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Y Pwyllgor Cydraddoldeb, Llywodraeth Leol a Chymunedau

Equality, Local Government and Communities Committee

25/10/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

David Melding AM Yn dirprwyo ar ran Mark Isherwood ar gyfer ail hanner y cyfarfod
Substitute for Mark Isherwood for the second half of the meeting
Gareth Bennett AM
Jayne Bryant AM
Jenny Rathbone AM
John Griffiths AM Cadeirydd y Pwyllgor
Committee Chair
Leanne Wood AM
Mark Isherwood AM

Y rhai eraill a oedd yn bresennol

Others in Attendance

Anthony Hunt Llefarydd Cyllid, Cymdeithas Llywodraeth Leol Cymru
Finance Spokesperson, Welsh Local Government Association
Carys Lord Pennaeth Cyllid, Cyngor Bro Morgannwg
Head of Finance, Vale of Glamorgan Council
Debbie Wilcox Arweinydd Cymdeithas Llywodraeth Leol Cymru
Leader of the Welsh Local Government Association
Jon Rae Cyfarwyddwr Adnoddau, Cymdeithas Llywodraeth Leol Cymru
Director of Resources, Welsh Local Government Association
Steve Thomas Prif Weithredwr, Cymdeithas Llywodraeth Leol Cymru
Chief Executive, Welsh Local Government Association
Tom Jones Uwch-reolwr Prosiect, Viridis Real Estate
Senior Project Manager, Viridis Real Estate

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

Chloe Davies Dirprwy Glerc
Deputy Clerk
Jonathan Baxter Ymchwilydd
Researcher
Naomi Stocks Clerc
Clerk
Osian Bowyer Ymchwilydd
Researcher
Stephen Davies Cynghorydd Cyfreithiol
Legal Adviser

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 09:15.

The meeting began at 09:15.

1. Cyflwyniad, Ymddiheuriadau, Dirprwyon a Datgan Buddiannau
1. Introductions, Apologies, Substitutions and Declarations of Interest

Okay. May I welcome everyone to this meeting of the Equality, Local Government and Communities Committee? The first item on our agenda today is introductions, apologies, substitutions and declarations of interest. We have two Members who will be joining us but will be late. They are Leanne Wood and Jack Sargeant. We haven't received any apologies. 

Later, I'll welcome Leanne Wood to the committee, when she arrives, but at this stage, I'd like to thank Bethan Sayed for her work on the committee. Leanne is replacing Bethan, and I'm very grateful to Bethan for her work on a number of important inquiries and her general contribution to the committee over the period of her membership.

Okay. Any declarations of interest? No. 

2. Craffu ar Gyllideb Ddrafft Llywodraeth Cymru 2019-20: Sesiwn Dystiolaeth 1
2. Scrutiny of the Welsh Government Draft Budget 2019-20: Evidence Session 1

We will move on, then, to item 2, which is scrutiny of the Welsh Government draft budget. I'm very pleased to welcome Councillor Debbie Wilcox, leader of the Welsh Local Government Association, Anthony Hunt, who is the finance spokesman for the Welsh Local Government Association, Steve Thomas, chief executive of the WLGA, Carys Lord, head of finance for the Vale of Glamorgan Council, and also John Rae, director of resources, again for the WLGA. Welcome to you all. Thanks for coming along to give evidence to committee today.

First of all, I don't know whether, Debbie, you might want to make any opening remarks before we get into the questions that we have.

Chair, diolch yn fawr. Thank you very much. 

Diolch am y gwahoddiad y bore yma.

Thank you for the invitation this morning.

Thank you for the invitation to meet with this committee. Just the broad brushstrokes of an introduction from me, Chair, and that is that we are here to present our views from local government. We are, of course, a cross-party organisation, and, within that, we are representing the views of the 22 leaders from across the whole of the country. Clearly, we live in difficult times. As we enter year 9 of austerity, things couldn't be worse, but we will present those arguments and, hopefully, it will give you a much fuller account of where we are and what we're doing as we go through the morning. Diolch. 

Okay. Well, thanks for that, Debbie. That's very much what we want—that fuller, more detailed picture that will aid our scrutiny of the Welsh Government and the Welsh Government budget for local authorities in Wales.

Perhaps I might begin, then, with the first questions, and firstly to ask you, really: what are local government priorities for the period 2019-20, and indeed beyond?

Thank you. Well, I'll start off, in that case. The health service delivers health. Local government delivers education. Local government delivers social services. They are, and always will be, our main priorities and huge parts of our budgets. Just to note the difference between Wales and England, which I'm sure you know, is that, in England, local authorities don't deliver education. In Wales, we do. It is the largest part of every single council's budget, and it is the delivery of those services. The next large budget, obviously, is social services, and, within that, we are the preventative service. But, equally, the core non-statutory services that protect the public realm and well-being—libraries, public toilets, rural transport, community centres, youth services, and a host of others—are our priorities, but these have been decimated after eight years of austerity.

09:20

I very much concur with that. Just to give you a picture, though—social care and schools, between the two of them, make up the majority of our budgets. It's about £100 million out of £175 million, just to give a vague estimate in Torfaen, for example. So, the extent to which you can protect those into the ninth year of budget cuts without completely decimating everything else—and the everything else includes things that people really value—is limited. So, the extent to which they can continue to be protected going forward is very much open to question, because my usual ports of call—. My planning department wince every time I meet with them, because they know what I'm going to say, but after eight years of cutting them to the bone, there's very little fat to be trimmed there, so that's another non-priority area, so to speak, that you can't take money from. So, it's very difficult in those circumstances to protect something that's the majority of your budget.

Okay, thanks very much for that. Really, the other question I was going to ask you you've touched on, which is for us to understand, really, what the priority service areas are that you would want to protect going forward, and to what extent you will be able to protect them. I wonder if you could expand a little on what you've already said in those terms.

Chair, we've constantly, over the last eight years, looked to protect as much as we can in education and social care. They've been the two big areas in terms of going forward. For a period of time within the Welsh Government, there was a level of increased protection for schools. That has now gone. In terms of social care as well, the demographic pressures are such, they are rising by 4 per cent per annum, and even though we are trying to protect it, we are playing a losing game. In terms of those core services, we've tried to protect them as much as we can over the last eight years. I think we can safely say this year, and sadly say, that those services are now in the frame to be cut. We've run out of road when it comes to protecting core services. There is a distinct difference in this year, as we approach this year's budget, and that means that we will be looking—. Even if we give flat cash to schools, schools will not be happy with that—they will have to make teacher redundancies, they will have to make teaching assistant redundancies. There will not be enough money going into schools. But many authorities are working on the basis of flat cash going into schools; some authorities are working on the basis of cutting their schools.

I see. Okay. We will move on, then, to some further questions from Gareth Bennett.

Thank you, Chair. Thanks for the broad picture you've given of the situation, but do you have any specific views on this year's budget and the 0.3 per cent decrease? Obviously, Steve's just touched on it, but have you got any other—?

Yes, I'll start with that and then hand over to Anthony. Our view is quite clear: we thought more money would be available. The impact of eight years of cuts is that we have done all the heavy lifting. Local government has done all the heavy lifting on dealing with the austerity agenda. One might say it was a very clever political move to push it into local government. I was outside No. 10 last Thursday morning with my English opposite number, the leader of the Local Government Association Labour group, Councillor Nick Forbes, the leader of Newcastle. We were delivering a petition signed by over 5,000 councillors across Wales and England, called #BreakingPoint, because we are at breaking point. Add into that the massive scale of the pressures faced, plus, of course, your stated policies in Welsh Government, your documents, 'Prosperity for All' and 'A Healthier Wales'—you tell us that social care is a priority for you. You tell us that the Well-being of Future Generations (Wales) Act 2015, which is a superb notion, is a priority, but that has an emphasis on prevention, and we are the preventative service. Subsequent statements from the future generations commissioner, of course, have reinforced this.

Now, about £43 million of the gap—some of that has been closed by money from Westminster to fund teachers' pay. This accounts for the extra £15 million being available for schools from the Welsh Government budget. But the key question  here is: why is this money not in the revenue support grant, bearing in mind the current Cabinet Secretary has said very warm words about empowering councils? Equally, the Cabinet Secretary for Education announced on the floor of the Senedd last week that this money would be mainly used for teacher professional development. Well, that's all very well, developing teachers, but we're making teachers redundant because we can't afford to pay for them. It's ludicrous, and it exacerbates the way that the impact of these cuts will divert remaining resources away directly from the classroom. Anthony, I don't know if you want to pick up on social care. 

09:25

It's the same situation in social care, and social care's a good example of—. A 0.3 per cent reduction sounds manageable, but it's not just the gap between 0.3 per cent and 0 per cent; it's the gap between -0.3 per cent and where the pressures lie in the services we provide. We've got pay deals to fund this year, for both teachers' pay and local government pay deals, that need to be funded; they're long overdue for the staff that work in those services and they need to be paid for. So, the gap between about 5 per cent, where we think the pressures lie, and the 0.3 per cent—that is where the real damage happens.

Gareth, just before you continue, I think Jenny wanted to come in at this point.

Debbie, I just wanted to pick up on the point you made about why was the £15 million that was going to be made available to fund teachers pay—why wasn't that in the RSG? Could you just explain to us what the significance of putting it into the RSG is, rather than putting it straight into the education—?

The significance of putting it in the RSG is that you could spend it, in terms of your schools, directly in terms of your schools. The Cabinet Secretary stood up on the floor of the Senedd and announced it was going to teacher professional development to support the Donaldson curriculum—very laudable. Nobody would criticise that aim, but, at the same time, how can we be spending money in an arena like that when we're actually cutting teachers' jobs? It's about core funding, and the RSG is the place where core funding is located.

Okay, but my understanding is this money is to fund the increase in teachers' pay. Is that—? No.

The statement the other day was very clear that it's about teachers' professional development, and the words mainly on teachers' professional development were used. Teachers' professional development was linked to the Donaldson curriculum. Again, I put the point that Councillor Wilcox put: how can you be spending money on these things at the current time, when we're in danger of making teaching assistants and teachers redundant? This is the trouble with specifying and loading the money with grant conditions in this place. You know, we have agreements with you, across Welsh Government, that you're going to dehypothecate funding. Every year, we look to see the levels of dehypothecation, and, frankly, it just doesn't happen. There's £15 million there that could have gone straight into the revenue support grant to support core services, and again it's outside the settlement.

Okay, all right. Well, it's something we'll take on—

And the same principle applies to the extra £30 million for social care. It should be used to fund children's and adult services, and not tied up in grant conditions and small pots of money.

Just in very sharp political terms, our request would be: let us use that £15 million to prevent losing some of the teachers and the teaching assistants that have helped move our schools forward in the last 10 years. And in the same way in social care, let us use that £30 million to protect the jobs and the service that's provided by social workers for some of the most vulnerable people in our communities. I think one of the frustrations in this debate is that, often, the phrase is used, 'extra money for local government'—that we're asking for more money for local government. We're not; we're asking for more money for the services that some of the most vulnerable people in our communities rely on. This isn't extra money for me in Torfaen or for Debbie in Newport. This is extra money for schools in Torfaen, schools in Newport, schools across Wales—extra money for social care for vulnerable people across Wales. And that's what we're fighting for, not for more money for ourselves as if it was some kind of game between different levels of bureaucracy. This is about the services people depend on.

