand. But we're responding and we're confident at the moment that we are on target.


Could you just tell us a little bit more about how you're maintaining that balance? If the funding is being kept at the planned rate, but the demand is higher than expected, tell us a bit more about how you're preventing the programme from becoming unaffordable.

Well, the key thing for us is to concentrate on where our political priorities are. One of the things we're very keen to do is to drive apprenticeships into the higher levels. So, we'll be restricting access to the lower levels of apprenticeships—so, level 2 and things. We're very keen, if people are going to do level 2, that they see it as a route to increase their capacity and their ability to move on to those higher level apprenticeships. So, we have shifted the balance and we will probably, and we have already, restricted apprenticeships in certain sectors and encouraged them in others. So, we're obviously keen to see a lot more science, technology, engineering and mathematics, and we're reducing in other areas—perhaps in retail, for example.

Right, okay. And what's the strategic basis on which you've made those judgments?

One of the reasons is because we're responding to employer demands. We're responding to the needs of the regional skills partnerships. So, they're telling us these are the skills priorities that we need for the economy. So, those are the basis, really, on which we're—. We've got a very clear position in terms of the economic direction of travel in which we'd like to go—'Prosperity for All' shows us that direction—but the point of the regional skills partnership is to help us to respond to what employers are telling us we need.  

In terms of supporting the foundational economy, how can we make sure that, in the drive for those slightly sexier, higher end apprenticeships, we're not neglecting our base?

Well, I don't think that is happening. I would see construction, for example, as a part of the foundational economy, and we are very much pushing apprenticeships in those kinds of areas. So, that is very much a part of it, but what we want to see is that, if people embark on those kinds of apprenticeships, they don't start on level 2 and stop. This has got to be something where we drive people into those higher level apprenticeships, or we will continue to have a situation where we have in-work poverty, and that's got to be something that we have a huge ambition to tackle.

In terms of managing the demand, the committee's had some evidence from stakeholders that they're carrying—because of the rising pressure on the budget—some costs over into next year, which then means that they have to seek additional funding for the priority areas. How are you managing that with them, and how are you dealing with those competing priorities? 

Sure, thank you. We have a fairly active contract management position. So, we make a contract every year with each of our prime contractors, and then we follow up with them where they may have pressure points on their budgets, where they may have an increase in demand. If we have money available, we will satisfy that pressure point, providing it's in a priority area. If it's not in a priority area, as the Minister has just said, such as retail or perhaps business administration or customer care, at level 2, then we wouldn't satisfy that pressure point demand.

So far, we're pretty much on target to meet the pressure points that have been identified to us. We reserved £5 million for additional moneys to be distributed under the RSP process recently, and we've just announced now how that's going to be distributed. Most of that will hit the pressure-point returns that are required. But you are right, there is a pressure on this budget over and above delivery of 100,000 apprentices during the Assembly term, and that is perhaps something we need to tackle in future years. But at the moment it seems to be about all right.


Okay. I've got Oscar, Bethan and Joyce waiting before I come to David. Oscar Asghar first.

Thank you very much. Good morning, Minister. We understand that higher apprenticeships have become the priority in the apprenticeship programme. What can be done about the disproportionate impact on females this will have?

Well, you're right, that is a concern, and that's why one of the things we have to do is to make sure that we try and encourage more women to undertake the kind of priority areas that we would like to see them take up—so, STEM activities, for example. We have a whole programme to encourage young women and girls to undertake STEM subjects, but also we have these 'have a go' days, where people are exposed to different kinds of vocational training opportunities that perhaps they won't have seen, and part of the problem we have is that when you're young, there's quite a limitation in terms of what you have seen as examples of what you can do in future. So, in these 'have a go' days, where we literally see tens of thousands of young people coming through and being exposed to opportunities, we are ensuring that women and girls are also really pushed into those areas where we'd like to increase the numbers. But at the moment there are more women undertaking apprenticeships than there are men.

Thank you very much. Minister, one area that is of concern to me is the age factor: when somebody is below 60, there is funding available to them; over 60, funds are not available to them. Even though the pension age has increased from 65 to 67, the grant availability is not there. Haven't you considered, for females and males over a certain age, to get the grant available to them?

What we've done is to ensure that it is available to all ages, you're right, up to the age of 60. The issue there is that we have to ensure that the employers are happy to make that investment. It's the employers who undertake taking on an apprentice, and so we've got to convince the employers that it's in their interest to train up somebody, and at the age of 60, that is up to them to see. Now, it's up to those employers to determine whether they want to put that investment in.

Roeddwn i jest eisiau mynd nôl yn glou i rywbeth y gwnaethoch chi ei ddweud ynglŷn â thlodi. Wrth siarad â nifer o bobl sydd ar brentisiaethau, consérn iddyn nhw yw bod y tâl yn isel iawn, ac nid yw'n eu hennyn nhw i allu datblygu o fewn y maes i'r graddau—wel, mae'n eu hennyn nhw i eisiau datblygu eu sgiliau, ond wedyn o ran yr hyn maen nhw'n cael eu talu yn uniongyrchol, nid yw hynny'n eu helpu nhw yn eu bywydau bob dydd. Mae cael targed o 100,000 yn un peth, ond a ydych chi wedi edrych ar efallai newid y targed er mwyn, efallai, roi mwy o sylfaen i'r prentisiaethau o ran y tâl sydd yn mynd i'r unigolyn? Neu a ydych chi jest eisiau cyrraedd y 100,000, ni waeth beth maen nhw'n cael yn rhan o'r brentisiaeth honno? Achos mae'r elfen dlodi yn mynd i effeithio ar nifer fawr o bobl.

I just wanted to go back briefly to something you said about poverty. When I've been discussing this with a number of people on apprenticeships, their concern is that the pay is very low and it doesn't motivate them to develop in the area to the extent—well, it motivates them to develop skills, but in terms of what they're paid directly, that doesn't help them in their everyday lives. Having a target of 100,000 is one thing, but have you looked at perhaps changing the target in order to put more of a basis to these apprenticeships in terms of the payment that goes to the individual? Or do you just want to reach the 100,000, regardless of what they get from the apprenticeship? Because that poverty element is going to affect a lot of people.

Wel, rŷm ni'n ymwybodol iawn nad yw'r tâl yn uchel iawn. Mae'r un peth yn digwydd yn Lloegr, ac felly mae'n rhaid ichi hefyd ystyried y ffaith eu bod nhw yn cael hyfforddiant. Os ŷch chi'n cymharu hynny â'r ffaith, os ŷch chi'n mynd i'r brifysgol, mae'n rhaid i chi dalu am yr hyfforddiant yna, felly mae yna fanteision o ymgymryd â phrentisiaeth i'w gymharu â mynd i'r brifysgol, er enghraifft, achos ar ddiwedd y dydd nid ŷch chi'n dod mas gyda'r math o ddyled y byddech chi ynddi o wneud hyfforddiant mewn prifysgol. Felly, wrth gwrs, mewn byd delfrydol, byddem ni'n licio talu mwy, ond, wrth gwrs, beth sydd gyda ni yw byw mewn oes o lymder, ac rydw i'n meddwl y byddai hynny yn rhywbeth, pe byddai gyda ni fwy o arian, y byddai'n beth braf i edrych arno.

Well, we're very aware that the pay isn't very high, but it's the same as is happening in England, and so you also have to consider the fact that they do receive training. If you compare that to the fact that, if you go to university, then you have to pay for that training, there are benefits from undertaking an apprenticeship as compared to going to university, for example, because ultimately you don't leave with the kind of debt that you would from undertaking training at university. So, of course, in an ideal world, we would like to pay them more, but what we have is that we're living in an age of austerity, and I do think that that is something, if we did have additional funds, that would be wonderful to look at.

Ond a ydych chi'n tracio a oes pobl yn cwympo mas o wneud y brentisiaeth, efallai, oherwydd y ffaith nad ydyn nhw’n gallu fforddio parhau â hynny?

Neu a ydyn nhw’n parhau trwy’r cwrs cyfan gyda’r hyn sydd o fewn eu gallu nhw?

But are you tracking whether people are dropping out of apprenticeships, perhaps, due to the fact that they can't afford to continue with them?

Or are they continuing through the entire course within their ability?


Wel, mae cyfradd y nifer o bobl sydd yn cyflawni prentisiaeth yng Nghymru'n uchel dros ben—rydw i’n meddwl ei bod tua 86 y cant ar y lefelau is.