Think of us as the deliverer of services, like you think of the NHS as the deliverer of health, and I think there would be a much clearer focus on what we do.

I think we could demonstrate to you that any extra money that we get in the final budget would be more than spent on those services, because the choice, for me, isn't between whether I make cuts to social care or don't; it's whether I have to almost bleed other services dry in order to protect the most vulnerable in my community or not, because I won't stand by and let vulnerable people suffer. But if those cuts have to be made from elsewhere in my budget, then, increasingly, services that people value will close in order to protect the most vulnerable. That's the stark choice that we face in local government at the moment. 

09:30

Well, thanks for that, because that's certainly what we want to get to today as a committee—a much better understanding of the impact of the budget as it's currently proposed in terms of those local government services. Gareth. 

Okay. Bore da. Good morning. Last year, the indicative budget for 2019-20 anticipated a 1 per cent overall cut in local government budgets. This provisional settlement now indicates a 0.3 per cent overall reduction. How will that affect or alter overall local authority planning? 

The trouble is—. Sorry, Chair. The trouble is, from my point of view, that it doesn't because it's more than taken up by the pressures. The pay deals, for example, teachers' pay, local government pay, and more—that swallows up that difference. The difference between 0.3 per cent and 1 per cent for my authority is about £900,000—just under £1 million pounds. The effect of those pay deals dwarfs that. So, look, we're grateful that we're not in a situation that—not in such a stark situation as some of our colleagues in England are, and we appreciate that, but I often use the adage that that's a bit like having your arm chopped off and then being told to be grateful that you haven't had your head chopped off. You know, if you're bleeding to death, it's not much of a comfort to you that your head hasn't been chopped off. You want to do what you can to stop bleeding to death. So, yes, any improvement on the settlement is better, but we really need a step change in how local government funding is viewed if we're to save the services that people value.

Remember, of course, that while in your parts of north Wales lots of authorities there have not gone up at all, they're on a floor funding level of -1 per cent. So, the assumption that for all authorities across Wales that there's been an uplift in the settlement is not true. Five authorities are on a floor of -1 per cent, and would have been lower if the floor hadn't been put in place. And you see a range of authorities as well below -0.5 per cent, and one of the things I would suggest that could be considered by this committee is actually getting that floor raised to at least -0.5 per cent, which, at the end of the day, would only cost £4 million. It would only cost £4 million, that floor raise to -0.5 per cent, and I think that something like that, again, would show a level of commitment to local services that would be very welcomed.

And if we took it to flat cash funding, we'd be talking about £12 million, which, in the context of your budget—£12 million is really a very reasonable figure, and that would make a cash-flat settlement across Wales.

Could I just ask you on that, Debbie? I mean, cash flat, obviously, would be a considerable improvement on what's currently proposed—

To what extent would that deal with the pressures that local government is facing and the impact on services of the current proposals?

It would help us to limp on for another year, Chair. In terms of the actual figures—. I've got our figures guy on the end, so, if we had cash flat, Jon—?

Yes, I mean, 'Every little helps' is the phrase, isn't it? But it goes back to what Anthony said before, I think, that the sheer scale of the pressures that we estimate even with the current settlement at -3 per cent, if you take out some of the new responsibilities that are in there, free school meals money, et cetera, we're starting from a position a lot further down. So, the budget gap is actually about £320 million. Now, you can add back, then—we set this out in the written evidence—all the additional stuff that's in the settlement. So, there's the £15 million that's come from the UK Government for teachers' pay. We thought there was £15 million there additionally to go into education, and this was the other £15 million pot that was discussed before, but we can now discount that.

Then there's the social care money. Now, there's £20 million in the settlement, so that helps. There are question marks around the other £30 million pot and how much conditionality is going to be put around that, but even when you take those additional sums into account, you're still left with £250 million-worth of pressure that is basically arising—.

These aren't abstract pressures; these are pressures that are arising from the workforce. When you've got 25,000 teachers on your payroll across Wales, you've got a £1 billion net wage bill. Any small percentage change in that either way, a 1 percentage change either way, is £10 million. So, when you've got a 3-and-above per cent pay deal, when you've got added pressure of teachers' pensions, or certainly, question marks over the teachers pension contributions—

09:35

That's by 7.1 per cent that's gone up, hasn't it?

Yes, 7.1 per cent. So, you're still looking at a wide gap. So, while that additional money helps, certainly helps, it's going to help—it would help in north Wales, for the authorities up there who find themselves on the floor—they're still facing a substantial financial challenge.

Yes, I'm very familiar with Steve's comment. I've been somewhat inundated with messages from councillors and constituents, particularly in Flintshire and Wrexham, which were already receiving amongst the lowest per capita settlements in Wales. Can I just clarify, because there was a lot of content in those response, is the difference across Wales—the all-Wales average between 1 per cent and 0.3 per cent reduction—fully represented by the added revenue costs that you've referred to?

No. It doesn't reflect any of the pressures. I think this is the point that we've been making, as the WLGA, all through the summer—that 2019-20 was a different year. It was going to be difficult, because that's the year in which the workforce costs were going to ratchet up. So, whether this settlement is -1 per cent or -0.3 per cent, it's inadequate, because this is the—. As we went into 2018-19, it was one of the first years when pay restraint was essentially ditched. We'd gone through a number of years where officers and teachers and care workers, et cetera, basically had no wage increase, and then it was a 1 per cent wage increase. And then all of a sudden for 2019-20, or going into 2018-19, sorry, there was a 2 per cent pay increase for officers. There's the teachers' pay deal, firefighters' pay deal, and the Treasury are going haywire at the minute, with the employer contributions for non-funded pension schemes, which covers teachers, civil servants, NHS, et cetera, firefighters. So, that was the difference this year, and that's why a low settlement or anything approaching cash flat really isn't adequate and isn't going to cover the workforce pressures that we're currently facing.

I think that's the point I'm trying to clarify, that the gap between the indicative budget and, now, the provisional budget is more than compensated for by the additional salary costs, et cetera, that you referred to—wages and employer contributions.

They're of a scale that just blows that gap out of the water, to be honest.

That is the big difference this year. The new thing on the scene is pay inflation. In many respects, the hero, the unsung hero of austerity and the reason that we've been able to make the books balance for so long is the restraint that has been shown in terms of pay by local government workers. And that's similar across the public sector, to be honest. They've seen a 20-plus per cent drop in their real-terms wages, and that's what's helped keep the show on the road for so long, but that can't continue, because, too often, public servants are having to turn to food banks and things like that, and that's not an acceptable way to go. But pay deals mean that there is positive inflation in our projections that we've not seen before.

And, of course, we have cut about 20 per cent of our workforce in local government over the last five years. So, everyone's doing more for less.

And then, I understand that, net of the anticipated restoration of some grants into the RSG and before any council tax changes, you're facing a £262 million budget gap. How does that compare to previous years—[Interruption.]

I'm sorry—[Interruption.] Guess the theme tune. I'm sorry. There's no caller ID so it must be the press. 

09:40

We won't subject you to our fining system as you're not a Member of the Assembly, Debbie.

Thank you. I can't afford pay it, Chair. [Laughter.] 

To come back to the question, the £260 million is a lot higher than the estimates that we had in previous years, when we gave you written evidence last year about the 2018-19 budget. I think we estimated in there that the pressure for local government was something like £200 million. So, that additional £60 million that we've recognised this year—sorry, for 2019-20—is down to workforce costs, pay deals and increased pension contributions.

Finally, in terms of how to reconcile that, I've mentioned council tax, but there are—let's put it politely—differential levels of reserves held by councils. Some have virtually nothing, except for their minimum statutory provision; some appear on paper to have quite significant sums. Is that likely this year to change? Will councils be dipping in more to those reserves, where they have them, or not?

Reserve levels are down now to where they were in 2013, so councils have been dipping into reserves over the recent period. Carys, do you want to—?

That is obviously an option open to councils if they have those reserves. The only thing I would stress is that, once you've spent it, you've spent it, and the budgets that councils currently have are not sufficient to run the services that we all want to run and we need to run to support the people that we're here to serve. But that's only putting off the inevitable, and it may help councils for one year while they have to make significant changes if they're going to bring those budgets down, but, once they're spent they're spent, and we cannot rely on those as a long-term funding mechanism.

But is it not the case that some of those who are facing potentially some of the biggest reductions this year who are also fairly near the bottom of the per capita funding table are those who've already predominantly run down their reserves to a level where they can't really go any further but that there are some others who have been higher up, over years, the per capita funding table, which are still, by comparison with them, sitting on far higher levels?

I hear what you're saying about the per capita funding table. What I'd say to you is that I think we—. There are two people who understand the local government formula: one of them is him and the other one is dead. [Laughter.]

The trouble is, you start to interrogate that formula, you get into that formula, and you get lost in the numbers. The fact is that the formula as it currently stands is held together by duct tape and sticking plasters, there's no doubt about it. It probably needs a long hard look at it. The trouble is that to do that long hard look would take about three, four, five years, with ease. When we talk about the formula, one of the things I would say to you is that the formula—any formula you put in place is going to have a population base, it's going to be based on schoolchildren, it's going to be based on deprivation, it's going to be based on numbers. If Cardiff grows by 41,000 houses in the next 15, 20 years and the population of Cardiff grows exponentially, that will continue to affect the formula across Wales. And that's only right—the formula should reflect that growth—but the trouble is that what's happening as a result of that is that, with a lower quantum of money, with a fixed amount of money, that means that other authorities are getting squeezed. And Cardiff haven't got enough money to deliver the services that they want to deliver in terms of the scale of population growth they've got. I think the trouble is that, once you get into that formula discussion, you can get into a discussion that goes round and round, so it's tautological. The key issue is not the formula; the key issue is the quantum coming into local government.

Well, my question was actually more focused—I'm not trying to avoid the formula—certainly at this stage, on reserves, where some authorities have already, over the years, progressively reduced to a point beyond which it would be unsafe to go further, whereas others, by comparison—I'm not saying they're sitting on megabucks; by comparison—have still bit of fat to go. So, might that impact on a differential approach to council tax increases, for example?

I was just going to say, if it would help—. I think the question's a complex question. Maybe if we look for some data for you and—

And provide a note to the committee. That would be fine.

Is that okay, yes?

That would be very helpful. Thank you very much. Okay. We'll move on then to some questions returning to the preventative spend aspects of the budget, and Jenny Rathbone.

Thank you very much. On Tuesday, the Cabinet Secretary for health made an announcement about the £100 million plus that's in the transformation fund for health. He said that, actually, this £100 million isn't the prize; the prize is the £9 billion. And, if I look at my own authority, Cardiff and the Vale, they, I'm glad to say, have realised that putting more money into secondary care is not going to solve anything; it's just going to suck even more demand into secondary care. So, pulling resources and attention back to preventative services is at the top of everybody's agenda, or should be; we're never going to get to a healthier Wales if we don't. So, I suppose, looking at what the challenge is in relation to health, which I completely agree with, what do you think the challenge is for local government to endeavour to spend more money in prevention in order to have a lot less money—resources—being demanded of you in the acute end of your services?