Well, the rate of people who are completing the apprenticeships in Wales is very high—I think it's around 86 per cent on the lower levels.

Yes, it's consistently north of 80 per cent.

Ie, sydd lot yn uwch na sydd yn digwydd yn Lloegr. Rŷm ni'n poeni tamaid bach am beth sy'n digwydd ar y lefelau uwch, a dyna pam rŷm ni wedi ymgymryd ag adroddiad i weld beth y gallwn ni ei wneud i wella'r sefyllfa gyda faint sy'n cwympo mas o'r lefelau uwch. Ond hyd yn oed wedyn, mae'r cyfraddau, gyda'r rhai sy'n cwympo allan, yn cyrraedd tua 76 y cant, rydw i'n meddwl, ar y lefelau uwch. Felly, mae hynny hyd yn oed yn well nag yw e yn Lloegr. Felly, i gymharu â Lloegr, rŷm ni'n gwneud yn arbennig o dda o ran prentisiaethau. Rŷm ni'n dal i gyrraedd ein targedau ni, lle mae yna gwymp aruthrol wedi bod yn Lloegr yn y maes prentisiaethau.

Yes, which is far higher than what is seen in England. We're slightly concerned about what's happening on the more advanced levels, the higher levels, and that's why we've undertaken a report to see what we can do to improve the situation of how many people drop out of the higher levels. But even then, the rates, with those that do drop out, reach around 76 per cent, I believe, on the higher levels, so that, even, is better than the situation in England. So, to compare with England, we're doing very well with regard to apprenticeships. We're still reaching our target, whereas there has been a significant decline in England.

Good morning, Minister. I think, following on from Bethan, there are two areas that I'd like to explore, particularly in the lower level apprenticeship, and that is the area of looked-after children. We've just heard that the finances are very, very prohibitive. Do we give support to those who can't find support anywhere else? Because they could be completely on their own, and I've met some people in that situation—single parents who are trying to give their family an uplift. And, finally, my question is: when we look at the effect that could follow as a consequence of the focus on the higher end, potentially at the cost of the lower end, have we disaggregated the data to make sure that we're not creating an imbalance that will feed back into the communities and cause problems in those communities because people become NEETs—not in education, employment or training?

In relation to looked-after children, it's interesting. I've been looking at this recently just to—. I was trying to work out—in England, it's compulsory to have education till you're 18, so I was trying to work out, well, what happens to the Department for Work and Pensions? Why do they offer any money to people under 18? And the answer is that they pay looked-after children. So, if they wanted, for example, to undertake an apprenticeship or whatever, then they have access to DWP funding. So, that funding is available to them.

In terms of NEETs—look, we've got to really keep an eye on this, because we can't afford to increase the number of NEETs in Wales either. I'm proud to say that that's coming down, but we do need to keep an eye on this, and of course there's a danger, if you withdraw some courses that may be attractive to some people, that they'll say the alternative is, 'I'll just drop out of the system', and we can't afford to let that happen. Would you like to—?

Can I just add to that? I think there is something of a misunderstanding here about withdrawing from some of the level 2 activity, because what we've withdrawn from is stopping at level 2. So, if somebody comes into an employer and wants to do a level 2 in customer care, shall we say, providing that they're also willing to continue on to level 3 once they've done their level 2, then there is no barrier. But if all they're saying is that they want to stop at level 2, then there is a barrier and we are only reserving about 10 per cent of the overall budget for that purpose. The reason behind that is the life chances of the individual. If you only achieve a level 2 qualification, your life chances are pretty poor. If you can push yourself up to level 3, which is where we're trying to move the marketplace, then your life chances become slightly above average. If you can go to four, five or six, then your life chances improve with each step. So, there is a slight misconception here, I think.

Yes, okay, I accept that, but still, some people can't go any further because they haven't got the ability to go any further, and those are the people I'm really asking about.

And that's what the 10 per cent is for.

Well, what percentage of our population can't go beyond level 2?


I don't know the answer to that, I'm afraid.

I think the other thing to bear in mind is that apprenticeships are not the only route; there are other alternatives, so there may be other training programmes that are more appropriate. So, traineeships, for example, are an alternative route, which perhaps would be more appropriate for some of the people you're talking about.