09:45

Health issues are often immediate, aren't they, and they're visible. Prevention, by its very definition, is therefore invisible. So, many of the activities that the health service deliver are relatively quick results, a one-off basis: healing, mending breaks, curing diseases. Individuals and their families witness this and often praise the service that has been given, but prevention is long term and often unglamorous. So, we understand about the difficulty to cut back on health spending because there are immediate negative consequences: growing waiting lists, queues at hospitals. But spending on preventative services such as maintenance is often the first casualty in a cuts scenario. You can skip on maintenance for a while, but it's a false economy.

We see prevention as being multifaceted and requiring contributions from a diverse range of sources. Let me see if I can think of an example. Okay, a car accident: so, you have a car accident where injuries are treated in hospital, the individuals recover. But to prevent that accident in the first place, we've got a complex mixture: we've got driver education, possibly highway engineering, speed enforcement, potholes, street lighting, signage, highways gritting in cold weather. And failing to do any one of those increases the risk of an accident. Somebody falls over, they break their arm, they go into hospital, they get it set in a cast. But, if councils had the money to grit more effectively, we could prevent maybe 10 accidents. It's not glamorous, but it's—

No. I think it's a useful example, just to get to grips with this. So, obviously, under the Well-Being of Future Generations (Wales) Act 2015, we've got our public services boards, and that is precisely the sort of conversation one would expect to be happening there, because I think the health service isn't endeavouring to increase the number of people attending with road accident injuries. So, how do you think that the public services boards, and, indeed, the regional partnership boards, are able to promote that partnership, both with health and all the other stakeholders that need to be involved? Because some of this spend comes from people doing the wrong thing themselves, and they could be doing things differently.

Anthony, do you want to—?

I think the public services boards are a great opportunity to take that agenda forward. Take our public services board—we're getting all the different agencies together, for example, in Blaenavon, in one town at the top of the eastern valley, and trying to get those organisations working together more holistically around people. The trouble is, the change we face is often that work is, by its nature, invisible, because you're stopping things happening, you're working with people in a private and confidential way. And therefore it does get less attention than some of the more out-there, immediate stuff. It's the old adage: when the fire brigade started doing things like preventative education, people said, 'Why don't you spend more money on putting out fires?' I'm trying to think of some good examples. For example, there was a local walking group in the north of Torfaen that took on people who'd had chronic health problems and got them more active, more socially engaged, less isolated. The funding for that was due to end from another source, so we stepped in and helped fund that because, for £15,000 a year, you don't need to prevent too many acute operations to make that good value for money. But in the past perhaps there's been a disconnect between—that money, I guess, would be a health saving more than a local government saving, but we'll step in to make it, and I think the public services boards are vital to breaking down that silo mentality. It doesn't matter, in a way, if the money is saved from the health budget or from local government's budget. It's a budget saving and an improved outcome.

09:50

Okay. So, how do we get more integrated responses, then? Having identified what are the priorities in your area, I agree that you've then got to decide who is best placed to deliver on that objective, and I'm aware—we've heard in this committee—of certain things being delivered by the voluntary sector. So, for example, combatting loneliness is something that springs to mind, being delivered by the voluntary sector. And these things don't just reduce the budget on health. They also reduce the budget on social care.

Can I touch on your previous question, because I think your previous question answers your question? You talked about the regional partnership boards, and the regional partnership boards have taken on a huge importance in Wales in terms of the strategy around 'A Healthier Wales', seamless services, 'Prosperity for All'. There was an announcement this year of £30 million will go into the regional partnership boards. That £30 million is in the NHS budget line. The question I'd put back to you as Assembly Members is: why is it in the health budget line? Why not make that £30 million of preventative spend fund? Why don't we—? For example—a classic example last week talking to the north Wales leaders. One of the north Wales authorities is talking about cutting the disabled facilities grant. What is a disabled facilities grant? A disabled facilities grant may be a shower unit, it may be a handrail, it may be an extension, it may be steps. It is absolutely classic preventative spend. Why would we want to take on board new schemes when we're cutting those schemes? So, I think there's some really long, hard thinking to be done on preventative services and core preventative spend, and I think a request, again, we'd make to you as a committee is: that £30 million going into the regional partnership boards, why isn't that ring-fenced for local government preventative spend?

Thank you. I'm sure we'll take up that question. Just looking at another area that I've been involved in on another committee, which is the situation for care-experienced children, and looking at the ladder of prevention leading to acute—clearly, if we cut youth services we are going to get more young people ending up in both the care system and, indeed, in the criminal justice system, because the youth services are often the only place that young people can go to if things aren't going well at home and they've been chucked out of school. That's another area of huge spend, and terrifying costs for placing young people once they've been put into care. And Wales is an outlier compared with England, so what is the local government strategy for, if you like, rectifying that situation so we are better able to support people when things are starting to go wrong and putting in the support to prevent young people having to being separated from their families?

We've done a huge amount of work with Public Health Wales on the adverse childhood experiences agenda in Wales—and with the future generations commissioner—so, there's a lot of work. That work will not see benefits for a decade; it's a long, hard slog, but you've got to do it. That's exactly what you've got to do.

I think the point to make in terms of all the preventative spend issues that you highlight is that we are in a position where we have the strategies produced by the Welsh Government—'Prosperity for All' is an absolute classic strategy, it's a great strategy, and it says social care is the Welsh Government's main priority. Where is that reflected in the budget?

Okay. Well, we'll definitely take that back. But just looking at it in terms of the challenge to you as leaders of local government, public health is everybody's business, so how are we engaging all our workforce and the public in general and all the other stakeholders who need to be involved in this to make us a less sick country? We are at the moment not a well country and we have a huge job to do to make us into a healthier Wales.

09:55

WLGA run a classic scheme, the GP exercise referral scheme, which we run at a national level—an award-winning scheme. It's a scheme that, in the broad scheme of things, is cheap as chips to run and we could invest a lot more money. It's about getting people with diabetes, it's about getting people with heart problems, it's about getting people with dietary problems into leisure centres and making sure that there's a public health dimension to that. Leisure centres should be called 'public health centres', shouldn't they? That's what they are, in effect. And yet, what are we doing?

But unfortunately they're at risk of being closed. 

Okay, but I suppose I want a more comprehensive view of how all the workforce that you obviously employ are involved in this sort of agenda. For example, the people who collect our rubbish on a weekly basis—

Fortnightly; monthly.

How are they observing what may be going on in the house that hasn't put out its rubbish, and that sort of thing?

That is, indeed, a challenge back to us, Jenny, and I guess we all, separately as councils across Wales and cohesively under the preventative actions that Steve talked about, do look at our own workforces and there would be various schemes of developing mindfulness and healthy activities. You can walk into any council in any part of Wales and you'd find stuff on the notice board—often the unions, of course, are a great support with that and would help us to do that. But I think that there are probably, in terms of our own workforce, excellent examples out there and we could actually find that detail for you. However, again, it poses this wider question that, with the increasing complexity of having to do much more for less, then our own workforce are probably under much stress in order to do that. But that joined-up approach is an interesting one, and we'll take that back and think how that could be developed.

Okay, because I suppose my last question is, really: how do you think public services boards can be used to reshape services to better meet people's needs, understanding the holistic needs of our communities?

Well, I chair the Newport public services board and, in fact, in the chair's own constituency, we are developing a hub model in Ringland, where we are working with our registered social landlord, Newport City Homes, working with Aneurin Bevan and us, the council. So we are developing a health, community, living, shopping—. So it's this community hub model and it will be, when we get there, a really good example of that integration of services and using the financial model as best we can. But it will be a visible working in partnership, and I'm sure we'll invite you over when we open it. 

Okay. Thank you very much; I'd love to come. But I think it's about the resilience of all our public services in light of some of the other challenges that we are not in control of. And obviously, Brexit, if we have a hard Brexit, then the very difficult financial situation you currently face is going to be like an hors d'oeuvre, compared with the drop in public resources.

Indeed. Anthony and I were in Brussels two weeks ago and we've visited our colleagues in Northern Ireland and Scotland, because unity is strength, so we're looking for local government support across the nations. And I'm sure I don't have to speak for Anthony when we say we just cannot believe why we're leaving the European Union because the whole world is in governance in Europe, and the problems that that's going to cause for us, as you say, it will be a drop in the ocean, but—.

The other point I'd make about that is it's not just about Brexit, it's about the fact that Brexit exacerbates an already incredibly difficult situation. If the level of austerity continues at its current pace and its current depth, there will be authorities in Wales that will fall over. This is not alarmist: authorities will fall over. You've seen large authorities in England like Northampton go bankrupt. Surrey is issuing warnings. The biggest public sector organisation in Europe is Birmingham City Council, which is in deep financial trouble. Welsh authorities may not have been cut by as much as the English authorities, but as Anthony says, it's like the difference between a category 5 hurricane and a category 4 hurricane: they're both deadly. The bottom line is that I think there will be Welsh authorities—to go back to Mark's point—who are running down balances, they are having demographic pressures that are overbearing, and they are making a level of cuts that will tip them over. A few more years of this, and you will see authorities in Wales in really potentially dire straits. Again, Welsh Government's got to ask this, and I noticed an Assembly Member asking this question the other day: what happens if an authority in Wales does tip over? What's plan B? 

10:00

Okay, two or three local authorities in England, I agree, are in absolute dire circumstances, but most of the rest have managed to survive despite the fact that many of them have suffered 50 per cent cuts. So, there is also a challenge back to local government to say, 'We have to do things differently', because at the end of the day we aren't in control of the amount of money we get from the UK. 

No, indeed, but they're funded differently, with the greatest respect, in England. So, they've made the 50 per cent cut, but they only rely on 50 per cent of the RSG, whereas we rely on almost 80 per cent in Wales. As I stated earlier, I was in London last week with the leader of the Local Government Association Labour group, Councillor Nick Forbes, the leader of Newcastle, presenting a signature of over 5,000 signatures of councillors from Wales and England with #BreakingPoint, and that's the campaign that the English authorities initiated and that Wales supported. They are all—we are all at breaking point. 

Can I just come back to the point about prevention and early intervention? I think that takes four things. It takes leadership to not take the easy solutions, to work together in partnership with other organisations instead of building fiefdoms. It takes a positive culture of organisations opening up and working together. It takes patience, because sometimes many of the early intervention and prevention things we've done initially have caused more demand, because you turn over rocks and find things you might not like behind them. It takes some resilience to not just view the short term. But, inevitably, the fourth thing is does take is the resource. We've put £0.5 million into an early intervention prevention fund in Torfaen to try and work on some of these streams, and take the funding of those streams outside of the huge pressure in the rest of the budget. But when there is that pressure in the budget and when you're trying to prioritise schools and social care, the things that are preventative—youth services, leisure services, things like that—inevitably take the strain of the prioritisation you're trying to give to social care and schools.

And it's the hard side of prioritisation, isn't it? Because very often people think that we should prioritise, but I often come down here and different people with different passions—well-meaning passions—think their area should be a priority. That's great, but it doesn't add up, because if I meet with 20 different people and their area of expertise is something they passionately believe in and they think should be a priority, they're astounded that I don't instantly agree with them, but I can't because it doesn't add up. Someone talking about housing can think that's the seminal thing for keeping people healthy and leading positive lives. Someone interested in older people can think that that should be my priority; younger people, that should be my priority; refuse collection, recycling rates, that should be my priority; but it doesn't add up. And that's the frustration that I feel. We're trying to do what we can to prioritise preventative services, but we can't prioritise everything. Sooner or later, things are going to break. 