I think it's true to say that there may be some disquiet about the fact that the Welsh Government are using public funds in order to subsidise private companies to upskill their workforce. For instance, we've got £1.5 million going to Airbus, £1 million going to Ford, and £0.65 million going to other automotive companies. So, given that fact and given that the Welsh Government has previously stated that private industry should co-invest in the skills needs of the workforce as part of creating a resilient Wales, how is providing public funding to these companies compatible with this policy? 

Well, co-investment is absolutely part of what we do. We don't give money away to private companies. They are expected to come to the table also. So, co-investment is absolutely part of that strategy, but in relation to what we've done, for example with Airbus, I've been very, very clear with them that, actually, we are expecting a bit more bang for our buck, if we are going to help to upskill the workforce, which I think you've got to look at not just in terms of—it's not about upskilling the workforce simply for Airbus. This is about ensuring that local people have the ability to be flexible in future as well. We don't know what's going to happen in future. But we've also asked Airbus to over-train. So, whereas they might want to train 40 apprentices, we're saying, 'Well, look, can you train 60?' because they've got a good apprenticeship scheme, so why not use that programme, which could then help the supply chain that feeds Airbus, for example? We've also insisted that they sign up to the disability requirements that we are looking for companies to introduce in Wales, because we've got a long way to go to get disabled people into work. We've asked them to become involved in our Working Wales programme, giving opportunities to people who are unemployed. So, it's way beyond, 'Here you are, here's the money', and they don't get the money unless they train them, so we don't just hand it out.

Okay, well that goes a long way towards answering the other part of my question, with regard to how you can monitor the return on your investment in these companies. Obviously, you say that they're going to have 60 apprentices rather than 40—that's very measurable, you know that that's happened, but do you have any other ways of monitoring your return on investment?

Yes, well they don't get anything without a very clear letter, a grant award letter, which explains the terms and conditions that we expect them to undertake. So, those terms and conditions are very clear. No money leaves here without us seeing evidence that the training activities have been undertaken. So, the money doesn't go out the door until the action has been completed.

Okay. Again, you've pre-empted part of my question, Eluned. Thank you for that. Is there a clawback to recover funding in certain circumstances, if the return is not there?

We don't need a clawback because the work doesn't get paid for unless it's undertaken.

Okay. How will this fund actually be used in practice? Will it be spent in collaboration with and with the involvement of Welsh training and education providers, such as further education colleges, or is it Government-led or employer-led?

What happens is that the companies themselves will usually undertake a partnership with a further education college. So, in the case of Airbus they work very closely with Coleg Cambria. That relationship is very tight with them. So, we then are involved with ensuring that that partnership works for the benefit of the three institutions, including us.

Thank you, David. I've got Lee and Bethan waiting. Lee first. 

I just want to understand the decisions around support to the anchor companies, especially given the announcement yesterday on the decision to remove jobs from Schaeffler in Llanelli. One of the factors—it's only one factor, but nonetheless a factor—was the impact of Brexit. I'm concerned that we are giving large amounts of money to anchor firms who are themselves vulnerable would there to be a hard Brexit and about what thinking there has been by the Government about making sure that these decisions are resilient to future shocks. 


Well, I can tell you that this wasn't done lightly, because I was very aware of the situation where, you know, you don't want to be investing in—we don't invest in companies—. Don't forget, we're investing in people, and I think it's really important that we distinguish between where we are investing. You're right, we don't know what's going to happen, and I think what happened in Llanelli yesterday is something that we need to be very, very careful of in terms of the fact that that could happen elsewhere. And Airbus is an area where we need to just keep a very close eye on what might be happening. Some of this was about ensuring that the skills for future production—if we can provide those, then we are more likely to be able to lock down investment for the future in Airbus, because skills are absolutely critical to their ability to produce the next generation of wings. And so we wanted to make sure that they were aware that we will stand with them, but if there is an issue then the people we've invested in will be able to use those skills transferably into other opportunities that may arise in the area.

I notice you've given £1 million to Ford, and clearly the signals around Ford in particular are very concerning. So, I understand your point about investing in people rather than companies, but nonetheless we are making a decision to prioritise funding for a very vulnerable sector, when you've also decided that we're not going to be investing in basic skills of people we know are going to be around in the labour market for a long time. I just wonder whether you can just clarify why that judgment's been made.

Well, the Ford decision is a long-standing commitment that was undertaken a while ago, so that's honouring a commitment that was given a while ago. Again, that money doesn't get paid unless that training has been undertaken. If there is an issue, and if the worst comes to the worst, then those people will need to find alternatives, and I think upskilling them in areas—you know, we're talking generally about engineering. There's a huge shortage of engineers in the UK at the moment, so I don't think we'll be wasting our money, because there is a huge demand for engineers. So, I'm confident that that is a good use of money.

It just follows on from that, really, because we've heard this week about Ford saying that they've told workers not to come into work for five days. At what point does the Government say, 'Well, actually, we've been pushed too far'? I've been involved in discussions with Ford for many years now, where they have been saying that certain lines will come to an end in 2020. For me, would the money be better used by putting it into apprenticeships via colleges directly as opposed to big companies that, potentially, do have that money to invest in skills themselves but are not doing that for whatever reason that we may not be aware of, due to—whether it's Brexit or whether they feel that the UK is not somewhere they want to carry on with their manufacturing base in the future? I think that's the concern that's alive in our communities, and I just wanted to probe you further on that.

Well, this is a concern that I've also had. If we are going to invest, I want to know that we're going to get some return for it. In relation to Ford, as I say, this is a long-standing commitment that we made when they were considering developing the Dragon engine. Part of our approach to them was to see if we could help them to attract that investment into Wales and this skills package was a part of our way of trying to attract them to bring that investment into Wales. As I say, we will not pay this money out unless that investment in training of the workforce will happen, and I don't think it's wasted money because there will be alternatives for those people in terms of engineering, I think, if the worst comes to the worst.


Thank you, Chair. You referred to the Working Wales programme earlier, and that's where I'd like to dig a little deeper. First of all, can you explain to us the rationale behind ending the traineeship programme and how you involved others in that decision?

I always think it's important that we don't throw away projects that are good just to kind of reinvent something and just to create something new. So, what's happened in relation to the traineeships—it's kind of targeted at young people—is that we looked at the programme, we had lots of assessments to evaluate what worked and what didn't work, and some of the reports that came back to us from, for example, I think it was York Consulting that did an assessment on it—. They said that we need to look at vulnerable people, we need to see if we can perhaps tailor-make some of our programmes and respond to the individual needs, and that's particularly true for people who perhaps have additional learning needs, and so what the new programme will do is allow us that flexibility. So, we're not throwing away the traineeship; we're putting it in with Working Wales, so there's one route, because a real part of what we're trying to do here is rationalise. There's complexity, huge complexity, of places where people can go for support. We're trying to rationalise the system so that everybody goes through the same gateway, and then you respond and you take away the barriers to the individual, and that's what that programme's trying to do. Yes, we did speak to people—Jobs Growth Wales, ColegauCymru, Careers Wales, the apprenticeship body—just to ask them what we needed to change, so there was an evaluation undertaken, yes.

Okay, thank you. And can you explain for us what you perceive to be the benefits of Working Wales, and also how is it going to impact on and fit in with wider Welsh Government objectives?

So, I think what's unique and different about this is that we work around the individual. The problem with programmes is that, if you don't live in this particular area or if you haven't been unemployed for more than six months or—all of those issues become a problem and create complexity. So, we're trying to make sure that everybody goes through the same gateway. What we're trying to do here is deliver on our 'Prosperity for All' aspirations, and we've got this employability plan, we've got commitments there to, for example, reduce the number of people who are economically inactive, to increase the number of people in work who are disabled. One of the things that we're trying to do is to make sure that we identify the best place for people. So, it may be that people aren't quite ready for work, and they will come through the Communities for Work programme, where you do some really, really sensitive hand-holding and build up their confidence before they can get anywhere near the workplace, and that's a long-term programme. So, people who are not quite ready for the workplace will perhaps be directed to alternative programmes that we have. I don't know if I answered your question there.

Yes, I feel you have, and it's encouraging to see that the way that Working Wales is set up will pull in perhaps some of the best legacy strands of Communities First and also plug that gap with adult learning as well, which is so important. We know about the cuts to that over the last 10 years with the UK Government's austerity agenda. But, aside from all of those very important and practical benefits, do you think that Working Wales also represents value for money and, if so, can you explain why?