Okay. Mark, did you want to come in briefly at this stage? We do need to move on. 

It's on prevention and intervention, so if I could. A couple of years ago, I attended the launch of the Co-production Network for Wales in mid Wales, and I think it was the director of social services for Monmouthshire that presented, and she said, 'We used to tell people what they can have. We now ask them what they want to achieve.' That was in the budget to help to drive their cultural challenge, but it went a lot further than that because the principle came from a Western Australia model, which had not been introduced at a time of austerity in Australia, but as a way of better engaging with people with mental health conditions. Can I presume that the £30 million that Steve's referring to is within the Welsh Government's £100 million transformation fund?     

10:05

No. Because the Welsh Government response to this is, 'We're putting £100 million into the transformation fund to integrate health and social care.' So, I'd be interested to know how you would respond to that and the impact—. Because I've had casework where constituents are saying that local authorities are actively moving or encouraging them away from direct payments into continuing healthcare, which, of course, switches the budget responsibility into a different area and can also impact on independence.

Finally, I've had a mountain of casework and also work through the cross-party groups that I chair, which are mainly related to disability and health, where third sector bodies delivering projects such as care and support for autistic people, British sign language, speech and language support, support for disabled children and support for disabled unemployed people, and so on, have lost funding with the consequent impact of a massive multimillion-pound increase in pressure on statutory services, because local authority commissioners have not got it. So, in addition to all of this, and in line with the Part 2 code of practice on the Social Services and Well-Being (Wales) Act 2014, which requires you to design and deliver with people and communities—not decide, consult and then go ahead—in addition to the broader issues, how can you use what you've got smarter?

Can I address the money issue first of all, because you're clarifying the point, aren't you? The £100 million transformation fund is a two-year fund—it's £50 million this year and £50 million next year. There are two further pots: there is a £30 million grant announcement, and we do not know the grant conditions on that as yet, which is outside the settlement. There's also a further £30 million announcement, which is for money to go into the regional partnership boards, which is in the health main expenditure group in the Welsh Government budget. So, in effect, there is £160 million located within those various funding streams.

The transformation fund is a competitive process. We've seen the announcement this week of key projects, for example, the hospital project in Cardiff. The issue is, in terms of all those—. I can understand why AMs can get confused about all this. We spend all day examining all this and it is not straightforward, is it? The £180 million announced the other day was a brilliant re-announcement of many other brilliant re-announcements. The issue that we want to focus on is making sure that that £30 million that goes into the regional partnership boards is spent on the types of services that you're talking about.

That you're talking about, yes.

Because otherwise, it will go—. I've no doubt that the national health service will spend it in a meaningful, gainful way, but in preventative terms, we can stop people going into the national health service. And I think in all of the things that you talked about there, which are of absolutely primary importance, if we had some additional money like the £30 million into the regional partnership boards ring-fenced for local government services and those types of services that you highlight, I think that would make a real difference across Wales.

So, I'm actually hearing the WLGA calling for ring-fencing—that's interesting.

Look, in the current climate, if it comes in a box with a ribbon on it, I'll take it. 

I'd leave out the ribbon.

Okay, before we move on, and we do need to because time is going by, could I just ask whether you're content with the Welsh Government's definition of prevention and preventative spending in the context of the budget? Basically, it's about working in partnership, co-producing the best outcomes and it's, in broad terms, those four levels: primary, secondary, tertiary and acute spending. Are you broadly content with that definition?

I saw the definition yesterday. I'm content with the definition, but whether Welsh Government meet their own definition—

That's the question. Okay, that's fine, if you're happy with that.

I'd just say, as well, that the budget document in annex A gives you a taste, doesn't it, of how you could use that framework to analyse budget lines? So, you could see from that, I think education gets a score of 93 per cent in terms of primary prevention. You can see from other services' budget lines that are associated with local government that many are associated with either primary or secondary preventative spend.

Okay, that's fine. Thanks very much. I think we'll move on to social care questions now, because we've touched on social care, but we need to come on to education and other matters thereafter. Jayne Bryant.

Thank you, Chair. Good morning. I think you've all spoken so incredibly clearly about the pressures that you have through social care, so I think this is a time to really focus on it, even though you've touched on it. Perhaps you can expand on the projected requirement for net spending on adult social care to increase by that 4.1 per cent in real terms, which I think is equivalent to £65 million a year on average.

10:10

I'll start off with that, then. Obviously, a number of organisations have estimated the pressure in social care budgets. So, you've got organisations like Wales Public Services 2025, the Health Foundation, and most recently the Institute for Fiscal Studiesin England, and they all alight on similar numbers. In local government, we came up with a similar figure, and it's that spending needs to increase by 4 per cent.

Can I just say, for a number of years we've been saying that the pressures in social care are some of the most disproportionate pressures that we face. Social care pressures are running at around about £100 million a year. Half of it is demography and the rest is made up of workforce costs—and when I say 'workforce costs', I mean those directly employed by councils—and £30 million within that is attributable to third party providers having to increase their pay rates due to the national living wage. So, all these figures triangulate. It's just in the past couple of years, as the leader has said, we've found that WPS 2025 came up with a similar estimate, the Institute for Fiscal Studies, and I'd add to the leader's list as well an organisation called LE Wales, which did some work a couple of years ago for the Welsh Government, and I actually cited them in the evidence that I provided for this committee last year. So, you've got half a dozen organisations now saying that the pressures in the social care area are acute and they are real and they are higher than health pressures—according to the IFS in England, 1 per cent higher.

Thank you. In the draft budget, the Welsh Government said that they'll invest £500 million in health and social care to improve performance, to drive transformation and integration and to help people live healthier and independent lives for longer. What impact do you think that that money could have on local government delivery of social care?

Can I contest that? There's a lot of windy rhetoric in Wales at the current time about seamless services between health and social care. Some of it is windy rhetoric. Why I say that is: if health and social care was a train, health being the first-class compartment, social care would be the second-class compartment. The clearest example of that is the way we treat the workforce in Wales. There are health workers, my son is one of them—my son has been a live-in carer for people with dementia and currently works for Monmouthshire social services. He earns £7.83 an hour. If he started in Lidl tomorrow as a customer services representative, he'd earn £9.25 an hour. The Welsh Government are putting £94 million into the health service this year to pay for 'Agenda for Change'. What is 'Agenda for Change'? It's the resolution foundation for the living wage. We're in a situation where we say to people in the social work profession, 'You're going to have the national living wage, but if you come into the health service, you can have this higher level of living wage.' You can talk all you want about seamless services and integration, but unless we do something about equalizing these workforce pressures, we're going to have this flawed system out there. It's one of the things people really need to think long and hard about. Are we prepared to continue with a situation where social care is in effect the cinderella of Welsh public services?

And a growing cinderella service, insofar as—we've talked about the 4 per cent increase in pressures, and we just know coming through our door in councils every day are more people asking for more and complicated and detailed social care, for all sorts of reasons. But let's not forget the 'a' word—austerity has had an incredible effect upon the public realm and the way in which people, as we move into year 9 of it, are falling by the wayside, and we are picking those people up and trying to deliver a service to them. But, you know, the huge uplift in people coming to our door is just incredible. Absolutely incredible.

10:15

Just before you do, Leanne, I think Jenny wanted to come in as well.

I think, here, this is about local government asserting itself with the health service, because it's what the health service does that drives up the demand for your services. If they're not dealing with polypharmacy, if they're not dealing with falls, if they're not getting elderly people out of hospital as quickly as possible, so they therefore lose their capacity to live on their own, then, clearly, the bill is ending up at your door. So, it's about everybody doing things differently, and I just wondered how much you are really challenging health, to say, 'You cannot go on doing things like this, because the cost to the community is just too great.'

Look, I'm on the public record of challenging health about this. While I fully welcome the additional resource going to health, and I'm under no illusion about the way in which the public and politicians view the health service—the health service is extremely dear to us, it's almost a sacrosanct service—but do you know what? We have to—. I was on the public record about 18 months ago saying that local government has done all the heavy lifting in terms of dealing with austerity and cutting services, and the health service must also look to itself about ways in which they can improve and deal with a smaller budget. And we can help them, because we've had to do it, so we can say to them—as well as being assertive, we can say, 'Look, we've had to do X, Y and A. Why don't you think about that?' Now, public services boards are a good vehicle for that. We've now got a function where we can work in partnership and have—that's what we need to do. We need to have those honest and grown-up conversations, and we mustn't be tempted not to go into territory that's difficult, because we couldn't be in more difficult times.

After we leave this meetings this morning, I'm going off to Parklands. It's in Jayne's ward, in Malpas. In Jayne's constituency, sorry—I'm used to talking to councillors, you see, so 'ward' is familiar language for me. And that's a wonderful preventative service, where we are keeping people out of hospital and we are getting people out of hospital, and we've got several of those in my city, and Anthony has the same—we have them across Wales. And that's what we need more of, but we also need to have those challenging conversations with our colleagues in health, to talk about ways in which they can do much more.

I just wanted to follow up on the point that Steve made about staff being an important resource and the importance of rewarding them well. And I wondered how much local authorities can expect to save if they outsource care services from in-house, or if they move towards zero-hours contracts. I'm presuming a considerable saving can be made and that's why many local authorities have taken that route. But it isn't necessarily the best way to pay staff or to treat them, in terms of terms and conditions as well, or in terms of the service that is received by the person being cared for.

I'd strongly agree with that. I believe that things like outsourcing and zero-hours contracts are a short-term fix that have long-term consequences, both for staff and, at the end of the day, for the service that people receive in the longer term. We've seen over the border in England, especially, a mass outsourcing of services, because those councils have had to meet the bottom line. But that's come at the cost of the services in the longer term, because you may get a good deal when you first go out, but then, further down the line, you get much, much less of a good deal.

How do you think we can stop that happening in Wales, then? It is happening to some extent, but how can we stop it going further?

It comes down to averting the funding crisis, really. I'm looking to bring more services back in-house, because I believe that provides a more holistic service. I'll give you one example—the enablement team of our home carers. I believe if you have them in-house, not only can you treat them better as employees, but you can get them looking at the whole person, not just working to fulfil a contract. That sort of longer term thinking might not deliver the short-term cash savings that it might do just farming the service out, but I believe it provides a better service for people in the longer term. It will help prevent some acute demand by keeping people more independent, living in their own homes, less susceptible to trips and falls and things that send them into hospital and send them on a negative spiral.

10:20

But at the end of the day, the more we're forced to meet short-term cash savings, the more short-term solutions, unfortunately, councils will be forced to come up with, whereas if we're given a bit more space to work constructively, to work with our staff—. I'm a great believer that councils only exist because of the hard work of the people who work for us. Public services, at the end of the day, are the sum total of the effort of those who work in them—

Absolutely. 

—and if we view the people who work in public services—as increasingly it seems to happen across this country—as almost the enemy of that service, and their rights, their terms and conditions almost stand as an opponent to quality services rather than thinking that treating those people well will result in better services—. I just think we really need to show that there is a better way than the race to the bottom, and I think we've got an opportunity in Wales to do that, but only if councils are given the fair funding that they need to survive into the longer term.