Well, we don't know because it hasn't started yet. We've set out some very clear targets about what we'd like to see achieved as a result of this. To get people who've been economically inactive for a number of years into work is not cheap. You have to stand by them, but you've got to set that off against the long-term cost for society, for them as individuals, for their families. One of the problems we have is that, if we do manage to get them into work, then, actually, the benefits go to the Department for Work and Pensions; they don't come to us in the Welsh Government. But we're doing this because it's the right thing to do, that we need to stand by people. I think what we're doing here is, we're trying something that is different; we have looked at other examples around the world where this has happened. One of the big differences here is that, actually, the people who win the contracts won't get paid unless they place people. So, the incentive on them to place people is big. That's a different way of ensuring that we meet these targets, I hope.


Thank you. One final question from me. Working Wales is going to be split into three different work strands: adult training, youth training and youth engagement as well. How will the amount of funding for these three work strands compare to the funding that was available in 2018 to 2019 for the same purposes?

I think there's about £18.5 million for youth engagement; there's about £13.8 million for youth training; there's about £6 million for adult learning. So, I think it was £19 million or so that's come from the traineeship programme. The two strands are slightly different: there's one that's much more supportive of people who are young but need a lot more hand holding, need to build up—perhaps they've got mental health conditions. What we're going to do is to encourage those people who win the tenders to make sure that they are addressing those barriers to work. But then, there's another programme for people who are closer to the market. You need to get people who are experts in this field to be really addressing those issues. I think it's £33 million. Is that right?

From traineeships.

Minister, are you able to allow us to extend the session by 10 minutes to 10:25?

Thank you very much. Do you have further questions, Vikki? Joyce wants to come in quickly.

Just one point because this is about budget scrutiny. You said that people are only paid if they place people in work. Is there a set period that they have to be placed? And is there monitoring of the success of those placements for that individual so that, in terms of the financial gain, there has been some added benefit to us as a consequence of spending the money?

Yes, and there's also a weighting. So, people who've been out of work for longer may attract a bigger payment than people who have just come out of work. People who have more complex needs will also attract more payment. So, we've tried to make sure that they don't cherry-pick the easier people to place, but also, there's a period of six months after they've been placed where we will continue to monitor. This doesn't just stop once they're in the workplace; that continues for six months.

Thank you. We've got three areas left to cover, so time is tight. I've got Oscar, then Bethan and then Joyce leading on an area. So, Oscar, you've got five minutes.

Thank you very much and thank you, Minister. My question straight is: Careers Wales has chosen to operate the employment advice gateway, but the Working Wales programme was put out to tender. Any reason?

Yes, because we've got in-house expertise in relation to Careers Wales, so, why would we want to open that up to competition? Let's work with what we've got, and we've given more money to Careers Wales to ensure that they access this. We need to use the expertise that's already available. On the other hand, in relation to Working Wales, there's a much broader market of people who have this ability to place people, who've got experience to place people, and so it made sense for us to go out to the market on that. And we should be announcing the winners of those tenders in the next couple of weeks, I hope.

Thank you. And why hasn't Careers Wales been prioritised for a funding increase to help ensure it can offer a comprehensive service to adults, considering the importance Welsh Government places on lifelong learning and preparing workers for changing skills needs?

So, the fact that they will be responsible for the employment advice gateway means that they will now be getting about £9 million extra. So, that will, I hope, enhance their opportunities to build up a workforce. But I think you've got to understand that there are changes afoot in the world in relation to how people access careers advice. In the past, people expected to see somebody face to face. A lot of this now is done online. But also—. Look, I recognise that Careers Wales has had many cuts in the past, and that's part of the austerity consequence, I'm afraid, but what we're trying to do is to make sure that they rationalise, that they work more effectively, and I'm confident now that they are heading in the right direction.


It's just going back to what we started on, really, with regard to Brexit and the challenges there. Obviously, in your paper you say it can introduce a significant risk within this portfolio in regard to the £340 million ESF-approved money, and that you may need to reduce apprenticeships if the money is reduced from the European Union. What contingency planning are you putting in place if that is the reality post Brexit, or are you convinced that the Treasury are going to be able to fund where Brexit lets off, really? You're already anticipating that apprenticeships may need to reduce, so would there be no other way of putting contingency plans in place?  