And I agree with what Anthony has said about the holistic approach to our workforce, but, of course, it's all about the money, isn't it? And the forcing—. Because we have to set that balanced budget. Okay? We don't have the luxury of health boards that can come back—. I was going to say, 'Please, sir, I'll ask for more', but I think that's fairly contentious in the context of comments yesterday. [Laughter.] We don't have that luxury, so every penny we spend we've got to make sure we've got the money in the bank because we can't do it—. We can't come back to you and say, 'I've overspent by £13 million'—health board x, health board y. I was talking in my own council yesterday about putting some services out, which, ideologically, goes against everything that I would want to do, and politically, but when I'm presented with, 'But these people are going to get a platinum service and there is more resilience with this organisation', then, as well as the cost, if other areas can provide a better service for residents, that's also a difficult one to argue against. It's not just about the money, it's the resilience, so if you look at—. Newport has contracted out all its leisure and cultural services. We've got an organisation now called Newport Live. They can do it far better than we did because they don't have the restraints of working within the local government context, so they can apply charity status and whatever—

I'm talking specifically here about care services, because I think that is a particular argument with the provision of care and the way that care workers are treated. I mean, I could have a discussion with you about other council services and outsourcing, but I think if we can focus down on care, because it does seem to me that councils are changing people's contracts, changing their employer without much input from those workers themselves, and if there's anything that Government can do—I hear what you're saying about finance, and I fully support what you're saying about that, but there may be other things. Plaid Cymru, for example, have put down motions a number of times to end zero-hours contracts in the care sector. Is that something that you would support Government doing, for example?

There's a huge discussion, Leanne, going on around this in terms of the social partnership approach in Wales. One of the things we've kept in Wales, but which has gone in England, is the two-tier code. So, in terms of the transfer of undertakings, people transfer over on their existing terms and conditions, and we've made sure that applies. I agree with you in terms of the care sector: I think the care sector model of cheap-as-chips commissioning is not going to last. I don't think it's going to last. And as the minimum wage pushes up, I think it will be a big strategic decision for councils whether they start to say, 'It's probably best to take that service back in-house.' But the problem is—the reason it's out there at the moment is because it's saving money. 

It's cheaper, yes. Okay. Well, thanks for your answers on that. 

Okay. Jenny, it will have to be very quick because we have to move on. 

What proportion of social care at the moment is provided by third parties? And how many of them are private providers? You may want to send us a note. 

All I would say is social care would collapse without the third sector in Wales.

Okay. But I'm particularly interested in the private providers.

We can do that, yes. Thank you.

Okay. I'm sorry to curtail the conversation, but time is about to defeat us and we need to move on to other important matters including schools and education, which obviously are extremely important. I wonder if you could expand on reports that financial issues with school funding are as acute or social care and what the impact will be on delivery. Again, I know you touched on the situation earlier, but if you could expand on that, please.

Okay. I'll begin, then, Chair, thank you, because, as we've repeatedly said, the big issue this year is workforce cost. We've already mentioned that the net bill for teachers is £1 billion, and for other education staff, it's nearly £600 million. So, the gross bill accounts for nearly 85 per cent of education spend, and seemingly small percentage increases in pay awards create a financial tsunami for us. Neath Port Talbot council are on record as saying, 

'The Council has provided a more or less an inflation proof increase to our schools delegated budgets for this current year.'

As things stand, we will be unable to repeat that for 2019-20, which will have a sharp

'impact upon staffing levels in schools, possibly exacerbated by the sharp increase in employer contributions for teacher’s pensions'.

I mentioned earlier it's going to be a 7.1 per cent increase for teachers' pensions. That's incredibly high—

10:25

We're talking about £41 million in terms of the pension situation.

That's the part-year cost—seven twelfths. 

So, obviously, that threatens the financial viability of several schools already in deficit positions, and this diversion of remaining resources away from the front line—. I go back and repeat about the £15 million spent on professional development and not in the RSG. As leader, I wrote to the Cabinet Secretary for Education the day before the provisional settlement announcement. The Association of Directors of Education in Wales had met the previous Friday, and we were starting to get feedback on the implication for schools. And the Welsh Government budget document shows, and I quote:

'Additional funding for teachers pay of £14.8m...means local authorities will not have to make efficiencies or reduce the number of teachers to meet the cost of the pay rise.'

Well, I—. I—

Speechless. 

I'm just trying to find the right words so I don't appear rude, but I just—. I don't get that. We will be reducing the number of teachers and teaching assistants. We cannot make ends meet. This is a huge cost for us, and the view that schools won't need to make efficiencies or redundancies is not just about covering the pay rise; it ignores the wider situation where some authorities are telling us privately that school budgets could plummet by about 5 per cent from next year, and I'll—

Yes, that's partly predicated on that situation with the pension. Okay. Anthony.

Obviously, we'll do all we can to try and protect schools, but that will have to be relative protection, not the protection we would want to give them. And it's going to come down to very difficult decisions, if we're not careful—if nothing changes—for governing bodies. And it has to be viewed in the context of this being the eighth or ninth year, not the first year, because those governing bodies have already made the savings in maintenance costs and all the other costs, and they're really down to the bone on those non-staff costs. Debbie mentioned the 85 per cent figure. When you're dealing with that high a percentage figure in terms of staff costs, inevitably, if your real-terms increase and your pressures aren't covered in a budget, even if we manage to give schools a cash uplift of some description, you're going to have to make cuts in staff costs, and that's going to come at the expense of teachers or teaching assistants. And this is why we're asking for the £15 million as a starter to help us keep those people in their jobs, because they're the people who deliver education to our young people, they're the people who have driven forward standards, and it would be a tragedy for jobs to be lost in that area in schools when we could do more to try and stop it.

If I could, Chair, maybe I could just add, really, to what's already been said, but locally, and I'm sure what we are facing locally is being faced by all authorities across Wales, which is that we have tried to support schools and to protect them but that that level of protection, as said, will have to be proportionate to all of the other budgets that we are also trying to juggle at the same time. If you look at the pressures that the school budgets are under, it is around staff salaries, it is around the pension costs, but we're seeing, again, additional pressure around children who need additional support in schools. A growing number of our children need specialist support, and whatever we do that is another huge increase in demand on our services, and however hard we try to support those children and young people in-area as well, it's increasingly difficult to do so, because some of them need such tremendous levels of support, really, and to source that locally is very, very difficult. It's service pressures and complexity again, a little bit like we discussed in the social care element, really. It is demographics, but it's also about what's making up that demographic as well.

For authorities, it's very, very difficult to manage, and then, I'm just touching on, obviously, the formula for the schools as well; how we're funded differs across Wales, which puts more pressure on some authorities, possibly, than others. But education is certainly an area where we've all striven, really, to support and to maintain, but I think that level of support is becoming more and more difficult as we go forward and the kind of settlement that we're facing in the coming year.

10:30

So, if the increase to teachers' pay isn't covered in terms of the settlement, and the 5 per cent increase in employer contribution to the teachers' pension fund isn't covered, you would expect to see—it would be inevitable that there would be job losses in the teaching staff, teaching assistants and general staffing right across our local authorities in Wales.

Yes, Chair. That's the position. We've already heard of reports of some school closures. There have been media reports, for example, on Anglesey, and, of course, here, austerity is combining with falling pupil rolls, and that's a toxic mix. Ynys Môn—they might have to merge primaries or lose their sixth forms, or reduce empty places. I know that Anglesey's cabinet are looking at a shortfall, or a review about saving £5 million over three years, and that's about 17 small primary schools closing to help to balance the council's books. So, it's a loss of teachers, a loss of schools.

It is an extremely worrying situation, and it is exactly the same with social care. People are now presenting—. I've got 191 more children with additional needs in Newport than I had last year. That's a huge extra bill for us—191 presenting. Why are they presenting? Society is feeling the pressures of austerity. The social fabric is breaking down, we have issues with families, with children. I'm seeing things that I hadn't seen before, and, at the end of the day, if we can't have the appropriate funding to keep those places open, it's going to exacerbate things even further. It's a self-fulfilling prophecy there, but education is the biggest spend that we have, and alongside social care, our biggest worry.

Could I ask you as well, if the increase in teachers' pay, and, indeed, increased contributions to the teachers' pension fund are covered by Welsh Government, what would the position then be in terms of jobs, educational services and our schools?

Well, we, you know—.

You've got to put the teachers' pension in the too-hard box at the moment. I mean, we are waiting for the Treasury to make a decision on that. The 22 leaders have written to the Treasury, the Treasury are particularly slow at answering that letter at the current time.

I usually wait about seven or eight weeks for a reply.

But, you know, if that teachers' pension cost doesn't come through—more importantly, it'll come through at least for next year—but if that teachers' pension cost doesn't come through, all bets are off. That is a huge—. You talk about an in-year cost of £40 million; that's £40 million we haven't got. We're down again on our budgets, so if you add a further cut of £40 million into an already tough situation, I'm not quite certain where you go with that.

No. I understand that. I'm just wondering if that is covered, if the money is provided for that, and for the teachers' pay increase, what then would be the situation for schools in Wales?

As I'm saying, we're working on a basis that it is going to be covered. I don't think we can work on any other basis. By the formula itself, of the money that you get from Westminster, the Treasury should be paying for this. This is the same as they paid for the teachers' pay dimension. But we shall wait and see; we look forward to the announcement.

Are you saying that there will be job losses, even if that pension situation is covered, as it should be, by the Welsh Government, and, indeed, the situation with teachers' pay increase, that there will still be a loss of jobs?

10:35

There were job losses this year, as there were last year.

But if something could change in the final budget, we would work with you to prevent those job losses. That's the potential prize if we can think again and find some money for the core education budget.

What is the additional figure that you'd need in the budget to prevent any job losses, then, would you say?

We've gone through the settlement, and there's the RSG currently set at -0.3 per cent, and outside the settlement there's £15 million in terms of money to go to schools, there's £30 million in terms of money to go to social services, and there's a £30 million pot in the health service budget to go to regional partnership boards. I am not saying that is the silver bullet. I am not saying that is the answer to our problems, but if all that was lumped into the RSG, that would be a lovely start. If we did something about the floor, that would also be very useful. If the Chancellor stands up on Monday and announces something on social care, that would be greatly helpful. All these factors could take what is a dreadfully serious situation into something that's manageable, at least, again for another year. It's not sustainable in the long term, but it gets us through. And austerity's over, so clearly we haven't got to worry about it in the longer term.

Okay, thanks for that. Yes, we all welcomed the announcement that austerity is over, and we now await the actual action.

Tell my treasurer that.

Indeed. Just sticking with the workforce, the figure of 5 per cent job losses in general, across the bulk of local authorities, without additional funding—and that, I think, is a yearly figure that you've stated—could you just expand on that assertion, on what basis you've come to that figure?

If I could answer that, in September, we did a survey of all 22 authorities and we asked a number of questions about pressures, funding reductions, impacts on services, impacts on workforce. One of the most sensitive questions we asked was what was going to be the impact on jobs; indeed, many authorities didn't actually answer the question, or edged around it. But for those who did answer it, they were saying around about 5 per cent reductions. They weren't sure whether they would be compulsory redundancies, but they certainly thought 5 per cent in each year over a three-year period, and, of course, up until—well, it wasn't until this year; since the onset of austerity, we estimate from Office for National Statistics figures that we'd already lost about 24,500 posts in local government. So, it certainly suggested to us that the pressures we were facing over the next couple of years, the impact on job losses, were actually going to accelerate. It's because of what we've been talking about earlier—about the massive impact of workforce costs.

Okay, thanks for that. Mark, did you want to come in on council tax in our remaining seven minutes?

Right. Fortunately, from our guide—as you've twigged, we have a guide; it's not a big section—I will only refer to council tax in the context of reserves. You said, obviously, you'll come back to us on that. But notwithstanding those points, what are you anticipating the trend for council tax rises is likely to be in the foreseeable future, given everything else that you've already told us?

Well, we look at the Welsh average at band D council tax where we start, and that's about 89 per cent of the latest estimated figure, or it's £1,672 for England, and the trend has been for that gap to close over the last few years. Now, hard-pressed residents of our councils and our constituents—they could be facing a prospect of a further 5 per cent increase this year and beyond in terms of council tax rises. I'm sure we've all seen in the media figures like 28 per cent for Pembroke, or 11 per cent for Flint, in your area. But we're looking at—the real median employee earnings are still 2 per cent to 3 per cent below the 2007-8 level. The Institute of Fiscal Studies predicted that this slow average growth income is likely to continue over the next few years, so this is becoming increasingly problematic in Wales, but it is our only source of increasing any of our income. Therefore, we will look upon it. I mentioned earlier that we have a different cut in Wales. In England it's 50/50—50 per cent RSG, 50 per cent council tax. In Wales—Newport, it's actually 18 per cent of my budget is council tax. So, even if I put my council tax up by 10 per cent—which I'm not intending to do, but if I did—that covers a very small percentage. Every percentage on council tax for me in Newport is worth about £0.5 million. So, it's not a huge way that we can fund a gap, and that's why we're hearing figures like 28 per cent for Pembrokeshire, because that wouldn't raise—. It would probably help them to balance their budget this year, but that huge number—28 per cent—doesn't raise that huge an amount of money. There was no cap on council tax rises here last year. I don't know what the Cabinet Secretary is minded to do this year, but it is the only opportunity. And, again, if we raise council tax, Welsh Government—. You know, if you were minded to put a cap on that, I think that would be extremely difficult. 

10:40

No-one wants to put council tax up, especially in an era where services are being cut back, because it inevitably leads to the accusation that people are paying more for less but, unfortunately, that's the inevitable reality of austerity. I don't want to put council tax up because I realise the pressure on people's budgets, but the alternative of making even deeper cuts to services and losing even more jobs and diminishing services is even more unpalatable. It's Rhodri's choice between the unpalatable and the inedible, if I can get that out.

For me, my other word of caution with council tax is how ineffective it is. I have to put council tax up by 3 per cent to raise £1 million. Now, that's not going to solve my problems. Even if I wanted to double my council tax, it wouldn't solve the problems we face. It's like trying to fight off a dragon with a stick of celery, especially in an area—like many parts of Wales—where there isn't the council tax base to really have an impact. The trouble with council tax is that we can all agree that it's imperfect, but no-one can agree what the alternative is and how that would be any better. But the short answer to your question is, yes, it's inevitable: if cuts to the core grant keep continuing, council tax will keep continuing to rise because of the gearing effect. To offset a 1 per cent drop in my settlement, I have to raise council tax by nearly 4 per cent, and that gearing effect will always mean that, under austerity, people end up paying more for less.   

This is the classic tactic, however, isn't it, in terms of shifting austerity on to the local state, because the assumption is that the council tax is going to make up the difference. There's a council tax yield figure in the Welsh Government's budget that I think is set at 6.3 per cent.   

Yes, so you're expecting us to raise our council tax by 6.3 per cent. 

There's almost an anticipation that it will go up by that. Debbie mentioned Flintshire. The authorities—Conwy is talking about 11 per cent, as Mark will know. It's an interesting dilemma for Conwy, isn't it? You tell your residents that you're going to have a monthly bin collection—you move to a month—and you put your council tax up by 11 per cent. That's how desperate things are. That's how desperate things are. And, as I say, that council tax pressure is a classic way of Government shifting pressure onto the local state.  

Okay. We're very near the end of our allotted time, but Jenny Rathbone, I think, wants to ask something further. 

Yes. Why is it your only source of income? Why are you not able to raise money in other ways—getting the polluter to pay, for example? It won't work in all areas, but you could consider congestion charging, you could consider increasing parking charging, you could consider fining people for polluting their recycling with food waste. There are a series of things that you could do to punish people who do the wrong thing for the whole community.  

Yes, thank you. That's a very good point, and we do do that. 

But what's its income-generating possibilities? I mean, how much—

It's marginal. 

10:45

Have you looked at that? All right. And the other thing—

It's a plaster over a gaping wound.

The other thing is the Preston economic model, whereby public services all spend more of their procurement on local businesses. In Preston district authority, they've increased the money circulating by £500 million. 

Yes. I've had meetings with Matt, the leader of Preston. It's based on the co-operative model and it is a very good idea, and we are looking at that local procurement much more. The trouble is it's really difficult when we're just trying to keep our noses above water. We don't have—. We don't have the—. We don't have the capacity—that's the word. We don't have the capacity to go off and develop more projects now; we're trying just to hang on and keep going. That's the issue. You've got a new generation of local government leaders now. You've got some fantastic people who really want to change and to move things, but we are totally constrained by just keeping going and running the shop. That's the issue.

I'm going up to visit Preston next month. Yes, it's a great thing to explore, but I only wish I genuinely thought it would solve our problems. 

Okay. Well, we have reached the end of our allotted time. Thank you all very much for coming in to give evidence to the committee today. It's been a very interesting and worthwhile session. We have much material for thought in our scrutiny of Welsh Government and the Minister in due course—the Cabinet Secretary. So, thanks for that. You will be sent a transcript to check for factual accuracy. Diolch yn fawr.

Thank you, Chair. 

Diolch yn fawr iawn. Diolch am y gwahoddiad. 

Thank you very much. Thanks for the invitation.

11:00

Gohiriwyd y cyfarfod rhwng 10:47 ac 11:01.

The meeting adjourned between 10:47 and 11:01.

3. Ymchwiliad i Ddiogelwch Tân mewn Tyrau o Fflatiau yng Nghymru (Sector Preifat): Sesiwn Dystiolaeth 6
3. Inquiry into Fire Safety in High-rise Blocks in Wales (Private Sector): Evidence Session 6

We move on to item 3 of our agenda today, our inquiry into fire safety in high-rise blocks in Wales in the private sector, and this is our sixth evidence session. I'm very pleased to welcome Tom Jones, who is senior project manager for Viridis Real Estate. Welcome, Tom. Thanks for coming in to give evidence to committee today. If it's okay with you, I'll move straight into questions and a general question, really. That terrible tragedy of Grenfell Tower, Tom, obviously changed the way developers consider fire safety when planning new high-rise developments. What would you say those changes have been in the way that developers would now view these matters?

Our immediate reaction was, on schemes we were building or designing at the time, just to review the cladding materials we were specifying or the architects were coming up with. So, even without knowing the outcome of the fire, there was an immediate look to looking at things like brick or different rockwool materials that we could use instead. So, we speculatively changed things, moving forward, even not knowing if we would have had to have done that, we just—as a general move in the industry to just play it safe when you're at that early stage.

Yes, and that was mainly centered around the cladding issue, really, was it?

That's right. I think it just made us look at what we were designing at the time, and think, 'Well, is there a way of doing it differently?' There were a few schemes we changed, which cost us more money, but longer term we just felt it was the safest option. We didn't want to be left with a building with a problem, so—.

No, okay. What would have been the increase in cost, Tom? Is there a ballpark figure for that in percentage terms, or—?

We changed—. It was an office scheme in London, so it's quite different to a residential scheme, but that was about a 100,000 sq ft office and that was about a £400,000 uplift in the cost. It was brick, so we changed the internal insulation from being the rigid board that you see to being the rockwool that you typically see in houses. So, quite a big cost there. I guess it would be similar on a residential project if you were considering it.

Yes, okay. There are obviously a number of different parties involved in large developments, Tom—the developers, the designers, contractors, subcontractors, et cetera—so I guess, in terms of all those relationships, it can get quite complicated. Does that raise issues of concern, would you say, in terms of making sure that we do get buildings that are as safe as possible in terms of fire risk?

I think it does to a point. I think probably—. We'll perhaps come on to it a bit more later, it's just—if the products aren't even around then it's less of an issue. I think not being able to actually use those products would be the first point, really. Yes, it's always complicated dealing down through a contractor and the supply chain, but I think, if they can't even be specified, then it's less of a problem, which I think is where we're moving anyway, but—.

Yes, okay. In terms of the intended occupiers of the building, does that have any bearing on the fire safety features? If it was student accommodation, for example, would it be seen as a higher risk, or is it basically a matter of complying with the minimum requirements required by building regulations?

The occupiers don't really—. In terms of the cladding, it doesn't really change the building, but there is obviously a perceived risk—. If you're a residential block, people are more familiar with a building than if it's a hotel. So, a hotel does tend to have—not necessarily in terms of cladding—more fire input into it in directional terms and getting people out of the building who don't know where they're going. But the way you build the building wouldn't change; over a certain height, it needs to be cladding of a certain type, so I don't think it really affects it, to be honest. 

11:05

No, okay. Sticking with building regulations for the moment, Jenny Rathbone.

Good morning. Thank you very much for coming along. How effective do you think the building control system now is since constructors have been able to appoint their own building inspectors? We heard quite a lot of evidence from local authorities that if they're too rigorous in the way they inspect buildings, then they are in danger of not being invited to take up business in the future. 

I think that's true to a point. The theory is that the approved inspector should be the same as the local authorities'. A lot of them are. They've left the local authority and they go and work as these approved inspectors. So, they are the same people.

Yes, but even within local authorities, we have corrupt officers.

Yes, but I think it's not so much that people are trying deliberately to change things; I think it's just that the regulations are very complicated to keep up with. So, it's quite a lot of responsibility on one individual overseeing the building control signing. The technicalities involved in signing off a building are vast. So, it's a lot for them to take on board. They might be overstretched and there might be a fairly open lack of understanding of an area that leads to an error, more than a deliberate, 'Well, we'll ignore that cladding and we'll just sign it off.' I don't think anyone does that.

Okay. But, you can see that there's a potential conflict of interest that if the inspection is too rigorous and they ask the constructor to redo a part of the work, there'll be an aversion to getting that particular rigorous inspector back in the future.

I think there probably would be. Personally—

It's sort of human nature. I think if people have had problems—. I don't think anyone minds the rigorousness. In fact, I'd quite like this to be one building control, no approved inspectors, and just firm and you know where you are with them. I think the problem is that different individuals can become hard to deal with sometimes. So, if it's rigorous because you have good knowledge, then it's fine, but rigorous if you're just being rigorous for the sake of it and not really understanding the process is different. So, I think having one point of call would be good, which you could rely on, that were duly hard to deal with in a way—I think that would be fine.