Look, we've been discussing with the Welsh European Funding Office exactly where we stand. We are confident that what they're telling us is that we have a guarantee until 2023, in fact, which is quite a long way off. When you think about that for any other Government programme, that's unlikely—you know, we have an annual budget—but here we have an assumption that things will carry on until 2023 on the basis of that Treasury guarantee that we were given. And I think one of the challenges for us is to maximise the drawdown. There's more European money available because of the devaluation of the pound, so that's part of what we're trying to do—to make sure that we do use that money up. But, if you think about anything else, 2023 is actually quite a long time period. Would you like to add something?

The only thing I'd add is that after that period has ended, there is still negotiation around the additional money that Whitehall are talking about in terms of, I think they're calling it the shared prosperity fund, and that is still out there to play for. So, the budgets, we feel, are relatively secure until 2022-23, and thereafter it's a different discussion, if you like. 

I think the bigger problem we have is that if there is a downturn in the economy and if we see companies close, and if we see SMEs close, then the question is: where are these apprenticeships going to come from? Who's going to be offering the apprenticeships? So, the issue then will not be one of funding it, but actually: who's going to host these people? 

My other question would be on the FE sector. You say in point 42 in the paper that

'the FE sector currently acts as lead beneficiary on ESF projects worth between £4m and £10m'


'In the event of a no deal Brexit, and the Treasury guarantee not supporting these existing projects, volumes of learners would need to reduce to align with the reduced funding.'

What's your assessment of how many learners would have to decrease? And would there be any discussions that you would have with UK Government, instead of saying, as you have in this paper, that they would need to reduce, that you would use potentially some of the money from the prosperity fund so that wouldn't have to happen, for example?

I'll have a go, because this is getting a bit complicated now. Those projects—the £4 million to £10 million—are projects that are unrelated to Welsh Government. Those are projects that the FE colleges have applied for separately outside of Welsh Ministers. 

We don't have any control over them, no. But the Treasury guarantee applies to them, because that applies to anything that is signed off before December 2020, as things stand at the moment. And then, of course, it's the same answer as the last one: that the political debate has to take place as to what happens to the United Kingdom prosperity fund thereafter. But, in relative terms, that £4 million to £10 million is much less than our exposure, which is roughly about £25 million a year on Working Wales and on the apprenticeship programme taken together. Roughly. But it's broadly the same answer as the last time, I'm afraid. 


Is that the same as well for Communities for Work? Obviously, that's being maintained until 2020, but, of course, a lot of that money comes from the European Union. So, would you have to reconfigure that as well?

Well, what they're telling us is that it's up to 2020, but it actually carries on. You've got the plus two, plus three situation, so I think that's the same situation, I think. We can check that. 

We would have to come back to you on that because we don't have the information on Communities for Work. 

Minister, in regard to the Treasury funding guarantee, in your paper, you say to us that

'Draft guidance from HMT on the functioning of that guarantee has raised a number of concerns about whether full costs will be met. Welsh Treasury and WEFO officials are liaising with counterparts in the UK Government to seek further clarity and reassurances.'

Have you any update on that following your paper to us?

I haven't got an update, but I have had a more extensive discussion with WEFO on this. So, for example, technical assistance, which is part of the programme, is something that apparently is not covered by the Treasury guarantee. So, there's a chunk of money that is there now that may not be covered in future. So, I think that's still being negotiated. 

I want to ask some questions now in order to understand the budgets for the regional skills partnerships, and whether, now that they're playing an increasing role in delivery, they've received a funding uplift this year, as compared to last year, because I can't quite work that out from the budget. 

So, I think we're assuming that it will be the same level, although no decisions have been taken yet on the specifics of that budget line. But, you're absolutely right. I think RSPs, I hope, are playing an increasing role. I think we've got to give them more respect. You'll be aware that there has been a review undertaken by John Graystone. So, I think we're assuming that, at the moment, it's going to stay on the same level. But what we have done is we're creating pots elsewhere so that the response to what they're saying is acted upon. So, we've created this new £10 million fund, where further education, for example, can't access that pot unless they're responding to what the RSPs are saying, and the same thing now for apprenticeships. So, although the money might not be going directly to additional funding—it won't be going directly to the regional skills partnerships—in terms of the response to the regional skills partnerships, that money is effectively increasing. 