Because, I think, we've heard evidence from the fire services in Wales that, often, once the building's been sealed up with the first fix, you can't actually see whether buildings are complying with the regulations and that, when they've had the opportunity to look behind and see what the quality of the work has been, often it has been defective in terms of fire safety.

Yes. I think it goes to the point that if you've had one, we'll say building control, even if they're an approved inspector, if you have one person dealing with—. You know, their fees are not overly high; the workload is high, so to inspect all of those buildings, they're very reliant on input from the sub-contractors and the contractors to them, to say, 'Well, here's a sign-off report of the fire-stopping', but they don't go around every building looking at—. They'll walk through and they'll do visits, but the time allocated isn't really—. I know, myself, from walking around, that it's very hard to see every little bit of a building, and I'm there a lot more than a building control officer is. The time they have to actually see issues is not really enough, to be honest.

And buildings like yours—the one you're building in Cardiff—is a more complicated business than just bricks and mortar. If we haven't got people inspecting the quality and the accuracy of the work of sub-contractors, how do you know whether you're going to get the building that you signed up for?

It's harder to, definitely. We tend to employ then the architect and the people who work for us directly back to us to do a quality check as well, because quality monitoring is always one of the biggest issues in construction. The thing is, you know that building control don't have the capacity. So, we use the team who've designed the building, we employ them directly back to us, to oversee then the contractor who's building, to make sure that he's building it as per the drawings, et cetera. That just helps take the load off the building control.

11:10

But, obviously, not everyone does that. That's just our choice, because we don't have a—. That's the only way we can monitor it, but it's not a forced route—that's just our way of doing it. 

But for those who don't take that option, how do they have any confidence that what they've commissioned is what gets built?

You don't. I would be very wary of just employing a contractor that you didn't have any control over, and just relying on building control. Because if they know when he's coming round, they can cover things up very easily. A lot of the building control staff, and more so now, are probably not experienced enough in detailed construction, because there's so many different ways of building a building. It's not just, you build a brick a wall, and here's a floor joist—there's lot's to it. So, their knowledge base has to be huge to try and keep up with it. So, it's very easy to outwit them if you were a less than honest contractor.

Okay. So, how clear is the building regulations 'Approved Document B (fire safety)', with the benefit of hindsight of Grenfell?

It's very specialist. It is clear enough to a point, but I think the fire regulations particularly are confusing, and you get baffled by suppliers selling you products that claim a class 0 fire retardant. They just throw everything at you to make their product seem okay. And it can almost bamboozle a building control officer.

I'm not an expert on the fire regs. I don't want to pass too much comment other than that I find them fairly confusing. I think if you just had clear building regs, that would be fine, but there are lots of other British standards and EU regulations that come in, so you have one set of regs, but then you also have these other overarching elements that come in, which allow you to take a different route to compliance. So, you have to really understand them to navigate your way through. Rather than it being just one set of rules, there are three or four, and as long as you go down one of those routes you do comply, but it means you have to be extremely knowledgeable to do that and a standard building control officer probably wouldn't know enough of the detail.

Okay. Obviously, one of the lessons from Grenfell is that there was a particular type of flammable panels that was put on and, had they chosen something that was slightly more expensive, there would have been a completely different level of fire resistance. So, do you think that that is the way in which the building regs need to be changed, to ensure that the sales pitch from a designer or constructor isn't blurring the clear requirement to build something that is going to be fire resistant?

Definitely. I think that, probably, the key element now is that my—. I don't quite know where we stand with our building—we'll come on to that with some testing. My frustration in doing our investigation into it, internally, was that we could even be sold products that might be not really up to scratch, and they're sold by large reputable firms, they've been used by lots of people, they come with all the certification. But actually, when you delve deeper into it, the product on its own, if combined with the wrong insulation internally, isn't necessarily a good system.

I ended up speaking directly to the cladding manufacturer's representative in Europe and she said, 'Well, in Europe, we don't sell that. It's only in the UK that the regulations have been soft enough to let it through.' So, it's just sold as a cheaper product, but actually, you wouldn't be able to buy that in Germany. They don't sell it. They just don't even specify it.

They're not EU regulations then, are they? Sorry, I keep—I should go through the Chair.

It's hard to gauge. I don't want to quote on the understanding of the regulations with it. The products that they sold in the UK complied with the regulations here, and can be used in various combinations to achieve the required compliance, which is what's happened with us. But, in isolation, the product just sat on the edge of performance. Whereas in Europe, they just didn't take the risk—they'd say, 'We just don't use that', because then there's no question about workmanship.

Our buildings are so finely engineered here that you have to rely on everything being put together perfectly for it to work. But, of course, you know what happens on a building site, someone has an off day, they don't quite finish something, they don't seal it properly. There's too much reliance on the whole thing. Whereas, if you just had something that doesn't burn, it doesn't matter if someone misses a fixing or a detail, because it still won't catch fire. That's where we should be: not using materials that are a risk at all, because I don't think you'll ever get the site efficiency perfect.

11:15

Yes. So, basically, you'd like to see Government changing the regulations to operate a precautionary principle.

I think you've done it—. And it's hard to follow—. The note that came out recently was about putting a ban on combustible products. I think that's the right approach, that those materials, you cannot buy or specify in buildings of a certain height. I don't know that the regs need changing beyond that, because you don't want to over-confuse, but if you can't even—. If no-one will even specify that product on the building, then that draws a line quite safely, I think.

Okay. So, when you're involved in the design and construction of a building that you're investing in, at what point is advice sought on fire safety, particularly where you've got a tall building, like the one you're producing in Cardiff?

Early on, generally. I mean, it depends. The more complicated the building, perhaps the earlier you do it, but you have a fire risk assessment done early on in the design. We tend to bring in fire engineers early to help. There are always problems with the buildings in terms of—. The building regs are very prescriptive—rightly so, I think. A maximum escape distance is a maximum escape distance, but every time we design a building, they're all different. You know, take a building like this; it's very unique and very intricate, so you tend to have to bring in fire engineering to help with, 'Well, that corridor is 2m too long—do you still need it to be that long? So, we need to put a different sprinkler in.' There are lots of other things that come into the design to make it comply, which is fine, and it's sensible—I don't disagree with that. So, you tend to bring on—. If it's a complicated building like this, you'd have a fire engineer very early on in the process to help you understand how you're designing it.

Okay, that's interesting. In the initial design phase of the student accommodation that you're developing in Cardiff's capital quarter, how much involvement did you have, as the investor?

Not loads. We bought the scheme with an existing design that was worked through. Because it's not, obviously, as complicated as this building; it's fairly straightforward, so there's some fire engineering that goes into place, but with sprinklers in, it makes everything a lot easier, because it just takes the pressure off everything else. Everyone becomes a lot more relaxed: 'Sprinklers are in—okay.' You know, you've got a bit of tolerance on escape distances and things like that.

Okay, so that was a significant factor in your decision to invest in it, was it?

No, it's just what you have in Wales: you have sprinklers. So, it didn't change our—. I mean, we're very grateful that we do have them in there now, obviously, but it didn't change our investment in there. That was just what came with the building.

Okay, so the previous developer had—. How much did you know about how much they had consulted the fire authorities?

I don't think they had consulted vastly, because it was just with planning. But the approach on this level of building is that you bring in a fire engineer, but it's a bit easier on that than it is on this building, for example, just because it's a bit more straightforward. It's a relatively square box, so the fire engineer comes in and assists the design team early on, once the architect has drawn up.

Okay. So, in general terms, how much do you, as the developer, insist on having oversight of the quality of the build?

It goes back to what I was saying earlier, really. Every project we do, we'll employ the architect, the mechanical and electrical engineers and the structural engineer as direct appointments. Because, they're normally appointed underneath the main contractor, but we have a sort of whistleblowing clause, if you like, back to us. So, if our architect goes around and he sees things that he thinks the contractors shouldn't be doing, and 'That's not what I drew', he can come back to us and say, 'Look, there's a problem; you need to stop this and get this changed.' That's what we do with all our schemes, just to help that. 

Okay. That's very useful to know. And in the projects that you're involved in, who chooses the building control body?

We generally do. We'll go out to competitive tender from local firms, and we tend to involve the local authority—a bit like we do for appointing an architect. You have two or three, or three or four quotes, and then normally you get them in to interview them and see whether they seem good and whether their prices—. I mean, obviously, you do look at price, so whether their price is sensible. We don't pick the cheapest, but you want to get prices in to know it's about right for the service they're offering.

So, price is an element, but how much attention do you pay, in the appointment process, on ensuring they're going to be asking the right questions or looking at the right things?

11:20

It's a key part of it. I mean, we tend to only employ larger firms. We have only done one thing in Cardiff, so we had to come into this quite new here, whereas if we're doing something somewhere else, where we've used people before—we use the same firm repeatedly because we know them and we trust them, whereas here it was a bit cold. We came in, and we had to interview three firms we didn't really know just to meet people and think, 'Well, do they seem technically competent? What's their past experience? Have they worked on this sort of building before?' That's the process you go through, and what their proposal is, really. 

Okay, thank you. As far as you're aware, in your own experience, is there generally a preference for private-approved inspectors over local authority building control?

I think we've ended up with probably slightly more private, but then we've used quite a few where it's been local authority. I think probably two thirds private, a third local authority. It depends on capacity as well, really, because you do want them to be able to work with you quickly. We're always under time pressure, as usual, to do things, so it's more about their capacity and ability to get on with things than their willingness to do it.

So, would you say that you look at every case on its merits, depending on—? Obviously, local authorities differ in their—

Yes, we've used a few local authorities that have been very good, and you have someone come and you think, 'Wow, they're fantastic.' So, it really depends. They're like private businesses even though they're local authorities. They're trying to be competitive in the market. They're not actually any cheaper, they're the same sort of price, it's just really ability. If you meet the person who's running it and they seem very competent, you're probably more likely to go with them.

Thank you, Chair. I wonder if I could just take you back to an earlier answer when you talked about your contact with contractors, and I think you said that you wouldn't rely just on building inspection at the end; you would expect your architect and, presumably, surveyors to be in regular contact with the contractors and inspecting the building as it goes on. I wonder if you could just explain that process of how often they would be involved during construction phase. And would it be fair to infer that they're looking at more systematic issues rather than very individual stuff, because, inevitably, they're not going to be able to micro-examine at that level, and I think you also said that the robustness of all the building materials has to take into account human factors. So, could you just explain that process a little bit?

In terms of the monitoring process?

Yes, and how much of it is there and how often you would expect your architect to be down on site.