There have been, Minister, concerns previously within this committee about the regional skills partnerships not taking a long-term view, and all of the policy and the money direction that we've heard about this morning is to address the long-term view and the prosperity of Wales. So, with that in mind, how are you going to help ensure that the money that we invest today in the partnerships is going to bear some fruit long-term, because, clearly, that's what you want to do?

As I say, I think what I'm more interested in doing is making sure that the deliberations that they come up with, and the suggestions that they're coming out with in their annual reports, in terms of where they think the skills gaps are, are acted upon. That, for me, is more important than shoving money into an administration. And, so, that's what we've been doing. We've switched that money, and we're also undertaking now a review of the funding formula for further education, where we'll be looking at planning issues in future, and making sure that planning in relation to FE will take on board the demands that are coming from those regional skills partnerships. We've got to start training people for jobs that exist and to fill those skills gaps because there's work to be done in that area.


In terms of training for people for the jobs that don't yet exist, and the Phil Brown review—we're expecting that to report in the new year—what budget planning are you thinking of doing about creating a fund to carry through those recommendations?

I'm very aware that this is an area that we need to focus on. I was in the Tramshed just yesterday, or the day before, talking to them about what we need to do to address the issues of digital upskilling and how quickly we can turn this around and what's the best mechanism to do it, particularly for people who are in work today. So, this is not just about the future—people who are in school now; this is about people who are in work now, who are going to lose their jobs: how do we upskill those people? We're trying to see, for example, if we can introduce individual learning accounts, where we will allow individuals to access funding to upskill in areas where there are skills shortages, and digital is one of those areas. So, we're still trying to lock down the funding for that, but we're very keen for that to be a direction that we go in. Until Phil Brown has reported, of course, it's difficult for us to respond. But, as you're aware, I've written to all the regional skills partnerships, to ask them to specifically look at what we can do in relation to digital and automation.

So, once Phil Brown has reported, will you be looking again at your budgets to see how headroom can be created to recalibrate the system, if that's what he recommends?

I'm hoping that some of that—. What I don't want to do is to create new system constantly and have a report over here. I think what's important is that whatever Phil Brown comes up with is then fed through the regional skills partnerships. We've got to respect the structures that we have at the moment so that we're responding locally and making sure that we can build up the skills base locally. One of the problems we have is: who's going to teach these people? So, that's one of the things that we've been discussing and that I discussed in the Tramshed the other day. Who trains the trainers? Because people can command big salaries now, so actually teaching some of these skills—it's difficult to get those people to teach. But we can do this remotely—there are all kinds of creative ways we can do it. So, I think we need to be a lot more creative in terms of the way we upskill people; it's not always about two-year or three-year courses. I don't think that's going to be the modern way in future.

So, just to be clear, your starting assumption is that you will keep the existing budgets and the existing structures and try and recalibrate them to meet Phil Brown's recommendations.

I think if we start reorganising structures, we're just reinventing another structure. I'm not interested in doing that. I want these regional skills partnerships to work and I would like those partnerships to take on board the recommendations of whatever—

I've already written to them. I suppose I'll write to them again.

Right. Didn't that work—writing to them? Were they responsive?

In the reports this year, there's much clearer reference to digital skills.

Minister, can I thank you for your time this morning and for allowing us to extend the meeting by 10 minutes or so? Thank you very much.

Before we go into private session, can I just inform you that the Cabinet Secretary for Economy and Transport is unable to join us this morning due to a family matter, so the committee is already looking for new dates over the next two weeks to rearrange that session. So, we won't be taking item 6 today.

3. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o eitem 4 and 5
3. Motion under Standing Order 17.42 to resolve to exclude the public from item 4 and 5


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


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

Cynigiwyd y cynnig.

Motion moved.

I move to item 3, and can I resolve, under Standing Order 17.42, that we exclude members of the public from the remainder of the meeting? Are Members content? We'll take a 10-minute break.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 10:24.

Motion agreed.

The public part of the meeting ended at 10:24.