Well, it's down to us really driving it, and it depends on the scheme. The more complicated the scheme, the more you'd like someone down there, and perhaps the bigger monitoring team might be—. With a job like this, it's quite big but it's quite repetitive. So, almost, early on, you, sort of, benchmark the quality so that you know that the rooms and things are being built well, and there is a level of assumption then that, when you're walking around, you do see things being repeated properly. So, architects you'd expect—I think once a week probably they go down. They tend to go down and have other meetings and then they maybe pop in and have a look around. But the biggest problem on these is that that's 550 bedrooms, so you can imagine trying to open the door on 550 rooms—how long it takes to go around, looking at every room. It takes all day. So, inevitably, people just walk through. Unless it's jumping out at them, it's quite hard to—. The architect and the engineers, they're all keeping an eye on things, which does work well, but there is also reliance on them, the main contractor, having—they rely on their subcontractors providing quality control back to them. There's also a checking process there, and that does depend, then, on how efficient and how good the main contractor is. You'd like to think, if they want more work and repeat business and they use the same subcontractors, they will need to work quite well together. That's, kind of, common sense, but it doesn't always work like that. If they are a good team—which we have used here, in fairness—they have the service team work with them closely on a lot of projects. So, they know how they work, they know what their internal sign-off is. So, a plumber will sign off his plumbing at his stage. So, there's also reliance on our team just overseeing the commissioning and signing off reports from the subcontractors. So, if the subcontractors said, 'I've done this electrical certification', our team will check, 'Yes, that's been done.' So, some of it is just overseeing the paperwork that comes back through and some is physically inspecting. And you want to do that early on to stop the repetition of defects. So, if you plumb one flat wrong once, that's going to happen 500 times, so you need to make sure that you get those early ones right and keep an eye, spot-checking afterwards, to make sure. So, I think we have more people on a job like this than an office. If it was a simple office that was open-plan, it's a lot easier to manage that. So, there are more people here. It varies per job, really.

11:25

So, compliance has to be really integral to the contractors' day-to-day work. They have to be overseeing it, really, and ensuring they've got robust systems in place. We've heard some evidence that, given just the nature of complications with a building and that, as it becomes finished and sealed, the ability to spot some of the defects obviously declines dramatically, and that some form of building inspection that is very thorough—perhaps for 5 or 10 per cent of buildings—and you're given no notice and at some stage they go in and they really do this sort of micro-examination—. Do you think that would add real rigour to the system? Because at the moment I think we are all discovering that an awful lot is taken on trust, basically, and it's all about your initial awarding of contract and confidence of people. I'm sure that you're very careful in what you do, but, as you said, if someone's had an off day, and you're a workforce of a couple of hundred onsite and everything, things happen.

That's right, yes. At peak, there are nearly 300 people on site, so trying to manage 300 people having their moments is hard. I think you're right because the main contractor—this is design and build, so the main contractor is reliant on the subcontractor passing that 'I've done my plumbing' report up the line, and that's reliant literally on that plumber saying, 'I've done it.' There is other testing, but if you knew that there was an independent building control body that came down, and particularly if you don't know when they're coming—I think that's great. I would like that, I think. They'd need to be well informed—they'd need to come down with the same team each time. You know, 'We have the drawings, we know what's supposed to be being built, we're going to spot-check you, and we're going to go through your commissioning data.' Services are really rated on the commissioning, because you can't see—you know, with wiring, it's very hard to see if it's right until it's tested, so you need—. But even just to see that paperwork and the spot-checking I think would be good. There isn't that same fear at the moment. People come in but it's a bit more casual.

Some people say that the extensive use of subcontractors also makes all sorts of compliance much more difficult, but would you view that as just a counsel of perfection because subcontracting has always been absolutely profuse in the building sector?

Yes. I think you couldn't shift away from that because buildings are so complicated that they need a myriad of little specialist firms to get in. So, you couldn't change that system, but you could change the inspection process.

You talked earlier also about your surprise when you were speaking to the rep of some cladding material that you've used—that product—that it was only in effect, in Europe, being used in Britain, and I presume you didn't know that was the case until that point. So, what process do you go through when you're choosing materials? Or would it normally be the case of the contractor would do that for you and you'd see the recommendations and you'd be kind of signing something off late in the day and choosing between two or three options? How does that work?

It can vary, really. It depends on the building and how interested you are in the cladding, really, I think. A building like ours, the planning drawings come out and you've got brick cladding and then you've got the metal, the aluminium. We take a relative interest in that, but there's an assumption also that the team put forward components that are compliant with the regs. If the contractors are under an obligation to meet our original specification, which is compliant with building regs, and if they were to change the panels for a cheaper one, they'd have to come to us to say, 'Look, we're looking to change this because we can get this and it's going to save you £100,000.' They would have to come and tell us. We don't really mind who makes the panels in that instance. We're more interested in how the building looks. As long as it complies with the regs, it doesn't matter where it comes from, and as long as the team are happy with that. Some systems in other buildings—I keep using here as an example because it's more notable—but if you're very into the cladding, you'd take more of an interest and you might say, 'You have to use this slate, or this wood, from this supplier.' But, obviously, if you're supplying rainscreen cladding, we're more interested in the cost and compliance than who supplies it.

11:30

And would I be right in inferring that it's the more visual elements, then, perhaps, that you're making decisions on? Because, presumably, there's a total range of products that are used in any building, and you can't possibly be involved in—

Yes, we just want a building to look like the design and to fit that. And, obviously, when you're competitively tendering, you're wanting to get the thing that's the best price within reason—not always the cheapest, but, generally, it leans towards that being the right way you choose from. 

In your portfolio of buildings, there are buildings that you have purchased from others—they're already there, and actually purpose-built as well. So, what's the mix in your portfolio?

It's not a large portfolio, it's probably only about 15 properties. I guess they're quite big individually, but it's mainly offices we have, and j ust two student blocks—one in Leicester as well.

The firm—probably about 13 of those we've built.

Yes, most of them are built—refurbishment or new builds.

We've heard from some that when managing agents are hired, and they come into an existing building, the paperwork on fire regulations and the procedure is not always complete. Is that something you've either had experience of or that you've heard from colleagues in the sector that can be a challenge?

Yes, I think it's very hard at the end—it's notoriously hard. Everyone likes, in the building sector, the designing and the building of it. The bit at the end where you put the paperwork together is probably the most boring bit, and that people tend to—. So, you have to have a good system in place with the contractor, and that tends to come from the bigger contractors—they tend to be better, generally, at putting the as-built information on the building together. That includes the specification of the materials, all the things to do with health and safety in the building and getting that together. I do always find—we get these folders electronically now, and you go through and it seems fine, and it is generally all right, but I also find that, sometimes, I want to find something I can never quite find. It's only when you really want to look for something—things can be missing. So, I think the intention is there that it is correct and is together, but just by the sheer volume of information that comes in, sometimes things are missed out. I'd like to think that buildings we finish—we take a look through and we wouldn't worry too much if someone forgot to put the sheet on what make of taps were in, but we would want to check for all the commissioning certificates—the fire safety, the building control—because we obviously build a building as an asset that has a value to us. We always think, 'Well, if we're going to sell it tomorrow, what is the purchaser going to want?' They're going to want that folder and it's all going to have to be in there. So, we check it before we hand it over to a managing agent. They still always ring me up and say, 'I can't find this thing', but it should be minor, hopefully, not, 'There's no fire certificate for the building' or that sort of thing. But it wouldn't surprise me if people don't pay attention to that and just finish the building in a rush, and, 'Here you go', then manage it.

So, if you are purchasing a building that's 15, 20 years old, you'd often run into difficulties with the thoroughness of the paperwork, or relevance, I suppose, in terms of any additions that might have happened to them. How would that affect the purchasing decision? Is that a big thing for you?

You just take a view on what element of information is missing. If there's a concern over something critical like fire safety, then it becomes a big problem, whereas if it's minor, you just say, 'We'll take a view on that.' We'll either allocate a cost to repair or remove it. So, things you look out for have changed over the years. Asbestos is still there, but, obviously, it's not used so much now. Aluminium composite material is now that sort of material, where, every time you buy a building, everyone's looking at it, 'What's that panel? Is that aluminium? Right, how much of that is there?' We might have to change it, even if we can't find out what it is, and we'd say, 'Well, okay, let's just assume we're going to change it', and they'd work it out. So, you take a risk on each.

So, you have a hierarchy of risk where fire safety is top and asbestos is—

Absolutely. Life safety and health and safety are kind of key, really.

Thank you very much. I'm new to this committee, so excuse me if I'm asking an obvious question.

11:35

That's fine. No problem.

I'm trying to understand where liability lies, really, when something goes wrong. So if, for example, the building is a social housing block of flats, say, that was commissioned by a housing association, fire checks were carried out by the relevant fire authority, and something goes wrong from a fire perspective, where does the buck stop in that scenario? Who's responsible for that going wrong?

When you say 'something goes wrong'—it's quite hard; there are quite a few elements to the question. There are a number of elements to it, I guess. If the design of the building is correct—. If there's an issue with the design of the building, it's a designer-related issue, and then we'd follow that through to what element of that building caused that problem. If it's an operational error on the building then it's a management—. So, for example, if you build a building correctly and then you hand it over to your managing agent, and then they're responsible for running that building, and then they block all the fire escapes with cardboard boxes, it's an operational element. There is—and this is what I've found recently with the fire officers and things being involved—we've got them in to Capital Quarter to do a double-check on our building, just to really make sure it's good while we're in this transitional period. But they are very reliant—. You have a fire safety assessment done, you have fire risk assessments done, and you have the fire officer involved. There's quite a lot of different reports done, and they all seem to be cross-relying on each other, which I find sometimes a bit—

Does that make it difficult, then, to ascertain who's liable when things go wrong?

Yes. It's like I've assumed someone else has done that, and there's a bit of that going on. So, yes. If we have a managing agent on board, the building—when we finish a building, the building has—. I have to get the right phrases in my head, because I always get it wrong. It has to have a fire safety assessment, which is our design saying, 'This is how we believe the building operates—if there's a fire, the sprinklers come on, put the fire out, people escape. This is how it works.' That's the design that comes with the building. Then the managing agent has a fire risk assessment undertaken of the building as it stands, which includes how the building functions, but also then how the occupants, and how the building's managed, so you have these two documents, which should read, in an ideal world, together properly.

So, liability comes back to what actually caused the fire, I think, is perhaps the long-winded answer to that. So if the building fails, it follows through to the design. Was there a fault with the design or was it a management issue?

Okay. I've just got one more question. I wanted to follow up on a point you made earlier on about regulation, when you said it wouldn't happen in Germany, because you just wouldn't be able to buy those products. What needs to change here? Can we change legislation in this Assembly to get to the same point as where they are in Germany, or is it a bit more complicated than that?

I'm going to come from your angle, because I would like the regulations to change, but I think, yes, there are certain types of products—which I believe you're trying to do now, with the ban that's come out—that should not be available to be used on buildings over a certain height. So the current regulations or the proposal's come out to ban a certain type of insulation in cladding on buildings over 18m. So, ours is 36m—whatever it is. So, generally, tall buildings—over six storeys plus. I don't really know why you don't just ban it on all buildings, to be perfectly honest. But those panels are cheaper, so this is the thing—all the time it's used on the lower buildings, people will still use it. I just think if it's not there—you can't put asbestos on anything. It's just gone, which is a much better way than, 'Well, you can use it here, but you can't use it here'. It's too grey. I think people try and push it. Not that you can argue the height of a building, but—.

And is there a big difference in the cost between the panels that will catch fire and the ones that won't?

I personally think it's peanuts. I wouldn't know exactly but it is, but you wouldn't even really—. I mean, that's £30 million to build that building. If you had to do a slightly different type of cladding and it was totally fire resistant, it might be £100,000 or £200,000, even if it's £400,000 more, in the scheme of—it's £1 million plus to change it now. It's nothing, in reality. I'm speaking out of turn, I guess. If you're a local authority, every £100,000 matters if you're refurbishing a tower block, doesn't it? So, the commercial pressure does really come down to it.

11:40